February Issue 2005

On January 28, the World Bank clarified to an over optimistic Pakistani nation that the Indus Water Treaty does not envisage a role for the financial institution “in the determination of any issues which might be brought before a neutral expert.” The statement said the bank “will not participate in any discussion or exchange beyond its role in the process of appointing a neutral expert.”

After awaiting a bilateral resolution of the Baglihar dispute for years, Pakistan finally moved the World Bank on January 18, and requested it to appoint a neutral expert under the provisions of the treaty signed in 1960 between India and Pakistan to determine the usage of six rivers. On receipt of Pakistan’s share of a record of the actions taken prior to the request to ensure meticulous compliance with the treaty by all parties, the World Bank acknowledged that it has the mandate to appoint a neutral expert, but was not a guarantor to the treaty and would not directly participate in any discussion or exchange on the subject.

The Indus Waters Treaty, signed on September 19, 1960, sets up a legal regime determining the rights and obligations of both parties concerning the use of the waters of the Indus basin. The World Bank is a signatory to the treaty for certain specified purposes. It is not a guarantor of the treaty. Under the treaty, use of the rivers Sutlej, Beas and Ravi, termed the eastern rivers, has been allocated to India while Pakistan is entitled to unrestricted use of the rivers, Indus, Jhelum and Chenab. India can only interfere with the flow of the western rivers for the following uses: domestic use, non-consumptive use, (navigation, flood control, fishing and wildlife), agricultural use and generation of hydroelectric power and storage works.

Historically speaking, Pakistan had accepted the treaty with more trepidation, given the fact that the water flows of the western rivers were insufficient to replace the supplies from the eastern rivers, but it had accepted the terms to end the lingering water disputes. However, officials now reckon that further concessions could actually create difficulties for sustainable use in the the future. The country already faces a water shortage, and any interference with the flow of the western rivers would only aggravate the situation.

Pakistan admits to have wasted time between1992 and 2000 in correspondence between the commissioners on the adequacy of information supplied under annexure D of the treaty. After the objection surfaced, the two countries’ officials met to deal with the issue of Baglihar as given in the treaty, but the talks remained inconclusive. Pakistan then served another notice to India to meet the three conditions, namely, stoppage of work on the project; on-site inspection by the Pakistan Indus Waters Commission; and resolution of the dispute by September 30, 2003, failing which it reserved the right to approach the World Bank for the appointment of a neutral expert.

In the case of Baglihar Dam, Pakistan has been raising serious objections on six areas, including its design, size and water storage capacity. Technically speaking, Pakistan wants India to consider other technical pursuits or modify the design. The dispute relates to the project configuration, free board, spillway (ungated or gated), firm power, pondage, level of intake, inspection during plugging of low level intake, whether it would be a low weir or dam, supported by engineering calculations related to the Indus Water Treaty. The Indians believe that the conditions at the site of the Baglihar plant make a gated spillway necessary. Pakistan insists, the documents say, that the site is suitable for an ungated spillway and therefore a gated spillway should not be installed, as it contravenes the provisions of paragraph 8 (e) of annexure D to the treaty.

Today, Pakistan demands that India should agree to stop all work on the project till the bilateral meeting proposed by the Indian secretary succeeds in arriving at a resolution. India’s Secretary for Water Resources, VK Duggal, told his Pakistani counterpart, Ashfaq Mahmood, that there is no provision in the treaty for stoppage of work and past experience in this context has also not been productive. Official documents of the meeting say the Indian side felt that the technical discussion indicated that convergence of views on some issues, if not all, was possible, and again proposed that engineers/experts from both sides should continue their technical discussions after a short recess in which they could examine in more detail the data and calculations exchanged during these discussions.

Pakistan also complains that the pondage in the operating pool, being 37.722 million cubic meters, exceeds twice the pondage water level, which contravenes the provision of paragraph 8 ( c ) of Annexure D to the treaty. Yet another objection relates to the intake for the turbine, as Pakistan believes it is not located at the highest level, as required vide paragraph 8 (f) of Annexure D to the treaty. “It would be very hard to suspend the work of the project, and the team had elaborated that the design of the project was very much as per the parameters of the treaty,” an official document quotes the Indian authorities in Islamabad during the January 3-6 final meeting.

Under the terms of the treaty, several steps need to be undertaken before the World Bank’s role in appointing a neutral expert is triggered. A first step could be that any ‘question’ between the parties to the treaty be resolved through the Permanent Indus Commission itself. If the ‘question’ is not resolved there, it becomes a ‘difference’ and is referred to a neutral expert, to be appointed by the two countries, or by a third party agreed upon by the two countries. In the absence of such an agreement, the World Bank, in consultation with the two countries, would make the appointment of the neutral expert.

According to the treaty, if the ‘difference’ does not fall within the mandate of the neutral expert, or if the neutral expert rules that the ‘difference’ should be treated as a ‘dispute’, then a Court of Arbitration would be established. The role of the World Bank, along with other institutions such as the Secretary General of the United Nations, is to participate in the selection of three appointees to the seven-person court. The parties to the treaty each select two members of the court. The World Bank itself plays no part in the actual hearing or determination of the issues before the tribunal. The World Bank is also bound to set up a trust fund to meet the expenses of the neutral expert.

Foreign Office spokesman, Masood Khan, says the bank was performing its role in accordance with the treaty. “The bank has reiterated that it is playing its role in the process of appointing a neutral expert. The neutral expert will come up with a determination of the issues involved in the construction of the Baglihar Dam,” he says. However, the former secretary of Water and Power, Syed Shahid Hussain, is less optimistic. He says, “The appointment of a neutral expert is not going to be easy.”According to Hussain, after the two governments fail to jointly appoint an expert, the bank shall appoint one within one month after the date of request. This provision is subject to an important caveat, which stipulates, “Every appointment shall be made after consultation with each of the parties.” The findings of the neutral expert would be binding on both India and Pakistan, but the World Bank carries no implementation powers or mechanism. Honouring the findings of the neutral experts depends upon the two countries’ desire to carry on with the treaty.

Legally speaking, the experts believe that Pakistan has not played its cards smartly on the Baglihar Dam issue and has already delayed the move by at least five years. The dam, on which work began way back in May 1992, is in the final stages of completion. The support infrastructure work, power intake, water conductor system, river diversion works — in fact, the entire dam — is set to be completed by December 2007.

Barrister Munawar Akhtar of Amhurst Brown, who has successfully pleaded a number of cases for Pakistan in international arbitration, says, “Pakistan should have written to the World Bank about this dispute a few years earlier, because I believe the financial institution acts as underwriter of this treaty.” The former dean of Social Sciences, Quaid-i-Azam University, and International Law expert, Dr Ijaz Hussain says: “By taking the World Bank path, the chances are that India will show flexibility in the matter as it did when Pakistan served the first notice in May last year. India, which was not amenable to on-site inspection, readily agreed to it then. The World Bank route appears to be Hobson’s choice for us.”

An official from the ministry of law and justice, requesting anonymity, said till the findings of the neutral experts, it is more of an engineering-related question than a legal one. He was referring to the six areas where Pakistan objects to the design of the dam. The legal pundits here agree that in case Pakistan felt unsatisfied or India showed indifference to the World Bank findings, the case may go to the arbitration court whose verdict would be binding on both the parties.

The treaty only has a provision that a court of arbitration shall be established. Before the proceedings of the case both India and Pakistan will have to (a) agree to the place of arbitration, (b) what rules should govern such arbitration, (c) should it be by a sole arbitrator or a tribunal of three or more persons, (d) what law will govern, and (e) help of professionals experienced in international arbitration should be obtained to advise on these and other crucial matters of strategy. He, however, observed that, “the losing party will have the right of appeal.” The appeal lies generally with the High Court of the country where arbitration is held or the parties can expressly agree to a different forum for appeal, the leading law practitioner explained.

Not every one is optimistic about the outcome of the Baglihar dispute. Former Secretary Shahid Hussain believes that it is unlikely that India would give in to Pakistan demands. “After investing a billion dollars in the construction of the dam, Indian stakes are so high that by any logic there seems to be no going back from their point of view,” Shahid explains.

There is still some hope if one looks at the 1991 draft agreement on the Wullar Barrage which provides an opportunity for settlement of water disputes under the IWT, which asked India to keep 6.2 meters of the barrage ungated with a crest level at EL 1575 meters and foregoing the 30,000 acre feet storage capacity allowed to it, besides some mutually binding provisions. The million-dollar question here, is why can India and Pakistan not agree to a similar modus operandi over Baglihar?

Analyst believe that low water flows and energy deficiency have forced India to increasingly manipulate the IWT to its advantage; secondly, Delhi wants to use water as political leverage against Pakistan; thirdly, keeping up ancillary issues as a wall to keep the core issue on the backburner and lastly, to prove to the Kashmiris that Islamabad is denying them jobs and opportunities which originate from the state’s very own resources.

Jalil Abbas Jilani, Director General of Pakistan’s Ministry of Foreign Affairs, is confident of a positive outcome from a neutral expert’s report on the Baglihar dam. “Our case is very strong. We have weighed it a number of times and consulted Pakistani and foreign experts on the issue and there is no technical flaw in our position,” he told Newsline in an interview.

He hastens to add that Islamabad is still striving to make India change the design and size objections by exerting diplomatic pressure. As a positive gesture, Islamabad has not raised the issue of Baglihar Dam during the visit of James D. Wolfensohn, President of the World Bank, or with the executive directors, who arrived here on January 31. From decision-makers in the top government offices to the leading landlords in agriculture-dependent Punjab and Sindh, the Baglihar Dam row rings alarm bells that are becoming louder and louder as 2007 draws near. If the dam is completed within the scheduled time, it will considerably cut off water to downstream farmers in the Punjab province as well as to Sindh.