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The World Bank has backed out of playing arbiter between the two countries, on the issue of India building dams on Pakistan’s rivers, creating serious implications for Pakistan.

In letters, sent to Finance ministers of India and Pakistan, the Bank has taken this strange position that it was doing this to safeguard the Treaty. But, under the 1960 Indus Water Treaty, which was signed by Prime Minister Jawaharlal Nehru and Pakistan’s President Ayub Khan, either country can approach the World Bank and ask it to arbitrate on issues that are not being settled bilaterally.

PRESS RELEASE: World Bank Declares Pause to Protect Indus Waters Treaty

Jim Yong Kim, World Bank’s group President said, “We are announcing this pause to protect the Indus Waters Treaty and to help India and Pakistan consider alternative approaches to resolving conflicting interests under the Treaty and its application to two hydroelectric power plants.” The problem is that Pakistani efforts to resolve the issues through bilateral talks with India have not yielded any results.

Pakistani disappointment was obvious when Mirza Asif Baig, Pakistani Commissioner for Indus Waters, gave an ambiguous response on Wednesday saying that they have received the letter from the World Bank and are looking into the matter. On the other hand, India’s External Affairs Ministry Spokesperson Vikas Swarup hailed the decision by the World Bank as being the correct one.

The Treaty gives India rights to use the waters of the eastern rivers (Ravi, Sutlej, Beas) and gives Pakistan rights over the western rivers (Indus, Jhelum, Chenab), with India having the right to use up to 20 percent for ‘consumption purposes’ including for  power generation. However, Pakistan has contested that Kishenganga (350MW) and Ratle (850MW) hydroelectric plants being built violate the design parameters of the Treaty and will reduce Pakistan’s due share.

In August 2016, Pakistan had formally requested the Government of India for settlement of outstanding disputes pertaining to India’s construction of Kishenganga and Ratle hydroelectric plants on rivers Neelum/Jhelum and Chenab respectively. They had approached the World Bank, by referring the matters to the Court of Arbitration as provided in Article IX of the 1960 Indus Water Treaty.  Under the Treaty, the World Bank has an important role in the Court of Arbitration, because it appoints 3 neutral judges, to the Court, while each country appoints two arbitrators, before which the case will be presented. India had already earlier approached the World Bank requesting it to appoint a neutral expert on the issue.

However, the World Bank has decided to sit on the fence, and asked the countries to resolve the issue bilaterally. This it has done so, knowing fully well, that both countries have had a series of bilateral meetings that go as far back as April 2010, and all have failed to resolve the issue. The differences on the designs of the two plants have also been discussed during the 108th, 109th, 110th, 111th and 112th meetings of the Permanent Commission for Indus Waters and have not come to any resolution.

It is clear that the lobbying done by India in the past one month at the World Bank’s Washington DC headquarters has resulted in this outcome. Because, earlier in November, the World Bank had asked both sides to agree to its mediation, suggesting that conducting 2 concurrent processes for arbitration that each country had asked for would not be practical and could be disbanded during this process of mediation.  Later, in November, the World Bank also held a drew of lots in their headquarters, to determine who will appoint three umpires to sit on the Court of Arbitration that Pakistan had requested.

At that time the Bank had clarified: “The World Bank Group has a strictly procedural role under the Indus Waters Treaty and the treaty does not allow it to choose whether the one procedure should take precedence over the other. This is why we drew the lots and proposed potential candidates for the Neutral Expert today,” said Senior Vice President and World Bank Group General Counsel Anne-Marie Leroy.

However, it is clear that during this time period, India and not Pakistan, has been able to convince the World Bank of its own view. As India’s external spokesperson Vikas Swarup said, “The government had pointed out on 10 November, 2016 the legal untenability of the World Bank launching two simultaneous processes– for appointment of a Neutral Expert as requested by India and establishment of a Court of Arbitration requested by Pakistan– to adjudicate technical differences between India and a Pakistan on Kishenganga and Ralte projects. By temporarily halting both the processes now, the Bank has confirmed that pursuing the two concurrent processes can render the Treaty unworkable over time.”

As on other outstanding issues between the two countries, where India rejects third party mediation (for instance Kashmir), here also, India has not agreed to any kind of mediation by the World Bank. Pakistan once again finds itself in the awkward situation of being dependent on India’s promises of being “fully conscious of its international obligations.” It is to be noted that currently the meetings of the Permanent water commission have been suspended by India, PM Modi was quoted after the Uri attack as saying “water and blood can’t flow at the same time.”

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