Indus Waters Treaty under Threat

In modern history, the Indus Waters Treaty is regarded as a fairly successful model for the resolution of disputes and arbitration on one of the most sensitive issues of water-sharing between the two acutely difficult neighbours – Pakistan and India. The treaty, despite frequent tense and difficult times in bilateral relations, has served quite effectively in management of water issues between the two countries. However, in the past few years a thinking is increasingly finding resonance in India for revision of the Indus Waters Treaty, particularly removing the scope of third-party arbitration.

On January 25, 2023, India issued a notice to Pakistan for amending the Indus Waters Treaty through commissioners appointed under Article XII (3) of the Treaty. It is understood that Pakistan now has 90 days to respond.  To understand the matter and its context, the Indus Water Treaty was a brainchild of the former World Bank President Eugene Black aimed at addressing the water dispute that arose after independence of the two countries.

After nine years of the World Bank-moderated negotiations between Pakistan and India, the Treaty was signed between the two countries on September 19, 1960 with the World Bank being the third signatory. The Treaty allocates the Western Rivers (Indus, Jhelum, and Chenab) to Pakistan and the Eastern Rivers (Ravi, Beas, Sutlej) to India, while allowing each country certain uses on the rivers allocated to the other.

The Treaty sets out definitive mechanisms. The Permanent Indus Commission with a Commissioner from each country is used for cooperation and information exchange between the two countries regarding their use of the rivers.

The differences that arise on these issues are to be resolved by a Neutral Expert and the disputes are to be referred to a seven-member arbitral tribunal called the Court of Arbitration.

Although a signatory, the World Bank’s role is procedural and limited to the designation of individuals to fulfill certain roles in the context of Neutral Expert or Court of Arbitration proceedings when requested by either or both the parties. The spirit of the treaty is to help the two countries reach an understanding on the use of these mechanisms.

The two key disagreements between Pakistan and India that emerged in recent years and are at the centre of the dispute relate to concerns regarding the technical design features of the Kishenganga (330 megawatts) and Ratle (850 megawatts), the two run-of-the-river hydroelectric power plants on tributaries of Jhelum and Chenab planned to be constructed by the Indian side. In 2016, Pakistan asked the World Bank to facilitate the setting up of a Court of Arbitration to look into its concerns about the designs of the two hydroelectric power projects. India asked for the appointment of a Neutral Expert for the same purpose.

The Treaty does not empower the World Bank to decide whether one procedure should take precedence over the other; rather it vests the determination of jurisdictional competence on each of the two mechanisms. Thus, the World Bank engaged in efforts involving high-level meetings to seek an amicable resolution, including five meetings of the Indus Water Commissioners between 2017 and 22.

But last year after exhausting all its efforts, the World Bank decided that there was no prospect of an agreement between the two sides and, therefore, resumption of the process of appointing a Neutral Expert and a Chairman for the Court of Arbitration had to undergo simultaneously. The Bank also acknowledged that inability of the two countries to reach an agreement on such issues poses a risk to the Treaty itself. Consequently, the World Bank appointed Michel Lino as Neutral Expert on Indian request and Professor Sean Murphy was appointed as Chairman of the Court of Arbitration.

It appears that now the two countries are in a perfect stalemate like in many other areas of their interaction as neighbours. Indian experts, analysts and diplomats are contending that a unilateral decision by Pakistan in 2016 to refer the matter to the Permanent Court of Arbitration is a violation of the Indus Waters Treaty’s provisions of graded mechanism for dispute settlement and simultaneous work by Neutral Expert and the Permanent Court of Arbitration can lead to two contradictory outcomes on the matter.

Pakistan on the other hand believes that the Court of Arbitration has been set-up by the World Bank under the relevant provisions of the Treaty. It suspects that the Indian notice is to divert attention from the proceedings of the Court of Arbitration in The Hague and politicise this matter pertaining to technical designs of the two Indian projects.

For the past many years there has been debate about the need for the revision of the Indus Waters Treaty. Pakistan has continued to raise objections about Indian efforts to create storage dams on its side which may affect Pakistan’s water share, if not today then in future. Islamabad also believes that there is a need for taking cognizance of adverse effects of climate change on Pakistan, especially the heavy floods bringing havoc to the people in downstream areas.

India has been objecting to Pakistan’s concerns raising questions about Pakistan’s mismanagement and wastage of water on its part. But the Indus Water Treaty has for the past over 60 years been a reasonable framework for addressing these issues amicably.

However, the process of revision of the Treaty can be a risky and complex affair. The efforts for revision of the Indus Water Treaty are likely to practically unleash the existing framework which has been delivered for past 60 years or so, while its substitution or replacement with a better or improved version is going to be a humungous task. In the 1950s, the negotiations of this Treaty in a different international setting where International Financial Institutions like the World Bank had weightage to steer such sensitive undertakings and major global powers like the US and the UK were fully supporting the endeavour. The present international environment may not be conducive for a revision that could address concerns of both sides.

In this situation, it seems that a more prudent option for the two sides should be to work within the framework of the existing Treaty making best use of its mechanisms. The quest for improvement for mechanisms should not be allowed to become a threat to the treaty itself.