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Nations With Healthy Trade Relations Seldom Go To War

Trade does bring people together. It may sound a little stretched, but it’s true that the human race is today living in one of the most peaceful phases of its existence.

Photo Credit : Reuters

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The world today is seeing the maximum volume and value of trade than ever before. From global trade per month of less than $1 billion in the run-up to World War 1, global trade now stands at a whopping $1,365 billion per month, according to figures of WTO.


When natural gas started showing greater promise by way of lower cost and abundant & long lasting potential, compared to crude, nations which had reserves of this natural asset suddenly started getting new friends. Iran and the US had been at loggerheads ever since the Shah of Iran was overthrown in 1979 and the revolution brought about by Ayatollah Khomeini. Sanctions followed. But gas was too good a commodity to let go when crude prices were on the boil. It took a lot of doing for the sanctions to be partially waived but Iranian gas started showing up in global markets. Despite the severe differences between Shias and Sunnis in the Arab Gulf, but for Saddam Hussein’s war mongering, there has been no direct wars between the two (unless where a third party is involved.) Trade is the binding factor in this case.


Among the many lofty goals envisaged by the South Asian Association for Regional Cooperation or SAARC member states, trade is seen as a cornerstone. The underlying idea is to ease border trade through these member countries and open more trading points for the general good of the people. Progress has been slow and marred by political developments, especially those between India and Pakistan. Yet overall trade between SAARC members has increased from $16.64 billion in 2005 to $46.51 billion in 2015, a growth of 179.5 per cent over a decade. Given its true potential, sans politicking over conflicts, this number could have been many times larger.


Closer home, any talk of India-Pakistan relations boiled down to the near-constant conflict at the Line of Control (LoC) and terrorism sponsored by that country in Jammu & Kashmir. Till trade started. Again, it took a lot of doing for direct trade to start and sustain. Unfortunately, direct trade took a back seat during the Kargil conflict as well as at various other points when the possibility of full-scale war reared its head. Yet, Indo-Pak trade increased from a paltry $0.34 billion in 2003-04 to $2.61 billion in 2015-16, a whopping rise of 667.6 per cent. And informal trade, which comprises the bigger part of the overall Indo-Pak trade and which survives periods of strife between the two countries, is routed through a third county such as Dubai. Estimates put this trade figure at between $4 billion and $5 billion. Clearly, trade and people-to-people contacts have helped.


Between India and China too, trade has increased multi-fold over the past years. From $2.8 billion of bilateral trade in 2002, the two countries recorded trade to the tune of $70.73 billion in 2015-16. Of course, India is running a huge trade deficit with China to the order of $52.68 billion in 2015-16. Conflicting views over border issues have marred the true potential of bilateral trade between India and China too. However, healthy trade between rising Asian giants is the way to go. In fact, global peace can only be achieved through sustainable global trade and the new upcoming superpowers understand this dynamic than ever before.  


It is not without reason that experts, scholars and thinkers from as far back as Libanius, a Greek teacher of rhetoric of the Sophist school, who lived in the fourth century, to New York Times columnist Thomas Friedman have said that nations with healthy trading relations seldom go to war. For, the two stand to lose a lot in the bargain. Very aptly Frederic Bastiat, the 19th century free-market economist and classical liberal French author, said: “When goods cannot cross borders, armies will.”

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Rakesh K. Shukla

The author is an entrepreneur & a political analyst.

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