Finance: Addressing the root issues

Whether India will heed the counsel of global powers, including the United States, and how it will interpret Pakistan’s warning of a “swift, resolute and notch-up” response, as per the army chief, to any act of aggression remains unclear. Consequently, the risk of military escalation cannot be entirely ruled out despite intense diplomatic efforts aimed at averting a clash between the two nuclear-armed neighbours. For Pakistan’s economic managers, this development presents a new and highly complex challenge. Should New Delhi move to divert water flows designated for Pakistan, managing an economy already strained by water shortages would become immensely difficult. Additionally, such a move would undermine the broader international diplomatic initiative aimed at preventing hostilities between the two countries.