The Problem

India is constructing a dam on river Chenab in Jammu and Kashmir, which would produce 450 MW electricity for the people of the state. The one billion dollar project located at Chaderkote in Doda district is scheduled to become operational from December 2007. Baglihar Hydro Electric Power Project (BHEP) is executing the project and almost 33 percent of the work stands completed. At the heart of the dispute is the design of the project which, according to Pakistan, provides for submerged gated spillways and, therefore, allows Indian control over Pakistani waters in breach of the Indus Water Treaty signed between India and Pakistan in 1960 brokered by the World Bank. Under the Treaty, India has rights over the waters of the Ravi, Sutlej and Beas rivers while Pakistan has rights over the waters of the Indus, the Chenab and the Jhelum. All the rivers flow from India to Pakistan.

Pakistan's Contentions

According to Pakistan, India had proposed construction of the dam in 1992 and began building in 2000 even though it had not approved the design as required by the Indus Water Treaty. Consequently, Pakistan wants India to halt the ongoing work on the dam, as the gated structure would provide India the capability to manipulate the flow of water to Pakistan's disadvantage. Consequently, Pakistan has decided to invoke Article 9(2) of the treaty which provides for settling disputes through neutral experts or arbitration if they cannot be resolved between the two Indus Water Commissioners. Pakistan had never done so with other projects in J&K.
India's Contention

India's contention is that the project does not propose to store water and will not disrupt flows. India insists that it does not violate the Treaty of 1960. It claims, neutral experts, if appointed, would also arrive at the same conclusion. Taking cue from the fate of the Tulbul project, India had refused to stop the construction work till a mutually acceptable settlement was reached. Tulbul project has not taken off again since India stopped construction, as a goodwill gesture, a decade ago.
Recent Development

A secretary-level meeting took place on January 4-6, 2005 between India and Pakistan to resolve the contention. The meeting was initially scheduled for two days but was extended by a day since the two delegations could not hammer out a solution. The talks failed to resolve the issue as both sides stuck to their positions.  For the first time, Pakistan has decided to formally approach the World Bank to intervene.

Claims and Counter-claims

The Indian side presented detailed technical information to mitigate Pakistan's apprehension. Indian negotiators sounded hopeful that the talks were held in a constructive and positive manner and moved very well claiming that it was a run-of-the-river project and was fully compatible with the provisions of the Indus Water Treaty. However, India stressed that if Pakistan still decides to approach World Bank, India would respond appropriately.

Pakistan was of the view that the presentations only suggested that India was building a "huge dam" and not a run-of-the-river project. Pakistan claims that it had been talking to India in good faith, hoping that the issue would be resolved bilaterally, but regretted that India had been "talking and constructing" at the same time. The stalemate continued as Pakistan stuck to its objections against the design specifications of the plant. India offered to continue  technical discussions for another week but the Pakistani team said it would do so only if construction was stopped at the site.

J & K Reflections

The Government of Jammu and Kashmir has accused Pakistan of creating obstacles in the functioning of the project. Kashmir is facing power shortage but has the potential to generate as much 15,000 MW to its current production of just 600 MW. The Finance Minister of J & K has urged that if Pakistan says that it has the interests of the Kashmiri uppermost in its mind, then it should not create obstacles in the functioning of the Project.

Meanwhile on January 9, 2005 Jammu and Kashmir Power Development Corporation (JKPDC) has signed an agreement with a consortium comprising nine big financial institutions for raising a loan of Rs 17.70 bn for timely completion of the project. The agreement stands signed with the Power Finance Corporation (PFC), Rural Electrification Corporation, HUDCO, J-K Bank Limited, Union Bank of India, UCO bank, Central Bank of India, Indian Overseas Bank and Canara Bank.

Strategic Impacts

Pakistan seems to be worried that the project could present a strategic threat, giving India the control over waters vital to agriculture in Punjab province of Pakistan. It may not have a direct impact on the ongoing composite dialogue process between the two countries but will most certainly be an irritant. Such bilateral issue must be resolved amicably in the interest of Kashmiri people rather than getting it internationalized to bully India. A mature diplomacy is imperative.