Jammu & Kashmir: A Challenge Beyond Militancy

Indian Prime Minister Narendra Modi on April 2, 2017, inaugurated the Chenani-Nashri tunnel in the Indian state of Jammu & Kashmir, symbolically asserting the progression of economic development in the state. Amidst instances of violent civil unrest and acts of militancy, the development portrayed the governing Bharatiya Janata Party’s efforts to reinvigorate economic development in the state.

However, the successful completion of the project, notwithstanding the socio-political challenges presented by the state, did not materialise without difficulty. More so, the project’s success does not diminish the challenges faced by multiple other infrastructure projects in the state, where they transcend the risks of militancy.

Businesses in India and abroad have been confronted with challenges, at times incurring substantial financial injuries. Thus, it is important to determine the dynamics influences risks and opportunities in Jammu and Kashmir in order to understand the challenges presented by the state.

Tourism vs. Terrorism

On April 2, 2017, Indian Prime Minister Narendra Modi inaugurated the dual lane Chenani-Nashri tunnel in the Indian state of Jammu & Kashmir (J&K), spanning 10, 890 metres. Construction for the tunnel began in 2011 at a price of approximately 572 million USD (37.2 billion INR), reducing the distance between Jammu and Srinagar from 41 kilometres to 9.2 kilometres. The tunnel provides an alternative for transportation and travel, to the Srinagar-Jammu National Highway on National Highway (NH) 44, given its vulnerability to inclement weather including heavy snowfall and avalanches.

As part of the tunnel’s inauguration, Prime Minister Modi in his speech outlined that ethnic Kashmiri youth would have choose between “tourism and terrorism”, crediting the tunnel as a part of long-term infrastructure development plans, aimed at resurrecting J&K’s economic potential. More so, the tunnel serves strategic significance in the transport of goods and movement of military personnel, hardware and associated logistical operations. Notably however, the inauguration took place amidst a “shutdown” across J&K in protest against Modi’s visit.

Civil Unrest & Militancy

Since the death of Hizbul Mujahideen (HM) commander Burhan Muzaffar Wani in July 2016, instances of civil unrest have witnessed an uptick, including protests and funeral processions for deceased militants. Acts of militancy since, have also included an increased focus on targeting state authorities and their representatives, e.g. snatching weapons of police officers, kidnapping police officers’ family members, etc. The attacks as GRID91 assesses, are to intimidate state authorities with retributory violence against their family members; deter enforcement, especially as the Indian Army recently provided counter-terrorism training to the J&K police (not part of its core functions). Such measures aim to integrate and expand anti-terrorism efforts in the state. Interestingly, Wani in a video addressed to Kashmiri youth in August 2015, noted that while militants can “trouble” the families of police officers, they do not seek to do so as it is against religious principles and their families are considered as their own. Southern J&K, known to have several districts as HM strongholds, with support for Wani from local youths, have witnessed frequent armed encounters between militants and Indian security forces since the latter half of 2016.

Over the past two weeks, Indian security forces have pursued a crackdown across southern J&K, arresting at least 135 individuals suspected of militant activity. Notably, there has been a visible uptick in militant activities targeting security personnel and local politicians in certain instances since March 25, involving HM militants and local sympathisers. More so, legislative polls were held during April 2017, for which separatist politicians Syed Ali Geelani, Mirwaiz Omer Farooq and Mohammad Yasin Malik, called for a boycott of the same. The call focused on the narrative of “betrayal” against “martyrs”, in reference to militants killed by Indian security forces.

The developments since July 2016 and recently, illustrate the prevalence of tensions and reinvigorated anti-India sentiments amongst militants and their supporters, seeking to demonstrate continued resolve. This is particularly so as the November 2016 demonetisation measures, announced by the Ministry of Finance, were aimed at curbing terror funding in J&K, with security agencies reporting a reduction in militant attacks and protests in the initial period following these measures.

However, to understand how militancy in J&K has arrived at this point, it is important to reflect upon the developments preceding Wani’s death from the summer months of 2015.   

On July 27, 2015, LeT militants made their way into the Indian state of Punjab, incorporating traditional fidayeen style tactics used by the Pakistan based jihadist group. Between the second half of May 2015 to July 2015, attacks against telecom infrastructure (although not new to the state) observed an uptick, namely perpetrated by a self-styled group Lashkar-e-Islam. The organisation however, was a splinter faction of the HM’s northern command, led by Abdul Qayyum Najar, who was later disavowed by HM leader Syed Salahuddin. The attacks against telecom infrastructure were part of Najar’s strategy to exert his faction’s presence in northern J&K and consolidate operational territory. LeT as an ally of HM under the United Jihad Council (UJC), dependent on northern J&K as a point of infiltration, examined this development unfavourably (as providing logistical support from local allies is a requirement to facilitate infiltration) and in tandem with HM militants, began a campaign of attacking militants from Najar’s faction; accompanied by infiltration bids by LeT militants. Notably in this period, border infiltrations witnessed an expected rise between May 2015 - August 2015, however the overall figure was reduced compared to previous years, according to Indian authorities.

In the process, the focus of HM, and thereby local militancy, moved south. Although Najar’s split was a contributing factor, southern J&K was seen as a resource to tap into for recruitment purposes. A young commander, 20 years old at the time, by the name of Burhan Muzaffar Wani (alias Arif Khan) was a prominent figure of HM in southern J&K. Wani, originally from Tral (fondly called Kandahar by militants) in Pulwama district had risen up the ranks of leadership and become a key recruiter and youth icon amongst prospective recruits; gave a face to militancy in J&K. Wani was extremely proactive on social media platforms including WhatsApp, Twitter, Google Plus and Facebook, as a tool for recruitment. He successfully connected and resonated well with local youths in southern J&K who harboured anti-India sentiments - helping make sense of their internal dissonance with national and ethnic identity. According to GRID91’s sources, recruits were required to have a minimum education level of class 10 according to Indian education standards and were offered lucrative monthly pay packages. Wani reoriented HM’s recruitment focus towards local youths from J&K, especially in the south.   

The use of social media initiated a change in the way militants are recruited in J&K. In turn, this also represents a significant generation gap between the current generation of militants and those from the ageing leadership, including separatist parties and leaders. Young recruits like Wani had received formal education and are able to exercise an online presence and connect to a broader audience of prospective recruits. This also refutes traditional theories that lack of education plays a predominant role in motivating individuals towards acts of violence, including terrorism, especially in J&K.  The recruitment of young militants like Wani, enables a social media oriented generation of militants as decision makers. Overall, the use of social media became an emerging component of terrorism in J&K, and plays a crucial role.

That said however, despite Wani’s efforts, the number of attacks against security forces declined overall. In addition, there were numerous factors to this, including the implantation of embedded agents within HM and shoddy counterintelligence from HM, due to which Wani predominantly remained in Tral before his death on July 8, 2016 in an encounter with Indian security forces. More so, sections of HM’s recruits and the senior leadership, were, according to GRID91’s sources, disillusioned with Wani and his inability to organise militant units beyond Tral due to the obstacles he failed to overcome and individual fears. Wani and his close inner circle soon began to be viewed as a liability to the HM.

However, Wani’s popularity amongst local youths, especially in southern J&K remained an achievement of information warfare (militant propaganda); as seen during Wani’s funeral following his death, coupled with retributory acts of violence against Indian security forces.

The recent spike in militancy during the latter half of March 2017, although not unprecedented, illustrates how militants and separatist sympathisers have sought to use the change in weather patterns (melting snow) as well as the April 2017 legislative polls to offset perceptions of their fading clout as a relevant stakeholder in stability.  More so, they are ultimately aimed at pressuring a change in central and state government policies and political dynamics.

On April 9, 2017, the J&K state authorities recorded a record low turnout between six and seven percent for legislative polls in the state, for the constituency of Srinagar, the state capital. In addition, approximately 200 instances of poll related violence were recorded, killing 8 individuals and injuring approximately 100 Indian security personnel. The violence targeted poll booths following the boycott call by separatist leaders discussed previously.  

The Government of India with Prime Minister Modi of the Bharatiya Janata Party (BJP)  at the helm, has pursued a relatively aggressive policy in conducting counter-militancy operations, incorporating a strategy targeting the commanders/leadership hierarchies of militant groups; a means of breaking the structure of militant groups and their abilities to organise militant units (an obstacle HM commander Burhan Wani faced due to targeted crackdowns). In addition to Burhan Wani, notable examples of this include the killing of Lashkar-e-Taiba (LeT) commander Abu Qasim in Kulgam district in October 2015. Qasim who was a key LeT recruiter, was amongst the chief planners of the Udhampur attack against Indian security forces in August 2015 and responsible for the killing of J&K Police Sub Inspector Mohammed Altaf Ahmed, head of a Special Investigation Team (SIT) and notorious for his operational successes in counter-militancy.

Militancy in J&K as a byproduct of the hostilities between India and its western neighbour, Pakistan, continues to remain a contentious area of discussion between the respective governments of both countries. The nature of India-Pakistan relations while encompassing traditional aspects such as trade and cultural ties, continues to be dictated by the current status quo of Kashmir, a dispute which dominates the geopolitical dynamics between the two nations since the 1947-1948 war between India and Pakistan. Currently, bilateral dialogue between the two countries remains in a deadlock, especially following the September 2016 attack against Indian security forces in J&K’s Uri, after which a successful cross border operation involving Indian special forces followed in the same month.

The stalemate between the two countries can also be attributed to domestic pressures; namely the Pakistani military and government’s need to project itself as hardline against India (particularly given that Pakistan’s military establishment utilises subversive narratives to legitimise their role in the political system and garner civilian support), and the governing BJP’s need to maintain its aggressive posture against Pakistan for strategic foreign policy objectives and domestic politics; dealing with a perceivably duplicitous Pakistani civilian government deemed to hold little influence over policy decisions as the country’s military wields larger influence, is viewed with much scrutiny and disdain amongst India’s present political establishment and electorate. More so, the demonetisation measures in November 2016 specifically targeted the finance of terrorism utilising the smuggling of Fake Indian Currency Notes (FICN) using money laundering methodologies, according to India’s Ministry of Finance. This is especially considering that FICN primarily originates from Pakistan, as an operation sponsored by the country’s Inter-Services Intelligence (ISI), while FICN is known to penetrate India’s legitimate banking system via Nepal, the UAE, Singapore, Sri Lanka and Thailand.  

The ongoing political alliance between the BJP and Jammu & Kashmir People’s Democratic Party (PDP) in the J&K state government (strongholds in Jammu and Leh-Ladakh), has faced scrutiny from political opposition members following the April 2017 poll violence. Separatist leaders and opposition parties will seek to project the poll violence and low turnout as a failure of the BJP-PDP alliance, especially given its longstanding unpopularity in the Kashmir valley area. More so the Jammu & Kashmir National Conference (NC), following its defeat to the BJP-PDP alliance has in turn been viewed to adopt populist agendas in line with separatists, particularly in the Kashmir valley area.

Combined with the stalemate in India-Pakistan bilateral dialogue, the poll violence and low turnout in J&K and the uptick in militancy - the developments raise pressure against the BJP-PDP alliance to make political concessions to separatists, and the central government to engage with Pakistan on Kashmir; the overall scenario deemed to convince local populations that India’s current approach to Pakistan lacks desired results. That said, such a  scenario, if truly formidable, remains convenient for Pakistan alone and poses the question of whether the current BJP led Indian government will make political concessions or not and thereby, the J&K state government.

While militancy and politics dominate domestic and international discourse on J&K, infrastructure projects have consequentially suffered, whether due to labour issues, civil unrest or corruption and administrative delays. More so, infrastructure development has thus far, recorded a negligible effect against militancy. The obstacles to successful business investment ventures in the state ultimately go beyond militancy.

Examining the local economy of J&K, the state overall lacks appropriate infrastructure, poor education, transport and healthcare facilities accompanied by poor human development. Literacy, industrial development, and overall socio-economic growth show gaping deficits and are correlated with poverty. J&K state’s prominent industries namely constitute horticulture, floriculture, handlooms and handicrafts, tourism, mineral-based industry, gems and jewellery, sericulture, Information Technology and pharmaceuticals according to the Ministry of Commerce & Industry.

Amongst several socioeconomic factors, the increasing population in  the state ultimately pressurises the availability of finite resources, bearing implications for economic development and quality of life, given a limited endowment of basic infrastructure. More so, an increasing population, reduces the J&K state government’s ability to save in the long run as dependency on state infrastructure and facilities increases. Additionally, a major portion of J&K state’s population are in the youth category under the age of 14; who until much later in their life, cannot be part of the local workforce.

The frequency of militant attacks as well, even if not targeting major infrastructure projects, have resulted in damage and loss to healthcare and education infrastructure (hospitals and schools) as well as government buildings and offices, significantly increasing state costs. Overall, an increasing population with restricted or limited access to essential resources results in inadequately educated and trained labour as well as innovation and development. In turn, this essentially means that higher investment costs are incurred to achieve a set output; in addition to obstacles to land leasing/acquisition and administrative costs, higher salary demands/needs by the local workforce; for instance, this includes the functioning factories, construction of roads and buildings, irrigation projects and so on.

Ultimately, militancy becomes an attractive source of income and livelihood, especially for youths who are the largest segment of the state’s population and are targeted for recruitment (bearing in mind lucrative salaries for HM recruits, as an example).

Terrorism as an industry, has deemed the threat of violence as a lucrative business venture for young Kashmiris, capitalising upon perceived marginalisation, encompassing poor human and economic development. Militancy ultimately disrupts economic stability and progress, simultaneously degrading living standards. However, lack of education facilitates but is not a direct cause of militancy, as those with low education standards may take part in civil unrest or employment in labour intensive industries.

Crucially however, the continued threat to economic resources and investments from militancy, has led to an over-dependency on financial support from the central Government of India to the J&K state government. The average growth rate in the state measured in terms of gross state domestic product (GSDP) was recorded at 10.2 percent between the Financial Years of 2004-2005 to 2015-2016, below the national average.  In turn, this overall, presents a systematic cycle of violence and economic consequences, based on a ‘cause and effect’ approach.

The BJP thus far, has utilised economic development as a core component of its electoral agendas while building credibility on those lines with recent economic reforms and associated legislations to encourage foreign direct investment (FDI) into India. Considering this, Prime Minister Modi’s inauguration of the Chenani-Nashri tunnel was a projection of the BJP’s pro-development agenda, timed just prior to legislative polls scheduled for April 2017. However, infrastructural development such as the Chenani-Nashri tunnel as well as those in the past, while advertised as victory milestones, have done little to deter militancy.

In the Financial Year 2016-2017, 72 infrastructure projects in J&K were sanctioned by the Government of India. Additional infrastructure projects planned by the Modi administration in J&K include:

• Ring Road around the Jammu region and an additional ring road around the state capital of Srinagar - work for which is scheduled to begin in July 2017.
• Zojila tunnel between Leh-Ladakh.
• Enhancing road transport connectivity, the Government of India in 2015 sanctioned two highway projects aimed to four-lane the Ramban-Banihal and Udhampur-Ramban section of National Highway 1A.
• Construction of a bridge over the Chenab river, prospectively the world’s tallest bridge after construction.
• Six hydropower projects worth 15 billion USD, despite warnings from the Pakistani Government regarding disruption of water flow to the country.

FDI into J&K state from April 2000 to March 2016 was recorded at 6 million USD according to the Ministry of Commerce & Industry. While economic reforms including the Goods and Services Tax (GST) bill have been approved in Parliament, and is slated for implementation in July 2017, the provisions of this would not apply to J&K due to Article 370 if the Indian Constitution granting autonomous privileges to the state. However, a similar legislation in this light, would have to be passed in the J&K legislative assembly, in tandem with the GST by July this year.

Importantly however, the track record demonstrated by previous infrastructure projects, including projects involving foreign investors, are an indicator to the Government of India that J&K state has yet a larger set of milestones to achieve before transitioning to an FDI destination.  

Past and present domestic and foreign investments, have indicated an ongoing interest in power and road infrastructure development projects in J&K. The Chenani-Nashri tunnel inaugurated in April 2017 is one example, particularly where FDI was involved. However, while the private sector in India and abroad has taken cognizance of the business potential presented by such infrastructure projects, these have not been without hurdles, stretching beyond the risks of militancy.   

Overall, the above presented case studies illustrate that barriers to investment go beyond militancy and fragment into legal and administrative procedures as well as instances of civil unrest, which have ultimately hampered road and power infrastructure projects. More so, due to inadequate road and power infrastructure, private corporations expend the majority of their costs on logistics (transportation of materials), rather ironically as these two industries have attracted substantially large investments. Be it environmental hazards (landslides/avalanches) land acquisition hurdles, labour strikes, power outages or civil unrest, combined with a proportionately disaffected, isolated and inadequately educated population,  the obstacles to successful infrastructure projects have led to higher dependency on government institutions for execution and implementation. Additionally, this is the result of risk averse perceptions amongst private corporations, foreign and domestic.

Upping The Ante: Militancy & Civil Unrest

As the summer and monsoon months progress and the snow melts, instances of militancy are expected to witness a substantial increase as seen over the past two years. Particularly in the case of HM militants and their sympathisers, attacks will likely remain focused on southern J&K than the north in comparison, including Pulwama, Anantnag, Kulgam and Tral. Targets of these attacks however, aside from military personnel, will be increasingly oriented towards police officers and politicians, as acts of intimidation. Additionally, banks and associated logistics entities are likely to be targeted due to cash deficits amongst militant groups following the November 2016 demonetisation measures. Attacks may include but are not limited to armed encounters, kidnappings, armed robberies, assault and weapon snatching as well as targeted assassinations. Additionally, civilians suspected to be police informants may also be targeted. Subsequent curfews and resulting interruptions for local business vendors will likely add to frustrations against Indian security personnel, prompting participation in civil unrest (as such participation is often done in return of monetary rewards).

Crucially considering  cross border militancy that is known to occur during the summer and monsoon months, particularly infiltration by LeT and Jaish-e-Mohammad (JeM) militants, is anticipated as well, particularly in areas such as Baramulla and nearby areas in proximity to the Jhelum river. Instances of military actions by the Pakistan Armed Forces, citing the May 1, 2017 Border Action Team (BAT) assault against two Indian Army soldiers, simultaneously prompt enhanced military presence along cross border areas, and potentially, a military response. Overall, further instances of cross-border confrontations are likely to increase.

This is especially so as the governing BJP is unlikely to make significant concessions to the Government of Pakistan for reasons discussed previously, while the Pakistani military would seek to convince its local population that the country holds an upper hand against India.

Politics: Maintaining The Status Quo

The BJP till date, has relied heavily upon a pro-economic development approach for its electoral successes in J&K, especially Leh-Ladakh and Jammu. While the BJP continues to pursue its policy of no dialogue with separatists, the PDP led by J&K Chief Minister Mehbooba Mufti advocates the need for dialogue prior to which normalcy should be achieved. Although this highlights differences between the alliance partners, and exposes how poll violence and the ultimate cancellation of the Anantnag bypoll have pressurised the PDP, the status quo of the alliance and their respective political strongholds are unlikely to change in the short-term. In the long run, this may be seen as an opportunity by the National conference (NC) in opposition, should differences amount to tensions, the PDP may perceive the BJP as dominant, and result in leadership struggles within the PDP as a result of splintering the party along differences in opinion. That said, Mufti has thus far successfully managed internal party differences while balancing such notions with the need for an alliance with the BJP.

Challenges Persist To Investments

While multiple road and power infrastructure projects have been announced, significant challenges remain as a result of inherent and systemic barriers to executing such projects in an efficient and timely manner, as seen previously. While militancy and cross border violence create adverse perceptions amongst businesses, the challenges to doing business in J&K extend beyond militancy and have more to do with political and civic mismanagement, which have led to multiple hurdles despite initiatives from private corporations and government entities. While the BJP seeks to project achievements of economic development in the state, its focus on road transport and power, are ultimately guided by the requirements of the Indian Armed Forces as a priority. The issues faced by J&K remain perennial, and do ultimately have a significant role in attracting business to the state. In the short run, this is unlikely to change as the BJP will continue its policies placing security in the state as its dominant priority, while seeking to expand political influence in the state. More so, the challenges discussed previously as a result will likely persist over the coming months. Overall, FDI investment into J&K face challenges and are unlikely to record significant business interest, particularly as these challenges can be divided into security related hostilities as well as mismanagement of governance in the state, ultimately hampering business continuity.

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