Pahalgam Attacks Add Yet Another Layer Of Uncertainty To India’s Woes
India’s response to the attacks only adds to the trade and economic uncertainty unleashed by US president Donald Trump’s crude attempts to make America great again.
Death and perfidy cast their dark shadow over the week in review. Terrorists gunned down 26 tourists in Jammu and Kashmir’s idyllic Pahalgam, and injured several more. In a move designed to inflame communal passions in India’s already febrile polity, the terrorists first checked if their victims were Muslims or not, before shooting them dead.
The Resistance Front, identified by Indian authorities as an offshoot of the Lashkar-e-Taiba, which, along with Jaish-e-Mohammad, has been a prime Pakistan-based terror outfit active in Jammu and Kashmir, has claimed responsibility for the strike. The attack came while US vice president JD Vance was visiting India, along with his Indian-origin wife Usha and three children. Pakistan has chosen to attack India in the past as well, when India was playing host to senior American leaders. In 2000, on the eve of then US president Bill Clinton’s visit to India, LeT militants had killed 36 Sikhs at the village of Chattisinghpora, in Anantnag district of J&K.
New Delhi sees Pakistan instigation behind the attack. Pakistan Army chief Asim Munir had chosen to bring up a favoured Pakistan metaphor on Kashmir, calling it Pakistan’s jugular vein, days before the attack. Pakistan is in a mess, undergoing yet another austerity programme as part of the conditionality of an International Monetary Fund (IMF) loan. Terrorists have been staging spectacular acts, such as holding an entire train hostage in Balochistan, and killing Chinese nationals working on the China Pakistan Economic Corridor projects. The Taliban ruling Afghanistan have been refusing to toe the Pak line, and Pakistan has been deporting Afghan refugees in large numbers back to their country.
Popular unrest over the ousting of prime minister Imran Khan and his sentencing, along with his wife, for corruption, still simmers beneath the surface. The IMF has downgraded Pakistan’s growth rate for 2025 to 2.6%. When trouble hits Pakistan and popular discontent with the country’s rulers, meaning the army, bubbles up, the army conjures up fresh images of its old enemy, India. The post-election political consolidation in Jammu and Kashmir, and movement towards the restoration of statehood provoke Pakistan, as well.
More Economic Uncertainty
Vance’s India visit follows his meeting with the ailing Pope Francis in Rome on Easter Sunday. Vance said he had a great meeting with the Pope. The Pope did not live to tell his side of the story. India announced a three-day mourning for the Pope, but outrage over Pahalgam leaves no room for serene sadness in official India.
India has so far acted only to throw out Pak diplomats, suspend the treaty on sharing Indus waters with Pakistan, and close the Attari border. The Pahalgam attack and India’s response add yet another layer of conflict to the trade and economic uncertainty unleashed by US president Donald Trump’s crude attempts to make America great again by placing huge tariffs on imports to the US.
While many countries, including India, have been negotiating trade deals with the US to escape the stiff reciprocal tariffs president Trump had announced on April 2, China has refused to negotiate at the business end of a gun. It has banned the export of certain rare earth minerals vital to electronics, electric vehicles and defence production in the US. It has asked Chinese airlines not to take delivery of Boeing planes, and two of them, painted in the colours of Xiamen Airlines, have flown back to the US from China, where they had arrived for handover to Chinese buyers.
A Blinking Trump
There is reason to believe that the standby medical team at the White House is reaching for eye-drops: of late, President Trump has been blinking hard and unnaturally often. After announcing 145% tariffs on imports from China, Trump blinked and exempted smartphones, computers and electronic items from the tariffs. When charges of cronyism and lobbying began to start flying, Trump blinked again and said a new tariff regime would be introduced for such products.
Trump expressed displeasure at Fed chairman Jerome Powell’s decision to not cut rates, and his severe, even if measured, criticism of the tariffs and their potential to create inflation and hurt economic growth. The President can sack Fed governors, said Trump. The markets crashed. Trump blinked again, and said he had no plans to sack Powell. American markets got up from their swoon.
Trump had, in his first term, scuppered the Iran nuclear deal that his predecessor, Barack Obama had struck, along with China, Russia and Europe. His administration is back in negotiations with Iran for another nuclear deal, very much on the lines of the deal he had torpedoed, except for Iran’s new proximity to weapons capability.
The IMF and the World Bank have their annual spring meeting in Washington DC, where they release their forecasts for the world economy. The IMF forecast lowers global growth to 2.8%, and India’s growth to 6.2%. It estimates a 40% probability of US growth slipping into negative territory.
Trump’s policy announcements, since he took office, have largely been in line with the Conservative think tank Heritage Foundation’s Project 2025, a wish list of policies and actions. Project 2025 seeks American disengagement from the IMF and the World Bank, replacing multilateral engagement with bilateral deals with countries. Treasury Secretary Scott Bessent has made it clear that the US would stay put with its largest quota/shareholding in the Bretton Woods twins, but has asked these bodies to stop their woke pursuit of climate change mitigation and diversity, equity and inclusion.
Trump has been scowling long and hard at China’s leader, Xi Jinping. Xi has disdained engaging in the game of eyeballs and scooted off to Vietnam, Malaysia, and Cambodia to talk up a partnership with these three ASEAN members. China’s battery specialist, CATL, announced a new sodium ion battery, which, it claims, can let an electric vehicle run 520 km on a five-minute charge, beating BYD’s recent achievement of a five-minute charge powering a car for 400 km. Chinese companies are competing among themselves, leaving Tesla far behind, in the EV race.
Trump has blinked again and hinted at much lower tariffs on imports from China, if China comes to the negotiating table.
A Grim Picture
Markets have been seesawing, along with Trump’s eyelashes. Banks — JP Morgan, Goldman Sachs, to Morgan Stanley — have been feasting on the opportunities for trading profits created by volatility, whether with or without foreknowledge of Trump’s ocular intentions remaining a matter of speculation.
Indian markets have done better than American ones, recouping about half the losses inflicted by the Trump Tariff Turmoil.
As if to make up for his retreat before China’s intransigence, Trump has lashed out at Ukraine president Volodymyr Zelenskyy for his reluctance to trade land for peace. Russia is still being gently cajoled to negotiate peace, even as Russia’s missiles and drones shower death over Ukrainian towns.
Israel continues to pound Gaza, and kill Palestinian civilians in their hundreds, in the name of eliminating Hamas activists. America’s attacks on the Houthis in Yemen have not destroyed their capacity to strike, and the Middle East continues to engulf the prospects for peace and resumption of uninterrupted oil supplies in a thick fog of uncertainty.
With the mercury climbing across India, makers of air-conditioners, refrigerators, and cold beverages cheer. For the rest of us, the picture is grim.
