ISLAMABAD — A $3 billion increase in defense expenditure may not qualify as a phenomenal sum for countries in the developed world, but it is a move that is certain to be at the center of the continuing security debate in South Asia.

In the days since the Indian government announced its plan to increase its annual defense budget by almost $3 billion, or 28 percent, in the next financial year, the issue of New Delhi’s military expenditure has caught the attention of South Asia watchers.

The rise represents the steepest defense-spending increase in India’s history. While that may alarm many outside India, officials in New Delhi are quick to add that some of the new funds will go toward replenishing outdated equipment while other costs will include beefing up the temporary border — or Line of Control — between India and Pakistan in Kashmir.

Last year, Pakistan and India approached the brink of war when Pakistani-backed fighters took strategically important mountain heights on the Indian side of the LOC near Kargil. Pakistan eventually had to withdraw those fighters under international pressure, but in the meantime India has used the experience to support its claim that it needs to strengthen security.

In recent months, India has also stepped up criticism of Pakistan, denouncing it as a country that supports cross-border terrorist incursions into India. Islamabad’s response has been to categorically deny that it is supporting the Muslim separatists in Kashmir who are fighting for independence from India. Pakistan and India remain sharply opposed on the division of Kashmir, which has been the reason for two of the three wars fought between the two countries in their 53-year history.

There appears to be little prospect of any imminent resolution of the Kashmir dispute, and the intensified defense posture of either or both countries has become a concern for regional, and perhaps even international, security. It is now almost two years since India tested its nuclear-weapons capability in May 1998, followed shortly thereafter by Pakistan, citing what it said was the necessity of maintaining South Asia’s military balance. Since then, the two countries have repeatedly been urged by the West, and other developed countries such as Japan, to scale down hostilities and begin working toward a peaceful resolution of their dispute.

Unlike in 1998, however, when Pakistan immediately matched the Indian nuclear test, Islamabad does not have the economic capacity to respond to New Delhi’s proposed defense-expenditure increase. While Pakistani nationalists have been quick to demand an appropriate response, they will just as quickly realize that Pakistan’s relatively small economy simply cannot afford the kind of quantum leap that would be required to keep up with India.

For many analysts, then, the question is: Will this be the end of the South Asian arms race? Unfortunately, the answer is no. Even though Pakistan cannot afford to stay abreast of India in terms of military expenditure, South Asia’s two main rivals have ample opportunity to continue challenging each other.

In the past three years, Pakistan has unmistakably demonstrated that it is working on developing an arsenal of missiles armed with nuclear warheads, in case a conventional war should give India the edge and push Islamabad into a corner.

Ever since it was learned that Pakistan had acquired the capability to produce nuclear weapons, the issue of when, how and where Islamabad would respond with a nuclear strike has remained unclear. Now, in the wake of India’s planned defense-expenditure increase, the issue of Pakistan’s nuclear-tolerance level is even more heavily shrouded in mystery.

In the event of a war, is Pakistan going to feel even more threatened and insecure than before? Might that insecurity trigger earlier use of the nuclear option, in response to the overwhelming and already established conventional superiority of its adversary? Nobody has accurate answers to such questions. But concern for peace in South Asia is likely to mount, especially if Pakistan continues to regard the hike in India’s defense budget as a brand-new security threat.

For the world beyond South Asia, security concerns in the region remain a pressing issue. It is unlikely that anyone will be able to convince India to reduce its spending on defense. With India’s liquid foreign-exchange reserves worth almost 10 times its proposed $3 billion increase in defense expenditure, New Delhi is clearly invulnerable to outside pressure.

However, intense international efforts to promote new peace initiatives in South Asia may at least help to bridge the growing gap between the India and Pakistan. In the short term, with a military government in Pakistan determined not to engage in any substantive discussions with India unless the issue of Kashmir is treated as central, and with India’s coalition government taking a hard line on Pakistan, getting the two sides to talk at all may be a tough proposition.

Yet with so much at stake for regional, and indeed global, security, conditions in nuclearized South Asia can hardly be ignored for long. India may be in a position to outspend Pakistan on defense, but that is not to suggest that Islamabad is willing to accept its neighbor’s overwhelming dominance as a given — not just yet.

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