In a significant development, the World Bank has paused the separate processes initiated by India and Pakistan under the Indus Waters Treaty to allow the two countries to consider alternative ways to resolve their disagreements.
"We are announcing this pause to protect the Indus Waters Treaty and to help India and Pakistan consider alternative approaches to resolving conflicting interests under the Treaty and its application to two hydroelectric power plants," World Bank Group President Jim Yong Kim said.
The pause was announced by Mr Kim in letters to the finance ministers of India and Pakistan. It was also emphasised that the World Bank was acting to safeguard the Treaty.
Pausing the process for now, the World Bank would hold off from appointing the Chairman for the Court of Arbitration or the Neutral Expert -- appointments that had been expected on December 12 as earlier communicated by the World Bank.
India had taken strong exception last month to the World Bank's decision to set up a Court of Arbitration and appoint a Neutral Expert to go into Pakistan's complaint against it over Kishenganga and Ratle hydroelectric projects in Jammu and Kashmir.
Surprised at the World Bank's decision to appoint a Neutral Expert, as sought by the Indian government and at the same time establish a Court of Arbitration as wanted by Pakistan, India had said proceeding with both the steps simultaneously was "legally untenable".
Both processes initiated by the respective countries were advancing at the same time, creating a risk of contradictory outcomes that could potentially endanger the Treaty, the World Bank noted.
"This is an opportunity for the two countries to begin to resolve the issue in an amicable manner and in line with the spirit of the treaty rather than pursuing concurrent processes that could make the treaty unworkable over time. I would hope that the two countries will come to an agreement by the end of January," Mr Kim said.
The current processes under the treaty concern the Kishenganga (330 megawatts) and Ratle (850 megawatts) hydroelectric power plants. The power plants are being built by India on, respectively, the Kishenganga and Chenab Rivers. Neither of the two plants are being financed by the World Bank.
The World Bank said that the 1960 Indus Waters Treaty is seen as one of the most successful international treaties and has withstood frequent tensions between India and Pakistan, including conflict.
In September, the World Bank, which had mediated the Indus Water Treaty, had said it was approached by India and Pakistan and it is "responding in its limited, procedural role as set out in the treaty".
"India and Pakistan have informed the World Bank that each has initiated proceedings pursuant to the Indus Waters Treaty 1960 and the World Bank Group is responding in its limited, procedural role as set out in the Treaty," it had said.
The Treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of the rivers, known as the Permanent Indus Commission which includes a commissioner from each of the two countries.
It also sets out a process for resolving so-called "questions", "differences" and "disputes" that may arise between the parties.
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