India Pakistan War Risks
A terrorist attack in Kashmir makes an Indian strike on Pakistan, and subsequent retaliation, more likely.
Commercial audience: traders, aviation, shipping,
On 25 April, reports emerged of localised exchanges of fire between Indian and Pakistani forces in Leepa Valley, Kashmir. On 22 April, Muslim gunmen killed 26 Indian tourists in Indian-controlled Kashmir.
India blamed Pakistan for the Kashmir attack and promised to retaliate. India suspended the 1960 Indus Waters Treaty, which manages how water is divided between India and Pakistan. Given that 20% of Pakistani GDP and 40% of Pakistani labour are in agriculture, this is a major long term strategic threat to Pakistan.
In an official statement from the National Security Committee on 24 April, Pakistan described any diversion of water flowing from India to Pakistan as an “Act of War”, and promised to protect its water rights at all costs. It also said that it would suspend all international agreements with India, including the Simla Agreement, which regulates the Line of Control in Jammu and Kashmir, a water-rich area claimed by both countries. Pakistan closed its airspace to all Indian flights and suspended all trade with India. The two states continue exchanging escalatory steps, including the expulsions of diplomats and citizens, and the suspension of trade.

Pakistan’s military has entered into a state of readiness, anticipating Indian military action, similar to 2019. Then, after a suicide vehicle bomb attack that killed 40 Indian police officers, India retaliated after 12 days with an airstrike in Pakistani-controlled Kashmir, claiming it hit a terrorist training camp. Pakistan retaliated the following day with its own airstrike, which led to a dogfight between Indian and Pakistani jets. An Indian MiG-21 was shot down.
Context
India’s military spending is much higher than Pakistan’s, and its army is larger, more modern, and better equipped. However, the terrain of Kashmir is very difficult to manoeuvre in, and Pakistan has a robust tactical nuclear first strike policy in the event that India collapses its defensive lines along the border in Kashmir, in Lahore, or near the Indus River.
India’s biggest fear is a two-front war, in which it would have to fight China and Pakistan simultaneously (Bangladesh’s military capability is marginal). Given India’s current [real or perceived] military superiority against Pakistan, escalation makes sense to India.
China, for its part, does not want to see Pakistan defeated. First, Pakistan is an important counter against India, which China views as a rival. Second, the China Pakistan Economic Corridor is one of numerous Chinese projects intended to reduce China’s vulnerability in the Strait of Malacca. Third, China is building the world’s largest dam near the Indian border, close to Bhutan and Bangladesh. The logistics for building such a dam are indistinguishable from a major military build up. And it would take place at the point where India is most vulnerable. China would probably want to complete this project before a war with India breaks out. Last, China does not want a war in which the Pakistani army is degraded, requiring more Chinese equipment that Pakistan would struggle to pay for. Not providing that equipment, on the other hand, would allow India to dedicate more resources to challenging China on their joint border, where they are in dispute over the control of water sources.
Implications
India is almost certain to conduct a military strike in Pakistan, most likely an airstrike or a series of airstrikes, to which Pakistan will also almost certainly respond proportionately.
The most likely scenario is that this remains contained, with just a few days of skirmishes and airstrikes against military targets, rather than civilian assets.
China and America will likely seek to mediate the conflict to avoid further escalation.
Even if the issue is resolved quickly with localised skirmishes and airstrikes, this would not lead to the resumption of trade or the re-opening of land borders and airspace to each others’ flights.
If we are wrong, and the escalation grows beyond just a few days of fighting, then this would risk turning into a prolonged, stalemated, American-Chinese proxy conflict, mirroring Russia Ukraine.
Attacks on shipping would become likely in this scenario. They are very unlikely under our current assumptions.
Pakistan’s economy would be far more vulnerable than India’s, especially if Gulf Arab states refuse to back Pakistan financially, given their strategic ties to India.
Russia would want to help India, given that it views it as a counterweight against China and the West. Moreover, the Americans would accelerate their abandonment of Ukraine, in order to bring Russia on side and try to contain China.
Even if the initial fighting remains contained, further escalation would be very likely if India were to proceed with efforts to divert river water from Pakistan. This would be seen by Pakistan as a casus belli.
The greater the duration of the conflict between India and Pakistan, the greater the risk of rioting in British cities such as Bradford, Leicester, Birmingham and Manchester, as Hindus and subcontinent Muslims fight one another. London’s boroughs of Hounslow, Brent, Newham, and others would also be vulnerable to unrest.
Could be a novel way of reducing the number of migrants in the uk if the squabble gets serious.