Our Bureau
New Delhi
The Indus Waters Treaty (IWT), long celebrated as a triumph of water diplomacy, is once again in the spotlight following India’s suspension of the pact after a deadly terror attack in Pahalgam. While the treaty is known for dividing the vital Indus river system between India and Pakistan, few realize that India also paid a hefty financial price—$174 million (over $1.6 billion today)—to bankroll Pakistan’s water infrastructure.
The 1960 treaty, brokered by the World Bank after eight years of tense negotiations, granted Pakistan exclusive rights over the western rivers—Indus, Jhelum, and Chenab—while India retained the eastern rivers—Ravi, Beas, and Sutlej. The deal was struck only after India and other donor nations agreed to fund over $1 billion for Pakistan’s dams, canals, and barrages, with India’s share being pivotal to the agreement’s success.
The roots of the treaty lie in the 1947 Partition, which split the Indus system and left Pakistan vulnerable to water shortages. As India began developing its own infrastructure, tensions soared, and war loomed. The World Bank stepped in, but negotiations repeatedly stalled over Pakistan’s demand for compensation to build new waterworks. India initially resisted, but the Bank insisted that India’s exclusive access to the eastern rivers justified a financial contribution.
After intense bargaining, India agreed to pay $174 million over ten years, a sum managed by the World Bank’s Indus Basin Development Fund. This money financed major Pakistani projects like the Mangla Dam, ensuring the country’s agricultural survival.
Despite India’s hopes that the treaty would usher in peace, relations soon soured. Within five years, Pakistan initiated conflict in Kashmir and Gujarat and continued to challenge India diplomatically and militarily. The recent suspension of the IWT by India, following Pakistan-backed terrorism, marks a dramatic shift in approach.
