As in other conflict zones like Indonesia’s Aceh, Kashmir’s 13-year insurgency has spawned a “war economy” that skews economic incentives, derails development and leaves the battle zone awash in cash and corruption. For every Indian bounty, Pakistan pays thousands of dollars to the widows of “martyrs.” Kidnapping, ransom and extortion are growth industries. The war economy has even fueled a building boom of sprawling Italianate and Swiss-style villas in one of India’s poorest states. Shop rents in Srinagar’s busiest market have leaped sevenfold since the violence began. “I call this Kashmir Inc.,” says Amitabh Mattoo, a professor at Delhi’s Jawaharlal Nehru University. “There’s no doubt some benefit from the conflict and would be hostile to its resolution.”
One of the biggest obstacles to peace may be Kashmir’s own government. A senior official in New Delhi privately says that Kashmir’s ruling party, the National Conference, is corrupt and a failure. Kashmir is unique in possessing a degree of economic autonomy that blocks oversight from New Delhi. Many believe the state’s politicians have every incentive to see the fighting continue. “This administration has its own vested interest in keeping the gun alive,” says Mehbooba Mufti, former opposition legislator of the People’s Democratic Party. Although National Conference officials deny these allegations, many locals are convinced that upcoming September elections will be rigged in order to maintain the party’s hold on power. Says former Hurriyat Conference chairman Omar Farooq, “The election’s just a smokescreen for international consumption.”
Hopes are not the only thing that have gone up in smoke in Kashmir. A 440-megawatt hydroelectric-dam project on the Kishanganga River was a boondoggle for entrenched bureaucrats and politicians. Court documents reveal that $3.2 million allocated for infrastructure projects went into the pockets of more than 200 officials from 1992 to 1997–and nothing was ever built. Another scam in Kashmir’s Anantnag district saw $17 million disappear in two years with only a handful of bridges and irrigation canals to show for it.
Peace could be about the worst thing that could happen to Kashmir’s profiteers. Syed Ali Shah Geelani, a hard-line political leader, was arrested in June for suspected corruption, a charge he denies. Income-tax officials are still examining how Geelani was able to maintain a Srinagar mansion with 14 servants on a declared monthly income of $360. With the war economy churning out spoils like these for the taking, reconciling the political troubles over Kashmir may be the easy part.
