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Terrorism and the Funding of Terrorism in Kashmir

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 1 March 2002



The independence of India from the British Empire was marked by its partition into two countries, viz India and Pakistan. As a corollary to independence and partition of India, 500‐odd princely states which had direct relationship with the British Empire were required to integrate with either India or Pakistan — the successor states. The process of integration of princely states was not without its highs and lows. Some of the princely states, like Hyderabad, Junagarh and Jammu and Kashmir, posed quite a few problems at the time of integration for several reasons, namely the inclination of its rulers, the religious component of the local population and the competing interests of the two successor states, India and Pakistan. Hyderabad and Junagarh were favourably resolved in India's favour. Integration of Jammu and Kashmir with India was not a smooth affair. It was only after Pakistan‐aided forces including the Pakistan army had invaded Jammu and Kashmir that the then ruler of Jammu and Kashmir signed the instrument of accession in India's favour. With the instrument of accession, India had a locus standi to protect its territory in Jammu and Kashmir by military means. The salvage operation of throwing the Pakistan‐aided forces and Pakistan military out of Jammu and Kashmir could not be accomplished fully, because India agreed that the United Nations, to which the Kashmir dispute was to be referred, would help in the resolution of the Kashmir issue within the accepted legal framework which was in India's favour. However, India's experience with the United Nations was a great disappointment. In fact India had put so much faith in the United Nations that it even agreed to a plebiscite in Kashmir for resolving the dispute, subject to the condition that Pakistan vacated the illegally occupied areas of Jammu and Kashmir. India need not have agreed to a plebiscite in Jammu and Kashmir, but it did so because of its abiding faith in democratic principles, notwithstanding the legal framework on the basis of which the integration of other princely states with the successor states was carried out. To date, Pakistan has not vacated what is today called ‘Pakistan‐occupied Kashmir’. On top of that, in 1962 China gobbled up a large part of Kashmir in the north‐east, on the basis of a boundary dispute which it raised with India and which has yet to be resolved. To make matters still worse and more complicated, Pakistan ceded a part of Pakistan‐occupied territory to China. Thus the situation, as of today, is that 45.7 per cent of the 222,336 sq. km area of Jammu and Kashmir is with India, 35.1 per cent is with Pakistan and 19.2 per cent is with China. Apart from a war with China, two more full‐scale wars have been fought with Pakistan over Kashmir; the 1965 war, which was confined to the western theatre, and the 1971 war. The 1965 war was a short one and through the Soviet Union's mediation, an agreement was arrived at which was to no one's advantage and more or less restored the status quo ante. Following the 1971 war with Pakistan, India was in an advantageous position, because East Pakistan had ceded from West Pakistan and emerged as an independent country, the two‐nation theory to which Pakistan subscribed as the basis for partition of India into two successor states of India and Pakistan had been exploded; India had 90,000 Pakistan prisoners of war and it had also made large gains on the western front by occupying certain strategic positions. It was from this position of strength in 1971 that India decided that the Kashmir dispute had to be resolved bilaterally by India and Pakistan without any foreign intervention; a doctrine to which Pakistan subscribed at that point of time. In fact, India approached the bilateral talks between the two countries in a spirit of magnanimity. As a first step, India decided to return to Pakistan 90,000 prisoners of war. It agreed to a fresh demarcation of the Line of Control (including withdrawal from several strategic positions) on the unwritten understanding that this Line of Control, over a period of time, based on good neighbourly relations with Pakistan — supplemented by economic ties — would ultimately result in its becoming a de jure border from a de facto border with Pakistan; though the officially stated position continues to be that the whole of Jammu and Kashmir is an integral part of India. The 1971 agreement with Pakistan, which is also called the ‘Shimla Agreement’, thus constitutes the principal plank for the settlement of the Kashmir issue with Pakistan on a bilateral basis.


Trehan, J. (2002), "Terrorism and the Funding of Terrorism in Kashmir", Journal of Financial Crime, Vol. 9 No. 3, pp. 201-211.




Copyright © 2002, MCB UP Limited

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