To resolve the water dispute between India and Pakistan, both countries agreed under the framework of the Indus Waters Treaty of 1960—widely regarded as one of the most enduring agreements in international water diplomacy endorsed and facilitated by the World Bank.
The Treaty, brokered with the support of the World Bank and signed after nearly a decade of negotiations, governs the use of six rivers of the Indus Basin. It allocates the three eastern rivers—Ravi, Beas, and Sutlej—to India, and the three western rivers—Indus, Jhelum, and Chenab—to Pakistan. However, it permits limited use of the western rivers by India, particularly for hydropower generation, under strict design constraints.
The current disagreement centres on the Kishenganga and Ratle hydropower projects in India, located on tributaries of the Jhelum and Chenab rivers. Pakistan claims the design features of these projects violate the Treaty, while India insists they remain compliant with the permitted technical parameters.
The projects—Kishenganga operational since 2018 and Ratle under construction—have not been financed by the World Bank. Nonetheless, both countries approached the Bank in 2016 to initiate different Treaty mechanisms: Pakistan sought a Court of Arbitration, while India requested the appointment of a Neutral Expert.
As per its procedural role outlined in the Treaty, the World Bank cannot determine which process takes precedence. In an effort to avoid parallel proceedings, the Bank paused action on both requests in December 2016, hoping the two nations would resolve their differences amicably.
After five years of unsuccessful negotiations, the World Bank resumed its procedural obligations in March 2022. By October 2022, it had appointed Mr Michel Lino as the Neutral Expert and Professor Sean Murphy as Chairman of the Court of Arbitration. Separate handover meetings with both individuals took place on 21 November 2022.
These two mechanisms are independent under the Treaty, empowered to decide their own jurisdictions and procedural rules. The World Bank remains involved solely in a logistical and financial capacity—reimbursing the remuneration and expenses of the Neutral Expert from trust funds contributed by India and Pakistan.
Established during the Cold War with backing from former US President Dwight D. Eisenhower—who praised it as “one bright spot… in a very depressing world picture”—the Treaty has endured several wars and recurring hostilities between the two nations.
Despite persistent challenges, the Indus Waters Treaty continues to serve as a critical legal and institutional framework for cooperation on transboundary water management in South Asia.
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