Tensions between India and Pakistan rose yesterday after New Delhi moved to review a privileged business status to Islamabad and threatened to revoke a key water-sharing treaty.
The moves follow the India's decision to look for options beyond diplomatic pressure after a terror attack on an army camp in Kashmir killed 18 soldiers on Sept 18.
India blames Pakistan for the deadly assault. Pakistan rejects the accusation and says India should conduct a proper investigation before it apportions blame.
New Delhi has vowed to respond to the Kashmir attack, and has launched a campaign to isolate Pakistan diplomatically, including through the United Nations.
On Tuesday, India said Prime Minister Narendra Modi would not attend the South Asian Association for Regional Cooperation (Saarc) summit in Islamabad in November, in a major snub to its neighbour.
Hours later, Bangladesh said it was also pulling out. Afghanistan and Bhutan -- both close India allies -- have since followed suit, according to a Saarc official who asked not to be named.
India's announcement came hours after Sartaj Aziz, foreign policy adviser to Pakistani Prime Minister Nawaz Sharif, warned India against drawing __more water from three rivers that flow from India into Pakistan.
Aziz said Islamabad would seek arbitration with a commission that monitors the Indus Water Treaty if India increased its use of water from the Chenab, Jhelum and Indus rivers.
India says it does not plan to abrogate the treaty but Modi said on Monday India should "maximise" the amount of water it uses without breaching the agreement warning “blood and water cannot flow simultaneously.”
If India revoked the treaty, Aziz said, Pakistan would treat that as "an act of war or a hostile act against Pakistan".
Later on Tuesday, Pakistan approached the World Bank amid reports that India could revoke the 56-year-oldwater-sharing treaty, with senior Pakistani officials taking up the matter with the international lender which had mediated the water-sharing deal.
A delegation of the Government of Pakistan led by the Attorney General for Pakistan, Ashtar Ausaf Ali, met with senior officials of the World Bank at the World Bank Headquarters in Washington DC, to discuss matters relating to Pakistan's recent Request for Arbitration given to India pursuant to Article IX of the Indus Waters Treaty, 1960, Geo News reported.
The report also said Pakistan approached the International Court of Justice, but did not provide any details.
On 19 August, Pakistan had formally requested India for settlement of outstanding disputes pertaining to India's construction of Kishenganga and Ratle hydroelectric plants on rivers Neelum and Chenab respectively, by referring the matters to the Court of Arbitration as provided in Article IX of the treaty.
Under the treaty, the World Bank has an important role in establishment of the Court of Arbitration by facilitating the process of appointment of three judges, called Umpires, to the Court, while each country appoints two arbitrators.
The Pakistani officials met with senior officials of the World Bank to insist on early appointment of the judges and empanelment the court, it said.
The treaty gives India complete rights to waters of the Eastern Rivers (Ravi, Sutlej and Beas) and gives Pakistan the rights over the Western Rivers (Indus, Jhelum and Chenab) with limited allowance for use of water by India from the western rivers for purposes of, among others, power generation.
The treaty provides specific design criteria for any hydro-electric power plants to be built by India. Pakistan has held the position the Kishenganga and Ratle hydroelectric plants violate the design parameters of the treaty.
Meanwhile adding pressure to Islamabad, a meeting convened by Modi today will explore the option of dragging Pakistan to the World Trade Organisation's (WTO) dispute resolution body for refusing to reciprocate for 20 years India's granting of the Most Favoured Nation status to Pakistan.
Under the World Trade Organization (WTO) agreements, countries cannot normally discriminate among their trading partners. If a country grants another country a special favour (e.g. lower customs duty on imports) then it has to offer the same favour to all WTO members.
India granted Pakistan MFN status in 1996, and Pakistan is yet to reciprocate. According to a report, out of India's total merchandise trade of $641 billion in 2015-16, Pakistan accounted for a meagre $2.67 billion.
India can move WTO and request for withdrawal of MFN status to Pakistan, citing breach of security.
Divided between India and Pakistan since 1947, the flashpoint of Kashmir lies at the heart of the countries' rivalry.
India and Pakistan have fought three wars since partition in 1947, two of them over Kashmir, where the two countries regularly exchange fire across the disputed border.