After the suicide bombing claimed by the Islamists of Jaish-e-Mohamed (Mohamed’s Army) that killed forty-four policemen, India plans to take sanctions to isolate Pakistan, with for instance, a possible withdrawal of the most favored nation clause.
This renewed tension between the two nuclear powers comes against a backdrop of increased electoral competition in India and more than 25 years of separatist insurgency in Kashmir, a predominantly Muslim region in northern India, where Pakistan is accused of backing the rebellion.
If this situation is not new, it adds to other significant issues in Asia including the commercial rivalry between the United States and China and the fragile dialogue between Donald Trump and his North Korean counterpart Kim Jong-Un.
The uncertainty factor for investors will lie mainly in the ability of the Trump administration to reduce Indo-Pakistan tension in the event of a sudden aggravation.
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