India has proposed a new round of talks with Pakistan.  The last meaningful talks in 2007 led to a thawing of relations and real progress till everything was brought to a grinding halt by the terrorist attacks in Mumbai.

What are the payoffs and incentives for the two countries?   David Ignatius ar the Washington Post offers this analysis:

“The India-Pakistan standoff is like one of those game-theory puzzles where both nations would be better off if they could overcome suspicions and cooperate — in this case, by helping the United States to stabilize the tinderbox of Afghanistan. If Indian leaders meet this challenge, they could open a new era in South Asia; if not, they may watch Pakistan and Afghanistan sink deeper into chaos, and pay the price later.”

The quote offers a theory for how India might gain from peace but what about Pakistan?  Pakistan cannot be treated as a unitary actor.  Some part of the elite and perhaps even the general population may gain from an easing of tension and a permanent peace with India.  But the Pakistani military has quite different interests.  The military dominate Pakistan politically and economically.  Their rationale for resources, power and prestige relies on perpetual war not perpetual peace.  Sabotage is a better strategy for them than cooperation with India.  The underlying game is not the Prisoner’s Dilemma.

Military payoffs have to be aligned with economic payoffs to encourage cooperation.  Economic growth can also generate the surplus to bankroll a bigger army.  A poor country needs the threat of war to divert valuable resources into defense.  But a rich country does not.