The 450-megawatt Baglihar hydel power project threatens to pour cold water on the warming relations between India and Pakistan. Pakistan says the project, on the Chenab river, violates the provisions of the World Bank-brokered I960 Indus Water Treaty between the two countries. On January 18, Pakistan moved the bank to intercede in the matter. According to the treaty, Pakistan has exclusive use of the Indus, Jhelum and Chenab rivers while India has access to the Ravi, Beas and Sutlej rivers. (However, there is a provision for India to construct hydel power projects on the rivers.) The completion of the project, at an estimated cost of Rs 500 crore, would reduce the dependence of J&K on the national grid by 40 per cent in the summer. In winter, however, the generation will fall to one-third because of the receding water levels in the Chenab. The project, started in 2000, but running behind schedule, is expected to be operational by December. Pakistan says the design of the dam violates the treaty and wants the project to be halted; its experts inspected the site in 2003. India disagrees and wants the issue to be resolved through bilateral talks. Several high-level meetings involving experts from both sides in the Permanent Indus Water Commission have failed to allay Pakistan's apprehensions. In a diplomatic offensive, Pakistan has briefed European Union missions and envoys from Canada, US, China, Australia and Japan. Foreign Minister Khurshid Kasuri says, "If the issue is not settled we will have no option but to recast the provisions of the treaty." However, chief engineer of the project A.G. Malik says, "The dam's storage capacity is 37 million metric cusecs of water, while the treaty provides for double that." He says that India can defend the design now that Pakistan has moved the World Bank. There are huge financial implications for Pakistan, says Prof. Nisar Ali, head of the department of economics at Kashmir University. "Neutral arbitration will cost millions of dollars," he says. "Besides, Pakistan has to be 100 per cent sure it has a case. Otherwise, it could become a major embarrassment." Ali feels that Pakistan's move is to prevent India from constructing other projects on the Chenab, Jhelum and Indus rivers. The treaty, signed by Prime Minister Jawaharlal Nehru and President Ayub Khan, has withstood the 1965 and 1971 wars and the Kargil war in 1999. However, successive governments in J&K have accused New Delhi of signing the treaty without taking the people into confidence. Chief Minister Mufti Mohammed Sayeed has demanded Rs 5,000 crore as compensation from the Centre to offset losses as the treaty limits the agricultural land that can be irrigated with the waters of the Indus, Jhelum and Chenab. ?