The Indus Water Treaty is one of the most liberal water distribution agreements between the two countries. The Pact between India and Pakistan was signed in Karachi in September 1960 by Jawaharlal Nehru, then Prime Minister of India, and Pakistani President Ayub Khan. Nehru hoped the agreement would bring prosperity and peace to farmers on both sides, friendship and goodwill between India and Pakistan. Unfortunately, this has not been the case, as relations between the two countries remain strained. Black`s hopes of finding a quick solution to the dispute were premature. While the Bank expected the two sides to reach an agreement on the allocation of water, neither India nor Pakistan seemed willing to compromise their positions. While Pakistan insisted on its historic right to the waters of all tributaries of the Indus and half of Western Punjab was threatened with desertification, the Indian side argued that the prior distribution of the waters should not set a future allocation. Instead, the Indian side established a new distribution base, the waters of the western tributaries headed to Pakistan and the eastern tributaries to India. The substantive technical discussions that Black hoped for were hampered by the political considerations he expected to avoid.
For more than a year since the end of 2016, the World Bank has been working tirelessly to find an amicable solution to the recent disagreement and protect the treaty. Dozens of high-level meetings were convened and a large number of proposals were discussed. The World Bank remains committed to acting in good faith and with full impartiality and transparency in fulfilling its obligations under the Treaty, while continuing to support countries. Lilienthal`s idea was welcomed by officials at the World Bank (then the International Bank for Reconstruction and Development) and then by the Indian and Pakistani authorities. Eugene R. Black, then president of the World Bank, told Lilienthal that his proposal „makes a big sense.“ Black wrote that the bank was interested in the economic progress of both countries and feared that the dispute over the industry was only a serious obstacle to this development. India`s previous objections to third-party arbitration were corrected by the Bank`s insistence that it would not decide on the dispute, but that it would work as a channel to reach an agreement.  One of the final stumbling blocks of an agreement was the financing of the construction of canals and storage facilities that would transfer water from western rivers to Pakistan.
This transfer was necessary to compensate for the water that Pakistan abandoned by ceding its rights to the eastern rivers. The World Bank initially planned for India to pay for the work, but India refused.  The Bank responded with an external financing plan. An agreement on the Development Fund for the Indus Basin (Karachi, 19 September 1960); an agreement between Australia, Canada, West Germany, New Zealand, the United Kingdom, the United States and the International Bank for Reconstruction and Development (IRDC) and Pakistan, which have agreed to provide Pakistan with a combination of resources and loans.  This solution eliminated the remaining stumbling blocks of the Agreement, and inland and long-distance navigation was signed in 1960 by both countries on the same day as April 1, 1960, with retroactive effect from April 1, 1960, but the provisions of the Indus Basin Development Fund Agreement do not affect the domestic/domestic labor society in accordance with Article XI, paragraph 3 . Grants and loans to Pakistan were granted in 1964 under a supplementary agreement.  India and Pakistan were on the brink of war for Kashmir. . . .