One of the last 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 catch up with the water that Pakistan abandoned by giving up its rights to the eastern rivers. The World Bank originally predicted that India would pay for this work, but India refused.  The Bank responded with an external financing plan. Agreement on the Indus Basin Development Fund (Karachi, September 19, 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 agreed to make a combination of funds and loans available to Pakistan.  This solution eliminated the remaining stumbling blocks of the agreement and inland navigation was signed by both countries on the same day in 1960, retroactively from April 1, 1960, but the provisions of the Indus Basin Development Fund Agreement do not in any way affect inland navigation in accordance with art. XI (3).  Subsidies and loans to Pakistan were renewed in 1964 by a complementary agreement.  Black`s hopes of finding a quick solution to the Indus conflict were premature. While the Bank expected the two sides to agree on the distribution of water, neither India nor Pakistan seemed willing to compromise their positions. While Pakistan had its historical right over the waters of all tributaries of the Indus and the risk of half of western Counjab by Desertification, the Indian side argued that the pre-distribution of water should not set a future allocation.
Instead, the Indian side has established a new distribution base, with waters from western tributaries to Pakistan and eastern tributaries to India. The technical discussions on the substance that Mr. Schwarz hoped had been hampered by the political considerations he expected to avoid. India and Pakistan were on the brink of war for Kashmir. It did not seem to be possible to negotiate on this subject until tensions subsided. One way to reduce hostility . . . will focus on other important issues on which cooperation is possible.
Progress in these areas would foster a sense of community between the two nations that, over time, could lead to a colony of Kashmir. As a result, I proposed that India and Pakistan jointly develop and implement the Indus Basin river system, on which both countries depended for irrigation water. With new dams and irrigation canals, the Indus and its tributaries could be brought in to provide the extra water each country needs to produce more food. In this article, I suggested that the World Bank could use its good offices to bring the parties to an agreement and help finance an industrial development program. :93 Black has also made the difference between the «functional» and «political» aspects of industrial controversy.