Only the paranoid survive.- Andrew Grove
The threat of major conflict between India and Pakistan will overshadow all other regional issues during the next 15 years. [...] The decisive shift in conventional military power in India's favor over the coming years potentially will make the region more volatile and unstable.
- Global Trends 2015 (CIA Report)
However, their asymmetrical conventional force capabilities and doctrines could create pressures for one side to launch nuclear weapons, even if they would prefer not to.
- The Risk of Nuclear Use Between India and Pakistan (Center for Contemporary Conflict)
There are only three ways to build lasting cooperation and friendship in the international arena. Culture, commitment and credibility. The US and the UK will never go to war against one another. Japan is a trusted nation because of its strong commitment, which they showed by building a no war doctrine into their constitution. The third option requires a lot more work. There are several ways to achieve it, consistency being a primary requirement. Arab nations will never heckle Israel, except for launching covert terrorist attacks against this tiny nation. Israel's doctrine has been very simple and derived directly from Newton's third law. Credible? You bet.
In a manner of speaking, India's foreign policy has been pretty consistent so far, consistent in its continuous bungling and utter lack of direction. This must frustrate other countries no end. The objective of foreign policy is the well being of citizens, not earning brownie points (or awards) for being nice.
There were some quotes in the beginning of this post. They are somewhat outdated, because they analyze the India-Pak situation within assumptions of rationality. After the Red Mosque fiasco, who will believe that Pakistan (as a sum total of its various fractious groups, powerful army and a dubious Government) will behave rationally?
This brings us to an important question. How likely is a preemptive nuclear strike from Pakistan? A corollary to that is, if Pakistan is supposed to be X% irrational, why even bother? Both questions can be easily answered. Given how close Pakistan was to launching a preemptive attack recently, the probability remains very high. Now, irrationality takes many hues. One can be a complete basket case in which case all bets are off. But it is easy to see that the powers that be within Pakistan do care about their own well being. Therefore, it is safe to assume that a credible deterrant on India's part will necessarily involve:
(a) A complete annihilation of Pakistan
(b) A complete subjugation of Pakistan leading to a likely capture of its leadership
The 1-2-3 agreement will act as a serious dampener against India's nuclear counter-strike credibility.
Second, the agreement makes it look like we are a civilized nation or trying our best to look like one. The part of the problem for Pakistan was that it could never be completely sure that we didn't have one or two nuts in our country. Now they know, especially after watching our National Security Advisor on Devil's advocate. What a shame. The dude looks like the uncle next door who just retired and takes his toddler grandchild for a morning walk to the park every day and whose only guilty pleasure is an extra cup of filter coffee.
Third, this agreement is a bilateral agreement with the US only. We are villains in the eyes of the international community (especially the militant anti-war European liberal lobby) simply for owning nukes. Ambition to own more nuclear stuff, peaceful or otherwise, makes us look even worse. Needless to say, it doesn't earn us any goodwill from the Arab nations (queue: recent announcement of hefty arms deal with Arab states by the US).
We will analyze the economic part in another post. If you add the economic situation, it starts too look even sillier.
We believe that this hastily signed agreement is a colossal blunder on India's part. However, we do wish for the best and hope that nothing unpleasant happens in the near future.
Remember that after a nuclear winter, only roaches survive.

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