Weapons of Mass Destruction (WMD)

[CRS Issue Brief for Congress]

90149: Pakistan Aid Cutoff: U.S. Nonproliferation and Foreign Policy Considerations

Updated December 6, 1996

Richard P. Cronin
Foreign Affairs and National Defense Division

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Introduction: The Changing Context of the Aid Cutoff Issue
Legislative Action by the 104th Congress to "Clarify" Section 620E(e) Restrictions
Details of the Brown Amendment Changes
One-Time Release of $368 Million Worth of Military Equipment
Background to the Cutoff of Aid to Pakistan
Basis for the Aid Cutoff
Legislative Background
Partial Relaxation of the Scope of the Aid Cutoff
The Issue of F-16 Aircraft Built for Pakistan That Cannot be Delivered
Asymmetry Regarding U.S. Nonproliferation Policy Toward India and Pakistan
Pakistan's Response to U.S. and Other International Pressure
Stance on the Comprehensive Test Ban Treaty (CTBT)
Status and Dynamics of Nuclear Proliferation in South Asia
Urgent Threat of Nuclear and Ballistic Missile Proliferation
Ballistic Missile Proliferation
Implications of Recent Trends in India-Pakistan Relations
Role of China
U.S. Policy Options
Restore the Previous Section 620E(e) Restrictions and/or Extend the Certification Requirement to India
Congressional Options/Required Action
Waive or Repeal the Section 620E Certification Requirement or Further Reduce the Scope of Remaining Sanctions
Congressional Options/Required Actions
Seek to Promote a Resolution of Underlying India- Pakistan Issues
Congressional Options/Required Actions

LEGISLATION

CHRONOLOGY


SUMMARY

U.S. aid and arms sales to Pakistan generally had been prohibited since October 1990 because the President could not make a required annual certification to Congress under Section 620E(e) of the Foreign Assistance Act, the so-called "Pressler Amendment," that Pakistan did not possess a nuclear explosive device. However, on February 12, 1996, the President signed into law the Foreign Operations Appropriations Act for FY1996, which includes provisions that significantly relax previous restrictions on U.S. aid to Pakistan.

Section 559 of P.L. 104-107, introduced by Senator Hank Brown, provides a "clarification" of restrictions on aid contained in Section 620E(e) of the FAA. The revised Section 620E narrows the scope of the aid cutoff to military assistance and transfers. It expressly allows cooperation for such purposes such as countering terrorism and narcotics trafficking, promoting airport safety and security, and international peacekeeping. It also specifically allows military-to-military contact, including international military education and training (IMET).

The Brown Amendment specifically bars the delivery of 28 F-16 aircraft ordered and partially paid for by Pakistan, but allows the one-time release of $368 million worth of other military equipment ordered by Pakistan prior to October 1, 1990. New equipment transfers still would be prohibited under current circumstances. The Senate adopted the amendment on September 21, 1995, by a margin of 55-45, following an extensive debate. On April 18, 1996, the Washington Post reported that the President had approved the transfer of the equipment, despite evidence that some time in 1995 Pakistan had acquired 5,000 "ring magnets" from China that could be used in its covert uranium enrichment program.

The Senate action followed several committee hearings and briefings in both houses, and similar House action in passing legislation authorizing foreign assistance for FY1996 and FY1997 (H.R. 1561). The changes were adopted despite the fact that Pakistan has continued to increase its capability to build nuclear weapons since the October 1990 aid cutoff, and may possess one or more bombs.

Those supporting the relaxation argued that the aid cutoff has been counterproductive and had jeopardized ties with a long standing ally. They also pointed to unequal treatment of Pakistan and India under nonproliferation sections of the FAA. India exploded a nuclear device in 1974, well before Pakistan acquired a similar capability. Against this view, other Members of Congress argued that the amendment had worked in a rough fashion to constrain Pakistan's program and warned against sending the "wrong signal" to other potential nuclear proliferators.

Halting proliferation in South Asia has long been a high priority issue for U.S. South Asian policy. More recently, attention has focused on India's and Pakistan's missile programs. Current U.S. concerns center on the prospect that India may soon begin regular production and deploy its short range Prithvi missile, and that Pakistan may follow with deployment of M-11 missiles acquired from China.


MOST RECENT DEVELOPMENTS

Press reports in late 1996 suggested strongly that Pakistan faces severe budgetary and foreign exchange problems that are jeopardizing the government headed by Prime Minister Benazir Bhutto. According to one account, defense spending and debt service absorbed as much as 81% of total revenue expenditures during fiscal year 1994-95. Reportedly, Pakistan faces a $705 million debt service payment at the end of October. (Far Eastern Economic Review, June 20 and September 19, 1996.) Reportedly, as of mid-October the IMF was withholding further tranches of a $600 million standby loan until Pakistan agreed to impose an agricultural tax, reduce defense spending and cut other "non-development" expenditures. (Reuters, October 10, 1996)


BACKGROUND AND ANALYSIS

Introduction: The Changing Context of the Aid Cutoff Issue

Most U.S. aid to Pakistan has been suspended since October 1, 1990, the beginning of FY1991, for lack of a necessary certification by the President that Pakistan does not possess a nuclear explosive device. The ban on aid and arms transfers was partially relaxed by legislation signed into law in early 1996, even though Pakistan has remained unwilling to take the steps necessary to make it possible for the President to make the certification required under Section 620E(e) of the Foreign Assistance Act (FAA). Although Pakistan has rejected any unilateral steps to satisfy American concerns, it has professed willingness to match any steps by India to give up its nuclear option -- for instance by signing the Nuclear Non-Proliferation Treaty (NPT), which requires putting all of its nuclear facilities under the inspections and safeguards regime of the International Atomic Energy Agency (IAEA.)

Even as they continued to insist that Pakistan unilaterally step back from the nuclear weapons threshold, both the Bush and Clinton Administrations, and Congress, have recognized that the proliferation problem in South Asia cannot be separated from India- Pakistan and India-China security issues. Congress in 1992 amended the Foreign Assistance Act to make the pursuit of a regional nonproliferation accord a formal U.S. policy goal and has imposed new requirements on the executive branch for periodic reports on progress towards this goal.

This brief tracks the status of the cutoff issue as well as the broader issue of nuclear proliferation in South Asia, including relevant information on India's nuclear policies and capabilities; analyzes underlying tensions in India-Pakistan relations that bear on the nuclear issue; and considers options for Congress using the current aid cutoff provisions as the principal point of departure. For broader background on U.S. relations with Pakistan and India, and their relations with each other, see CRS Issue Brief 94041, Pakistan-U.S. Relations and Issue Brief 93097, India-U.S. Relations.

Legislative Action by the 104th Congress to "Clarify" Section 620E(e) Restrictions

On February 12, 1996, the President signed into law P.L. 104-107, a clean version of the foreign operations appropriations bill for FY1996 (H.R. 1868), which includes provisions that significantly relax previous restrictions on U.S. aid to Pakistan. The bill initially had been enacted by reference in a short-term spending measure. The change revises Section 620E of the Foreign Assistance Act to permit economic assistance and to allow the one-time release of $368 million in military hardware that had been ordered by Pakistan prior to an October 1990 cutoff of aid to that country, notwithstanding the President's continuing inability to make the required Section 620E(e) certification.

The battle over whether to relax the terms of the Pressler Amendment had begun in early 1995. In hearings on March 7 and 9, 1995, before the Subcommittee on the Near East and South Asia of the Senate Foreign Relations Committee, a number of Administration and private witnesses suggested with varying degrees of emphasis that the aid cutoff of Pakistan under Section 620E(e), popularly known as the "Pressler Amendment," had become counterproductive and called for more flexibility in the application of the aid ban. On March 7 Energy Secretary Hazel O'Leary noted the rapidly growing need for more electrical power in Pakistan, and said that constraints on Overseas Private Investment (OPIC) credits and Trade and Development Agency (TDA) programs were "constraining the growth of our sales and investment there." On March 9 Assistant Secretary of Defense Joseph Nye argued that closer cooperation could rebuild a relationship of trust with Pakistan's military and thereby gain more influence over its decisionmaking process regarding nuclear weapons and ballistic missiles. The Administration made similar appeals in other House and Senate hearings. These comments found qualified support from some Members of Congress and stiff criticism from others.

During action on H.R. 1561, which among other things would authorize foreign assistance for FY1996 and FY1997, the House adopted amendments proposed by Representative Doug Bereuter to partially relax the scope of the Pressler Amendment sanctions. Section 3306 of the bill would have amended Section 620E(e) of the FAA to allow development assistance in support of nongovernmental organizations and microenterprises, and aid for antinarcotics and antiterrorism cooperation, peacekeeping, and airport safety. (See Legislation section.) The same section would also have allowed Overseas Private Investment Corporation (OPIC) risk insurance and other trade promotion activities, which a number of Members see as primarily benefiting U.S. companies and workers, and allow Pakistani military officers to participate in the International Military Education and Training (IMET) program.

A companion section (Section 3307) to H.R. 1561, also sponsored by Representative Bereuter, expressed the sense of Congress that the U.S. government should make a "determined effort" to find a third party buyer for military aircraft that Pakistan has paid for but that cannot be delivered due to the Pressler Amendment and expresses congressional approval of the return, subject to certain conditions, of military equipment and spare parts sent to the United States for upgrading or repair. The bill passed the House with these amendments on June 8, 1995.

On September 21, 1995, the Senate voted by a margin of 55-45 to adopt the Brown amendment during action on H.R. 1868, the Foreign Operations Appropriations Bill for FY1996. Conferees adopted the amendment on October 24 (H.Rept. 104-295). The House agreed to the conference report on October 31 and the Senate on November 1, but the bill remained stalled due to unrelated issues that could not be resolved by the conferees until January 1996. The entire bill was incorporated into a continuing resolution, H.R. 2280, and signed into law by the President on January 26, 1996. Subsequently, on February 12, the President signed into law a clean version of the bill.

Details of the Brown Amendment Changes

The changes sponsored by Senator Hank Brown have the effect of modifying Section 620E(e) to limit the impact of the aid ban to military assistance and transfers. A new paragraph (2) would effectively allow assistance for counternarcotics purposes; military- to-military contact, including International Military Education and Training and aid to humanitarian and civic assistance projects; aid for peacekeeping and other multilateral operations; and anti-terrorism assistance. Any lethal equipment provided for peacekeeping would be on a lease or loan basis only, subject to return upon completion of the operation for which it was provided.

The legislation allows the return of military equipment owned by Pakistan but sent to the United States for repair, subject to conditions, and authorize the third party sale of 28 F-16 aircraft and reimbursement of Pakistan from the proceeds. The enacted changes could also relieve Pakistan of the obligation to pay storage costs for aircraft that it has purchased but that cannot be delivered due to the ban on arms transfers in effect since October 1, 1990 (provided this has no budget impact). During August 1995 it was reported that the Administration was considering the Philippines and Indonesia as likely third party buyers for the aircraft.

One-Time Release of $368 Million Worth of Military Equipment

The same legislation includes a new subsection 4 to Section 620(e) allowing the transfer of military equipment other than F-16 aircraft contracted for by Pakistan prior to October 1, 1995. This responds to an Administration proposal in July 1995 for authority to transfer to Pakistan some $368 million in military equipment that was in the "pipeline" before the October 1990 cutoff of aid and arms transfers. Principal items include three P-3C maritime reconnaissance (MR) aircraft, 28 Harpoon anti-shipping missiles, and 360 AIM 9L "sidewinder" air-to-air missiles, and a variety of other arms and military equipment and technology. Pakistan has Harpoons and AIM 9L's but lacks a modern maritime reconnaissance capability. The P-3C's can track and attack surface vessels and submarines, but are vulnerable to attack without fighter cover. India possesses more numerous but less capable Russian-supplied maritime reconnaissance aircraft. During Senate Foreign Relations hearings in mid-September 1995, witnesses generally agreed that the release of this equipment would have little impact on the military balance, which strongly favors India.

On April 18, 1996, the Washington Post reported that the President had approved the transfer of the equipment.

Background to the Cutoff of Aid to Pakistan

Basis for the Aid Cutoff

The original aid cutoff was based on intelligence analysis and came after several years in which Presidents Reagan and Bush stated that it was becoming increasingly difficult to certify to Congress that Pakistan did not possess a nuclear weapon. President Bush declined to make the required certification prior to the beginning of FY1991. Since the October 1990 aid cutoff, publicly available evidence continues to accumulate suggesting that Pakistan has at least a few nuclear weapons or can assemble them in short order. During a February 1992 visit to Washington, Pakistan's Foreign Secretary publicly stated that Pakistan had at least one nuclear weapon.

Legislative Background

The certification requirement is the most recent in a series of linked nonproliferation sections of the Foreign Assistance Act (FAA) that have attempted to use the threat of an aid cutoff as an incentive to Pakistan to discontinue its efforts to acquire a nuclear weapons capability. The most pertinent provisions are noted below.

  • The basic nonproliferation provision affecting Pakistan is Section 101 of the Arms Export Control Act (an expanded version of what was formerly Section 669 of the FAA). This provision forbids aid to countries that acquire nuclear enrichment facilities that are not under the inspection and safeguards system of the International Atomic Energy Agency (IAEA). The Carter Administration, in April 1979, invoked Section 669 and suspended aid to Pakistan after intelligence information confirmed that Pakistan was building a secret uranium enrichment facility.
  • Section 620E of the FAA, adopted by Congress in 1981 following the December 1979 Soviet invasion of Afghanistan, sought to reconcile U.S. nuclear nonproliferation policy with urgent U.S. regional security interests. Unlike Section 669, Section 620E is Pakistan-specific, having been adopted to reaffirm a 1959 U.S.- Pakistan bilateral security agreement and to permit the resumption of U.S. military and economic assistance to Pakistan by granting authority to the President to waive Section 669 in Pakistan's case if he decides that to do so is in the national interest. The waiver authority was granted initially for a period of 6 years, facilitating the Reagan Administration's commitment of a 6-year, $3.2 billion package of economic and military aid to Pakistan. The waiver authority was periodically extended by Congress after that date but subject to increasing conditions, especially the Section 620E(e) certification requirement.
  • In 1985, in the face of growing congressional impatience with Pakistan's evident determination to continue development of its nuclear option, Congress added subsection (e) to existing Section 620E, placing a new limitation on the President's ability to grant waivers to application of the then Section 669. Subsection (e), the Pressler Amendment, states "no assistance shall be furnished to Pakistan and no military equipment or technology shall be sold or transferred to Pakistan pursuant to the authorities contained in this Act or any other Act" unless the President makes an annual certification to Congress that Pakistan does not possess a nuclear explosive device and that the proposed aid will reduce significantly the risk that it will possess one. This section was the focus of action in the 104th Congress.
The addition by Congress in 1985 of subsection (e) to Section 620E in 1985 responded to clear evidence that despite U.S. admonitions, Pakistan was continuing to employ various covert means to work towards achieving a nuclear weapons capability. During the mid-1980s it became increasingly clear that U.S. support of Pakistan's conventional defense requirements was not working to limit its nuclear ambitions, as had been hoped. Eventually, U.S. intelligence agencies acquired evidence that indicated strongly that Pakistan had crossed the nuclear threshold in some manner.

Partial Relaxation of the Scope of the Aid Cutoff

Beginning in 1992, Congress began to grant partial waivers to application of Pressler Amendment sanctions. Section 562 of P.L. 102-391, signed October 6, 1992, stated that "restrictions contained in this or any other Act with respect to assistance for a country shall not be construed to restrict assistance in support of nongovernmental organizations ... " provided that the President deems such aid in the national interest. The section did not refer to any country by name but was widely assumed to be directed at Pakistan. Beginning with FY1993, Congress also exempted Titles I and II of P.L.-480 food aid from the scope of any aid bans with the exception of countries supporting international terrorism or relating to internationally recognized human rights. Both authorities were most recently extended in Section 550 of the Foreign Assistance Appropriations Act of 1995 (P.L. 103-306.)

In an action that drew bitter criticism from a number of Members of Congress, including Senator Pressler, the Bush Administration allowed limited commercial sales of munitions and spare parts for Pakistan's U.S.-supplied weapons on a case-by-case basis, including parts for Pakistan's U.S.-supplied F-16 fighters and Cobra attack helicopters. The State Department contended that the language of Section 620E(e) applied only to aid-financed or government-to-government sales, and cited other examples in which Congress had felt it necessary to legislate separate provisions to forbid commercial sales to targeted countries. The policy, which has been continued under the Clinton Administration, limits commercial military sales and does not allow "new technology or upgrades to systems already in the Pakistani inventory . . . ."

The Issue of F-16 Aircraft Built for Pakistan That Cannot be Delivered

Since 1995 Congress has paid renewed attention to the disposition of some 28 F-16 fighter aircraft (ordered before the aid cutoff) that cannot be delivered. Pakistan has paid about $658 million towards 17 of the F-16s, while another 11 F-16s were ordered on a credit basis under the Foreign Military (Sales) Financing (FMF) program. The funds were paid to General Dynamics (now Lockheed Martin). Although Pakistan continued to make progress payments well after the aid cutoff, it has complained bitterly that it has neither the aircraft nor the money it paid for them.

In early 1994 the Clinton Administration informally approached Congress about getting a one-time waiver to transfer the F-16s to Pakistan but withdrew the proposal after receiving a negative reaction. Following a January 1995 visit to Pakistan, Secretary of Defense William Perry said the Pentagon would explore the possibility of finding another buyer for the planes. Since that time, support for this solution has grown. During an April 1995 visit by Prime Minister Benazir Bhutto, President Clinton stated publicly that Pakistan should get either its money or the planes.

The recently enacted changes to Section 620E implicitly would allow the Administration to sell the aircraft to a third party and return the proceeds to Pakistan. Achieving this solution may be difficult due to the age and model series (F-16 A/B) of the aircraft built for Pakistan. Currently, the Administration is considering Indonesia and the Philippines as possible buyers.

Asymmetry Regarding U.S. Nonproliferation Policy Toward India and Pakistan

For a number of reasons, U.S. nonproliferation legislation and the Administration's diplomatic efforts have tended to focus primarily on Pakistan, rather than India or China, the latter of which is already recognized as a legitimate nuclear weapons state under the NPT. The lack of "symmetry" in the treatment of India and Pakistan that is now being criticized by Pakistan and some in Congress was never a deliberate policy decision, however. Rather, U.S. nonproliferation policies towards both countries arose out of special historical circumstances and practical considerations. Among other things, U.S. nonproliferation legislation has focused on the transfer of nuclear materials and technology, not their indigenous development. It is widely acknowledged that this approach was adopted in part to avoid having Israel fall under the scope of nonproliferation-based aid restrictions. Coincidentally, this also benefitted India, which like Israel has an indigenous capability for developing nuclear weapons.

The United States has not ignored India's nuclear activities, however. India's 1974 nuclear test served as a major spur to passage of the Nuclear Non-Proliferation Act of 1978. As a result of passage of that legislation, the United States eventually abrogated a 1963 nuclear cooperation agreement that otherwise committed it for 30 years to make commercial sales of enriched uranium for India's U.S.-built nuclear power station at Tarapur, near Bombay, due to India's refusal to put all of its nuclear facilities under international inspection. However, India had already tested a nuclear device before the adoption of the sections of the foreign assistance act that sought to check Pakistan's drive to acquire nuclear weapons.

Recently, the United States has focused more attention on India's missile programs with the objective of impeding its access to technology that could be used to enhance its ability to deploy nuclear armed missiles. Beginning with the Bush Administration, the U.S. government has put considerable pressure on Russia to block sales by Russia of low temperature, liquid nitrogen "cryogenic" rocket engines to India. The Bush Administration imposed trade sanctions on Russia's Glavkosmos company and the Indian government's Space Research Organization (SRO) in May 1992. The Clinton Administration achieved a partial breakthrough in mid-July 1993, when Russia reportedly agreed to limit its sales of rocket engines to a few needed for planned satellite launchers and to strictly control the transfer of technology that might contribute to ballistic missile development.

Pakistan's Response to U.S. and Other International Pressure

Pakistan has indicated a desire to continue its generally positive relationship with the United States, but thus far it has strongly resisted U.S. urging that it take necessary steps to permit a Presidential certification. Exchanges of visits by senior U.S. and Pakistan officials during the past several years have failed to resolve the impasse. During a highly publicized trip to New Delhi and Islamabad in mid-April, 1994, Deputy Secretary of State Strobe Talbott gained India's agreement to a nine-power conference on an agreement to ban the further production of fissile materials and a world-wide halt to nuclear testing, and renewed assurances from Pakistan that it has stopped producing enriched uranium. At the time of the Talbott visit, Pakistan repeated its objections to any verification measures that were not also applied to India, but on May 18, 1995, Reuters reported that Pakistan's foreign minister had said that the Bhutto government would consider U.S. proposals for "non-intrusive" means of verification that it was not producing enriched uranium and that it would consider "technical proposals" to that effect. This potential opening has not materialized to date.

Islamabad has had some success in replacing U.S. aid with that from other donors, notably Japan. Tokyo in recent years has supplanted Washington as far and away the largest aid donor to both Pakistan and India. As part of a revision of its global foreign aid policies, the Japanese government declared that aid decisions will be influenced by issues such as recipients' policies on nuclear proliferation, defense spending, and human rights. To date, however, the rapid growth of Japanese aid has been more noticeable than any efforts to use aid as a lever to promote nonproliferation. Japan continues to make clear its concerns about proliferation in high-level contacts with Indian and Pakistani leaders, but its officials have said that they would require proof of the possession of nuclear weapons before invoking an aid reduction or cutoff.

Political leadership changes in Pakistan have had little or no apparent impact on Pakistan's nuclear program, which remains under the control of the military. Prime Minister Benazir Bhutto, who took office after October 1993 elections, has indicated her desire to "bring Pakistan out of its international isolation," especially by improving Islamabad's moribund ties with the United States. Bhutto has stepped up cooperation on terrorism -- including the extradition to the United States of a key suspect in the World Trade Center bombing. She strongly urged that Pakistan be freed of the burden of the Pressler Amendment during her April 1995 visit to the United States, but reportedly offered no concrete nonproliferation proposals. It is widely believed among analysts of Pakistan's politics that she could not survive politically if she made meaningful concessions to U.S. nonproliferation demands in order to achieve this goal. In the recent past, political uncertainty in Pakistan and bitter tone of relations with India have tended to diminish the possibility of meaningful negotiations towards the U.S. goal of a South Asian nuclear nonproliferation accord and/or the accession by Pakistan and India to the NPT.

Stance on the Comprehensive Test Ban Treaty (CTBT)

In marked contrast with India's position, on September 10, 1996, Pakistan joined 158 nations in voting to endorse the Comprehensive Test Ban Treaty (CTBT), but reserved judgment about signing the treaty. India opposed the treaty both in the Geneva Talks and at the UN General Assembly. Pakistan has long maintained that it would not sign the treaty unless India does, however, and in view of India's position Islamabad's support for the treaty is largely cost-free. A Pakistani official stated on September 10 that Pakistan would "take its own sovereign decisions regarding the time and conditions for signature and ratification." (New York Times, September 11, 1996) The treaty requires the accession of 44 nations to come into force, including the "threshold states," India, Pakistan, and Israel. In August a spokesman noted that Pakistan was concerned about related issues such as India's missile programs and the Kashmir problem, which needed to be dealt with as a package between the two countries. He said that his country would "never accept unilaterally any obligations which tend to compromise its nuclear program." (Reuters, August 8, 1996)

Status and Dynamics of Nuclear Proliferation in South Asia

Urgent Threat of Nuclear and Ballistic Missile Proliferation

In May 1993, the Administration transmitted to Congress a required report on progress toward regional nonproliferation in South Asia, which cited a statement to Congress by the Director of Central Intelligence on February 24, 1993, that "the arms race between India and Pakistan poses perhaps the most probable prospect for future use of weapons of mass destruction, including nuclear weapons." The report also noted "that proliferation in South Asia is primarily a regional problem and, in the end, will require a direct high-level dialogue between India and Pakistan and a regional solution."

To date, publicly available information suggests that while India and Pakistan both have the ability to deploy a limited number of weapons in short order, neither has yet done so. In early December 1992, the Los Angeles Times reported that U.S. intelligence officials have concluded that Pakistan has enough nuclear material to make 10 nuclear warheads. Estimates for India are far higher.

On April 8, 1995, during a state visit to the United States by Prime Minister Benazir Bhutto, the Washington Post reported that Pakistan was building a 40- megawatt heavy water reactor at Khushab, in Punjab Province, that will produce plutonium that could be used as an alternative route to building nuclear weapons. Pakistan's suspected nuclear capability presently is based on enriched uranium. The reactor was being constructed largely from indigenous materials and would be outside the safeguards and inspection regime of the International Atomic Energy Agency (IAEA). U.S. intelligence sources reportedly stated that Pakistan does not yet have a capability to reprocess spent fuel to extract plutonium, but that a French-designed plant at Chasma whose construction was suspended in the late 1970s could be completed in several years if Pakistan decided to restart the project.

Ballistic Missile Proliferation

Current concerns focus on the possibility that India may begin serial production of its Prithvi tactical missile -- possibly as early as mid-1995 -- and that Pakistan will respond with the deployment of its own system based on the Chinese M-11 missile. This missile is believed to have sufficient payload capability to carry a nuclear warhead. Reportedly, India tested a Prithvi-II version in late January 1996 that would have suitable range and payload for the delivery of nuclear warheads.

Pakistan has test fired short- and medium-range missiles believed to be derived from Chinese missile systems and may be developing nuclear warheads for them. India, for its part, has tested both the short-range (250 kilometers) Prithvi surface-to- surface missile that in theory could carry a nuclear warhead, and an Intermediate Range Ballistic Missile (IRBM), called Agni. Although India has denied that its IRBM is intended to carry a nuclear warhead, analysts argue that these missiles would not be cost-effective with conventional explosive warheads. Due to budgetary constraints, development of the Agni IRBM reportedly has been suspended, at least temporarily. India also could deploy weapons on any of several fighter bombers in its inventory, including MiG-29s, Mirage 2000s, and Anglo-French Jaguar bombers.

Both India's Prithvi missile and Pakistan's M-11s are presumed to have a dual-use capability, i.e., the ability to carry either conventional or nuclear warheads. If such missiles are deployed by either country, however, the other is likely to assume the worst and seek a countervailing capability.

Implications of Recent Trends in India-Pakistan Relations

Adverse developments in Pakistan-India relations during the past few years generally have been seen as cause for increased concern about nuclear proliferation in South Asia. The main positive development has been the ratification by India and Pakistan in late 1990 of an accord pledging not to attack each other's nuclear facilities. This agreement has been judged by some observers as indicating tacit acceptance by both countries of mutual nuclear deterrence. Political relations have tended to worsen, rather than improve, in recent years, even as their capabilities to deploy nuclear weapons have increased.

A major source of tension has been the steady deepening of the conflict in India's Jammu and Kashmir State between Indian army and paramilitary forces and secessionist Kashmiri Muslim groups. Although the roots of Kashmiri political dissidence are local, various insurgent groups receive moral and -- reportedly -- material support across the frontier with Pakistan. The more the Indian government sees its control slipping, the more it tends to blame Pakistan for its inability to find a political solution to the problems or even to achieve a military solution. (For more background on the Kashmir issue and India-Pakistan tensions, see CRS Issue Briefs 93097, India-U.S. Relations, and 94041, Pakistan-U.S. Relations.)

In early January 1994, India and Pakistan resumed periodic bilateral talks at the foreign secretary level that had been suspended for nearly one and one-half years. Although Kashmir was included in the agenda for the first time, the discussions apparently failed to generate any progress towards resolving the issue and have not been resumed since then.

Role of China

China has been a long-standing ally of Pakistan and a source of military arms and nuclear technology. The United States has put various pressures on China to limit its exports of nuclear materials, technology, and missiles, including preventing such assistance to Pakistan, with mixed results, at best. China has agreed to subscribe to NPT restrictions on transfers of nuclear technology and materials, but evidence continues to accumulate that it has violated these commitments.

On February 5, 1996, the Washington Times reported that, according to U.S. intelligence sources, China during 1995 had sold 5,000 ring magnets to Pakistan's secret uranium enrichment laboratory. These were thought to be intended for use in gas centrifuges that are used to enrich uranium to weapons-grade. A subsequent report by the Washington Post on February 7 stated that the transfer took place during 1995. On May 11, 1996, the Washington Post reported that the Administration decided not to impose sanctions on China for providing Pakistan with 5,000 ring magnets suspected of being used in its uranium enrichment program. Although Administration officials expressed high confidence in their information about the fact of the transfer, they reportedly could not disprove claims by the Chinese government that it was unaware of the sale, valued at about $70,000. According to the May 11 report, Administration officials say China now has agreed not to carry out such transfers in the future and agreed to consult with the American government on export control policies and other proliferation-related issues. In response to skepticism about a lack of consistency in U.S. policy towards China, State Department spokesman Nicholas Burns reportedly argued that "what we got is what we would have sought from the Chinese to remove the sanctions had they been imposed."

China also appears to have provided intermediate range M-11 ballistic missiles to Pakistan in apparent contravention of its 1992 commitment to adhere informally to the Missile Technology Control Regime (MTCR), which bars the transfer of certain technologies and missiles with a range in excess of 300 kilometers. China is not a formal member of the 25-nation regime, which has no compliance mechanism. China and the United States have disagreed about whether the missiles provided to Pakistan exceed the range threshold of the MTCR.

The Clinton Administration on August 25, 1993, imposed a ban on the sale of satellites, satellite technology, and other advanced technology to China and Pakistan as a result of evidence that China has provided M-11 components to Pakistan. The United States and China in early October 1994, however, signed an agreement under which Washington would lift bans on certain high technology sales in return for Beijing's agreement not to sell medium-range missiles, in effect accepting the U.S. concept of "inherent capability" and ending the disagreement over whether the M-11 fell within the MTCR range limits.

On July 3, 1995, the Washington Post (p. A1, A17) reported on an apparent internal disagreement within the Clinton Administration over how to respond to evidence that Pakistan had acquired M-ll medium-range ballistic missiles from China. Reportedly the missiles have been in Pakistan since November 1992, and before an October 1994 commitment by China not to export such missiles. The July 1995 article claimed, however, that China may have supplied "additional components" for the missiles after that date. According to the article, the U.S. intelligence community regarded the evidence as "incontrovertible" that Pakistan had acquired 30 or more such missiles, but that for "political reasons" the Clinton Administration had resisted making a formal determination that Pakistan had acquired the complete missiles. The Administration reportedly has decided not to take legal cognizance of the transfer so long as the missiles remain in their shipping crates, a status that was in question as of late June 1996.

Acknowledging a transfer would require the imposition of "Category I" sanctions under U.S. law for violating the Missile Technology Control Regime (MTCR.) Among other effects, such sanctions would require the denial for at least two years of certain kinds of technology export licenses and a denial of U.S. government contracts with sanctioned entities.

The Washington Times reported on June 12 that U.S. intelligence officials had concluded that during the past several months Pakistan had deployed the missiles, but that the State Department continued to oppose making a finding that the transfer of complete missiles had taken place out of concern about the wider ramifications for the already strained U.S.-China relationship.

During a June 19, 1996 hearing, Members of the House International Relations Committee pressed official witnesses about the Administration's response to evidence that China had transferred M-11 ballistic missiles to Pakistan and related issues involving nuclear and missile proliferation in South Asia. Undersecretary of State for Arms Control and International Security Affairs, Lynn Davis, stated the Administration believed that China had continued to abide by a 1994 commitment not to provide M-11 missiles, but declined to discuss in open session press reports that missiles many believe were delivered prior to that date had been made operational. The Administration witness also defended the decision not to impose sanctions on China for its sale of ring- magnets suspected to be destined for use in Pakistan's uranium enrichment program.

U.S. Policy Options

Despite clear evidence of Pakistan's continued efforts to maintain or expand its nuclear weapons capability, U.S. options are limited by practical considerations. The United States is important to Pakistan, but its leverage is limited. Although it could be argued that the aid cutoff card never had been fully played -- and hence has not been fully tested as a policy tool -- Pakistan clearly was prepared to forego aid and the ability to purchase arms rather than provide the reliable assurances called for by U.S. nonproliferation law. Accordingly, even some strong critics of past U.S. forbearance seek ways to continue to preserve some degree of influence with Pakistan while finding ways to bring India more directly into the equation. Some possible approaches, a brief statement of the pro's and con's, and required actions by Congress are presented below.

Restore the Previous Section 620E(e) Restrictions and/or Extend the Certification Requirement to India

Some still favor comprehensive aid and technology transfer restrictions as contained in Section 620E(e) prior to its amendment in early 1996. Proponents of a complete aid cutoff are concerned about the implications of failing to uphold the most comprehensive interpretation of U.S. law once Pakistan has shown itself to have clearly violated the conditions for U.S. aid. From this perspective, any temporizing on the part of the United States will simply underscore an American lack of will to carry out the requirements of its own nonproliferation policy. This stand is based on the perceived need to maintain a consistent U.S. global nonproliferation policy.

Recent congressional action has largely foreclosed this option, though Congress could consider new sanctions on both Pakistan and India if either takes provocative actions such as acquiring new unsafeguarded nuclear technology, deploying nuclear-armed missiles, or testing a nuclear weapon. The explosion of a nuclear device by either country would require a cutoff of Foreign Assistance Act aid under Section 102 of the Arms Export Control Act.

Congressional Options/Required Action. Congress has already acted to relax the ban on economic aid and cooperation and IMET but could further modify the restrictions or restore the original Section 620E(e). India is not subject to the limitations on military aid to Pakistan but would violate other provisions of U.S. nonproliferation law and become ineligible for aid if it imports unsafeguarded enrichment or reprocessing technology or explodes a nuclear device (as would Pakistan.)

Waive or Repeal the Section 620E Certification Requirement or Further Reduce the Scope of Remaining Sanctions

Successive Administrations and their proponents have long argued that sensitive diplomatic issues such as this can be dealt with more effectively outside the rigidities of legislative formulas. Some argue that the U.S. policy might have more chance of success if any concessions by Pakistan did not have the appearance of "knuckling under" to U.S. pressure. Under this logic, the removal of the certification requirement -- coupled with vigorous diplomatic pressure and the continued implicit linkage of aid with nonproliferation policy -- might be more successful. A smaller group of regional security analysts sees the gradual movement towards fielding nuclear weapons as inevitable, and argues that the United States should be concentrating more on promoting confidence-building measures and arms limitation agreements.

The general critique of proposals to eliminate or reduce the scope of the Pressler Amendment, apart from lessening the power of Congress vis-a-vis the executive branch, is that this and other nonproliferation provisions were enacted out of frustration with the ineffective "quiet diplomacy" of successive Administrations and hence are deemed necessary to ensure that the President firmly implements U.S. nonproliferation policy.

Congressional Options/Required Actions. Congress essentially adopted this approach in Section 620E modifications adopted in H.R. 1868 and folded into H.R. 2880.

Seek to Promote a Resolution of Underlying India-Pakistan Issues

This option is a complement to other efforts rather than one that would directly eliminate the nuclear proliferation threat. Many analysts argue for more vigorous U.S. efforts to promote a regional nonproliferation accord by resolving underlying sources of India-Pakistan tension, especially the Kashmir dispute. Essential components of such an approach probably include greater symmetry in U.S. policy towards Pakistan and India, greater international involvement, and the use of increased positive and negative incentives in regard to both Pakistan and India, on the part of the United States as well as other developed countries.

Such a policy would likely require support from other aid donors as well, even if the United States took the lead. In theory, a combination of bilateral aid donor and multilateral bank pressure might significantly influence both India and Pakistan, but the biggest obstacle would be China's role as a potential nuclear weapons threat to India and a source of nuclear and missile exports to Pakistan. Neither the policies of other donor countries nor the policies of the multilateral banks are very susceptible to unilateral U.S. actions.

This approach has seemed implicit in a variety of recent U.S. initiatives, including U.S. and other international pressure that contributed to the resumption of suspended India- Pakistan foreign secretary-level talks in January 1994. To date, however, the Administration's efforts to encourage an India-Pakistan dialogue on the Kashmir issue have not produced any concrete result. Rather, U.S. statements and initiatives have been viewed by India as representing a "tilt" towards Pakistan and have led to a storm of Indian press criticism of U.S. policy. (For further background, see CRS Issue Brief 93097, India-U.S. Relations.)

Congressional Options/Required Actions. Congress has very limited ability to promote either a resolution of the Kashmir issue or a regional nonproliferation accord, although it has already made the latter an official objective of U.S. policy. Nor is Congress in a strong position to obtain greater adherence to U.S. nonproliferation policy goals on the part of other bilateral aid donors or multilateral institutions. An active U.S. effort to broker a regional accord or promote a resolution of the Kashmir issue would likely require Congress to provide flexibility to the Administration regarding the Pressler Amendment, since the removal of sanctions would likely be an important incentive to Pakistan.


LEGISLATION

P.L. 104-107, H.R. 1868
Appropriations for Foreign Operations, Export Financing, and Related Purposes, FY1996. Section 559 (Brown, Senate amendment No. 2708) adopted 55-45 September 21, 1995 (Vote No. 458), would modify Section 620E to clarify restrictions on aid to Pakistan to allow economic assistance, International Military Education and Training (IMET) programs, and various forms of cooperation previously barred by Section 620E(e) of FAA. Passed Senate September 21 (91-9). House conferees agreed to Senate amendment, with amendment; Senate agreed to the same October 24 (H.Rept. 104-295). Conference report passed House October 31 and Senate November 1, but left unresolved dispute over unrelated provision (concerning abortion as a means of family planning.) Enacted by reference in P.L. 104-99 (H.R. 2880), Balanced Budget Downpayment Act (which includes Foreign Operations Appropriations), January 26, 1996. Signed into law as a clean bill, P.L. 104-107, on February 12, 1996.

H.R. 1561 (Gilman)
American Overseas Interests Act of 1995. Introduced May 3 and referred to House International Relations Committee. Reported May 19 (H. Rept. 104-128, Part 1); passed House, amended, June 8, 1995 (222-192). Section 3306 would allow development assistance in support of nongovernmental organizations or microenterprises, Overseas Private Investment Corporation (OPIC) investment insurance, assistance for international narcotics control, International Military Education and Training (IMET), counterterrorism assistance, and assistance in support of aviation safety, immigration and customs procedures, peacekeeping, and promotion of U.S. trade and investment. Eligibility for IMET funding in FY1997 would be subject to Presidential certification that Pakistan "is fully cooperating with United States counter-narcotics assistance programs and policies." Section 3307 expresses sense of Congress that "the United States should make a determined effort to find a third party buyer" for F-16 aircraft paid for by Pakistan but which cannot be delivered due to Pressler Amendment sanctions, and states that the return of military spare parts sent to the United States for repair, or equivalent parts, would not violate Pressler Amendment ban on arms transfers. Passed Senate December 14 (82-16), after striking House text and substituting language of Senate-passed S. 908. Senate requested conference. Vetoed April 12, 1996. House failed to override April 30, 1996 (234-188).

S. 961 (Helms)
Foreign Aid Reduction Act of 1995. Introduced and reported June 9, 1995 (S.Rept. 104-95). Pakistan-related provisions adopted in P.L. 104-99, H.R. 2880, Balanced Budget Downpayment Act.


CHRONOLOGY

02/12/96 --President Clinton signed P.L. 104-107, which includes a "Clarification of Restrictions" on aid to Pakistan (Section 559) that allows economic aid and cooperation, military training, and the one-time release of $368 worth of military hardware ordered by Pakistan before the October 1990 aid cutoff.

08/23/94 --Former Prime Minister Nawaz Sharif stated that Pakistan had produced nuclear weapons. The Bhutto government quickly denied the statement, saying that Pakistan had the technological capability to produce weapons but had not done so.

05/18/94 ---According to Reuters, Pakistan's foreign minister indicated the Bhutto government would consider "non-intrusive" means to verify that it had not produced a nuclear weapon and would entertain "technical proposals" from the United States as a means of achieving a resumption of U.S. arms sales.

03/23/94 ---The New York Times reported that the Administration was floating the idea of a one-time exception to the Pressler Amendment to allow the delivery of F-16 fighter aircraft that have been paid for by Pakistan but cannot be legally delivered, subject to agreement by Pakistan to suspend the production of fissile material.

02/20/94 ---Section 620E(e) was reinserted in the Administration's draft changes to the Foreign Assistance Act (see entry below.)

11/22/93 ---Clinton Administration proposed eliminating the Pressler Amendment, Section 620E(e), relating to Pakistan, and other "country-specific" sanctions, as part of a major revision of the Foreign Assistance Act. The proposal is contained in a "discussion draft" sent to Congress, on which discussions were occurring prior to submission of a bill in early 1994.

10/06/92 ---President Bush signed P.L. 102-391, which includes a new Section 620F to Foreign Assistance Act making pursuit of a regional nonproliferation accord official U.S. policy and requiring two new reports to Congress on progress towards that goal and status of nuclear programs of India, Pakistan, and China. Section 562 also has effect of partially relaxing aid cutoff to Pakistan to allow development assistance provided through non-governmental organizations (FY1993 only) and P.L.-480 food aid.

10/01/90 ---As of the beginning of FY1991 President Bush had not made the necessary annual certification under Section 620E(e) that Pakistan did not possess a nuclear explosive device. From this date Pakistan became ineligible for new U.S. assistance until such time as a certification was made.

11/05/89 ---President Bush made a hedged certification that Pakistan did not possess a nuclear explosive device (Presidential Determination No. 90-1), the last such certification to be made under Section 620E(e).

11/18/88 ---President Reagan certified under Section 620E(e) that Pakistan did not possess a nuclear explosive device (Presidential Determination No. 89-7), but in a companion letter to the Speaker of the House he expressed doubt about how long he could make such a judgment with any certainty.

12/87---A Canadian national of Pakistani origin, Arshad Z. Perrez, was convicted in connection with an attempt to export extra-hard maraging steel that could be used in making centrifuges for enriching uranium. The Reagan Administration later determined that the export was attempted on behalf of the government of Pakistan to be used "in the manufacture of a nuclear device" and therefore violated Section 670(B), but the Administration invoked the President's national security waiver authority to prevent an aid cutoff. (Presidential Determination No. 88-5, January 15, 1988)

08/08/85 ---P.L. 99-83 came into force, which added subsection (e) to Section 620E, ("Pressler Amendment") requiring the President certify to Congress that Pakistan does not possess a nuclear explosive device during the fiscal year for which U.S. aid is to be provided.

06-84 ---U.S. Customs agents arrested three Pakistanis in Houston and charged them with seeking illegally to export krytrons, high speed electronic switches that can be used in nuclear bomb detonators.

12/29/81 ---P.L. 97-113 came into force, which included a new Section 620E to the Foreign Assistance Act, providing conditional authority to waive the provisions of Section 669 until September 30, 1987, if the President decides it is in the national interest.

09/15/81 ---The United States and Pakistan announce agreement on a six- year, $3.2 billion package of economic and miliary aid.

12-79 ---Soviet invasion of Afghanistan.

04-79 ---The Carter Administration invoked Section 669 of the Foreign Assistance Act to suspend U.S. aid to Pakistan on account of its acquisition of unsafeguarded uranium enrichment technology.






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