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18 June 1998

TALBOTT, LIPTON BRIEF ON INDIA, PAKISTAN SANCTIONS LAW

(Further details await executive order) (470)
By Rick Marshall
USIA Staff Writer
Washington -- Deputy Secretary of State Strobe Talbott and Treasury
Under Secretary David Lipton briefed reporters June 18 on the broad
outlines of the sanctions the Administration is imposing on India and
Pakistan for conducting nuclear tests last month.
These call for the United States to halt all non-humanitarian foreign
assistance, to terminate all foreign military sales, and end any new
credits or guarantees by US Government agencies such as the Ex-Im
Bank, the Overseas Private Insurance Corporation and the Commodity
Credit Corporation to both states.
The sanctions also compel the U.S. to oppose any loans to the two
governments from any of the international financial institutions, a
position that recently won the support of the other G-8 nations.
In addition, the U.S. will issue executive orders prohibiting U.S.
banks from extending loans to the Indian or Pakistani government,
according to a State Department fact sheet.
Despite sanctions, the United States "is going to try very hard" to
avoid harming the poor in the two South Asian states, Talbott said. It
is not the intention of the United States to isolate either India or
Pakistan, nor to see the people there suffer because of what their
governments have done, he added.
Indeed, Lipton noted, the U.S. will continue to support loans from the
international financial institutions for India's and Pakistan's basic
human needs. This includes such matters as education, maternal and
child health, rural development, water and sewage, and low income
housing.
The loss of other, non-humanitarian loans, however, could cost India
as much as $2.5 billion and Pakistan as much as $1.5 billion this
year, Lipton said.
In general, "American companies would be allowed to invest" in the two
countries, Lipton said. Similarly, U.S. banks will be able to lend to
the private sector.
However, there are a number of gray areas which the Administration has
not yet addressed, as the Glenn Amendments have never been applied
before. For example, should the prohibition on lending to the two
governments be defined broadly enough to include state-owned and
parastatal enterprises? Or how, exactly, should a bank be defined?
Answers to these kinds of questions, Lipton said, will be found in an
executive order due to be released "very soon."
In discussing the sanctions, Talbott made clear that the
Administration was invoking them because the Administration had little
choice but to apply the law of the land. However, he noted that
"sanctions have sometimes been more of a sledgehammer than a scalpel,"
and said that the Administration would be working with the Congress to
try to inject more flexibility in the way they are applied.