19 June 1998
TRANSCRIPT: ADMINISTRATION DISCUSS SANCTIONS ON INDIA, PAKISTAN
(U.S. "has no wish to see the peoples of either" suffer) (5460) Washington -- Senior Administration officials briefed reporters June 18 on the first steps the U.S. is taking to enforce sanctions against India and Pakistan because of their nuclear testing last month. The purpose of U.S. efforts is to "bring India and Pakistan into accord with broadly accepted international norms," Deputy Secretary of State Strobe Talbott said. Doing so should "make it possible for us to broaden the dialogue that we have with both governments so that we can deal with the many other issues where we have concerns in common." "We're not trying to engage in punishment for its own sake," Talbott continued. "In particular, we have no wish to see the peoples of either of these countries suffer as a result of their government's mistaken and dangerous decisions to test nuclear weapons." Following is the transcript of their remarks: (Begin transcript) U.S. DEPARTMENT OF STATE Office of the Spokesman For Immediate Release June 18, 1998 ON-THE-RECORD BRIEFING DEPUTY SECRETARY STROBE TALBOTT ON INDIA AND PAKISTAN MR. RUBIN: Welcome again to the State Department Briefing Room. We have today some very senior officials from the US Government to talk to you about an important action review item with respect to the India-Pakistan sanctions. We will start with Deputy Secretary Talbott and he will then introduce the rest of the officials who are here for you, at the end of which -- I guess already of which -- you now have a fact sheet that will lay out some of the decisions that have been made. So with no further ado, Deputy Secretary Talbott will describe the decisions. DEPUTY SECRETARY TALBOTT: Good afternoon, everybody. A littler earlier this week, the principles, which is to say the Cabinet-level advisers to the President, met to make some decisions on how to implement President Clinton's decision with regard to the application of US sanctions to India and Pakistan. And as Jamie indicates, the purpose of this briefing is to inform you as best we can about the content and the direction and the purpose of those decisions and also to give you some additional background that may be helpful to you in following the story which, of course, is very much ongoing. This briefing is in the spirit of an update on an ongoing situation and an ongoing process with regard to US policy. First let me just review a little bit the background and the context of the sanctions application. In the six weeks since first India and then Pakistan tested their nuclear weapons, the United States has been working with its principal allies and partners to build support in the international community for what might be called a firewall against any further developments that would undercut the global nonproliferation regime and jeopardize the security and stability and, indeed, the peace in the South Asian subcontinent. The key international meetings, of course, were the gathering of the Permanent Five Members of the Security Council of the United Nations in Geneva on June 4th, the Security Council resolution on June 6th, and the meeting in London on June 12th of the G-8, as well as a number of other states that have themselves forsworn the acquisition of nuclear weapons. These various gatherings have served to demonstrate that the international community has closed ranks behind a number of steps that we all feel it's very important for India and Pakistan to take if they are going to move back from the brink that they have approached. I will summarize those very briefly: Stop all further tests, adhere to the Comprehensive Test Ban Treaty immediately and unconditionally, refrain from the manufacture of warheads and bombs or attaching those to ballistic missiles, refrain from testing or deployment of missiles that would be capable of delivering nuclear weapons, halt the production of fissile material and participate constructively in negotiations on fissile material cutoff in Geneva, confirm policies not to export equipment, material or technology relevant to missiles or weapons of mass destruction and enter into ironclad commitments in that regard, refrain from threatening military movements or violations across the borders and particularly the line of control or any other provocative acts or statements, and reestablish direct communications between India and Pakistan with a view to addressing the basic cause of the tensions between those countries, including the issue of Kashmir. Now, if India and Pakistan, as we very much hope, decide that it is in each of their national interests to take these steps, then the world will be able to breathe much easier and it will be far easier to return to normal relations between the United States and other countries on the one hand, and India and Pakistan. And that can be true across a very broad front. But if India and Pakistan are to enjoy all the benefits of what might be called good citizenship and full membership under the non-proliferation regime, especially with regard to their civilian nuclear programs, then they would have to join the NPT as non-nuclear weapon states; otherwise, India and Pakistan will continue to forfeit certain opportunities that are available to NPT signatories. Now let me stress a point that I know we talked about that last time I came down here and met with you, and that is that it is not the intention of the United States or any of our international partners to isolate India or Pakistan. We're not trying to engage in punishment for its own sake and, in particular, we have no wish to see the peoples of either of these countries suffer as a result of their government's mistaken and dangerous decisions to test nuclear weapons. On the contrary, our efforts, both those that were engaged in bilaterally with the two governments in question and multilaterally through the various organizations through which we're working, have been intended to persuade both of these governments to take the steps that have been outlined by the P-5 and the G-8 and the Security Council. Those steps will bring India and Pakistan into accord with broadly accepted international norms and it will also make it possible for us to broaden the dialogue that we have with both governments so that we can deal with the many other issues where we have concerns in common. Against that backdrop, let me say a few introductory words about the decisions that have been taken with regard to sanctions. First, of course, sanctions are a matter of US law and the Executive Branch of the government is sworn to uphold and apply those laws. But second, we see that sanctions, properly applied, can send a powerful signal -- not only to India and Pakistan -- but a powerful signal to the rest of the world; namely, the signal that the path down which India and Pakistan have started to move with these two tests is a dead end and no one else should follow down that path. We hope that sanctions will prove to be an instrument for inducing India and Pakistan to take steps, which I have already outlined, back in the right direction away from the brink. Now as you all know, President Clinton announced very shortly after the tests that sanctions would be implemented correctly, firmly and promptly. Some elements of the sanctions could be and therefore were implemented immediately, but there were several other areas that required scrutiny by legal counsel in this Department and the other departments represented here in the briefing today. There were delicate judgments that had to be made, especially where we lacked any kind of precedent as a guide. These deliberations on sanctions have proceeded on their own track as we've moved forward with other aspects of our bilateral and multilateral engagement on this issue. This week's decision by the Principles Committee set forth guidelines on how to apply sanctions in the following areas: Number one, termination of US foreign assistance programs; two, termination of foreign military sales and financing and the export of US munitions list items; third, denial of credit and credit guarantees by United States Government entities; fourth, opposition of loans to India and Pakistan by the international financial institutions; fifth, a prohibition of US bank loans and credits to the Indian and Pakistani Governments, and; sixth, a prohibition on specific dual-use export items. Now I can anticipate that there are, of course, many questions on your mind and I want to give you a chance to ask those and us to answer them as quickly as possible, but there's one question that I can particularly anticipate and that is how will sanctions affect the people of India, and particularly those who have suffered poverty and hardship. In that regard, as a couple of my colleagues will elaborate, we're going to try very hard to avoid bringing hardship to the peoples of India and Pakistan and, especially, the poor. Accordingly, our humanitarian assistance programs will continue. I'm going to ask one colleague, Under Secretary of the Treasury David Lipton, to come up and say a few words about how sanctions are going to work with regard to US participation in the international financial institutions. We also have here today from the Defense Department Elena Romanowski, Roger Majak from the Commerce Department, and Kelly Kammerer from the Agency for International Development. But first, if you'd just give a few minutes to David Lipton. UNDER SECRETARY LIPTON: Let me just say a few words about the policies of the international financial institutions. The US began working with the G-8 and other members of the international financial institutions starting just after the Indian tests, beginning at the Birmingham Summit, to try to reach a multilateral consensus on how the loans of IFIs should be treated. There is now a G-8 consensus that -- on two key points: first, that loans to India and Pakistan in the category of basic human needs will go forward; and, second, that loans that are outside of that category -- non-basic human needs -- will be postponed. With the voting share that the G-8 have at the IFIs, we expect that consensus to be sustained. Just to give you some sense of the distinction, we consider basic human needs loans using criteria that the G-7 had used previously in 1990 in the case of China. We look at the specific needs served by individual loans and the beneficiaries involved. Generally speaking, it's the basic human needs of the population that we examine and we expect that loans in categories such as education, maternal and child health, water and sewage, low-income housing, rural development -- loans in those categories will go forward. So far, there have been loans postponed. Roughly $1.1 billion worth of loans to India have been postponed. There are three loans totaling $54 million -- a very small amount -- that are on the schedule at the World Bank for Pakistan and we expect that those will be postponed. To give some sense of the broad magnitudes of the impact of this -- of course it's very difficult for us to know what loans will come up because loans are being prepared as the year goes on -- but using past experience as a guide, we can expect that in the case of India, roughly $2.5 billion a year of loans would be in the non-basic human needs category, and in the case of Pakistan about $1.5 billion worth. Let me stop there. Q: What sanctions could you have applied but chose not to apply? You had some discretionary authority, as I understand. DEPUTY SECRETARY TALBOTT: Let me see if any of my colleagues can take a crack at that. I think basically, given our determination to use sanctions in a way that would be and would be seen to be firm, robust, a manifestation of how seriously we take this issue, there was a presumption that sanctions available to us will be applied. You've heard from David how we are attempting to thread the needle with regard to the one issue that I highlighted for you earlier, which is on the humanitarian side. I may call on others to step up here; in fact, as the questions go on, we may have you outnumbered by the end of the briefing. Q: Are IDA loans from the World Bank in a different category or will they be the same? UNDER SECRETARY LIPTON: I'm sorry, could you repeat that? Q: IDA loans. Soft money. UNDER SECRETARY LIPTON: This applies to all of the loans of the World Bank Group, whether concessional or non-concessional the business-oriented window, such as the IFC -- the International Finance Corporation -- and the guarantees of (inaudible). It applies to all loans of the Asian Development Bank, as well. Q: On the banking issue, I noticed that the wording here is exactly the wording from the law. After three weeks, do you have any other specifics about what US banks will or won't be able to do? Will they lend to (inaudible)? Will they be able to hold Treasury Bonds as reserves? Will they have to close down in India? What's happening? UNDER SECRETARY LIPTON: I can't really speak to the details of that only because the executive order is not finalized. We're working hard to finalize that and want to see it done as soon as possible. The Executive Order will clarify in a legal way for all concerned what the definitions are, discussing the coverage of banks, the question of what constitutes loans and credit -- some of the issues that you've mentioned -- the definition of government. But I can't discuss the details of that at this time. It's not resolved. Q: Can you tell us whether the banks -- will US banks be able to continue operating in India and Pakistan? UNDER SECRETARY LIPTON: Yes. The law requires that banks cease to make loans and credits to the governments of India and Pakistan. The law does not cover banking operations with the private sectors of those countries, and so banks can continue to operate. The issues that will be clarified in the Executive Order are the definitional ones that I referred to. Q: Most of the companies in India have said that they will work with the Indian government with or without the World Bank or US Government help -- they will continue to provide credit or manufacture or whatever. UNDER SECRETARY LIPTON: This Executive Order will cover US banks. Of course, there are other nations' banks and other companies that are not banks, of course, that would not covered by this, and the law -- and the Executive Order pursuant to the law have that limitation of coverage. Q: So just to be clear, American companies are still allowed to invest as they choose in India and Pakistan? UNDER SECRETARY LIPTON: American companies will be allowed to invest... The coverage of the Executive Order will pertain to banks. Q: Okay. And also, the numbers you mentioned -- $2.5 billion for India and $1.5 billion for Pakistan -- are those the amount of loans you expect to come up or the amount of loans you expect to try to block? UNDER SECRETARY LIPTON: Those are based on past history and not a specific roster of upcoming loans, estimates of the flow of loans that would be in the category "Non-Basic Human Needs" and hence would be postponed under this policy. Q: With respect to the timing on the Executive Orders -- I know you said you were going to try to do it as soon as possible -- can you give us some -- a little bit better idea of how soon that might be? UNDER SECRETARY LIPTON: I really don't have anything. Q: By the end of the month? UNDER SECRETARY LIPTON: I think it'll be very soon. Q: A question on the military aspects for you, Mr. Talbott and your military expert. Q: One more follow-up on the banks? DEPUTY SECRETARY TALBOTT: In a second. I'm sure that everybody will want to go back to that. Q: I'll be happy to yield. Q: No, no, that's okay. DEPUTY SECRETARY TALBOTT: Elena Romanowski of the Defense Department. Q: Thank you very much, sir. Ms. Romanowski, the conditions are here not to deploy or test missiles or nuclear weapons, and my question is will India and Pakistan be allowed to continue to develop -- not by testing -- but continue to manufacture nuclear weapons and stockpile those weapons as long as they don't take those weapons and mate them to delivery systems? DEPUTY ASSISTANT SECRETARY ROMANOWSKI: The question of allowing them -- there's certainly not going to be -- that is a decision that the Pakistani government and the Indian government are going to have to make, but we have tried very hard in what the decisions we've made according to the laws and our policies that would certainly prevent any and discourage any activity with us in that respect. DEPUTY SECRETARY TALBOTT: That kind of activity would be contrary to the benchmarks established by the P-5, by the Security Council, by the G-8 and by (inaudible). Q: Any more production would be contrary? DEPUTY SECRETARY TALBOTT: Yes. Q: The fact sheet says that the United States suspended delivery of previously approved defense articles and services to India. What were those? DEPUTY ASSISTANT SECRETARY ROMANOWSKI: I would have to get back to you on the actual specifics, but there were not that many of them actually. Q: (Inaudible) IMET training? DEPUTY ASSISTANT SECRETARY ROMANOWSKI: Well, yes, all of that that's covered under the Glenn Amendment which is IMET training, foreign military sales, finance programs and commercial sales of military equipment, all of that has to be terminated and is terminated. Q: I have a question on the -- what was said earlier about humanitarian. Isn't housing humanitarian? You support people -- housing, education -- all this really affects human beings. So what is -- UNDER SECRETARY LIPTON: I was listing in the category of loans that might well be considered basic human needs: education, health, low-income housing, rural development, water and sewage treatment. There may well be others. We will look at every loan that comes up to examine who the beneficiaries are likely to be served by the loan. And we've done that already and made that distinction in (inaudible). Q: A question for you, please. Yesterday the Ambassador from India had a session with some of us and he said, in effect, that he was expecting, for instance, OPIC loans and Ex-Im Bank actions to result in the fact that India will not be able to buy, let's say, generators from GE. He said they factored that in and they can go to European Union countries and get the same thing, pay a bit more in interest maybe and in insurance rates, but they're prepared to take that cost. Is he accurate? Are the EU countries prepared to step in where the United States will not sell? DEPUTY SECRETARY TALBOTT: Well, as a general proposition -- then I'm going to ask Roger Majak of the Commerce Department to tell you a little bit more about our attempt to thread the needle in another area -- and that is not do avoidable or undue harm to American commercial and business interests while pursuing our overall policy here. We would hope that our allies and partners in this venture would resist the temptation to try to exploit for near-term commercial advantage opportunities they might see as arising here because, after all, this is an issue that goes to the core interests of literally every country on the face of the earth, and particularly those major industrialized countries that are in a position to benefit commercially also have political responsibilities and, I might add, if things go very badly with regard to the nonproliferation regime, particular vulnerabilities. So we would hope that they would try to strike a balance from the same overall vantage point that we have, which we've described for you here. Roger, do you want to say anything more on this? ASSISTANT SECRETARY MAJAK: Well, let me just say that with respect to items that are controlled by the United States for nuclear and missile purposes, those items are controlled under international regimes -- the Nuclear Suppliers Group and the Missile Technology Control Group -- and we would expect and there has been historically strong cooperation through those organizations with these kinds of controls. In that area, by the way, we will be imposing a policy of denial for those items to all end users in India, both government and private. And with respect to government and private entities which we determine to be involved directly in nuclear and missile programs, we will deny all items, including items that currently do not come under any kind of export control. So the controls there constitute a virtual embargo. At the same time, other areas of control -- that is control of items not in the nuclear or missile category but still of concern to us for a variety of national security purposes -- and those items cover many of the items that American businesses may need for their operations in India. Those will be handled on a case-by-case basis. There will be a strong presumption of denial, particularly for transactions involving any entity in India that might be engaged in military activities or in business with the military. But we will have a broad area in short -- in short, we will have a broad area of case-by-case handling of these controls which will enable us to respond not only to the actions and behaviors of the Indian government, but also those of our friends and trading partners and trading competitors. Q: Did you get the feeling in your sessions with the G-8 that the other seven members would go along with a US denial, for example? ASSISTANT SECRETARY MAJAK: I have not been directly involved in the G-8 discussions. Maybe you would want to comment on that further. DEPUTY SECRETARY TALBOTT: -- Some more than others. It is -- Q: (Inaudible.) DEPUTY SECRETARY TALBOTT: To put it mildly. Look -- the United States has been out in front on this whole issue of using sanctions to pursue a set of objectives, about which there is absolutely no disagreement within the international community. We're out in front, but we are not by any means alone. As I think all of you know, the Japanese were very quick to bring their own considerable leverage to bear in the first instance on India, and then after Pakistan tested there as well. The Canadians, some of the Nordic countries, the EU as such -- but yes, we are out in front on this. We think that's exactly the right place to be and we think that there is sufficient consensus to make measures of this kind effective not only on a unilateral basis, but on a multilateral basis, as well. Q: Are these people going to be affected from the sanctions? There are so many people from India and Pakistan in computer trainings and in many other industries, especially in the computer field. ASSISTANT SECRETARY MAJAK: As we understand it, most of the computer operations conducted in India by or with American companies fall into a category that is not currently controlled for national security purposes. They may be not controlled at all or they may be subject to a licensing exception and, at the moment at least, that will not change. Q: Mr. Majak, this case by case approach, this will apply to both government and non-government entities regardless and then you'll just examine what they do and therefore just make a decision? ASSISTANT SECRETARY MAJAK: For items other than missile or nuclear related items, yes. Q: And are those details worked out right now or is there still remaining work to be done? ASSISTANT SECRETARY MAJAK: There's still remaining work to be done. We may -- we expect -- need in order to distinguish between particularly private entities who are involved in nuclear or missile activities as opposed to those who are not, we anticipate the need to probably publish a list. We, as you know, already have an entities list of firms in India for export control purposes. We would presumably want to expand on that; in fact, meetings and discussions will begin on that as early as tomorrow. Q: At the bottom of the first page, you talk about halting new commitments of USG credits and credit guarantees from OPIC, CCC, those kinds of institutions. Does this mean that commitments that have already been made will go through, go forward, but that any new commitments that might come up now will not go through? UNDER SECRETARY LIPTON: Yes, that's correct. I'm not familiar with all the details of it, but my understanding is that there will not be any new approvals, new commitments made by either institution, but where there are commitments and undispersed portions, that those will continue to go forward. Q: I want to ask a question about sort of the geopolitics of this whole issue now that all of this has been done. Help me understand why -- where we go from the fact that we now seem to be in Asia lined up with the communist proliferator against the democratic non-proliferator -- as between India and China? DEPUTY SECRETARY TALBOTT: Run that past me again, Tom, so all of us can savor the complexity of that question. Q: Through the P-5 and other arrangements that you guys have so eagerly solicited since this happened -- right -- we've put ourselves in Asia in the camp or at the side of the communist country with a long, unhappy record of proliferation -- namely China -- against a democratic country with no record of proliferation -- namely India -- and China, in fact, is one of the very sources of India's grief that caused them to do this in the first place. Now what should we think about that? DEPUTY SECRETARY TALBOTT: Okay. I'm glad you repeated it and filled in the blank. I thought I got the drift of your question, but didn't want to fill in the blank myself. First of all, as we've had occasion to talk about before in several settings, the United States -- and I think in this respect I'm speaking not just for the government and the Executive Branch but for many Americans -- has a very, very high regard for India. India has been a friend to the United States for a lot longer than other states in the region, including very large states in the region. India has been a democracy since it gained independence half a century ago. Moreover, it has been a secular and multi-faith democracy, which is yet another reason why Americans look to India with admiration. And we want to see India prosper and thrive and attain its aspirations for itself in the next century. And one of the reasons for the intensity of President Clinton's feelings, Secretary Albright's feelings, in response to India's having tested -- and I might underscore, tested first here -- is because it was particularly disappointing, and I would say even dismaying, coming from a country which otherwise seemed to be moving in the right direction in so many ways. So in no sense is our policy intended to be directed against India or anti-Indian. It is very much against one set of actions that India has taken, which we are convinced is against India's own interest including, to pick up on your word, Tom, it's geopolitical interest. Now, how to balance that with China. Our relations with China have come a long way in the last couple of decades, and I think as a direct result of a consistent policy of American engagement with China, Chinese activities and policy have also evolved in the right direction. As your question suggests, it wasn't that long ago that China was very much part of the problem with regard to proliferation in general and with regard to proliferation to South Asia in particular. We have been working with the Chinese on that. We are working with them now. President Clinton will be working with them on that issue when he goes to China very shortly. So I don't see any inconsistency here whatsoever. If we do not believe that India is safer as a result of having gone down this path; in fact, quite the contrary, and that's one reason we bring as much conviction as we do not only to what we are saying to them through sanctions and through statements like the P-5 but also through the bilateral channels that we have with them. Q: This US policy, I think, has been fairly clear and consistent for at least a month since the tests have taken place. There was a high level Indian delegation that was here, I think, late last week and there have been obviously many other conversations. Do you have a sense that India is any closer to signing the CTBT without delay as we have requested or that these sanctions are having this kind of an effect? DEPUTY SECRETARY TALBOTT: Well, at Secretary Albright's request, I conducted the very intense discussions with Mr. Jaswant Singh, a close adviser and colleague of Prime Minister Vajpayee when Mr. Jaswant Singh was here in Washington last Friday. I was joined in those discussions by Bruce Riedel, the senior director of the National Security Council who is here this afternoon. I would not want to characterize the substance of those discussions except to say that Bruce and I unquestionably came away from the discussion with an even better understanding of the Indian government's perspective on this issue. We already had a reasonably good understanding, not least because Ambassador Celeste had returned to New Delhi and we have been, of course, in close touch with him and he had been talking to people in the Indian leadership. We hope to have a similar dialogue with the Pakistani leadership. We have been making full use of the very fine Pakistani Ambassador here in Washington, Ambassador Khokar. Tom Simons is one of our best Foreign Service Officers representing us in Islamabad and there is a chance that in the weeks to come we will have additional channels as well. I believe that, returning to your question about Mr. Jaswant Singh, that he gave us a fair hearing on the views that we put forward to him as forcefully and clearly as we could. But this is an ongoing process, ladies and gentlemen, and it's an ongoing process in another sense, which I want to touch on because I think I'm getting eye signals from Jim that we've got to break it up here in a minute. And that is in the dialogue that needs to take place between the Executive Branch and the Congress. Sanctions, as I said at the very outset, are a matter of US law, which we are sworn to uphold and apply. Ever since Secretary Albright went up to meet with a large portion of the Senate last Wednesday, we have been involved in a variety of settings and the closest possible consultations with the Congress so that we can work with them to make sure that sanctions of the kind that we are applying here, primarily the Glenn sanctions but also, of course, Pressler and Symington which have particular bite on Pakistan, that these laws of the land remain instruments for advancing the national interest. And as Secretary Albright has said, sanctions have not always including in the current episode, fit that description; they have sometimes been more of a sledgehammer than a scalpel. We in the Executive Branch feel very strongly that there needs to be additional flexibility, additional discretion, additional waiver authority, in order to use these sanctions to the ends that the framers of the laws themselves intended. So that is going to be yet another front on which there is going to be a great deal of activity and consultation, and I hope collective wisdom as we move forward to meet this challenge. But I think we should probably end it on that note. Q: Just really quick to pick up on the remarks that you borrowed from the Secretary in her testimony this week about a surgical approach versus a sledgehammer approach to sanctions, would you say that what you presented to us today is more of a surgical approach to India and Pakistan, picking up on your remarks? DEPUTY SECRETARY TALBOTT: Yes. (End transcript)
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