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Weapons of Mass Destruction (WMD)

[CRS Issue Brief for Congress]

93-243: South Asia: U.S. Interests and Policy Issues

Updated February 12, 1993

Richard P. Cronin
Specialist in Asian Affairs
Barbara Leitch LePoer
Senior Technical Information Specialist
Foreign Affairs and National Defense Division

     The South Asia region, which is comprised largely of India
and the countries around its periphery, affects U.S. interests in
a variety of ways and sometimes has figured prominently in
Executive-Congress policy disputes. Although the collapse of the
Soviet Union has ended the last vestiges of strategic rivalry in
South Asia, ongoing regional problems span the gamut of generic
U.S. post-Cold War foreign and security policy concerns. These
include nuclear and missile proliferation, destabilizing
ethnic/religious conflicts, regional dissidence movements,
politically related human rights abuses, lurching progress
towards greater democratization, lagging economic development,
and widespread deforestation and other kinds of environmental
     Many of the problems of the region are rooted in unresolved
territorial disputes, problems of incomplete national
integration, inequitable socioeconomic systems, scant natural
resources, burgeoning populations and dysfunctional political
economies. Nuclear weapons and missile proliferation are perhaps
the most serious threats to the region and to U.S. interests,
along with the related India-Pakistan rivalry and the Kashmir
dispute, which create an ever present risk of conflict. A number
of countries are beset with militant separatist movements and
associated terrorist violence and government repression. At the
same time, several states recently have moved from
authoritarianism to democracy, and most have adopted
forward-looking economic reforms aimed at restoring fiscal
balance, giving more vitality to the domestic private sector and
attracting foreign investment. Even at relatively low levels of
economic development environmental problems abound, with the
prospect that they will get worse rather than better in the
foreseeable future. 
     Looking at U.S. interests in the region, five issues command
greatest attention: nuclear proliferation; the Kashmir dispute;
promoting democratization and respect for human rights; economic
liberalization and development; and the environment. While the
Clinton Administration may have somewhat different priorities
than its predecessor, it will face the same problems of
rank-ordering its objectives and deciding policy tradeoffs. 
     The main tools for promoting U.S. goals are policy
dialogues, arms and technology export policies, development
assistance programs and trade policy -including both market
access and market opening initiatives. Recent changes in the
international environment may give the United States new openings
to promote its goals, including the most difficult objective of
deterring nuclear and missile proliferation. The possibilities
for success will partly depend on the ability of Congress and new
Clinton Administration policymakers to find the right balance
between "carrots" and "sticks" and sometimes to make difficult
choices among incompatible policy objectives. 
                             TABLE OF CONTENTS
          DISPUTES 2
          ERA  3
          IN SOUTH ASIA  3
          Status of South Asian Nuclear and Missile Programs  4
          Congress and U.S. Nonproliferation Policy  5
               Nonproliferation Initiatives Aimed Primarily at
                    Pakistan . . 5
               1979 Pakistan Aid Cutoff  6
          1990 Pakistan Aid Cutoff and U.S. Nonproliferation and
               Security Policy Dilemmas  6
               Controversial Bush Administration Interpretation 7
               Partial 1992 Congressional Loosening of Pressler
                    Amendment Strictures  7
          Recent Efforts to Promote a Regional Nuclear Accord  8
          Ballistic Missile Nonproliferation Initiatives  9
          Chemical Weapons Proliferation Concerns  10
          PAKISTAN AND INDIA  11
          Territorial Disputes  13
          Sectarian Tensions and Violence  13
          Competition for Scarce Resources  14
          Militant Separatism in India's Punjab State  15
          Kashmir Revolt  17
          Turmoil in Pakistan's Sindh Province  19
          Tamil Separatism in Sri Lanka  19
          Nepal  22
          Bangladesh 22
          Pakistan 23
          India 23
          Sri Lanka  23
          India 24
          Pakistan 25
          Bangladesh 25
          Sri Lanka  26
          RIGHTS ISSUES  26
     (SAARC)  27
          TRENDS  29
          India 32
          Pakistan 34
          Sri Lanka  35
          Bangladesh 36
          Nepal  37
          U.S. Aid Strategy  38
          Cooperation with Other Donors  39
               PROLIFERATION  49
          Realistic Goals?  49
          Sources of U.S. Leverage  49
          A Little Help from Our Friends?  50
          RIGHTS 52
          PRIVATIZATION 53
                           U.S. POLICY INTEREST
     Although never viewed as an area of primary strategic or
economic interest, South Asia has long figured in a number of
important U.S. foreign policy concerns. Some of these concerns
have had a particular Cold War orientation, such as Pakistan's
long-standing status as a regional security partner against
Soviet expansionism, and have now clearly lost their former
salience. Other issues remain of enduring, or even increasing,
interest. These include preventing the proliferation of nuclear
weapons and missiles, supporting stability and deterring
conflict, promoting increased respect for human rights,
supporting wider democratization, promoting more rapid economic
development, averting a demographic explosion, and combating
environmental degradation. They will likely continue as areas of
significant policy interest for Congress and the executive
     Geographically, South Asia corresponds largely to the Indian
subcontinent and adjacent islands. It includes the countries of India,
Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, and the Maldives,
all of which share certain distinctive cultural traits.
Afghanistan is sometimes regarded as part of South Asia, but its
ties are equally strong with the former Soviet Central Asian
republics and Iran (West Asia.) All of the region's states once
were either part of Britain's Indian Empire (India, Pakistan, and
Bangladesh); colonial possessions administered under the British
Colonial Office (Sri Lanka); or subject to dominant British or
British Indian influence (Nepal, Bhutan, and the Maldives). 
     India, with its nearly 900 million people and 25 or so
officially recognized languages, constitutes the regional core
and the pivot point of many sources of regional tension. Every
other South Asian nation shares one or more ethnic or linguistic
group with India. These ethnic overlaps and the partition of
British India into separate states of India and Pakistan in 1947
have created a lasting source of friction and unresolved
page 2
     Congress and the President have frequently clashed over
South Asian issues. Differences have tended to center especially
around substantive disagreements such as how best to deter
nuclear proliferation or promote human rights in the region, and
around the constitutional prerogatives of each branch of
government. Particularly on nuclear proliferation issues, the
executive branch has tended to seek to maintain maximum
Presidential flexibility and to view congressional initiatives as
overly rigid approaches that threaten broader U.S. regional
security and foreign policy objectives. 
     On many policy issues, Congress has adopted tougher stances,
often relying on sanctions, such as aid cuts or imposing
certification or reporting requirements on the executive branch.
These approaches have been most prominent both in regard to
nonproliferation, democratization, and human rights issues. For
instance, most U.S. nonproliferation legislation applicable to
South Asia has been imposed on the executive branch over the
President's objection that the goals could be promoted better,
and with less damage to bilateral relations, through
behind-the-scenes diplomacy or pressure. 
     In the case of U.S. policy towards the Soviet invasion of
Afghanistan, on the other hand, Congress pushed hard to provide
more aid and more effective weapons for the Afghan resistance
forces, while the Administration, in the early years, took a more
cautious stance due to concern about the danger of putting
Pakistan at greater risk of Soviet retaliation. Most accounts
credit pressure from congressional hawks as the key factor in
getting the CIA to supply "Stinger" anti-aircraft missiles to the
guerrillas, which proved a decisive factor in causing the Soviets
to lose heart in what looked increasingly like an unwinable war. 
     In one recent assertion of its will, Congress, over the
objections of the Bush Administration, adopted legislation
providing for the splitting up of the State Department's Bureau
of Near East and South Asian Affairs, and providing for the
establishment of a new Assistant Secretary of State for South
Asia.[l]  The ultimate fate of this change remains uncertain. The
Clinton Administration has included a South Asian Bureau in its
reorganization of the State Department but as of mid-February it
had not named an Assistant Secretary to the post. Consequently,
South Asia remains under the overall authority of the Assistant
Secretary-designate for the Near East and South Asia, Edward P.
1. The Administration created the new bureau during 1992, but the
nominee named by President Bush as Assistant Secretary was not
confirmed by the 102d Congress.
page 3
     The end of the Cold War and developments within the region
recently have created a substantially different context for U.S.
interests in South Asia. Cold War era preoccupations have given
way to more generic world order concerns, especially regarding
nuclear weapon and ballistic missile proliferation and of
intrastate conflict such as ethnic/religious strife and
separatism. The growing number of immigrants to the United States
from the region has tended to accentuate long-standing
congressional concerns about human rights problems. Although
several countries formerly under military or autocratic rule have
become democratic, human rights abuses remain a troubling fixture
of South Asian societies. 
     Because the region remains mired in poverty and slow growth,
South Asian governments are starting to shed some of their
post-colonial, Third World mindset in regard to economic policy.
Although their commitment to radical reform is tenuous, most
regional states have adopted potentially far-reaching policy
changes aimed at overhauling their centralized, overly
bureaucratic, quasi-socialist economic systems to expand the role
of the private sector and attract foreign investment. These
developments offer the possibility of a more mature and complex
relationship with the United States and other developed
countries, the traditional aid donors to the region. 
     The United States retains several security interests in the
region, notwithstanding the recent changes in the global
strategic environment. These include the interrelated goals of
deterring or limiting nuclear and missile proliferation, averting
conflicts, and making sure that U.S. relations with regional
states are a source of positive influence on U.S. interests in
the Middle East/Persian Gulf region, and not a source of
instability. South Asia has also emerged as a focus of concern
about chemical weapons proliferation, mainly due to India's
exports of large quantities of dual-use industrial chemicals. 
     A cardinal principle of U.S. foreign policy during the past
two decades has been to deter the acquisition of nuclear weapons
by India and Pakistan or the transfer of weapons or technology to
other countries. The India-Pakistan proliferation dynamic is the
one that most directly impinges on U.S. Middle East concerns and
interests, which have normally been deemed vital due to their
connection with access to Persian Gulf oil, and with the
Arab-Israeli military balance.
page 4
Status of South Asian Nuclear and Missile Programs
     It is not possible to state, on the basis of open
literature, whether or not India and Pakistan have deployed
nuclear weapons in a launch-ready status. Few analysts, however,
now doubt that both India and Pakistan have, or are in a position
to construct quickly, deliverable nuclear weapons. India
conducted an underground nuclear explosion in 1974 and has been
credited with enough fissionable material -- plutonium, in this
case -- to produce 75 or more nuclear weapons.[2]  For some
years, analysts who follow nuclear proliferation issues have
credited Pakistan with enough high enriched uranium for 10-15
weapons. A Pakistani official acknowledged in Washington in early
February 1992 that his country had the capacity for making at
least one atomic bomb, but the government subsequently disavowed
the statement and continues to do so. In late 1992, Senator Larry
Pressler reportedly stated in a press interview that he had been
told by the Central Intelligence Agency (CIA) that Pakistan had
assembled seven weapons and could air drop one in a matter of
     2. For background on both country's programs, see Leonard S.
     Spector, Nuclear Ambitions. Boulder: Westview Press, 1990.
     (Chapter 6, India, p. 63-88; Chapter 7, Pakistan, p.
     3. Reuters report of Dec. 3, 1992, citing a Dec. 1, 1992 NBC
     News broadcast. On Dec. 2, NBC News reported that during the
     spring of 1990 Pakistan reacted to Indian Army war game
     maneuvers near its border by preparing to drop one of seven
     weapons from a specially configured C-130 cargo plane.
     According to former Prime Minister Bhutto, this alleged
     event coincided with the decision of the military to have
     the President of Pakistan dismiss her government. Pakistan
     denied the reports. Reuters, Dec. 3, 1992.
     Neither country has signed the Nuclear Nonproliferation
Treaty (NPT), although Pakistan insists that it will do so if
India does -- a safe stance at this point. India insists it will
not sign the NPT or enter into a regional accord so long as China
retains its nuclear capability. Both countries object to what
they characterize as the "discriminatory" aspects of the NPT,
which allows the five acknowledged nuclear states to keep their
weapons but bans others from joining the club. In addition, while
neither country admits to seeking nuclear weapons, strategists in
both countries have propounded theories of deterrence similar to
those popularized during the U.S.-Soviet Cold War, and argue that
nuclear weapons can be stabilizing rather than the reverse. 
     Both India and Pakistan have missiles and aircraft that
theoretically are capable of carrying nuclear weapons, but both
probably face serious technical problems in perfecting them as
efficient and accurate delivery vehicles. India, which first
launched its own satellite in 1980, possesses an advanced missile
program. India has tested both a short range (250 kilometers)
Prithvi surface-to-surface missile that has sufficient payload
capacity to carry a nuclear warhead, and an Intermediate Range
Ballistic Missile (IRBM), with a range of 1,000 kilometers or
more, called Agni. Whether it has solved numerous technical
problems related to the deployment of accurate and reliable
page 5
vehicles cannot be established from unclassified literature.
India could also deliver weapons with a number of European and
Soviet aircraft, including MiG23s and 29s, French Mirage 2000s,
and Anglo-British Jaguars. 
     Pakistan has test fired short and medium-range missiles that
are believed to be derived from Chinese systems, and may be
developing nuclear warheads for these missiles. In theory,
Pakistan could use its U.S.-supplied F-16 fighter bombers to drop
nuclear weapons on visually acquired targets by improvising the
necessary electronic wiring, which is omitted from U.S. export
Congress and U.S. Nonproliferation Policy
     India's underground detonation of a plutonium device in 1974
marked the beginning of a long, and still unresolved struggle,
between successive U.S. administrations and Congress over how
best to deter proliferation. For the most part, U.S. policy has
concentrated on denying access to nuclear materials and
technology, both through export controls and threats to withhold
U.S. foreign assistance. 
Nonproliferation Initiatives Aimed Primarily at Pakistan 
     For a number or reasons, this strategy has fallen more
heavily on Pakistan. First, India's nuclear program was largely
self-sufficient, whereas Pakistan needed to obtain nuclear
technology from abroad. Second, while India's blast was an
accomplished fact, the Ford and Carter Administrations, and
nonproliferation activists in Congress and outside, wanted to nip
the Pakistani effort in the bud and thereby to prevent a nuclear
arms race in the region. Third, Pakistani Prime Minister Bhutto's
talk of an "Islamic Bomb" gave greater urgency to preventing the
development of technology that might be shared with radical
Middle Eastern states, although many analysts judged that threat
unlikely. In the mid-to-late 1970s, the Ford and Carter
Administrations put strong pressure on France and suspended aid
to Pakistan in order to get the French government to cancel a
contract to build a large plutonium reprocessing plant in
Pakistan. During the same period Congress enacted several
landmark nonproliferation provisions to the Foreign Assistance
Act of 1961, amended (FAA), the body of law that governs U.S. aid
and arms sales policies. Section 669 of the FAA bars U.S. aid to
countries that deliver or acquire from abroad nuclear (uranium)
enrichment equipment, materials or technology not under
international safeguards. Section 670 bans aid to countries that
acquire plutonium reprocessing material, or that acquire,
detonate, or transfer a nuclear explosive device. 
     In one respect, India did fall afoul of U.S.
nonproliferation legislation. In 1980, the United States
terminated nuclear cooperation with India as a consequence of
passage of the 1978 Nuclear Nonproliferation Act (NNPA), which
required countries receiving U.S. nuclear materials or technology
or materials to accept so-called "full scope safeguards" by
putting all of their national facilities under international
inspection. This action ultimately led to the termination of
sales of fuel and spare parts to the U.S.-built Tarapur Atomic
page 6
Power Station, which was already under safeguards and which had
played no role in India's underground explosion. In order to gain
India's commitment to maintain safeguards on the Tarapur reactors
and spent fuel, the Reagan Administration concluded a tripartite
agreement with India and France in 1983, under which France
agreed to supply needed fuel and spare parts. This made the U.S.
action largely symbolic in effect. 
1979 Pakistan Aid Cutoff 
     In 1979 the United States cut off aid to Pakistan under
section 669 after it was learned that Pakistan had secretly begun
construction of a uranium enrichment facility. Following the
Soviet invasion of Afghanistan, Congress passed a new
Pakistan-specific provision to the FAA, Section 620E, to provide
a legal framework for the reestablishment of U.S. assistance to
Pakistan, thereby bolstering that country against Soviet pressure
and facilitating U.S. aid to the Afghan resistance movement based
in Pakistan. The new section gave the President the authority to
waive the applicability of section 669 in the national security
interest, even though Pakistan had not abandoned its uranium
enrichment program. The legislative change set the stage for a
six-year, $3.2 billion program of economic and military aid to
Pakistan, including the sale of 40 F-16 fighter bombers. 
1990 Pakistan Aid Cutoff and U.S. Nonproliferation and Security
Policy Dilemmas 
     Throughout the 1980's, actions by Pakistan repeatedly
challenged the premise advanced by the Reagan Administration that
support of Pakistan's conventional security requirements would
reduce its incentives to pursue the nuclear option. By the
mid-1980's it became unmistakably clear that Islamabad would
spare no effort to acquire a nuclear weapons capability, even to
the extent of violating U.S. export control laws to acquire
needed technology and materials. In response, Congress began
progressively to circumscribe the President's authority to
provide aid to Pakistan. 
     Frustration over Pakistan's resistance to U.S. pressure led
Congress in 1985 to add Section 620E(e), the so-called "Pressler
Amendment," that required the President to certify annually that
Pakistan did not possess nuclear weapons as a condition of
continued U.S. assistance and arms and technology transfers.
Presidents Reagan and Bush made several annual certifications,
but each successive year's finding was more hedged with
qualifications than the previous one. Due to reasons that cannot
yet be confirmed, President Bush failed to make the necessary
certification on or about October 1, 1990, the beginning of
FY1991, leading to a cutoff of most new U.S. aid. 
     As a result of the President's failure to certify Pakistan
for FY1991, all new economic assistance, and all military aid and
foreign military financing (FMF) sales were stopped, and the
delivery of major equipment was suspended. At the time of the
cutoff, about $700 million in economic aid remained in the
"pipeline." This money has continued to flow at the rate of about
$200 million per year
page 7
until the previously obligated funds are expended or projects are
terminated in an orderly manner.[4]  More than two years after
the inception of the cutoff, it continues to exact additional
penalties. In late December 1992, the U.S. Government asked
Pakistan to return eight surplus U.S. Navy frigates and a supply
ship that had been leased to the Pakistan Navy. The 1950's and
1960's vintage ships account for more than half of Pakistan's
total of 14 major surface combatants, according to press
     4. As of December 1992, the Agency for International
     Development estimates that all projects but one small
     research project will be closed out by the end of FY1994,
     and that about $293 million in economic assistance remains
     in the "pipeline." Remaining food aid funds were expended by
     mid-1992, but the Department of Agriculture has since begun
     negotiations with Pakistan on a vegetable oil aid program
     under Title I of P.L.-480. 
     5. Reuters report of December 24, 1992, datelined Islamabad,
     and December 29, 1992, datelined Karachi. 
Controversial Bush Administration Interpretation 
     The aid cutoff left a number of loopholes for the Bush
Administration, that apparently were not anticipated by Congress
when it adopted the Pressler Amendment. In a controversial
action, the Administration continued to allow commercial sales of
munitions and spare parts for cash on a case-by-case basis, on
grounds that there was precedent in similar situations for doing
so. As of mid-1992, the State Department reportedly had issued
export licenses totaling more than $100 million since the aid
cutoff, including spare parts for F-16 fighter planes and Cobra
attack helicopters. 
     Critics of the Administration's policy of continuing to sell
Pakistan spare parts, including Senators Larry Pressler, John
Glenn, and Claiborne Pell, among others, contend that it
undermines the aid cutoff and casts doubt on U.S. determination
to pursue a regional and global nonproliferation policy. The
Senate Foreign Relations Committee held a hearing on the
statutory meaning of the Pressler amendment on July 30, 1992,
without any apparent result in terms of the Administration's
interpretation of the disputed section.[6] 
     6. For more information, see U.S. Library of Congress.
     Congressional Research Service. Pakistan Aid Cutoff: U.S.
     Nonproliferation and Foreign Policy Considerations. Issue
     Brief No. IB90149, by Richard P. Cronin (continually
     updated). Washington, 1992.
Partial 1992 Congressional Loosening of Pressler Amendment
     Congress itself has shown concern about the consequences of
a total cessation of aid to Pakistan, and on several occasions in
recent years amendments that would have explicitly ended or
relaxed the aid ban mustered significant support. In September
1992, during action on the FY1993 Foreign 
page 8
Operations Appropriations Act, P.L. 102-391, Congress adopted a
little noticed Senate Appropriations Committee amendment to the
Foreign Operations Appropriations Act that appears to have the
effect of relaxing somewhat the ban on development assistance to
Pakistan. Section 562 of the aid appropriation provides 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 programs of nongovernmental
organizations ...." This provision is subject to a determination
by the President that such aid is in the national interest and
adherence to normal notification procedures to the Committees on
Appropriations. Subsection (b) of the same section excludes
PL-480 food aid from the purview of aid cutoff sanctions during
FY1993, except in cases of cutoffs imposed for human rights or
international terrorism reasons. 
     Although the new section does not mention any particular
country, some congressional sources suggest that this change was
adopted specifically to apply to Pakistan. It did not follow any
policy debate and it is doubtful if most Members voting on the
Senate bill or the conference report were aware of its
significance. Due to its limited scope and one-year time frame,
its intent and ultimate effect remains uncertain. 
Recent Efforts to Promote a Regional Nuclear Accord 
     During the past several years, both Congress and the
Administration have agreed upon the need for a regional solution
to the threat of nuclear weapons proliferation, thereby
implicitly acknowledging that while Pakistan has felt the main
force of U.S. antiproliferation policies, India and Pakistan are
equally part of the problem. Both branches of the U.S. Government
have embraced a proposal by Pakistan for five-power talks (India,
Pakistan, China, Russia, and the United States) on nuclear
nonproliferation in South Asia. P.L. 102-391, the Foreign
Assistance Appropriations Act for FY1993, adds a new Section 620F
to the Foreign Assistance Act that establishes a regional accord
as a U.S. policy goal and requires the President to report to
Congress every six months on efforts to achieve such an
accord.[7]  All parties have signaled support for the five-power
talks proposal, except India, which opposes any regional
agreement that would allow China to keep its own weapons. (As
presently envisioned, 
     7. A "policy" subsection, 620F(b) states that: It is the
     sense of the Congress that the President should pursue a
     policy which seeks a regional negotiated solution to the
     issue of nuclear nonproliferation in South Asia at the
     earliest possible time, including a protocol to be signed by
     all nuclear weapons states, prohibiting nuclear attacks by
     nuclear weapons states on countries in the region. Such a
     policy should have as its ultimate goal concurrent accession
     by Pakistan and India to the Nuclear Non-Proliferation
     Treaty, and should also include as needed a phased approach
     to that goal through a series of agreements among the
     parties on nuclear issues, such as the agreement reached by
     Pakistan and India not to attack one another's nuclear
page 8
China would only be a guarantor of a regional accord but would
retain its own nuclear weapons.) 
     Conscious of strong U.S. concern about this issue, India
engaged in a high-level dialogue with the United States in New
Delhi in mid-June 1992, but no new ground was broken. As of late
1992 the State Department was seeking to initiate an indirect
dialogue between India and Pakistan, with the United States as
the go-between, somewhat along the lines of past indirect Middle
East peace talks.[8]  Bilateral talks with senior Indian
officials were held in Washington during November 13-14. The
approach of the Clinton Administration is yet to be revealed. 
     8. Brahma Chellaney, "U.S. Plans Separate Talks on Indian,
     Pakistani Nukes. Washington Times, Oct. 12, 1992: A11.
     U.S. leverage is limited by the realization that India's
broad, albeit inefficient, nuclear and missile technology
establishment is largely immune to technology denial tactics. In
addition, China is not a promising candidate for any accord that
would constrain its own nuclear arsenal or even, it would seem,
its restraint in regard to missile and nuclear technology
exports. A Chinese guarantee not to use nuclear weapons against
India would have a tough time achieving credibility in New Delhi.
Ballistic Missile Nonproliferation Initiatives 
     During the past several years, both the Administration and
Congress have attempted to craft policies to deter missile
proliferation. The United States has taken the lead in promoting
the Missile Technology Control Regime (MTCR), which seeks to bar
sales of certain kinds of dual use technology and transfers of
missiles of more than 300 kilometers range. A number of
negotiations with China seeking to stop it from providing
missiles to Pakistan have met with limited success. China has
indicated its willingness to subscribe to Nuclear
Nonproliferation Treaty (NPT) restrictions on transfers of
nuclear materials and technology, but has not bound itself to the
more assertive controls of the Nuclear Supplier Group. In early
1992, China also signaled the Bush Administration its intent to
abide by the MTCR. The United States and China have disagreed,
however, on whether China's sale of M-11 short range missiles is
in violation of the MTCR, as its nominal range, which is near the
300 kilometer threshold, could vary depending on the weight of
the warhead. 
     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 missile
program. According to press reports in early May 1992, the Bush
Administration "at the highest levels" sought unsuccessfully to
block a pending sale of Russian booster rockets to India,
page 10
Russian and Indian insistence that they would be used only in
India's space program.[9] 
     9. R. Jeffrey Smith, "U.S., Russia Disagree Over Missile
     Sale to India," Washington Post, May 6, 1992: A11. 
     On May 11, 1992, the Administration imposed sanctions
against Russian and Indian public sector firms involved in a
proposed sale of Russian booster rockets, ostensibly for Indian
space launch vehicles (SLVs), with the effect that for two years
Russia's Glavkosmos company and the Indian Space Research
Organization (ISRO) are barred from trading with U.S. companies
or receiving U.S. government contracts. Moreover, under newly
tightened Commerce Department regulations, U.S. companies will be
required to obtain export licenses for any sales to specified
missile projects in a number of countries, including India and
Pakistan. The new ruling by the Export Administration, effective
June 16, 1992, covers any assistance to foreign missile
activities. The licensing restrictions include financing,
insuring, shipping, and brokering, as well as sales of any U.S.
product, whether or not it has military applications.[10] 
     10. Dept. of Commerce, Bureau of Export Administration, 15
     CFR Parts 771 and 778 (Federal Register, Vol. 57, No. 116,
     June 16, 1992/Rules and Regulations, p. 26773. 
Chemical Weapons Proliferation Concerns
     Because of its highly developed chemical industry, India has
also emerged as a target of U.S. efforts to curb chemical weapons
proliferation. India, in the mid-1980s, was a target of a
formerly secret group of the so-called Australia Group of western
suppliers who wanted to deny it access to chemical arms
technology. In recent years, however, it has emerged as an
exporter of chemicals that can be used to produce chemical and
poison gas weapons. Reportedly, in September 1992, the U.S.
Government succeeded in getting Cyprus to turn back a German ship
carrying Indian dual use chemicals to Syria. 
     India has partially responded to U.S. and other western
criticisms of its export activities by restricting the export of
four "core" chemicals and requiring prior notification on exports
of 15 others. New Delhi has resisted pressure to enact broad
controls on dual use chemicals, complaining that such demands
represent yet another form of western efforts to control Third
World economies and reinforce developed countries market
     ll. Brahma Chellaney, "India Is Target of U.S. Efforts to
     Curb Chemical Proliferation. Washington Times, Oct. 12,
     1992: A11.
page 11
     Notwithstanding U.S. opposition to regional missile and
nuclear proliferation, successive Administrations have also
placed significant emphasis on maintaining or expanding security
ties with Pakistan and India. In part, this is because the United
States has long sought to deter conflict involving India and
Pakistan and to serve, when possible, as an "honest broker" in
disputes between them. Additionally, the U.S. military and
intelligence services tend to see their particular institutional
interests as served by cultivating ties with regional military
and intelligence establishments. 
     The past year has seen increasing cooperation between the
U.S. and Indian military services, including a small but
unprecedented June 1992 naval exercise with Indian navy units in
the Indian Ocean, designated "Malabar-92". Joint Indo-U.S.
steering committees have been established to coordinate
interaction between the naval and armed services of the two
countries. Reportedly, the Defense Department has also explored
the possibility of selling India a wide array of electronic
warfare equipment as well as F-16 aircraft.[12] 
     12. U.S. Foreign Broadcast Information Service (FBIS),
     January 21, 1992, p. 41; April 2, 1992, p. 40; September 16,
     1992, p. 42.
     In the case of Pakistan, the Bush Administration, the
Defense Department and military services have sought to maintain
as much normalcy as possible in military ties. This policy
apparently stems partly from Pakistan's relevance to potential
operational requirements in the Persian Gulf and partly from a
desire to maintain potential sources of influence over Pakistan's
nuclear decisionmaking, which is dominated by the military.[13]
Such objectives are evidenced by the continued selective sales of
military spare parts and munitions and courtesies such as
engaging in an August 1992 "passex" (a routine passing exercise
in which basic maritime skills are practiced) with two Pakistan
Navy ships in the Arabian Sea near Karachi. Although the efforts
may not have borne fruit in regard to its nuclear program,
Pakistan did support U.S. policy during the Gulf War over the
opposition of the then Chief of Army Staff, Gen. Mirza Aslam Beg,
(subsequently retired) and a vocal section of the public.[14] 
     13. David Hoffman, "Sales to Pakistan Survive in U.S. Policy
     Rift," Washington Post, April 13, 1992, p. A17. 
     14. Barbara Crossette, "In Pakistan, War Stirs Emotions and
     Politics," New York Times, February 1, 1991, p. A7.
     The U.S. Government also has reason to be concerned that
Pakistan may see no choice but to align itself more closely with
radical Muslim states in order to counterbalance India's military
might. For its part, the Pakistani military still sees the United
States as the preferred arms supplier, and is continuing to
negotiate for the release of F-16 fighters for which partial
payment has already been made. Meanwhile, the Pakistanis are
exploring other options, including 
page 12
window-shopping for French Mirage 2000s, Russian SU-27s and
MiG-29s, and Chinese F-7P fighters and M-11 missiles.[15]
     15. See among others, U.S. Foreign Broadcast Information
     Service (FBIS) Daily Report Near East and South Asia,July
     23, 1992, p. 59; August 6, 1992, p. 38; and August 11, 1992,
     p. 68-69.
page 13
                        REGIONAL STABILITY CONCERNS
     The U.S. interest in preventing nuclear proliferation is
closely linked to an interest in promoting regional stability.
Although India's nuclear and missile programs can be partly
attributed to other factors, such as prestige and competition
with China, the long, bitter, and still unresolved India-Pakistan
rivalry has given the South Asian proliferation threat its
greatest immediacy and danger. India and Pakistan have fought
three wars with each other and continue to exchange fire
periodically in remote, undemarcated parts of their mutual
frontier. Both maintain first strike air and armor units in a
high degree of readiness, and from time-to-time conduct
provocative exercises. 
     Despite the relatively low priority of South Asia in U.S.
security policy, the India-Pakistan rivalry has absorbed
significant U.S. policy attention since the creation of India and
Pakistan as independent states in 1947. During the past decade,
new sources of threat have emerged in the form of tensions
arising out of subregional conflicts such as Hindu-Muslim riots
in India, the Tamil insurgency in Sri Lanka, separatist
insurgencies involving the Sikhs in India's Punjab State, a
Muslim insurgency in and Jammu and Kashmir State, and border
clashes near the juncture of India, Bangladesh, and Burma. 
Territorial Disputes
     Instability in South Asia has deep historical roots. The
reaction to colonial rule tended to take the form of competing
nationalist movements that caused British India to be divided
between a predominantly Hindu, but formally secular, India, and
an overwhelmingly Muslim Pakistan. The latter began as two wings,
East and West, separated by a thousand miles of Indian territory.
In 1971, East Pakistan, with Indian assistance, broke off to form
     India also has unresolved, historically-based territorial
disputes with several other neighbors, including China and Burma.
India's defense of its British-imposed boundaries with China
resulted in the 1962 Sino-Indian border war, which India lost.
Smoldering resentment at that defeat, and the development of
close Pakistan-China ties in the early 1960s, contributed to a
strong determination in India to build up its military forces and
develop a nuclear option. 
Sectarian Tensions and Violence
     Religious and sectarian differences have been the bane of
politics in South Asia, and have largely determined the region's
political boundaries. Pakistan (and its former East Wing,
Bangladesh) were explicitly created as Muslim majority states.
Millions of Hindus and Sikhs fled to India in 1947 and after,
while similar numbers of Muslims fled to Pakistan. Some
half-million were
page 14
slaughtered in ethnic clashes during this mid-twentieth century
example of "ethnic cleansing." 
     The partition has left bitter memories and residual
discrimination. In Pakistan and Bangladesh, the remaining
non-Muslim minorities--less than ten percent of the
population--suffer various forms of discrimination, though they
sometimes also enjoy a privileged economic position and, in the
case of Christians and Sikhs in Pakistan, a certain amount of
official patronage - subject to docile behavior. India's more
than 100 million Muslims do not suffer official discrimination
and, as an important voting bloc, enjoy special legal
dispensations in regard to Muslim family law and benefit from
policies aimed at promoting the interests of disadvantaged
groups. In reality, however, they suffer considerable
discrimination and often exist in a subculture outside the
political, economic, and educational mainstream. Especially in
northern India, Muslims face considerable hostility from state
and local governments, organized Hindu caste groups, and the
     The problems of India's Muslims were dramatically
highlighted by the December 1992 demolition of a 400-year-old
mosque in the ancient town of Ayodhya, in eastern India, said by
Hindus to be the birthplace of Ram, one of the principle Hindu
deities. For several years the mosque has been the site of a test
of strength between successive Indian governments, all committed
to secularism and the rule of law, and a militant Hindu
nationalist party, the Bharatiya Janata Party (BJP). Violence
erupted in December when the Hindu militants broke through police
lines and tore the mosque apart, stone by stone, leading to riots
in a number of cities that claimed 1,200 or more lives, primarily
     Several features of the Ayodhya incident and subsequent
Hindu-Muslim clashes are illustrative of the dynamics of
sectarian violence in India and South Asia. First, while the
Indian central government's policies remain unshakably
secularist, at the local levels the police for the most part
favored the Hindu majority and were responsible for numerous
deaths and atrocities against Muslims. Second, the incidents
reverberated throughout South Asia, resulting in harsh diplomatic
exchanges between India and several of its neighbors, notably
Pakistan and Bangladesh, and led to attacks on Hindu minorities
in those countries and the destruction of their places of
     Sectarianism is also the dominant feature in several other
situations involving regional dissidence and separatism. The four
most notable movements presently include Kashmiri Muslims and
Sikhs in India, Muslims in Pakistan, and Tamils in Sri Lanka (see
section on regional dissidence, below.) 
Competition for Scarce Resources
     Another destabilizing factor in the subcontinent has been
relentless population growth and migration in an already
overburdened environment, coupled with political and economic
policies that tend to promote a "zero-sum" competition among
groups for scarce resources. The continuing movement by
page 15
lowlanders into the Himalayan foothills has been a major
contributor to localized independence movements among tribal
peoples and other displaced groups. Major movements include
Bengali Hindus and Bangladeshi Muslims into the valleys and hills
of Assam, Indians into Nepal, and ethnic Nepalis into neighboring
parts of India and Bhutan. 
     In Pakistan, economic pressures have pushed Pathans from the
North-West Frontier Province into the western province of
Baluchistan, and Punjabis into Sindh. Both the Baluchi tribes and
the ethnic Sindhis have become minorities in some areas of their
own provinces, sparking organized political violence. 
     In Sri Lanka, formerly the British colony of Ceylon,
preferences given under the British to Tamils in educational
institutions and government offices created deep resentment among
the majority Sinhalese Buddhists. Following independence, the
government instituted a "Sinhalese only" language policy in order
to gain Sinhalese predominance in the civil service. By the late
1970s, this and other measures to undercut Tamil influence
spawned a violent independence movement in northern Sri Lanka
that continues today. 
     Partly in response to rapidly growing numbers of immigrants
to the United States from the region, Congress has taken an
active interest in dissidence and related human rights violations
in various parts of the subcontinent. The following section
provides a status report on four of the principal regional
dissidence situations. 
Militant Separatism in India's Punjab State
     Currently the most violent conflict in the region is the
struggle by militant Sikhs in India's Punjab state for an
independent or autonomous Sikh homeland. Sikhs constitute about
60 percent of the population of the state, with the balance being
Punjabi Hindus. Although historically divided on the basis of
social class and caste origins, the Sikh's increasingly have
rallied to the cause of "Khalistan" (land of the pure community
of Sikh believers). More than 20,000 Sikhs and Hindus reportedly
have died in the conflict in the past decade, including
militants, security forces, and civilians. An estimated 5,800
were killed in 1991 alone and more than 2,500 in the first half
of 1992.[16] 
     16. John Ward Anderson, "Punjab's Cycle of Violence," New
     York Times, September 2, 1992, pp. A23, A25.
     The conflict's origins lie in the 1947 partition of Punjab
Province, the granary of the subcontinent, resulting in the
disruption of its economy and the mass movement of millions of
Muslims to Pakistan's Punjab Province and like numbers of Sikhs
and Hindus to India's Punjab state. A combination of Sikh
industriousness and Indian government investment in
electrification, irrigation, and new seed strains made Punjab the
center of the U.S.-aided "Green 
page 16
Revolution" in India. Despite the relative prosperity of the
region, Sikh grievances over water sharing with other states,
regional autonomy and religious identity, festered and grew.
Internal Sikh divisions and heavy handed efforts at political
manipulation by a succession of Indian governments led, in time,
to growing political polarization. Earlier mainstream Sikh
demands for more autonomy within the Indian Union came to be
eclipsed in the 1980s by demands for independence on the part of
hard core fundamentalist groups using violent means, such as
terrorism and intimidation to promote their cause. 
     An attack by the Indian Army on militants at the Sikh's
Golden Temple in Amritsar in May 1984 touched off a "holy war"
between Sikh militants and the government, with moderates caught
in the middle. The assassination of Prime Minister Indira Gandhi
by her Sikh bodyguards in November and the retaliatory killing of
several thousand Sikhs by mobs in New Delhi and other northern
Indian cities exacerbated the growing political polarization of
the state. 
     To date, various efforts at a political settlement have not
brought an end to the conflict. Following a July 1985 accord
between Prime Minister Rajiv Gandhi and a moderate Sikh leader,
Sant Harchand Singh Longowal (shortly thereafter assassinated by
militants), elections brought to power a moderate Sikh government
in Punjab under Chief Minister Surjit Singh Barnala, a leader of
the mainstream Sikh Akali Dal (party). In May 1987, however, in
the face of continuing widespread violence, the Rajiv Gandhi
government suspended the elected assembly and instituted
President's Rule.[17]  The renewed effort to achieve a law and
order solution failed, and the violence intensified rather than
     17. U.S. Library of Congress. Congressional Research
     Service. India's Punjab Crisis: Issues, Prospects, and
     Implications CRS Report no.87-850 F, by Richard P. Cronin.
     Washington, October 6, 1987.
     Elections held in November 1991 for the state legislature
and members of Parliament were widely viewed as a sham, since
only about 20 percent of the population voted. Most of the Akali
Dal factions boycotted the elections, and the elected
Congress-led government does not appear representative of
majority opinion among the Sikhs. 
     More recently, the Punjab government has had more success in
drawing mainstream Sikhs back into the political process. In
municipal elections held in Punjab in September 1992, 75 percent
of the 1,260 seats contested were won by independents, many of
whom had either Congress or Akali backing. The Akalis and other
mainstream Sikhs also appeared to have participated widely in
panchayat (local council) elections, held in January 1993. 
     The central government repeatedly has been said to be on the
verge of announcing a new political initiative, but the Punjab
government headed by Chief Minister Beant Singh, has argued
strongly that political initiatives will not work until the back
of the terrorist campaign is broken. Of the more than 100,000
Indian army troops deployed to Punjab to keep peace during the
page 17
election, about half were still there a year later, along with
about 100,000 paramilitary forces and police. Following the
killing of a number of leaders of various militant factions in
July and August 1992, the militants retaliated by killing more
than 60 police officers or their relatives. In late 1992 the
Indian press reported that Sikh militant groups were in disarray,
property values were up, night-time transport and farming
activities had resumed, and the September municipal elections had
been reasonably peaceful. Nonetheless, Akali leaders warned that
solutions to economic and political problems must be found before
real peace will come to Punjab.[18] 
     18. Tarun J. Tejpal and Ramesh Vinayak, "New Signs of
     Confidence," India Today, September 15, 1992, pp. 56-59; R.
     Vinayak, " An Honest Election, at Last, India Today,
     September 30, 1992.
Kashmir Revolt
     Beginning in late 1989 the secessionist impulse erupted in
full force among the Muslim population of Jammu and Kashmir
State, the Indian-controlled part of the former "princely state"
ruled during the British period by the Maharajah of Kashmir.
Following the creation of India and Pakistan in August 1947, the
new countries struggled for control of the Maharaja's domains.
The resulting first India-Pakistan war during 1947-48 left the
western third of the state in Pakistan's hands -- the so-called
"Azad" ("free") Kashmir -- and the balance, including the fabled
Valley of Kashmir, under Indian control. 
     Kashmir was the scene of subsequent conflict in 1965 and
1971. Small-scale fighting still breaks out periodically along
the ceasefire line. Since 1984, however, the most serious
Indo-Pakistani fighting has been in Kashmir's Siachen Glacier
region where the cease-fire line was never demarcated, partly
because the extremely cold and mountainous area was considered
     In late 1989, a secessionist revolt broke out in Jammu and
Kashmir state, fueled by inept meddling in state politics by the
central government and the corrupt mismanagement of state
officials. Kidnapings and mass demonstrations led the Indian
government to suspend the state government in January 1990.
President's Rule (the suspension of the state government and
direct rule by the Government of India) has since been renewed
every six months, most recently in September 1992. 
     An increasing tempo of demonstrations since early 1990 has
caused the Indian government to pour hundreds of thousands of
security forces into the state. The crackdown has led to
confrontations in which troops have fired into crowds of unarmed
demonstrators. Curfews, the implementation of a range of harsh
internal security laws, and excesses on the part of the security
forces have spawned a proliferation of more than 40 secessionist
groups, each with its own agenda. 
     The Kashmiris themselves remain divided. One of the older,
larger groups, the Jammu and Kashmir Liberation Front (JKLF),
seeks an autonomous or 
page 18
independent Kashmir. More fundamentalist Muslim groups, such as
the Hizbul Mujahadin, seek union with Pakistan. India accuses
Pakistan of being the cause of the problems in Kashmir, supplying
arms and training to the militants, particularly the
fundamentalists. Pakistan claims to be only a source of moral and
political support. 
     Since early 1990, some 8,000 people are said to have been
killed in the violence in Kashmir, including militants, security
forces, and civilians. Both sides have been accused of serious
human rights violations. The economy of Kashmir, normally
dependent on tourism, is in shambles; less than 7,000 domestic
and foreign tourists visited Kashmir in 1991, compared with more
than 550,000 in 1989. 
     Two UN Security Council resolutions of 1949 and 1950 that
call for a plebiscite to allow the inhabitants of both parts of
the former princely state to decide whether to join India or
Pakistan have never been carried out due to the mutual failure of
India and Pakistan to carry out their preconditions. An India-
Pakistan peace signed at the Himalayan hill town of Simla,
following the 1971 war, committed India and Pakistan to resolve
the Kashmir conflict peacefully and bilaterally, which India has
interpreted to mean without recourse to "internationalizing" the
question by raising the issue of the UN resolutions. Although
Pakistan continues to call for holding the plebiscite and India
to resist, most outside analysts judge that the situation has
moved beyond the simple question of whether the state should have
become part of India or Pakistan. 
     Although the Rao government hints at holding elections, some
400,000 security forces still occupy the state, and militant
groups insist that the only referendum they are interested in is
a UN-sponsored plebiscite.[l9]  Even in this demand the militants
are divided, however. Pro-Pakistan groups support carrying out of
the original UN resolutions, whose context was a choice between
India or Pakistan, while groups such as the JKLF seek an open
plebiscite formula with a third option of independence. 
     19. "North India Tourism Suffers a Blow," Indian Express,
     May 15, 1992, p. 5; "Pakistan Invites Indian Prime Minister
     to Visit, Reuters, September 4, 1992; Rita Machanda, "Loss
     of Confidence," Far Eastern Economic Review, September 3,
     1992, pp. 22-23.
     Kashmiris in Pakistan-controlled Azad Kashmir have also
shown signs of dissatisfaction with their status but for a
variety of reasons they have been more restrained than their
co-religionists on the Indian side. Pakistani Kashmir has always
been more directly and less democratically ruled, and even those
who aspire to a united, autonomous Kashmir have little option at
the moment but to go along with Pakistan's efforts to dislodge
the Indians from the Kashmir Valley. 
page 19
Turmoil in Pakistan's Sindh Province
     Pakistan's Sindh Province has been the site of prolonged
turmoil involving banditry and other violence having important
political overtones. The violence in Sindh is also rooted, in
part, in the partition of British India in 1947. At that time
Muslim Muhadirs[20]  from India flooded into Pakistan, the
majority settling in Karachi and Hyderabad, the two major cities
of Sindh. 
     20. Literally, those who made the hajj to Mecca; in this
     case, it refers to those who moved to the newly-created
     Islamic homeland in Pakistan. 
     Since the mid-1960s, several million Pakistanis from other
provinces (Punjabis, Pathans, and Baluchis) have also settled in
urban areas of Sindh. As a result, the native Sindhis are only
the fifth largest ethnic group in Karachi, although they make up
more than 80 percent of the rural population and about half the
total population of the province. 
     For the past decade Sindh has witnessed a growing
three-cornered contest, often carried out through violence and
terrorism, among the Muhajir Qaumi Movement (MQM) political
party, representing Muhajir interests, the Sindhi nationalist
Jiye Sindh movement, and pro-government groups. In May 1992, the
central government deployed army troops to Sindh in the wake of
increasing crime, kidnapings, political assassinations, and
terrorist attacks on railways and gas pipelines. More than 2,000
alleged criminals were arrested in rural areas. In Karachi, where
some 1,600 people were arrested, MQM offices were raided and the
party accused of operating torture cells and stockpiling
automatic weapons. 
     In June 1992, the turmoil threatened to pull down the
national government of Nawaz Sharif. The MQM, which had joined
the ruling coalition largely out of political expediency, quit
the Sharif government and asked its deputies to resign their
seats in both the national and Sindh assemblies in protest of the
military crackdown. By late 1992 tensions had risen sharply
between the Army, which dislikes prolonged civil order duties,
and the Nawaz Sharif government, which fears a resurgence of
crime and violent power struggle.[21] 
     21. Hamish McDonald, "Things Fall Apart," Far Eastern
     Economic Review, August 6, 1992, pp. 18-20; Najam Sethi and
     Mohammad Mirza, "Army Says It Will Pull Out from Sindh If
     President Continues to Protect Sindh Government," The Friday
     Times, September 17-23, 1992, p. 3. 
Tamil Separatism in Sri Lanka
     For the past decade, Sri Lanka has been racked by communal
violence and civil war that has claimed more than 17,000 lives,
7,000 since June 1990.[22]  Minority Tamils, concentrated in the
northeastern part of the island, are 
     22. "10 Top Officers Killed by Mine in Sri Lanka,"
     Washington Post, August 9, 1992, p. A28.
page 20
fighting majority Sinhalese for an independent ethnic homeland
called "Tamil Eelam." Of the country's 17 million people, about
74 percent are Sinhalese, usually Buddhist; 18 percent are Tamil,
usually Hindu and either descendants of Tamils who have been in
Sri Lanka for centuries or were brought by the British from
southern India in the 19th century to work the tea estates. Sri
Lanka's Tamils have always had close relations with the 50
million Tamils across the strait in India's Tamil Nadu state,
causing Sinhalese to fear that a Tamil homeland in the north of
the island would lead in the longer term to Tamil domination of
all of Sri Lanka. 
     Achieving educational and civil service predominance under
the British, the Tamils found themselves increasingly
discriminated against by resentful Sinhalese following
independence. Communal violence and increasing radicalization of
Tamil groups marked the 1950s and 1960s. A Tamil separatist
movement in the late 1970s spawned the formation of numerous
guerrilla groups, the strongest and best organized of which was
the Liberation Tigers of Tamil Eelam (LTTE). Employing suicide
tactics advocated by its charismatic leader, Vellupillai
Prabhakaran, the LTTE gradually expanded its terrorist activities
to form a highly disciplined guerrilla movement, with support
from foreign arms and training and supply bases in southern
     As the guerrillas increasingly targeted banks, hotels, and
joint-venture industries, the Sri Lankan government sought
military training and arms abroad. Efforts to eliminate the
guerrillas through military action were stymied by various forms
of Indian interference, including an Indian air-drop of relief
supplies to the besieged town of Jaffna carried out in violation
of Sri Lankan air space. 
     The character of the conflict changed in July 1987. Indian
Prime Minister Rajiv Gandhi and Sri Lankan President Junius
Jayewardene signed an accord under which the Sri Lankan
government agreed to grant a significant measure of provincial
autonomy. India, for its part, agreed to send a peacekeeping
force of 50,000 to supervise surrender of Tamil arms. The
guerrillas, however, refused to surrender, and Indian forces lost
1,200 troops in fighting with the guerrillas before withdrawing
in 1990. Meanwhile, the Sri Lankan government's conciliatory
efforts toward the Tamils and the presence of Indian troops
sparked a revolt against the government by the Sinhalese
ultranationalist Janatha Vimukthi Peramuna (JVP). The revolt was
forcefully put down in 1989, allegedly with the aid of
paramilitary death squads.[23] 
     23. Gamini Samaranayake, "Ethnic Conflict in Sri Lanka and
     Prospects of Management: An Empirical Inquiry," Terrorism
     and Political Violence, Summer 1991, vol. 3, pp. 82-85.
     In April 1991, Rajiv Gandhi was assassinated while election
campaigning in southern India. According to Indian government
investigators, the assassination was meticulously plotted by the
LTTE and carried out by a female suicide bomber. As a result of
the assassination, the flow of supplies from India and sympathy
for the LTTE in Tamil Nadu state have diminished. Reportedly, 
page 21
many Sri Lankan Tamil refugees in that state, feeling
increasingly unwelcome, are opting for repatriation. In early
1992, there were indications that the LTTE was willing to
negotiate with the government of President Ranasinghe Premadasa.
Sinhalese hardliners, however, feel that the LTTE is on the run
and a ceasefire will only give them a chance to regroup. 
     Although the Tigers may be on the run, they claimed credit
for exploding a landmine in August that killed ten high-ranking
Sri Lankan military officers, including Maj. Gen. Denzil
Kobbekaduwa, the commander in charge of the government's campaign
against the LTTE. Sri Lankan troops, reportedly enraged at the
death of the popular commander, retaliated by killing 39 Tamil
villagers and burning their homes.[24]  The country was further
rocked by violence in November when a suicide bomber on a
motorcycle killed a high-ranking naval officer, Vice Admiral
Clancy Fernando, and three others in central Colombo. 
     24. Manik de Silva, "Sinhalese Backlash," Far Eastern
     Economic Review, February 20, 1992, p. 26; "Taming the
     Tigers," Economist, June 6, 1992, pp. 34, 39; FBIS Daily
     Report Near East and South Asia, August 11, 1992, p. 71;
     Feizal Samath, "Rights Group Discloses Sri Lanka Army
     Massacre," Reuters, September 12, 1992.
     The countries of South Asia share, to an extent, a legacy of
British-influenced political traditions, including conflicting
tendencies towards both democratic and authoritarian governance.
Although the region's educated elites often were schooled in the
concepts of constitutional democracy, the parliamentary system,
rule of law, and civil liberties, the colonial governments
imposed a highly centralized, authoritarian rule, often enforced
through laws that denied basic rights of speech, assembly, and
due process. Moreover, important foundations of democratic
development, such as the education and economic well-being of the
general populace were often neglected. 
     Despite ongoing human rights problems in most South Asian
countries, one of the most positive developments in recent years
has been a strong region-wide trend away from authoritarian rule
and the reaffirmation of democratic processes. Since 1990, four
South Asian nations -- Pakistan, India, Nepal, and Bangladesh --
have changed governments through reasonably free and fair
elections. Three of these previously had long periods of military
rule (Pakistan and Bangladesh) or monarchical dominance (Nepal).
In Sri Lanka, parliamentary elections were last held in 1989 and
presidential elections in 1988. Political parties are not
permitted in the strong presidential system of the Maldives.
President Maumoon Abdul Gayoom was nominated for a third term 
page 22
by the Majlis (legislature) as the only candidate and
subsequently reelected in a public referendum in 1988. Although
Bhutan is a traditional monarchy, currently ruled by King Jigme
Singye Wangehuck, participation in the government has been
widened somewhat by the institution of a National Assembly, Royal
Advisory Council, Council of Ministers, and local development
     Nepal's major political parties and student groups in
February 1990 launched a Movement for the Restoration of
Democracy that led to violent street demonstrations forcing King
Birendra to relinquish absolute power in favor of a
constitutional monarchy. The country held its first democratic,
multiparty elections in 32 years in May 1991, resulting in a
narrow victory for the Nepali Congress Party (NC), whose leader
G.P. Koirala became prime minister. Although the first year of
the fledgling democracy was marred by antigovernment strikes and
protests, the NC won more than 55 percent of the posts in local
elections contested in May 1992; rival leftist parties won about
29 percent of the posts. 
     In Bangladesh, a coalition of major political parties and
student groups in late 1990 organized anti-government protests
against a decade of authoritarian rule by President H.M. Ershad,
who resigned on December 8. Ershad is currently serving a
ten-year prison sentence for possession of unlicensed arms and
faces charges of corruption and misuse of power during his tenure
in office. The Bangladesh Nationalist Party (BNP) won a majority
in elections held in early 1991, and BNP leader Khaleda Zia,
widow of assassinated former President Ziaur Rahman, was named
president. As a result of a referendum held in September 1991,
Bangladesh changed to a parliamentary system of government, and
Begum Zia, as she is known, became prime minister.[25] 
     26. "Begum" is an honorific used in South Asian countries to
     refer to a woman of high social status.
     The new democratic government faced a difficult first year.
A major cyclone left more than 139,000 dead; paralyzing strikes
were called by teachers, bank employees, transport operators, and
industrial workers; and more than 250,000 Muslim Rohingya
refugees poured into Bangladesh from neighboring Burma, severely
taxing the already thinly stretched resources of the government.
On August 12, the Khaleda Zia government survived a no-confidence
motion in parliament, offered by the opposition Awami League, by
a margin of 168 to 122. The motion criticized the government for
the increasing lawlessness and disorder in the country. Violence
by rival student groups continues to plague Dhaka University,
whose 25,000 students serve as a power base for the major
political parties. 
page 23
     Military regimes have ruled Pakistan for more than half of
the post-independence period. Fractious interludes of civilian
rule have usually ended with the army reasserting control.
Benazir Bhutto, elected in 1988 following a decade of
authoritarian rule by military strongman Zia ul-Haq, was
dismissed by President Ishaq Khan in August 1990 for alleged
corruption and inability to maintain law and order. In a break in
the pattern, elections were held in October. The Islamic
Democratic Alliance (IDA) coalition, led by Nawaz Sharif, won
over Bhutto's Pakistan People's Party (PPP). Despite allegations
of vote fraud, most observers accepted the IDA victory. In 1992,
Prime Minister Sharif's coalition government suffered a number of
defections and resignations by minor parties, but continued to
retain a majority in the parliament. In November, Benazir Bhutto
held rallies across the country in a, thus far, unsuccessful
attempt to bring down the Sharif government. 
     India, which has the strongest democratic traditions in the
region, managed to hold free and fair elections in May-June 1991
in the midst of the crisis created by the assassination of former
Prime Minister Rajiv Gandhi during the elections. The Congress
Party (I) gained a plurality of seats and formed a minority
government with Narasimha Rao as prime minister. Elections in
Punjab in November 1991 and defections from the Telugu Desam
party in August 1992, brought Congress party strength to 251 in
the 544-member Lok Sabha (lower house of parliament), still short
of a majority. On most votes, however, Congress can claim the
support of 25 independents or members of allied parties in
Sri Lanka
     In Sri Lanka, unlike many parliamentary governments, the
office of the president carries a great deal of power, including
power to dissolve parliament and call new elections and to
appoint the prime minister and cabinet and preside over their
meetings. Ranasinghe Premadasa was elected to a six-year term as
president of Sri Lanka in 1988, and his United National Party won
a majority in parliamentary elections held in 1989. Although
marred by violence, both elections were viewed by observers to be
relatively honest. In September 1992, the Sri Lankan Supreme
Court unanimously rejected an opposition party petition to
declare the 1988 election null and void. Widespread violence that
kept voter turnout unusually low in that election was judged to
have affected the voter returns for all candidates.[26] 
     26. Craig Baxter, et al. Government and Politics in South
     Asia, Boulder: Westview Press, 1991.
page 24
     Positive democratization trends at the level of national
political institutions have been offset in recent years by human
rights abuses. Although human rights violations are a persistent
problem in South Asia, reaching down to the lowest rungs of
government, the most serious problems have arisen in the context
of efforts to contain regional dissidence and separatism. The
interrelationship between dissidence and the human rights
situation tends to be circular. That is, dissidence tends to grow
when human rights are abused, and the consequent radicalization
of dissident movements spawns additional rights restrictions and
even greater excesses on the part of the security forces. 
     Various human rights organizations have alleged wide-scale
violations in India in recent years, particularly in Punjab,
Kashmir, and the Northeast. These regions reportedly have
suffered a continuing round of security force excesses, on the
one hand, and murder, kidnaping, and extortion by militants, on
the other. 
     The Indian government employs a broad range of internal
security legislation, some of it left over from the colonial era,
to deal with perceived threats to national security. Where
applied, such legislation permits authorities to detain persons
without charge or trial for up to one year; provides for special
courts, the proceedings of which must be conducted in secret; and
gives security forces broadly defined powers to shoot to kill,
while granting them immunity from prosecution.[27]  In responding
to dissidence and terrorist violence, security forces allegedly
have exceeded even these expanded powers, engaging in house-
to-house searches, mass arrests, indiscriminate firing on
civilian crowds, burning of residential neighborhoods, rape,
torture of prisoners, and staging of fake "encounters" to cover
up deaths of prisoners. In a March 1992 report, Amnesty
International noted that torture and deaths in custody are a
significant problem in all the states of India. In only three of
the more than 400 death-in-custody cases documented in the report
were police officers convicted. Following high-level talks with
Indian officials in late November, Amnesty International
expressed optimism that they may soon be allowed to conduct
independent inquiries in India.[28] 
     27. U.S. Library of Congress. Congressional Research
     Service. India's Internal Security Legislation: Basic Facts
     and Human Rights Implications. CRS Report no. 91-599 F, by
     Barbara Leitch LePoer. Washington, August 12, 1991. 
     28. Amnesty International, India. Torture, Rape & Deaths in
     Custody, New York: March 1992, pp. 1-6; Michael Battye,
     "Amnesty International Hopes for Probe in India," Reuters,
     November 21, 1992.
     Speaking at the Non-Aligned Movement summit meeting in
Jakarta in early September 1992, Prime Minister Rao expressed
frustration that international criticism was directed at regional
governments for their alleged human rights 
page 25
abuses while the depredations of "practitioners of terrorism or
secessionism" were overlooked. This stance notwithstanding, in
the following weeks Rao pushed for the establishment of a
government Human Rights Commission for India under the
sponsorship of the Home Ministry, which met for the first time in
October.[29]  In view of the underlying dynamics of Indian
society and the regional dissidence situations, including a long
tradition of abuse of authority by the police, few expect this
body to bring about any fundamental change in the situation. 
     29. Moses Manoharan, "India Cautions Summit on 'Absolute'
     Human Rights," Reuters, September 2, 1992; "Cms Okay Move on
     Human Rights Panel," India Today, September 15, 1992, p. 1. 
     In Pakistan, provincial government security forces have
reportedly used excessive force in responding to ethnic tensions
in Sindh Province, especially in actions against the Pakistan
People's Party (PPP), which tends to represent ethnic Sindhi
interests, and the immigrant-based Muhajir Qaumi Movement (MQM).
In a report issued in June 1992, Amnesty International charged
that the Pakistan government had engaged in a campaign of
harassment of members of the opposition Pakistan People's Party
in Sindh Province. According to the report, between the dismissal
of the Bhutto government in August 1990 and early 1992, the Sindh
police engaged in mass roundups, lengthy detentions, and
widespread torture including rape. In July 1992, during a
three-month military crackdown on alleged criminal elements in
Sindh, President Ishaq Khan issued a special order giving army
personnel immunity from civil and criminal liability during
operations anywhere in the country and full powers of search,
arrest, and seizure of weapons.[30] 
     30.  Amnesty International, Pakistan. Arrests of Political
     Opponents in Sindh Province, August 1990 - Early 1992, New
     York: June 1992, 1-8; Hamish McDonald, "Things Fall Apart,"
     Far Eastern Economic Review, August 6, 1992, p.20.
     The government of Bangladesh also has been accused of human
rights, abuses, most notably against tribal minority groups in
the Chittagong Hill Tracts of Bangladesh. Low-level conflict
between the Bangladesh government and the Shanti Bahini, the
armed wing of a tribal insurgent organization called the Jana
Sanghati Samit (JSS; People's Solidarity Association) has
occurred off and on since 1973. The insurgency is fueled by
tribal fears that the Chittagong Hill Tracts are gradually being
swamped by Bengalis, whose share of the population of the region
has grown from 3 percent in 1947 to 45 percent at the present
time. Rights abuses have reportedly declined under the Khaleda
Zia government, which was elected in 1991 after a long period of
military rule. Amnesty International has noted, however,
instances of detention without trial, 
page 26
torture, and death in custody, and restriction of freedom of
expression that are alleged to have occurred since 1991.[31] 
     31. U.S. Department of State, Country Reports on Human
     Rights Practices for 1991, February 1992, pp. 1357-58;
     Amnesty International, Human Rights Violations in the
     Chittagong Hill Tracts: An Update, London: December 1991,
Sri Lanka
     Human rights observers report that both the government and
insurgent elements have been guilty of abuses in Sri Lanka. In
responding to armed insurgency and terrorist attacks of the
separatist Liberation Tigers of Tamil Eelam (LTTE), the Sri
Lankan government has given the predominantly Sinhalese security
forces wide-ranging powers through the Prevention of Terrorism
Act and the Emergency Regulations, which permit arbitrary arrest
and incommunicado detention. Security forces, however, allegedly
have often gone beyond these powers to carry out abductions,
torture, and extrajudicial killings. Knowledgeable sources state
that as many as 10,000 disappearances of both Tamils and
Sinhalese, usually young men, have occurred over the past five
years; the disappearances were attributed to security forces,
vigilante groups, and insurgent elements, but the degree of
responsibility of each group was unclear.[32] 
     32. U.S. Department of State, Country Reports on Human
     Rights Practices for 1991, February 1992, pp. 1589-95.
     The Bush Administration lists human rights as a major U.S.
South Asia policy concern, and the State Department reports on
serious human rights abuses in the region in its annual Country
Reports on Human Rights Practices. Many in Congress have
expressed dissatisfaction with what they perceive to be a lack of
effective action by the State Department on the issue. 
     In part, the Congress may be responding to concerns of
constituent groups with ties to the subcontinent, while the
Administration prefers to treat rights issues as internal matters
and tends to be more reluctant to become involved in questions
involving international disputes, such as Kashmir. In recent
years, Members of Congress have proposed various resolutions
deploring human rights violations in India, calling for a
plebiscite in Kashmir, and seeking access to troubled areas of
India for human rights monitoring organizations. In 1989, a bill
linking development aid to India with an improved human rights
situation in Punjab and access for Amnesty International was
narrowly defeated. In June 1992, however, the House passed by a
margin of 219-200 an amendment to the House Foreign Assistance
Appropriations Bill linking $24 million in proposed development
aid to India to the repeal of five Indian national security laws.
page 27
a practical matter, the amendment's effect was limited to an
expression of congressional disapproval of India's policies since
it only reduced the total appropriation for economic assistance
and in any event the cut was restored in conference. 
     Regional cooperation is a comparatively recent development
in South Asia, beginning in the early 1980s with efforts that
culminated in the formation of the South Asian Association for
Regional Cooperation (SAARC) in 1985. Prior to that,
Indo-Pakistani rivalry, fear of Indian hegemony by the smaller
states, and concern by India that its neighbors might gang up on
it in a regional forum all militated against the development of
regionalism. Although none of these factors have disappeared from
South Asian relations, two decades of relative peace, the
economic gains made by other regional groupings, and fear of
trade protectionism by the industrialized nations have made
regional cooperation more attractive. 
     The SAARC charter calls for a pyramidal organization capped
by the seven heads of state, who meet in a summit at least once a
year. At the next level, the council of ministers (comprising the
foreign ministers of the seven states) meets twice a year and
serves as the policymaking body. Below that, a standing committee
composed of the foreign secretaries, coordinates and monitors
programs and mobilizes financial resources. At the base of the
organization are the technical committees, which formulate and
implement programs in agriculture, rural development,
telecommunications, meteorology, health and population, postal
services, transport, science and technology, cultural exchange,
women in development, and prevention of terrorism and drug
     SAARC has had limited success in promoting regional
cooperation. Its critics point to the failure of SAARC in the
past to address such problems and issues as economic and trade
cooperation, water use and the environment, arms proliferation,
and bilateral tensions between India and Pakistan. SAARC
supporters, however, point to such achievements as the
establishment of a SAARC Food Security Reserve of 220,000 tons of
foodgrains for emergency use and to conventions signed on the
suppression of terrorism and the prevention of drug trafficking
and abuse. At the December 1991 summit meeting, the heads of
state agreed to establish a South Asian commission on poverty
alleviation and to relax trade restrictions within the region.
Under consideration is a proposal to establish a South Asian
Preferential Trade Arrangement (SAPTA) by 1997. A SAARC chamber
of commerce, charged with promoting regional trade and economic
relations and headquartered in Karachi, was scheduled to be
inaugurated in 1992. On the agenda for the next SAARC summit
meeting, slated for early 1993 in Dhaka, is a proposed SAARC
regional development fund,
page 28
to which the Japanese reportedly are considering making a
substantial initial donation.[33]
     33. Mukund G. Untawale, "India and the World," Conflict,
     vol. 11, no. 2, 1991, pp. 123-24; Amarnath K. Menon,
     "Floundering Along," India Today, January 15, 1992, p. 73;
     "India Accepts Offer on SAARC," Far Eastern Economic Review,
     September 10, 1992, p. 9. 
     Analysts describe as the most positive benefit of SAARC so
far the institutionalization of a process that has fostered
contact between the region's policymakers and experts through
hundreds of meetings held annually. Although contentious issues
may not be raised in SAARC forums, such issues are sometimes
raised in behind-the-scenes negotiations that lead to resolution
of problems, as in the demarcation of the maritime boundary
between India and Pakistan. Moreover, on several occasions SAARC
summit conferences have provided an opportunity for private talks
between Indian and Pakistani leaders that have helped foster
mutual understanding resulting in at least a temporary defusion
of tensions.[34]  Proponents of a stronger SAARC take as their
model the more broadly successful Association of Southeast Asian
Nations (ASEAN). Hopes for a more effective regional organization
suffered at least a temporary setback, however, when the Dhaka
summit was postponed twice in the wake of the December 1992
Ayodhya incident. 
     34. Op. cit, Untawale, p. 128. 
page 29
     With their large populations, low income levels, and
generally meager natural resources the South Asian countries
traditionally have typified the classic "Third World" developing
societies. In general, despite substantial infusions of outside
resources from bilateral and multilateral donors, the South Asian
countries have experienced relatively slow net economic growth
rates, low per capita incomes and decreasing shares of world
trade. Many factors have contributed to lagging growth and
involvement in the global economy, but increasingly analysts have
centered their criticisms on insufficient reductions in the rate
of population growth, the related failure to adopt universal
primary education, and ineffective economic policies. 
     During the 1980's U.S. aid and trade policy moved sharply in
the direction of promoting market-oriented economic reforms, in
addition to continuing longstanding support for education, family
planning and women and child welfare programs. Overall, U.S. aid
programs in South Asia have experienced a long term decline in
funding, but aid as well as selective trade sanctions and
pressures have been employed to effect policy changes favored by
the United States. 
     Among the most serious problems facing the countries of the
region are population growth rates that far outstrip the pace of
economic and social development. At current rates of increase, by
2030 India will pass China as the most populous country in the
world -- both countries having about 1.5 billion people.
Pakistan's population of 117 million, at the current growth rate,
is projected to double in 25 years. The other countries of the
region face similar problems of burgeoning populations resulting
from declines in mortality rates and increases in life
expectancies brought about by improved health standards and
epidemic controls. Despite improved health conditions, South Asia
has not had the rise in standard of living and education levels
that have led to declining birth rates in East and Southeast
     Soaring population growth has put increased pressure on
scarce resources, particularly in India, Bangladesh, Pakistan,
and Maldives, where the resource-to-population ratio is extremely
low. Food shortages have occurred throughout the region at
various times as a result of poor crop years or natural
disasters. Some forty percent of the people of South Asia live
below the poverty line. Increased need for arable land and fuel
has contributed to deforestation, stream siltation, and flooding.
Population growth further aggravates problems of poor land
distribution, resulting in a continuing flow of the landless to
urban areas in search of employment. Conditions in South Asia's
urban slums provide a fertile environment for political unrest
and social tensions. Following the Ayodhya
page 30
crisis, the most serious rioting occurred in the mega-slums of
distant Bombay.[35]
     35. Shaukat Hassan, "Environmental Issues and Security in
     South Asia," Adelphi Papers, no. 262, Autumn 1991, pp. 8-16.
     The results of population control efforts of South Asian
governments have varied greatly from country to country, but
generally they have fallen well short of the objectives of their
proponents. Birthrates have fallen substantially in a number of
countries, but they are still high. Regional population growth
rates are the highest for Pakistan and Maldives at 3.1 percent
and 3.7 percent, respectively. India is at mid-range with 2.1
percent, and Sri Lanka's growth rate of 1.2 percent is the lowest
in South Asia. Although begun in the 1950s, India's family
planning program has been criticized for its lack of trained
staff, poorly maintained clinics, and the limited choice of
contraceptives offered. Family planning in India also has been
slow to overcome popular rejection of the draconian measures,
including forced sterilization, applied during the political
emergency period of the mid-1970s. Sterilization is still India's
most heavily promoted and utilized birth control program, with
most couples participating already having had three or four
children. Government programs in other South Asian countries are
not much more effective. 
     Low levels of government spending on health and education,
especially for females, throughout the region have been a serious
drawback to population control efforts. Improvement of child and
maternal health care are seen by many population experts as key
to lowering fertility rates; only when people have confidence
that their children will live to adulthood will two-children
families become an acceptable norm. Education and literacy,
particularly for women, are also seen as critical factors. For
example, the Indian states of Kerala and Tamil Nadu, which have
the highest female literacy rates in the country, also have the
lowest birth rates. Not only are literate women more apt to be
aware of the value and methods of family planning, they are also
more likely to be motivated by economic opportunities outside the
home. Education for women also delays marriage age, an important
factor in lowering birth rates.[36] 
     36. Hamish McDonald, "Paying for the Past," Far Eastern
     Economic Reviw. December 26, 1991, pp. 16-17; Shanti R.
     Conly and Sharon L. Camp, India's Family Planning Challenge:
     from Rhetoric to Action, Washington, D.C.: Population Crisis
     Committee, 1992.
page 31 
     After decades of following central planning and public
sector dominance as an economic model, several South Asian
countries began in the 1980s to reassess the direction of their
economic policies. The year 1991 appears to have been a watershed
year in which the region as a whole awoke to the reality of a new
post-Cold-War environment and the economic reform movements
sweeping Eastern Europe and other parts of the world. Spurred by
dwindling foreign exchange reserves, growing budget deficits, and
prodding by international lenders and aid donors, most South
Asian countries have embarked on a course of economic
restructuring aimed at promoting efficiency and growth and
attracting foreign investment. 
     The governments that have come to power in most of the
countries in the past 2-3 years face serious challenges that go
beyond correcting past flaws in economic policy and continuing
fears of foreign economic domination. Such problems include:
ineffective, bloated bureaucracies; widespread tax evasion; the
social and economic drain of communal disharmony and
regional/ethnic dissidence; high levels of defense spending; lack
of infrastructure; lack of production and export diversification;
high population growth rates; and low health and education
levels. Despite these problems, significant strides toward major
economic restructuring have been made throughout the South Asia
in the past two years. Most have paid greater attention to
controlling their budget deficits and privatizing inefficient,
money-losing state enterprises. 
     Drawn by the new economic climate, low labor costs, and
market potential of the region, investors worldwide, and
particularly from Japan and the East Asian "tigers" (South Korea,
Taiwan, Hong Kong, and Singapore), have shown increasing interest
in business joint ventures and large-scale investment in the
region. For example, the Japan Bond Research Institute's
semiannual Country Risk Rating Survey, conducted in July 1992,
increased India's rating from 4.1 to 4.6, on a scale of 10. New
ratings for Pakistan (3.9), Sri Lanka (3.7), and Bangladesh
(2.3), reflected a gain of 0.2 for each. Comparative rankings
page 32
the former Soviet Union (average) at 3.1; Africa (average) 3.1;
Vietnam 3.6; Thailand 8.1; and Mexico 6.1.[37] 
     37. Yukio Nishikawa, "South Asia and Southeast Asia Improve
     in Country Risk Survey," Nikei Weekly, September 19, 1992,
     p. 4.
     South Asia still has a long road to real competitiveness in
the global economy. Recommendations for continued economic growth
in the region focus on the lowering of fiscal deficits coupled
with the greater investment of government resources on improving
infrastructure and developing the full potential of each
country's "human capital," which can only be realized through
major gains in health, education, and other social indicators. 
     Indian economic policy promoted by India's first prime
minister, Jawaharlal Nehru, called for a centrally-planned
economy with government domination of key sectors such as heavy
industry, transport, communication, mining, etc. Both public and
private sector domestic industry were protected from competition
by steep tariffs, a nonconvertible currency, and a morass of
regulations and licensing requirements. Although India gradually
achieved broadly-based industrial development, it lacked
international competitiveness, and by the 1980s its real and per
capita growth rates lagged far behind the export-driven economies
of East and Southeast Asia. At the expense of social services and
infrastructure, enormous amounts of capital were tied up in
loss-making public sector enterprises and the ever-expanding
bureaucracy. The collapse of communism in the Soviet Union and
Eastern Europe cost India important export markets and its source
of bartered oil and capital goods. 
     When the Narasimha Rao government came to power in June
1991, many saw the Indian government as tottering on the brink of
default, with an external debt of $71 billion, a budget deficit
running at 12 percent annually, and barely enough foreign
exchange reserves to cover a few weeks worth of imports. Rao
appointed as finance minister Manmohan Singh, whose economic
reform goals included paring down the fiscal deficit, privatizing
state-owned industries, and wooing foreign investment by removing
complex joint venture controls and raising foreign exchange
equity from 40 to 51 percent. 
     India also revamped its restrictive trade regime by reducing
tariffs and licensing requirements and laying the groundwork for
gradually making the rupee internationally convertible. Since
February 1992, exporters can exchange 60 percent of their
proceeds at market rates and the rest at government rates. The
government says it hopes to achieve full convertibility within
two years, although many doubt this will be feasible. The list of
import items requiring licenses has been substantially reduced.
Although India's tariffs are still among the highest in the
world, tariffs on most capital goods have been cut from 80
percent to 55 percent, and maximum tariffs reduced from 150
percent to 110 percent. The list of multinational companies that
have invested in India since 
page 33
reforms were instituted includes Ford, GM, BMW, Kellogg, Suzuki,
IBM, Shell, GE, Mitsubishi, and Coca Cola.[38] 
     38. Hamish McDonald, "Round One to Reforms," Far Eastern
     Economic Review, July 23, 1992, pp. 14-18; World Bank,
     Country Briefs, June 1992, 50311. 
     Against significant opposition, the government has also
continued to push a limited program of privatization of state
industries. In the first phase, $1.2 billion was raised by the
sale of shares in 31 state-owned enterprises. Beginning the
second phase in September, the government will offer shares in 20
public sector firms to major institutions in a public auction
expected to raise $1.3 billion. Another 58 of India's 230 public
sector enterprises have been targeted for rehabilitation or
closure, if necessary. This is a slow and cautious process,
however, with mounting opposition from trade unions, the bulk of
whose members are government employees. A National Renewal Fund
has been established to provide retraining or retirement packages
for affected workers.[39] 
     39. Hamish McDonald, "Failed Gods of the Past," Far Eastern
     Economic Review, July 23, 1992, pp. 16-17; Jeremy Clift,
     "India to Sell Stakes in More State Companies," Reuters,
     September 17, 1992. 
     India's economic reform measures have depended heavily on
support from international donors, who generally have expressed
strong approval of the efforts made, thus far. In June 1992, the
Aid-India Consortium, comprising 12 countries and 7 agencies,
raised its aid commitment to India for the year by 7.5 percent,
to $7.2 billion. IMF director Michael Camdessus noted at a
September press conference that India had made more progress in
the past year than in the previous decade of gradual reform. In
the latest round of liberalization efforts announced in
September, foreign institutional investors were given approval to
invest in the Indian stockmarket. Petroleum prices also were
raised, reportedly in line with promises made to the IMF and
World Bank, which have long been critical of costly subsidies on
food, fuel, and fertilizers that mainly benefit the middle
     40. Bill Tarrant, "India, Reform Back on Track, to Seek New
     IMF Loan," Reuters, September 18, 1992. 
     Although the reforms have generated a sharp increase in
U.S., Japanese and other foreign investment, on top of a low
base, they still appear to fall short of what would be required
to attract enough large scale foreign investment to significantly
raise the efficiency of the Indian economy.[41]  Major problems
include tariffs that, while substantially lower, remain too high
to induce necessary competition in the economy; excessive
regulation and red tape at the 
     41. See Far Eastern Economic Review, Jan. 21, 1993: 53-54;
     Journal of Commerce, Jan. 8, 1993: 6A; and U.S. Department
     of Commerce, Foreign Economic Trends and their Implications
     for the United States: India, Aug. 1992, p. 7.
page 34
state and local level; burdensome customs and import-export
clearance procedures; and unwieldy foreign exchange controls. 
     Progress on remaining obstacles is seen to depend heavily on
whether the Rao government can gain approval of its fiscal 1993
budget, which will be presented in February and must be passed by
parliament before the fiscal year begins on April 1. The planned
budget is thought to include a number of critical domestic
revenue, tariff, and banking changes. Reportedly, despite its
struggle with the Congress (I)-led government over the Ayodhya
mosque issue, the strongest opposition party, the BJP, does not
plan to oppose the reforms.[42]  Due to the nature of its support
base, however, the BJP remains economically nationalistic in
outlook and generally hostile to foreign participation in the
Indian economy. 
     42. Wall Street Journal, Dec. 23, 1992, A4. 
     The Nawaz Sharif government in 1991 began an ambitious
economic reform program, including privatizing state-owned
enterprises and liberalizing foreign investment and exchange
regulations. Some 35 state-owned industries (out of 100) and two
banks have been transferred to the private sector. State
monopolies in transport, telecommunications, and insurance are
also being dismantled. The Pakistani rupee has been made freely
convertible, and there is 100 percent foreign exchange equity. 
     The efforts appear to be paying off, although Pakistan's
disturbed internal security situation continues to discourage
foreign and domestic investment. The economy grew by 6.4 percent
for the fiscal year ending June 30, 1992, up from 5.6 percent the
previous year; exports rose 21 percent; investment increased by
17.6 percent; badly-needed machinery imports went up 56 percent;
disbursements of bank loans to businesses rose 64 percent.
Although exports were up, imports rose too, resulting in a $2.6
billion trade deficit for the year. 
     The government responded to the continuing trade deficit by
announcing further measures to boost nontraditional exports.
These include liberalizing imports of capital goods and raw
materials that are essential to producing competitive
manufactured goods as well as offering incentives for exported
manufactures. Duties were removed or reduced on machinery for
manufacturing sporting goods, cutlery, surgical goods, footwear,
textiles, etc. Export duties were reduced on cotton yarns; tax
exemptions and transport subsidies will be given for other
products; and trade procedures have been simplified. Longer-range
plans call for opening protected domestic industries to
competition by cutting the list of banned imports and reducing
tariffs by about 10 percent annually.[43] 
     43. Arun Chacko, "Prickly Path to Reform," India Today,"
     February 29, 1992, pp. 136-37; Salamat Ali, "Turning the
     Corner," Far Eastern Economic Review, August 13, 1992;
     Salamat Ali, "Mercantile Message," Far Eastern Economic
     Review, July 16, 1992, pp. 56-57. 
page 35
     Despite the achievements of its reform program, Pakistan's
economy still faces serious problems. External donors, including
the IMF and the Asian Development Bank, have expressed concern
over Pakistan's growing budget deficit, high inflation and
unemployment rates, and low savings and investment rates, while
at the same time praising the progress that has been made.
Further measures recommended include broadening of the tax base,
focusing on development, and reducing defense expenditures. The
Nawaz Sharif government has also faced domestic opposition to
many of its economic reform measures. Benazir Bhutto's opposition
PPP has charged the government with corruption and cronyism in
carrying out its privatization program. 
     Certain domestic legal developments and political
initiatives relating to long-standing tensions between secularism
and Islamic sentiment in Pakistan have had negative economic
consequences. Investor confidence was seriously undermined when
the federal Shariat Court -- the country's highest religious
court -- in November 1991 ruled that bank and other types of
interest were forbidden by the Koran. This ruling reportedly
caused lenders to pull out of a hydroelectric project on the Hab
River near Karachi. The ruling has been appealed to the Supreme
Court, which has yet to hear the case. Meanwhile, the situation
has become further tangled by a constitutional amendment proposed
by Sharif, apparently for tactical political reasons, that would
extend further the jurisdiction of Islamic religious courts over
civil law and, at the same time, give constitutional protection
to the government's economic reforms.[44] 
     44. World Bank Report, pp. 524-27; Salamat Ali, "Desperate
     Ploy," Far Eastern Economic Review, August 27, 1992, p. 13;
     FBIS Daily Report Near East and South Asia, August 6, 1992,
     p. 24; Salamat Ali, "Question of Interest," Far Eastern
     Economic Review, December 12, 1991, p. 27. 
Sri Lanka
     The Ranasinghe Premadasa government, which came to power in
1989, has accelerated various economic reform efforts aimed at
boosting domestic and foreign investment that date from the early
1980s. Investment incentives and economic reforms attracted $362
million in foreign investment in 1991, up from $56 million the
previous year, notwithstanding the country's still-troubled
political situation. Incentives for foreign investment include
100 percent foreign exchange equity; tax holidays of from 5 to 15
years; duty-free imports of machinery, equipment, and raw
materials related to the project; no capital gains or export
taxes; and special export processing zones managed by the
government's Greater Colombo Economic Commission, which
facilitates investor relations with government agencies. Another
important draw for investors is Sri Lanka's low-cost manpower,
highly literate (88 percent) workforce.[45] 
     45. John Hail, "Sri Lanka. A Resurgent Economy."
     Institutional Investor, April 1992 (special. suppl.), pp.
page 36
     Privatization efforts, begun in 1987, have resulted in 12 of
49 state enterprises being at least 51 percent privatized, many
of them taken over by foreign investors. Export diversification
efforts were also showing results. Although still the world's
largest tea exporter, by 1991 Sri Lanka had increased its
industrial exports to equal 60 percent of the total. In 1992, the
government announced plans to expand Sri Lanka's three export
zones to include the entire island as a free-trade area.
Asia-Pacific countries were leading investors in numbers of new
projects in 1991, led by South Korea (32), Hong Kong (22), and
Japan (18). The overall working of the economy is still bedeviled
by inefficiency and layers of bureaucratic approval
     46. For one foreign investor's view of the problem, albeit
     tinged with humor and underlying optimism, see an account of
     the travails of setting up a shipping office by an official
     of Singapore's Neptune Orient Lines. Journal of Commerce,
     Dec. 30, 1992: A1,3. 
     Continuing clashes between government forces and Tamil
separatists, largely confined to small areas in the north and
east, did not seem to be the damper on investor confidence they
were in the 1980s. Terrorist bombings that killed eleven
high-ranking Sri Lankan military officers in August and November
1992, however, were likely to have some negative impact on the
investment climate. Aside from the economic and social costs of
the ongoing insurgency, major economic problems in 1992 included
high rates of unemployment (20 percent) and inflation (21
     47. Jean-Claude Buhrer, "Sri Lanka Fast Forward," Manchester
     Guardian Weekly, May 17, 1992, p. 16; FBIS Daily Report Near
     East and South Asia, July 21, 1992, p. 73. 
     On coming to power in February 1991, the Khaleda Zia
government expressed a commitment to economic reform and
export-led growth. Bangladesh Finance Minister Saifur Rahman
instituted a number of reforms in 1992, including cutting
personal and corporate taxes, with the hope of reducing tax
evasion. In order to encourage Bangladeshi expatriates to invest
in local enterprises, a 30 percent tax on money repatriated from
abroad was eliminated. Budget allocations for education were
increased along with spending for the generation of electric
power, always in short supply. The government also agreed in
principle to open power generation and supply in the major
industrial centers to the private sector. Under the
government-run system there are 40 percent losses resulting from
wastage and illegal tapping of electricity.[48] 
     48. S. Kamaluddin, "Reform, by Degrees," Far Eastern
     Economic Review, July 2, 1992, pp. 46-47.
     The Bangladesh economy grew 4.1 percent in fiscal year
1991-92 (up from 3.6 the previous year), public debt was reduced,
and inflation and interest rates both declined. A number of
setbacks, however, threatened to undermine 
page 37
government reform efforts. In April 1991, a devastating cyclone
struck Bangladesh killing 140,000 people and destroying most of
the crops, livestock, homes, industry, and infrastructure of the
coastal region. Development projects were delayed by an
inefficient, overstaffed, and sometimes corrupt civil service.
Plans to privatize 40 state-owned manufacturing units by June
1993 appeared to be stalled by labor union opposition. Political
violence and rising crime in 1992 threatened to undermine
investor confidence. Domestic and foreign investment is key to
the diversification of the country's exports, of which jute,
leather, garments, and frozen fish currently account for 90
     49. S. Kamaluddin, "Dangers of Drift," Far Eastern Economic
     Review, September 10, 1992, p. 78; Caitlin Murphy,
     "Sinecures vs. Sewing Machines," Wall Street Journal, August
     7, 1992, p. A12.
     Bangladesh's low wage rates have attracted a number of
foreign firms interested in setting up high labor content
production for export, especially in the areas of electronics and
textiles. Whether the country can attract enough foreign
investment to significantly boost domestic incomes and exports,
especially in view of major infrastructure shortcomings remains
to be seen. 
     Nepal, too, recently has caught the wave of economic
rethinking sweeping South Asia. In May 1992, the Koirala
government announced new policy measures that abolish major trade
restrictions. Previously, the government required licensing for
almost all imports and exports; under the new trade policy, only
about 40 items will be subject to licensing restrictions. The
government also has begun privatizing some of the 62 state-owned
corporations and has adopted a partial currency convertibility
system for foreign exchange transactions. 
     In September the Nepalese government announced a major drive
to attract foreign investment to 80 "priority" industries. The
government plans to send six delegations in late 1992 to
destinations in Asia, Europe, and the United States to publicize
a package of incentives for new enterprises set up either on a
joint-venture or 100-percent-equity basis. New incentives include
seven-year tax holiday provisions; guarantees for repatriation of
earnings; and the advantage of Nepal's concessionary access to
major foreign markets. Under a recently established One Window
Policy, investors are guaranteed a decision on investment
proposals within 30 days as well as taxation advice and
infrastructural assistance. A seminar for foreign industrialists
and entrepreneurs, jointly sponsored by the UN Industrial
Development Organization and the Nepali government, also was
scheduled for late 1992. Potential foreign investors and aid
donors have begun to take notice of the new policies. In
announcing in July a grant to extend hydroelectric power 
page 38
distribution in Kathmandu Valley, Japanese officials lauded
Nepalese efforts to introduce a market-oriented economy.[50] 
     50. Kedar Man Singh, "Opening the Himalayas," Far Eastern
     Economic Review, June 4, 1992, p.67; "Nepal Also Adopts
     Partial Currency Convertibility," Indian Express, March 5,
     1992, p. 11; FIBS Daily Report Near East and South Asia,
     January 6, 1992, p. 69, July 29, 1992, p. 54, and September
     9, 1992, p. 54.
U.S. Aid Strategy
     The South Asian countries constitute one of the largest
blocks of countries receiving the more traditional forms of U.S.
economic development assistance. This includes, in particular,
programmatic Development Assistance and P.L.-480 food aid. U.S.
aid to the region traditionally has been justified on the basis
of several, sometimes conflicting, policy goals. As articulated
in a number of executive branch policy statements, the major U.S.
policy goals in South Asia are to (a) promote regional security
and the decrease of tensions between states, particularly the
nuclear arms race between India and Pakistan; (b) encourage
development in the region through the process of economic
liberalization; and (c) continue support for the strengthening of
democratic institutions. 
     With the exception of Pakistan, U.S. aid to South Asian
countries over the past few years has remained at about the same
level, with a slight decline for the region as a whole. U.S. aid
to Pakistan was suspended in October 1990 because of concerns
over its nuclear weapons program; however, some nonmilitary aid
in the pipeline continues to flow. Although some Members of
Congress criticized the lack of "symmetry," Congress in 1991
resisted attempts to extend the Pressler amendment to India. 
     More than half the $127 million (FY1992) total aid for
Bangladesh was comprised of food assistance. The remaining $56
million in development aid supported projects that increase
private investment in agricultural production, processing, and
marketing; access to health and family planning services;
nonagricultural private sector investment; and participation in
local and national government. USAID programs that have
contributed to democratization efforts in Bangladesh include
voter education programs and training of indigenous poll watchers
and election observers. 
page 39
     Of the $143 million (FY1992) total aid to India, the bulk
was for food assistance, largely consisting of edible oils
provided under the P.L.-480 program. The $47 million in
development assistance goes to support programs in housing and
urban development; industry; energy; health, population, and
nutrition; and agricultural research and natural resources
management. AID development strategy in India focuses
particularly on efforts to accelerate the process of economic
     About $19 million of the $79 million (FY 1992) total aid to
Sri Lanka is development assistance in support of government
policies that promote a private sector-oriented, open-market
economy, as well as health, education, and environmental
programs. In view of Nepal's ongoing transition to democracy and
a more market-oriented economy, AID reports that it is shifting
its program focus toward the private sector, by supporting a
variety of economic privatization, agro-enterprise, and
democratization projects. U.S. aid to Nepal, about $18 million in
FY1992, also supports projects in voter education and parliament
strengthening as well as training for election observers and
emerging political leaders. 
Cooperation with Other Donors
     South Asian nations are feeling the effects of the changing
foreign aid strategies of bilateral and multilateral
donor-lenders. Environmental concerns, human rights, nuclear
nonproliferation, military spending, economic reform, and poverty
reduction are all becoming concerns and conditionalities in a
time of increasing demand on scarce aid resources. 
     The World Bank, the largest intergovernmental lending
agency, announced in May that poverty-reduction would be the main
focus of its work in the 1990s, and Bank loans would be
proportional to a country's own efforts to reduce poverty. India,
Pakistan, and Bangladesh all ranked among the top 15 World Bank
borrowers for the 1987-91 period. Bank officials also stated that
nonproductive military spending would be a prime factor in
assessing loan requests. Likewise, the UN Development Program
(UNDP) last year noted the
page 40
link between human development and military spending and stated
that aid should be conditional on what priority countries place
on education and health. 
     In their annual meetings to decide aid commitments, the aid
consortiums for South Asian countries are increasingly
scrutinizing those countries' records on human rights, military
vs. developmental spending, economic reforms, and fiscal
responsibility. Japan and Germany, in particular, have
established more stringent criteria regarding recipient
countries' military expenditures. 
     In June 1992, the IMF delayed consideration of a $1 billion
loan to Pakistan because of its growing budget deficit. Although
the Aid India Consortium pledged a record $7.2 billion that
month, there reportedly were suggestions that Delhi should reduce
its military spending. World Bank and Japanese support for the
Narmada dam project is currently on hold pending further
assessment of environment and human rights concerns. 
     Although the United States usually undertakes trade
initiatives at the behest of U.S. businesses or overall trade
policy objectives, the executive branch and Congress generally
have taken the position that these steps are also in the best
interest of the target countries. In recent years India--the
largest U.S. trade partner in the region--has received the most
attention due to its numerous trade and investment barriers and
inadequate protection of patents. The Bush Administration named
India in May 1989, along with Japan and Brazil, as a "priority
country" under the Super 301 provisions of the U.S. Omnibus Trade
Act of 1988 for its 40 percent equity limit on foreign investment
and restrictions on foreign entry into the insurance industry.
The equity issue largely became moot after the Rao government
promulgated its new economic liberalization program, which now
allows 51 percent ownership in most industries. 
     In May 1991, after years of discussions, the Office of the
U.S. Trade Representative (USTR) cited India for lack of
protection and enforcement of intellectual property rights under
the Special 301 provision of the Trade Act of 1974. After a
9-month investigation, the USTR determined that India had
strengthened its copyright and trademark laws but still lacked
adequate patent protection. In April 1992, the Bush
Administration removed Indian exports of drugs and
pharmaceuticals from the duty-free list under the Generalized
System of Preferences (GSP), and a five percent customs duty was
imposed on the $36 million trade. U.S. pharmaceutical
manufacturers have estimated their annual losses resulting from
widespread pirating of drugs and other products to be about $400
     As of late 1992, the pharmaceutical issue remained the
subject of negotiations. According to some accounts, the Indian
government is edging towards adopting stronger protections, if
only so that its producers will not be closed out of U.S. and
other developed country markets. A new irritant was a
page 41
move by the Cipla company in India to market a domestic version
of the AIDS treatment drug AZT at about one-fourth of the cost of
the version produced by Burroughs Wellcome, which holds the
license to produce the drug, originally developed at the National
Cancer Institute. Burroughs Wellcome currently exports the drug
to India from the United States. India, with an estimated 1
million HIV positive people, argues that most infected persons
could not conceivably afford even the cheaper Indian drug, but a
limited market exists among well-to-do and middle income Indians
and the possibility exists of substantial black market exports.
Cipla will not pay any royalty to Burroughs Wellcome and will
produce the drug without its approval. This will be legal in
India because India grants patents to processes, rather than
products. Since Cipla has devised a new process to make the drug,
it is reportedly under no obligation to Burroughs Wellcome under
Indian law.[51] 
     51. Hamish McDonald, "India's Drug Challenge," Far Eastern
     Economic Review, Oct. 1, 1992: 78-79. 
     Although narcotics-related problems are on the increase in
most South Asian countries, Pakistan is the most seriously
affected. Opium is cultivated mainly in the tribal areas of the
North-West Frontier Province (NWFP) and converted into heroin in
more than 100 laboratories scattered along the border between the
NWFP and Afghanistan. In recent years, the Pakistan-Afghanistan
border region has supplied an estimated 40 percent of the heroin
consumed in the United States and a large share of the heroin
consumed in Europe. Much of Pakistan's heroin production,
however, remains in Pakistan, which itself has an estimated 1-2
million heroin addicts.[52] 
     52. Joseph Limprecht, "Operation Islamabad: Combatting
     Narcotics in Pakistan," Foreign Service Journal, November
     1991, pp. 28-30.
     About $7 million in USAID anti-narcotics assistance for
FY1991 was suspended in October 1990, along with other foreign
aid for Pakistan, under the "Pressler amendment" cutoff, although
similar aid provided under the State Department's International
Narcotics Control Program continued, including about $4.6 million
in FY1992, with $4.8 million requested for FY 1993. Most of the
funds support government of Pakistan efforts to arrest and
prosecute major traffickers, destroy heroin laboratories,
eradicate the opium crop, introduce substitute crops, build roads
into remote areas, and provide anti-drug education. Although
large amounts of heroin have been seized and several laboratories
shut down, both foreign observers and the Pakistani press point
to rampant corruption that prevents enforcement of Pakistan's
anti-narcotics laws. Some Pakistani officials linked the rise in
opium production from 165 tons in 
page 42
1990 to more than 200 tons in 1991 to dwindling USAID support for
crop substitution and infrastructure development projects in the
tribal areas.[53] 
     53. U.S. Department of State. Bureau of International
     Narcotics Matters. International Narcotics Control Strategy
     Report, March 1992, pp. 241-47; "Lahore's Flourishing Drug
     Trade," The Friday Times (Lahore), May 28-June 3, 1992, p.
     5; FBIS Daily Report Near East and South Asia, November 5,
     1991, p. 86. 
     Although India has long been a major transit country for
drugs originating in Pakistan or Burma, the Indian press reports
that India is now a leading producer of illegal heroin. The share
of Indian-made heroin in the world market reportedly has reached
$2 billion; India itself has about one million heroin addicts.
India is also the world's largest producer of licit opium for
pharmaceutical purposes, some of which gets diverted to heroin
production. Most illicit opium is grown in the border areas of
India's Northeast and in the northern state of Uttar Pradesh,
where it is processed into heroin and easily transported across
porous borders to Nepal and Bangladesh. Nepal, which serves as a
transit country, also reports about 26,000 heroin addicts and
casual users. Although there are no U.S. anti-narcotics foreign
assistance programs in India or Nepal, both countries cooperate
closely with the United States on narcotics problems. U.S.
Government-funded courses provided counternarcotics training for
Indian officials in 1991, and the U.S. Drug Enforcement
Administration office in New Delhi cooperates closely with the
Indian Narcotics Control Board. The new Nepal government
reportedly places a high priority on narcotics control, pledging
in 1992 to adopt the UN drug control master plan and establish a
narcotics enforcement unit. Narcotics control programs in both
India and Nepal suffer from inadequate training and
     54. U.S. Department of State. Bureau of International
     Narcotics Matters. International Narcotics Control Strategy
     Report, March 1992, pp. 228-40; Anirudhya Mitra, "Riding New
     Highs," India Today, November 15, 1991, pp.8892.
page 43
     South Asian countries not only share similar environmental
problems but, also, in some cases share responsibility for each
others problems. The region's vast river systems, for example,
know no boundaries, and activities in one country's part of a
watershed often have serious impact on downstream neighboring
countries. As a result, watershed protection and water-use
disputes have been a common feature of post-independence regional
     Deforestation is perhaps the most serious regional
environmental problem because of its causal relationship with
such other environmental problems as soil erosion, flooding,
silting of waterways, and destruction of coastal fisheries. Aside
from their value as a natural resource and deterrent to soil
erosion, forests play an important role in regional weather
systems by recycling enormous amounts of rainwater, and their
destruction can have a major impact on the climate of an entire
region. Although deforestation is a serious problem in all of
tropical Asia, the rate of destruction of forest resources
historically has been greatest in South Asia, where the forested
area was reduced by 43 percent between 1850 and 1980. Moreover,
in the 1980s, Nepal had the highest average annual rate of
deforestation in tropical Asia (4.1 percent), followed by Sri
Lanka (3.5 percent). Nepal's forest cover decreased from 60
percent to 34 percent in the two decades between 1961 and 1981.
In India and Bangladesh, forest cover has been reduced to 15
percent and 9 percent, respectively.[55] 
     55. Gopal B. Thapa and Karl E. Weber, "Actors and Factors of
     Deforestation in 'Tropical Asia'," Environmental
     Conservation, vol. 17, no. 1, Spring 1990, pp. 1-2; Shaukat
     Hassan, "Environmental Issues and Security in South Asia,"
     Adelphi Papers, no. 262, Autumn 1991, 12-15; see also U.S.
     Library of Congress. Congressional Research Service.
     Tropical Deforestation. Issue Brief No. IB89010, by Susan R.
     Fletcher, March 22, 1991 (archived). Washington, 1991.
     Mounting population pressure is cited as one major cause of
deforestation, as woodlands are destroyed by livestock grazing,
fuel-wood cutting, and conversion to agricultural land. The
landless, who account for 50 percent of the population of Nepal
and nearly one-quarter of the population of Pakistan,
increasingly have used forest areas to provide their basic
survival needs of food, fuel, and animal fodder. However,
political and economic elites also share the blame for
deforestation resulting from commercial logging and livestock
ranching. Moreover, elites often have accumulated by various
means agricultural lands formerly owned or used by small farmers,
who have been forced to seek subsistence in forested areas.
Dependence on wood for cooking, heating, and some agro-industries
such as tea-drying is a major drain on forest resources in the
region. In the mid-1980s, the percent of total energy 
page 44
consumption supplied by wood was 36 percent in India, 55 percent
in Sri Lanka, and 98 percent in Nepal.[56] 
     56. Op. cit., Thapa and Weber, pp. 22-24. 
     Soil erosion and degradation in South Asia are increasing at
an alarming rate as a result of deforestation and
over-irrigation. Recent flood disasters in Bangladesh and
northern India have been attributed in part to deforestation of
watershed areas in the Himalayan Mountains and foothills of
Bangladesh, India, and Nepal. Loss of forest cover exposes soil
to wind and rain erosion often resulting in landslides in upland
watersheds. Without forest vegetation to absorb water and hold
soil in place, surface runoff and erosion are greatly increased
resulting in swollen streams, silted channel beds, and flooding
downstream. Floods cause enormous loss of lives, homes, crops,
livestock, and property. The flood situation in Bangladesh has
deteriorated greatly since 1954, when that area experienced its
first high flood of the twentieth century. Between 1954 and 1988,
there were 14 high floods, including the 1974 flood, which killed
more than 28,000 people in Bangladesh. Since 1970, there have
been five high floods, including consecutive floods in 1987 and
1988. In the high flood of 1988, which did $1 billion in damage,
twice the land area (77,700 sq. km.) and nearly three times the
number of major rivers (30) were flooded as in 1954. In India,
too, the area subject to annual flooding has more than tripled
since 1960.[57] 
     57. Md. Abdur Rob, "Flood Hazards in Bangladesh: Nature,
     Causes and Control," Asian Profile, vol. 18, no. 4, August
     1990, pp. 365-71. 
     Aside from deforestation and soil erosion that result in
siltation of channel beds, Bangladesh blames some of its flooding
problems on the construction of the Farakka Barrage, built by
India in the 1970s to divert water from the Ganges River (Padma
in Bangladesh) into the Hooghly River, through a feeder canal, in
order to flush silt from the port of Calcutta. Sharing of the
Ganges waters has been a sore point between the two countries for
nearly two decades. Bangladesh claims that low dry-season flows
caused by water diversion at Farakka have increased salinity and
desertification of downstream soils in Bangladesh and contributed
to channel siltation, resulting in increased flooding. Various
water-sharing agreements have been worked out through the years
--none entirely satisfactory to either side -- the last one
expiring in 1988. At a ministerial meeting held in late August
1992, Bangladesh and India agreed to set up a joint committee of
experts to work out an equitable, longterm arrangement.[58] 
     58. Nahid Islam, "The Ganges Water Dispute: Environmental
     and Related Impacts on Bangladesh," Bangladesh Institute of
     International and Strategic Studies Journal, vol 12, no. 3,
     July 1991, pp. 271-81; Reuters, August 27, 1992.
page 45
     Hydroelectric and irrigation projects have been a mainstay
of Indian development since independence. Since 1947, more than
3,000 large and medium-sized dams and countless canals and
reservoirs have been built to provide power and arable land for
the country's growing population. Allocation of the region's
waters has been a major source of dispute both among the various
Indian states and between India and its neighbors. In recent
years, however, major dams and irrigation projects have also
become human rights and environmental battlegrounds. Critics note
that such projects have displaced more than 11 million people and
their homes and villages as well as submerging vast tracts of
forest and farmland. Moreover, some seismologists believe that
major dams in geologically unstable areas can increase the
likelihood of earthquakes resulting from reservoir-induced
seismicity (RIS), which can occur when a large body of water is
impounded in a reservoir behind a high dam in such an area. RIS
earthquakes reportedly have occurred at a number of reservoirs in
India. Much of the opposition to the Tehri dam, under
construction in the Himalayan region of Uttar Pradesh state,
centers on concerns about the seismic vulnerability of the
     59. Clarence Maloney "Environmental and Project Displacement
     of Population in India," Universities Field Staff
     International Reports, 1990/91, no. 14, pp. 1-7; Aparna
     Viswanathan, "Reservoir Induced Seismicity. A Man-Made
     Disaster," Economic and Political Weekly, December 28, 1991,
     pp. 2979-80. 
     Environmentalists claim that large-scale irrigation projects
often lead to waterlogging and salinization of the soils in the
surrounding area. Waterlogging can occur in land near irrigation
canals that are not lined with concrete or in certain soils that
with perennial irrigation become to heavy and waterlogged to
work. Salinization can occur when irrigation water evaporates,
and salts dissolved in the water crystallize leaving a crust on
the surface of the soil. Salinization and waterlogging have
plagued irrigation projects in the subcontinent since the 19th
century. Environmentalists point to vast tracts of irrigated land
in India and Pakistan that have gone out of production as a
result of waterlogging and salinization. In Pakistan, where more
than one-quarter of irrigated land suffers from salinity,
irrigated land is reportedly going out of production at the rate
of 100 hectares a day. According to studies by the Indian Social
Institute, one million people in India have been displaced by
waterlogging and salinization from irrigation projects. As
alternatives to major hydroelectric and irrigation schemes, some
environmentalists propose small-scale projects and more emphasis
on energy and water conservation measures.[60] 
     60. Op.cit., Hassan, p. 18; Op.cit, Maloney, p. 3-8.
     Human rights and environmental groups have been particularly
critical of the projects underway on the Narmada River, in the
western Indian states of Gujarat and Madhya Pradesh, for which
the World Bank has so far loaned India $450 million of the
estimated $5.4 billion total needed to complete the projects.
Congressional hearings were held in 1989 on the environmental
impact of the 
page 46
Sardar Sarovar dam, the largest of some 30 major dams in the vast
irrigation and power development scheme. Critics note that the
dam will submerge a huge inhabited forest area, displacing 70,000
people. Supporters state that the Narmada project when completed
will provide power, irrigation, flood control, and drinking water
for an area inhabited by 30 million people. In June 1991, the
World Bank announced "an independent expert review" of the
environmental and rehabilitation aspects of the Sardar Sarovar
project, to be led by a former UN administrator, Bradford Morse.
Released in June 1992, the study concluded that the project was
faulty in terms of the human and environmental impact as well as
the project design and urged the Bank to "step back" from the
project for further analysis. Problems noted in the 360-page
study included inadequate planning for resettlement, problems of
waterlogging and salinity, and inadequate planning for storage
and delivery of water to drought areas. In November, World Bank
president Lewis Preston stated that the Bank would continue
funding the Narmada project, while setting conditions for its
support. Resettlement and environmental impact targets will be
reviewed by the Bank's board in May 1993.[61] 
     61 U.S. Congress. House. Committee on Science, Space, and
     Technology. Subcommittee on Natural Resources, Agriculture
     Research and Environment. Sardar Sarovar Dam Project.
     Hearing, 101st Cong., 1st Sess., October 24, 1989,
     Washington, U.S. Govt. Print. Off., 1990, 218 pp.; Susumu
     Awanohara and Rita Manchanda, "Dam under Fire," Far Eastern
     Economic Review, July 2, 1992, p. 18; Bill Tarrant, "India
     Dam Dispute Reflects Debate on Rights, Environment,"
     Reuters, June 28, 1992; Jeremy Clift, 'World Bank Chief
     Backs Huge Indian Dam Project," Reuters, November 15, 1992. 
     In India, with the world's 11th largest industrialized
output, lax controls reportedly have led to pollution of
countless streams and wells by such industries as tanneries,
pharmaceuticals, and paper mills. The most disastrous incidence
of industrial pollution occurred in 1984 when an explosion at the
Union Carbide India Limited (UCIL) chemical plant in Bhopal,
Madhya Pradesh, spread poisonous gases that killed at least 4,000
people and affected thousands more in the surrounding area. In
October 1991, the Indian Supreme Court upheld a 1989 settlement
requiring Union Carbide Corporation, the U.S. company that owns
51 percent of UCIL, to pay $470 million in compensation to the
victims. Environmentalists also point to the industrial
development zone of Patancheru located near Hyderabad, the
capital of Andhra Pradesh state. A former farming community,
Patancheru is now the site of more than 300 factories, which
environmental groups say have polluted the surrounding soil, air,
and ground water with their industrial wastes.[62] 
     62. FBIS Daily; Report Near East and South Asia, October 23,
     1991, p. 44; Barbara Crossette, "300 Factories Add Up to
     India's Very; Sick Town," New York Times, February 6, 1991,
     p. A3.
page 47
     New Delhi is now considered the world's third most polluted
capital city; levels of harmful suspended particulates in the air
average five times the maximum acceptable standard set by the
World Health Organization. More than 30 percent of New Delhi's
air pollution comes from industry and 53 percent from vehicle
     63. Michael Schuman, "Unequal Struggle," Far Eastern
     Economic Review, September 19, 1992, p. 48.
     Faced with problems of mounting population and the need for
economic development, environmental concerns have ranked fairly
low with most of the region's governments. Environmental
ministries have traditionally been weak in relation to those
concerned with industry, mining, or power, for example, and
enforcement of environmental laws is lax. Moreover, many
environmental issues are without borders and create continuing
international friction, as in the case of water allocation and
watershed protection. Although some of the smaller South Asian
states have sometimes pressed for a regional approach to such
issues, India has always preferred to retain the advantages it
has in bilateral negotiations. The general consensus on
environmental issues at the December 1991 SAARC summit was that
development was the central concern and that the developed
nations should not propose environmental standards that would
keep the developing countries "where they are." 
     Pressure for protection of the environment in South Asia is
currently centered in the environmental protection groups,
various other nongovernmental organizations (NGO's), and public
interest law firms, such as Sri Lanka's Environmental Foundation
Limited. Such groups often look to the U.S. and other developed
nations for environmental concepts, legal language, and
technology as well as for financial support. At the Earth Summit
in Rio de Janeiro in June 1992, the developing nations, led by
India, resisted efforts by the developed nations to pass a
convention declaring forests a "global resource" because of the
poorer nations' fears of infringement on their national
sovereignty. The impasse on agreement on development aid at the
summit centered around refusal by most of the developed nations
to make financial commitments and worry on the part of the
developing countries that development assistance would be
funneled only into solving environmental problems, rather than a
whole range of other needs. 
     South Asia remains a region that is susceptible to a variety
of U.S. sources of influence, including the ability of the United
States to tilt the military balance, the region's dependence on
the U.S. market, and the direct and indirect 
page 48
U.S. influence over aid flows. In a region where no outside power
has gained significant economic or military footholds, the
attitudes of the lone superpower still count heavily, despite the
passionate nationalism of all the regional states. 
     The diverse nature of U.S. interests in South Asia
inevitably suggests a long list of policy issues and options.
Typically, U.S. policy has been marked by a considerable number
of either conflicting policy objectives or contradictions in the
means used to pursue them. For instance, past support for
Pakistan's security arguably helped promote competition in
military technology between India and Pakistan, and thereby to
endanger stability. Legislative sanctions that seek to deter
nuclear proliferation or penalize countries for human rights
violations by cutting aid sometimes have been at variance with
other goals of promoting development, encouraging economic
liberalization, or controlling narcotics traffic. 
     Broad agreement exists on basic U.S. policy goals, such as
deterring nuclear and missile proliferation; promoting stability,
democracy, and adherence to internationally recognized human
rights standards; encouraging economic liberalization; protecting
the environment; and halting narcotics trafficking. For the most
part, policy differences revolve around the means to promote
goals and the relative weight to be accorded them. 
     The United States possesses four basic policy vehicles for
achieving its foreign and security policy goals in South Asia:
(1) government-to-government policy dialogues; (2) economic
assistance programs, (3) arms sales and dual use technology
export policies, and (4) the use of access to the U.S. market and
market opening strategies to influence regional states' economic
and trade policies. 
     The following discussion focuses on the interaction between
the various U.S. policy goals and the tools available to U.S.
policymakers, and the tradeoffs involved when goals conflict. The
discussion places particular emphasis on five objectives: 
     o    deterring nuclear and missile proliferation; 
     o    supporting a resolution of the Kashmir problem; 
     o    gaining better adherence to internationally recognized
          human rights standards; 
     o    promoting economic liberalization and growth; and 
     o    promoting greater protection of the environment.
page 49
Realistic Goals? 
     Recent developments suggest that both Congress and the
executive branch have concluded that getting India and Pakistan
to give up what they have already achieved may be unrealistic,
but that capping their current programs, stopping the continued
production of fissionable material, and preventing the deployment
of nuclear arms and ballistic missiles may be achievable and
remains a matter of urgency. Under the right circumstances, it
may be possible to get India and Pakistan to agree to some kind
of verifiable standoff short of a deployed nuclear weapons
capability, assuming that it has not already occurred. 
Sources of U.S. Leverage
     The United States remains better positioned than any other
power or grouping of countries to act as an even-handed, but
forceful broker on proliferation and regional security issues.
This requires a careful balance of pressures as well as positive
incentives to maintain mutual confidence and advance
negotiations. Because of factors noted above, the United States
enjoys significant influence with both India and Pakistan, though
not enough -- thus far -- to prevail over their own determination
to develop their nuclear and missile options. 
     The recent U.S. initiative for promoting indirect five-power
talks on a regional nuclear proliferation accord tends to benefit
from the end of the Cold War era of strategic polarization.
Particular factors of importance include India's loss of its
Soviet ally and access to relatively cheap Soviet arms;
Pakistan's, lack thus, far of any attractive alternative to
currently suspended U.S. weapons sales; global trends towards
nuclear arms reductions; and the extreme financial straits of
both protagonists. These effects may be short term, however. For
instance, as evidenced by recent sales of Su-27 fighter-bombers
to China, Russia has a strong desire to rebuild its arms export
earnings on a wholly non-ideological basis. This could end up
causing a new flow of advanced weapons into the sub-continent,
possibly both to India and Pakistan. 
     U.S. efforts to reduce India-Pakistan tensions over
territorial disputes and to discourage interference in each
other's regional dissidence situations would provide positive
support to the goal of a regional nonproliferation accord, though
not necessarily enough to bring the parties to an agreement,
since India and Pakistan, like other powers, must consider
capability as well as intention. Likewise, any real acceleration
of economic development could make all of the regional states
less preoccupied with traditional security concerns and more
interested both in closer integration into the global economy as
well as in greater regional economic integration. 
     While sanctions can be a deterrent, they also tend to work
against a broad-based dialogue and against confidence-building.
If the sanctions themselves are inadequate, and if they do not
leave any way to end them short of capitulation
page 50
by one side or the other, then for all practical purposes U.S.
leverage has been lost. 
     On several grounds, some observers now see the Pressler
amendment as having outlived its usefulness. It has failed to
move Pakistan, it arguably has reduced U.S. influence and,
ironically, it gives India added incentive to oppose talks on a
regional nonproliferation accord, since keeping Pakistan in the
dock with the United States over its transgressions serves to
weaken Pakistan's defense capabilities. The main drawback to
removing the sanctions is that the past policy of accommodating
Pakistan's conventional defense requirements did not achieve the
desired objective either,[64]  and the aid cutoff remains the
main source of U.S. leverage. 
     64. In a succession of congressional hearings beginning in
     late 1981 Administration officials regularly told Congress
     that aid to Pakistan's conventional defense requirements
     would reduce its incentives to acquire nuclear weapons.
     It remains to be seen if Congress will move in the direction
of relaxing the cutoff of aid to Pakistan, or, conversely,
putting additional pressure on India via parallel aid sanctions.
A partial easing of the terms of the Pressler amendment was
effected during 1992 action on the Foreign Assistance
Appropriations Act. Section 562 of the Act effectively permitted
the limited restoration of food aid and development aid provided
through non-governmental organizations (NGOs). 
     The strong support for the concept of a regional
nonproliferation regime as contained in the new Section 620F of
the Foreign Assistance Act, also added during consideration of
the FY93 Foreign Operations Appropriations Act, would appear to
signal the desire of Congress to promote an even-handed and
positive containment of the proliferation threat. Both actions
imply more interest in positive efforts to promote a regional
accord, in addition to sanctions. These steps appear to suggest
increased support for remaining in constructive engagement with
both Pakistan and India. The extent to which such engagement can
bear fruit remains to be seen. 
A Little Help from Our Friends? 
     While critics have often dismissed claims by India and
Pakistan that their nuclear programs were to meet pressing civil
power needs, and not for military purposes, these needs do exist
and meeting them is critical to the efforts of both countries to
attract more foreign manufacturing investment. More than a decade
after the United States turned over to France the function of
supplying fuel to India's Tarapur Atomic Power Station (TAPS),
the French, as a consequence of signing the Nuclear
Nonproliferation Treaty (NPT) now appear to have accepted the
U.S. standard of full-scope safeguards as a condition to nuclear
cooperation. Reportedly, France will not continue to sell low
enriched uranium fuel to India after the expiration of an
Indo-French contract in 1993 (also the expiration of the
underlying 30-year U.S.-India nuclear cooperation 
page 51
agreement.)[65]  Provided the French follow through with this
policy, India's need for fuel for its Tarapur facility could be
used as a lever to obtain compliance with U.S. and other western
nonproliferation objectives. Similarly, after earlier indicating
that it would consider supplying a nuclear power plant to
Pakistan under a safeguards regime applying to that facility
only, the French have indicated to Pakistan that full scope
safeguards would be required.[66] 
     65. "French View of Nonproliferation Treaty Examined,"
     Indian Express, Oct. 3, 1992, FBIS, South Asia, October 16,
     1992: 32;. also, FBIS, South Asia, Oct. 1, 1992: 38. 
     66. "French Supply of Nuclear Plant Ruled Out," Islamabad
     Radio Network, FBIS, South Asia, June 12, 1992: 
     As noted above, Japan likewise has announced more stringent
foreign aid guidelines that could reinforce U.S. policy goals.
Based on recently formulated aid principles, Japan says that it
is advising recipients at annual aid consortia meetings that
excessive military spending, destabilizing weapons exports, and
questionable nuclear activities will be taken into account in
deciding the next year's aid allocations. Thus far, Tokyo's track
record of taking strong stances towards aid recipients is not
very impressive. In particular, Japan has been unwilling to apply
these criteria in the case of China, its most important aid
recipient. It is possible, however, that Tokyo will seek to apply
these principles in the case of India and Pakistan. Japan is now
by far the largest donor to both India and Pakistan, and
potentially it could exercise considerable leverage. 
     With some shift of U.S. nuclear policy, the support of Japan
and other technologically advanced countries might be enlisted in
support of a number of goals that would have broad international
support and not bear the stigma of American domination. These
could include getting Indian and Pakistani participation in a
comprehensive test ban (India has signed the limited test ban
agreement), acceptance of a ban on production or use of fissile
material in weapons, and/or participation in the forthcoming 1995
NPT Review Conference. Other possibilities might include some
modification of the NPT to accommodate the sensitivity of
threshold nuclear powers like India and Pakistan.[67] 
     67. For a discussion of various ideas for bringing India and
     Pakistan into discussions on nonproliferation see CRS Issue
     Briefs IB86125, India and Nuclear Weapons [archived Dec. 20,
     1992] and IB91142, Pakistan's Nuclear Status [archived Jul.
     10, 1992], by Warren H. Donnelly and Zachary S. Davis.
     Any real progress on the larger threats to security will
hinge on gaining headway on the more intractable underlying
causes of instability. The single greatest irritant in
India-Pakistan relations is the unresolved Kashmir problem,
against which all other problems pale into relative
insignificance. The United States has little ability to directly
affect this issue, but analysts increasingly see 
page 52
resolving it as crucial to achieving regional stability. Current
policy, which supports the Simla Accord and its reliance on a
bilateral settlement of the problem avoids entanglements, but it
also puts the United States tacitly on the side of the status quo
with its attendant risks of conflict. 
     A lasting solution would require both countries to give up
their present aspirations -- India's to hold and Pakistan's to
get. This would require not only convincing India to rethink its
options, but also convincing Pakistan to cease its support of the
insurgents and take the politically risky step of abandoning a
cherished national objective. One possible resolution might be
some kind of quasi-independence along the lines of a
"sovereignty-association" with both states, as has been suggested
by an expatriate academic, Ayesha Jalal, and others.[68] 
     68. "Kashmir Scars," The New Republic, July 23, 1990: 17-20.
     The time could come when New Delhi might see tripartite
negotiations on some kind of an autonomous Kashmir as better than
interminable conflict or the loss of Kashmir to Pakistan. At
present, however, political realities in India tend to underpin
the resolve of the government and the bureaucracy to apply
whatever force is required for as long as required to hold onto
Kashmir. Unfortunately, New Delhi's current distress continues to
whet Pakistan's aspirations that, in time, it might achieve its
objective of getting the "whole loaf," thus bolstering its
inclination to provide material assistance to the Muslim
insurgents. This continues to make the situation a flash point of
potential conflict between India and Pakistan. 
     One of the characteristics of South Asia is that
notwithstanding a generally inequitable social order and lapses
into military or other authoritarian rule, the ethos of most
countries affirms democratic principles and respect for human
rights. Unfortunately, these commitments are all too often
neutralized by the greater fear of social upheaval or territorial
     The United States has a number of policy tools to promote
democracy and human rights, including aid programs aimed at
supporting democratization and aid sanctions in the case of
authoritarian relapses. Practical goals at times may be limited
to keeping the flame of democracy alive through symbolic gestures
and rhetorical support of democratic forces and leaders. U.S.
pro-democracy efforts seem to work best when authoritarian rulers
are unpopular and democratic leaders enjoy broad popular support.
Such a policy had positive effect in Pakistan and Bangladesh
during the late 1980's and early 1990's, and in Nepal's recent
movement towards constitutional democracy. At times, however,
U.S. policy in Pakistan was burdened by a distinct conflict of
policy goals, including attachment to President Zia ul-Haq as a
consequence of his stance against the Soviet occupation of
page 53
     Although U.S. human rights policies have often been
irritants in relations with South Asian governments, some in
Congress have maintained that such policies put the United States
"on the side of history." For the most part, democratic leaders
in the region have expressed gratitude for U.S. and in
particular, congressional support. In addition to rhetorical
support from Members of Congress and executive branch officials,
U.S. aid programs have provided practical support for institution
     Many major human rights problems today stem from situations
of regional dissidence -- in India's Jammu and Kashmir and Punjab
states, Pakistan's Sindh province, and the Tamil areas of
northern Sri Lanka -- in which the integrity of the state
conflicts with the goals of greater autonomy or independence for
specific ethnic or religious groups. Although U.S. policy has
long been to recognize that these are internal problems, public
reporting through the annual State Department human rights
reports to Congress and forceful advocacy of human rights by
Members of Congress has made the United States part of the
equation. Others, such as discrimination against women, have deep
social roots and attitudes that probably will take generations to
     As in other areas, the main problem for U.S. policy is to
reconcile different objectives and, sometimes, conflicting means.
Cutting off or reducing aid on account of human rights violations
may send a "message," but it likewise may inhibit U.S. access to
the offending government and make it difficult to promote other
policy goals for which aid may be an important prerequisite. As
in the nuclear proliferation area, the addition of the voices of
other aid donors may strengthen the U.S. hand, but this assumes
that other bilateral and multilaternors share U.S.
objectives and priorities, which is not always the case. 
     The United States can take some satisfaction in the economic
reforms that South Asian governments have adopted during the past
several years, but continuing U.S. policy influence is by no
means assured. Until now, the American "medicine," as delivered
positively through U.S. assistance to policy reform, and
negatively in the form of trade sanctions, has been generally --
albeit reluctantly -- accepted as "good" for the patient.
Although regional governments have embraced the virtues of free
markets, the privatization of state-owned industries, and
deregulation, the South Asian mind-set remains largely resistant
to the American concept of free enterprise capitalism. 
     The United States has two principal means of promoting its
own vision of development in South Asia. These include a policy
dialogue based on U.S. influence as a major contributor of
bilateral and multilateral aid, and as the region's largest
market, and through trade policies that promote market opening
and respect for copyrights, patents and other forms of
intellectual property.
page 54
     Increasingly, U.S. aid programs in South Asia have focused
on issues such as private sector development, the environment and
democratization, rather than brick and mortar infrastructure
development activities. This partly represents making a virtue of
necessity, i.e., seeking to maximize the impact of otherwise
shrinking aid budgets by focusing on conceptual ideas and
providing seed money for free market reforms. In the cases of the
poorer countries, U.S. transfers of financial resources and
agricultural commodities still play an important economic role.
In India and Pakistan, U.S. bilateral aid has dropped to
relatively insignificant levels. American views still carry
considerable weight, however, due to U.S. influence over the
lending policies of the World Bank and I.M.F. and the desire of
regional states to attract more U.S. investment and increase
exports to the U.S. market. 
     Traditionally, U.S. aid policy has been subject to numerous
contradictions and conflicting goals. Even before the November
presidential election, U.S. aid policy worldwide was the subject
of major criticism and a searching reexamination, both in the
executive branch and Congress. A short list of South Asian issues
includes the following: 
     1) What are the appropriate priorities for current U.S. aid
policy? Programs aimed at promoting growth may conflict with
other goals such as promoting adherence to human rights,
deterring nuclear proliferation, advancing U.S. agricultural
exports, protecting the environment or halting narcotics
     2) How effective have U.S. aid programs been in promoting
growth and development, which are, traditionally, the main
     3) Is the focus of U.S. programs what it should be? For
instance, should the United States consider shifting the focus of
its aid policy away from the current emphasis on a broad range of
basic developmental programs in order to provide more funding for
economic infrastructure [capital] projects, as has been argued by
a some Members of Congress? 
     U.S. trade policy can also be a powerful source of policy
influence. One issue is where to strike the balance between
punitive sanctions aimed promoting U.S. commercial interests and
supportive measures to encourage more rapid growth or develop new
markets? What is the appropriate balance between broad U.S.
economic interests and the interests of particular industries?
How are the Japanese and other business competitors addressing
the weak protection for patents and copyrights in the region?
These are difficult questions that will be central to trade
policymaking in coming years. 
     Although the United States has some differences in its
approach to promoting economic development from those espoused by
Japan and other developed countries, most aid donors and investor
countries agree on the general requirements for more rapid
development. Japan, in particular, has become more vocal in
expressing its views, due to growing interest in the
possibilities for investment in the region, both to tap its low
wage rates and as a point of
page 55
access into a potentially lucrative market. During 1992, for
instance, the Japanese presented the Indian government with a
list of twenty-one "requests" regarding desired changes in
India's investment, trade, financial and other economic policies.
Most of these points would be shared by American and other
companies wanting to do business in India, and tend to reinforce
a number of U.S. policy initiatives aimed at creating a better
climate for U.S. companies in India. 
     All other things being equal, accelerated economic
development in South Asia will bring even greater environmental
degradation. One major antidote is to overcome the current
inefficient utilization of resources through the adoption of
better technology. This includes reducing the region's dependency
on wood, soft-high sulphur coal, and cow dung for energy, and its
current highly inefficient use of petroleum fuels. Breaking the
dependency on wood for energy would help reduce the depletion of
watershed forest cover and consequent problems of ever more
devastating floods. Among other things, achieving these goals
will require modernizing the region's passenger car and truck
fleet to gain greater fuel efficiency, and finding alternate
energy sources that can be delivered down to the village level.
One obvious problem is that some of the alternative energy
sources, such as nuclear energy, have a host of other objections.
     The United States has a number of policy tools to promote
more environmental awareness and better environmental practices.
These include economic and technological assistance, including
the transfer of non-proprietary technology, soft EX-IM Bank loans
for development of the power and transportation sectors, and
policies to encourage private investment. The United States under
the Clinton Administration may also reconsider the Bush
Administration's opposition to demands by "Southern" countries
for more assistance from the IMF and the World Bank for
environment related goals. U.S. efforts might also benefit from
support for the same objectives by Japan and European donors,
although such support could pose commercial challenges to U.S.
industry as well. 
     Overall, the potential for growth in South Asia and the huge
scope for efficiency improvements ought to create a major market
for U.S. companies in the field of environmental technology. The
main political battles are likely to be fought over the extent to
which such exports should be subsidized or otherwise encouraged
by the U.S. Government, and where the balance should be struck
between commercial and environmental goals.
page 56
U.S. Library of Congress. Congressional Research Service. India:
Regional Dissidence and Human Rights Problems, by Richard P.
Cronin and Barbara Leitch LePoer. [Washington] August 2, 1991.
CRS Report 91-585 F 
-----India's Internal Security Legislation: Basic Facts and Human
     Rights Implications, by Barbara Leitch LePoer. [Washington]
     August 12, 1991.CRS Report 91-599 F 
-----Kashmir: Conflict and Crisis, by David E. Lockwood and 
     Barbara Leitch LePoer. [Washington] December 11, 1991. CRS
     Archived Issue Brief 90087 
-----The Kashmir Dispute: Historical Background to the Current 
     Struggle, by Richard P. Cronin and Barbara Leitch LePoer.
     [Washington] July 19, 1991. CRS Report 91-563F 
-----Pakistan Aid Cutoff: U.S. Nonproliferation and Foreign 
     Policy Consideration, by Richard P. Cronin. [Washington]
     (Updated Regularly). CRS Issue Brief 90149
South Asia: Basic Data

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