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Weapons of Mass Destruction (WMD)

[CRS Issue Brief for Congress]

94041: Pakistan-U.S. Relations

Updated November 7, 1996

Barbara Leitch LePoer
Foreign Affairs and National Defense Division

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Context of the Relationship
U.S. Policy Interests
Background of the Relationship
Pakistan-India Rivalry
Pakistan Political Setting
Pakistan-U.S. Relations and Bilateral Issues
Security
Nuclear Weapons and Missile Proliferation
The China Factor
Balancing the India-Pakistan Equation
Recent Administration Nonproliferation Initiatives
Terrorism
Pakistan-U.S. Military Cooperation
Democratization and Human Rights
Democratization Efforts
Human Rights Problems
Economic Issues
Economic Reforms and Market Opening
Trade and Trade Issues
Narcotics

CHRONOLOGY

FOR ADDITIONAL READING


SUMMARY

The main areas of U.S. concern in Pakistan are nuclear weapons and missile proliferation, regional stability, democratization and human rights, and economic reforms and development. An ongoing Pakistan-India nuclear arms race, fueled by rivalry over Kashmir, continues to be the focus of U.S. nonproliferation efforts in South Asia and a major issue in U.S. relations with both countries. South Asia is viewed by some experts as one of the most likely prospects for use of such weapons. India conducted an underground test of a nuclear device in 1974, and Pakistan is believed to have at least one nuclear weapon. India has developed short- and intermediate-range missiles, and Pakistan has acquired short-to-medium range M-11 ballistic missiles or components from China. India and Pakistan have fought three wars since 1947.

The Pakistan-U.S. relationship, which dates from the mid-1950s, began as a security arrangement based on U.S. concern over Soviet expansion and Pakistan's fear of neighboring India. Cooperation reached its high point during the 1979-89 Soviet occupation of Afghanistan. A deterioration in U.S.-Pakistan ties in recent years stems from the U.S. cutoff of aid to Pakistan because of its nuclear weapons program. In October 1990, U.S. aid and most arms sales to Pakistan were suspended when President Bush could not certify to Congress, as required under Section 620E(e) of the Foreign Assistance Act (FAA) (the so-called "Pressler amendment"), that Pakistan does not possess a nuclear explosive device. The Pressler amendment is Pakistan-specific and does not apply to India. The cutoff of aid to Pakistan under the Pressler amendment appears to have had little effect on slowing the nuclear and ballistic programs of either Pakistan or India. Both the Bush and Clinton administrations have considered good relations with Pakistan as key to U.S. interests in both South and Southwest Asia, and sought more flexibility in dealing with Pakistan than allowed under the Pressler amendment. A 1994 Clinton Administration proposal that Pakistan and India agree to a verifiable cap on their production of fissile material in return for a release to Pakistan of 28 F-16 fighter planes (purchased but undeliverable under the Pressler amendment) and certain economic and technological incentives for India languished on the negotiating table. In February 1996, the President signed into law the Foreign Operations Appropriations Act for FY1996, which includes provisions that relax restrictions on economic assistance to Pakistan and permit a one-time release of $368 million in military hardware ordered by Pakistan prior to the aid cutoff.

The nuclear issue aside, U.S. interests strongly support a stable, democratic, economically thriving Pakistan that would serve as a model for the volatile and/or newly independent countries of West and Central Asia. Although ruled by military regimes for most of its existence, Pakistan has had democratic governments since 1988 as a result of national elections in that year, 1990, and 1993. The free and peaceful elections of October 1993, which brought to power Prime Minister Benazir Bhutto and her Pakistan People's Party, were welcomed as an important step in reaffirming democracy. Congress and the Administration, however, continue to be concerned about reported terrorist activity, regional dissidence, and human rights abuse, particularly in Sindh Province and its capital, Karachi. The United States is strongly supportive of Pakistan's economic reform efforts, including privatization of public sector industries, trade liberalization policies, and efforts to attract international investment.


MOST RECENT DEVELOPMENTS

On November 5, 1996, Pakistan President Farooq Leghari dismissed the government of Prime Minister Benazir Bhutto and dissolved the Pakistan National Assembly. Former National Assembly Speaker Malik Meraj Khalid was appointed acting Prime Minister, and new elections were scheduled for February 5, 1997. In his proclamation dismissing the government, Leghari cited widespread "corruption, nepotism, and violation of rules in the administration of the affairs of the Government", as well as failure of the Bhutto government to stop extrajudicial killings in Karachi and elsewhere. The dismissal had been widely predicted as a result of growing popular dissatisfaction with Pakistan's economic situation and allegations of serious government mismanagement and corruption. Bhutto's husband, Asif Ali Zardari, who had become a major target of such allegations, reportedly was placed under detention by the interim government. Although Pakistan Army involvement in the dismissal was low-key -- limited to securing a few key installations -- most analysts noted that the president's action would not have been taken without support of the military.

In dismissing the government, President Leghari used powers provided under the eighth amendment to the constitution. These provisions have been used to dismiss four governments since 1985, including Bhutto's first government in 1990. Although the dismissal was viewed by many observers as an opportunity for a new approach to the country's serious economic and social problems, it was also seen as an indication of the inherent weakness in Pakistan's democratic political structure and organizations. U.S. State Department spokesman Nicholas Burns stated on November 5: "We believe the dismissal is an internal matter of Pakistan. President Leghari appeared to have acted within his constitutional authority." Burns noted that the two countries had longstanding "good relations" and "we expect them to continue." An International Monetary Fund team in Pakistan negotiating a stalled $600 million standby loan at the time of the dismissal was expected to remain in country to work with the interim government.


BACKGROUND AND ANALYSIS

Context of the Relationship

U.S. Policy Interests

U.S. policy interests in Pakistan encompass a wide range of issues, including: nuclear weapons and missile proliferation; South Asian regional stability; terrorism; democratization and human rights; economic reforms and market opening; and counter-narcotics efforts. These concerns have been affected by several developments in recent years, including: 1) the cutoff of U.S. aid to Pakistan in 1990 over the nuclear issue; 2) India and Pakistan's worsening relationship over the Kashmir issue since 1990, and their continuing nuclear standoff; and 3) Pakistan's see-saw attempts to develop a stable democratic government in the post-Cold War era.

The longstanding U.S.-Pakistan relationship has experienced a downturn in recent years because of Pakistan's continued pursuit of the nuclear option and the consequent cutoff of U.S. aid to Pakistan. Aid was suspended in 1990 under the Pressler amendment, which requires an annual certification by the U.S. President that Pakistan does not possess a nuclear device. Both Congress and the Administration have become increasingly alarmed in recent years by the ongoing nuclear and ballistic missile arms race in South Asia, which is driven largely by the continuing India-Pakistan dispute over Kashmir. In testifying before the Senate in late 1993, CIA Director James Woolsey described the India-Pakistan arms race as posing "perhaps the most probable prospect for future use of weapons of mass destruction, including nuclear weapons." Both Congress and the Clinton Administration have placed a high priority on pursuing a policy of seeking a regional negotiated solution to the issue of nuclear nonproliferation in South Asia.

A second major concern of both Congress and the Administration is that Pakistan continue its progress along the path of democratization and economic development. With this in view, Congress in 1992 partially relaxed the scope of the aid cutoff to allow for food assistance and continuing support for nongovernmental organizations (NGOs). A small counter-narcotics assistance program has also been continued. In September 1994, the Clinton administration announced a $10 million grant for a child survival/maternal health program following a meeting between Prime Minister Bhutto and U.S. Vice President Gore in Cairo. The Agency for International Development grant will be administered through NGOs. Aid for all of these programs totaled about $17 million for FY1995, with obligations for FY1996 estimated at about $2.6 million.

Although the democratic process was restored to Pakistan in 1988, the succeeding five years were marred by political instability, regional dissidence, and human rights violations. National and provincial elections held in early October 1993, however, were seen by international observers to be generally free and fair. A U.S. congressional resolution later that month hailed the elections as a sign of democratic commitment, and reaffirmed continuing U.S. interest in working with Pakistan on issues of bilateral and regional concern. Because of its proximity to West and Central Asia, Pakistan's internal politics and foreign policy continue to have relevance to broader U.S. regional interests. A stable, democratic, economically thriving Pakistan at peace with its neighbors would serve as an important model for the volatile and/or newly independent regions to the north and west.

Background of the Relationship

The long and checkered U.S.-Pakistan relationship has its roots in the Cold War and South Asia regional politics of the 1950s. U.S. concern about Soviet expansion and Pakistan's desire for security assistance against a perceived threat from India prompted the two countries to negotiate a mutual defense assistance agreement in May 1954. By late 1955, Pakistan had further aligned itself with the West by joining two regional defense pacts, the South East Asia Treaty Organization (SEATO) and the Baghdad Pact (later Central Treaty Organization, CENTO). As a result of these alliances and a 1959 U.S.-Pakistan cooperation agreement, Pakistan received more than $700 million in military grant aid in 1955-65. U.S. economic aid to Pakistan between 1951 and 1982 totaled more than $5 billion.

Differing expectations of the security relationship have long bedeviled ties. During the Indo-Pakistani wars of 1965 and 1971, the United States suspended military assistance to both sides, resulting in a cooling of the U.S.-Pakistan relationship. In the mid-1970s, new strains arose over Pakistan's apparent efforts to respond to India's 1974 underground test of a nuclear device by seeking its own capability to build a nuclear bomb. Although limited U.S. military aid to Islamabad was resumed in 1975, it was suspended again by the Carter Administration in April 1979, under Section 669 of the Foreign Assistance Act (FAA), because of Pakistan's secret construction of a uranium enrichment facility.

Following the Soviet invasion of Afghanistan in December 1979, Pakistan was again viewed as a frontline state against Soviet expansionism. An offer to Pakistan of $400 million in economic and security aid by the Carter Administration in early 1980 was turned down by President Zia-ul Haq as "peanuts." In September 1981, however, the Reagan Administration, negotiated a $3.2 billion, five-year economic and military aid package with Pakistan. Congress facilitated the resumption of aid in December by adding Section 620E to the FAA, giving the President authority to waive Section 669 for six years in the case of Pakistan, on grounds of national interest. Pakistan became a funnel for arms supplies to the Afghan resistance, as well as a camp for three million Afghan refugees.

Despite the renewal of U.S. aid and close security ties, many in Congress remained concerned about Pakistan's nuclear program, based, in part, on evidence of U.S. export control violations that suggested a crash program to acquire a nuclear weapons capability. In 1985, Section 620E(e) (the so-called Pressler amendment) was added to the FAA, requiring the President to certify to Congress that Pakistan does not possess a nuclear explosive device during the fiscal year for which aid is to be provided. The Pressler amendment represented a compromise between those in Congress who thought that aid to Pakistan should be cut off because of evidence that it was continuing to develop its nuclear option and those who favored continued support for Pakistan's role in opposing Soviet occupation of Afghanistan. Another $4 billion, six-year aid package for Pakistan was signed in 1986.

With the Soviet withdrawal from Afghanistan, beginning in May 1988, however, Pakistan's nuclear activities again came under close U.S. scrutiny. In October 1990, President Bush suspended aid to Pakistan because he was unable to make the necessary certification to Congress. Under the provisions of the Pressler amendment, all military aid to Pakistan was stopped and deliveries of major military equipment suspended. Also affected by the aid cutoff an was economic aid request for FY1991 totaling about $150 million. Under Section 552 of the Foreign Operations, Export Financing, and Related Programs Appropriation Act, added in 1992, provision of P.L. 480 food aid was permitted, which totaled about $7 million in FY1995. Narcotics assistance of $3-5 million annually, administered by the State Department's Bureau of International Narcotics Matters, was exempted from the aid cutoff.

Pakistan-India Rivalry

Three wars and a constant state of military preparedness on both sides of the border have marked the half-century of bitter rivalry between India and Pakistan. The acrimonious nature of the partition of British India into two successor states in 1947 and the continuing dispute over Kashmir have been major sources of tension, leading both countries to devote comparatively large resources to building defense establishments that include a nuclear weapons capability as well as the development of ballistic missile programs. The Kashmir problem is rooted in claims by both countries to the former princely state, divided by a military line of control, since 1948, into the Indian state of Jammu and Kashmir and Pakistan-controlled Azad (Free) Kashmir. India blames Pakistan for supporting a separatist movement raging in the Muslim-dominated Kashmir Valley that has claimed 20,000 lives since 1990. Pakistan claims only to lend moral and political support to the rebellion, while accusing India of creating dissension in Pakistan's Sindh province.

From 1994 until mid-1996, relations between Pakistan and India appeared to be in a constant state of deterioration with an increase in hostile rhetoric as well as heightened border tensions in Kashmir. Although the seventh round of foreign secretary talks were held in Islamabad in early January 1994, little progress was made; no further talks have been held. Both Islamabad and New Delhi frequently have accused the other of harassing, intimidating, or manhandling its diplomats, despite a diplomatic code of conduct agreement signed in 1992. Both countries engaged in the now-common practice of expelling members of the other's diplomatic corps on charges of espionage. Pakistan has refused Indian offers to resume the foreign secretary talks until India takes steps to create favorable conditions for holding the talks, including reduction of Indian forces, release of political detainees, and cessation of alleged human rights violations in Kashmir.

India's April-May 1996 parliamentary elections included polling for six seats for Jammu and Kashmir State, over the objections of Pakistan and the Kashmiri separatists. The elections brought to power in India a new United Front coalition government headed by Prime Minister Deve Gowda. With the coming to power of the Deve Gowda government, there have been some signs that both countries are ready to work toward mending their tattered relationship. Pakistan Prime Minister Benazir Bhutto sent a congratulatory letter to Prime Minister Deve Gowda in which she proposed talks "to create an environment which will be conducive to peace, security, and development so that the vast potential of our two countries can be fully realized." In his response, Deve Gowda expressed his government's interest in "peaceful and constructive relations between our two countries" and suggested the revival of the foreign secretary-level talks.

Pakistan Political Setting

Military regimes have ruled Pakistan for half of its 47 years, interspersing periods of generally weak civilian governance. Although Pakistan has had democratically elected governments since 1988, real power currently rests with an unofficial ruling troika comprising the elected prime minister, the indirectly elected president, and the chief of army staff. Since 1988, the army appears to have moved from its traditional role of power wielder or kingmaker to one of power broker or referee.

Pakistan People's Party (PPP) leader Benazir Bhutto, first elected prime minister in 1988, became the first democratically elected leader since her father, Zulfiqar Ali Bhutto was deposed, and later executed, in a coup led by General Mohammad Zia-ul Haq in 1977. After spending years in prison and under house arrest, Benazir Bhutto was elected prime minister in October 1988, following President Zia's death in a plane crash. In August 1990, however, Bhutto was dismissed by President Ishaq Khan for alleged corruption and inability to maintain law and order. The president's power to dismiss the prime minister derives from Eighth Amendment provisions of the Pakistan constitution, which date from the era of Zia's presidency.

Elections held in October 1990 brought to power the coalition Islamic Democratic Alliance government of Prime Minister Nawaz Sharif. A power struggle between the president and the prime minister in early 1993, however, led to Sharif's ouster under the Eighth Amendment provisions. In a hopeful sign of continuing democratization, the military resisted the temptation to take charge during the ensuing period of political turmoil. Rather, Chief of Army Staff Gen. Abdul Waheed Kakar brokered a settlement in which both the prime minister and president resigned, a neutral caretaker government was formed, and new elections were scheduled for October. The caretaker government (July-October), headed by Prime Minister Moeen Quereshi, launched a series of economic, political, and social reforms, as well as took steps to ensure free and fair elections. Some instruments of political patronage were abolished, and a crackdown was begun on tax evaders, loan defaulters, and drug traffickers. The Quereshi government won praise both at home and abroad for its effectiveness and impartiality.

In the relatively peaceful and fair October 1993 elections, supervised by the army, Benazir Bhutto regained power at the head of a PPP-led coalition government. The PPP won 86 of 217 seats, compared with 72 seats won by Nawaz Sharif's Pakistan Muslim League (PML). With the help of independents and small parties (including a breakaway faction of the PML), Bhutto won the parliamentary poll for prime minister, 121-72. Contributing to the stability of the new government, PPP deputy leader Farooq Leghari was chosen president in indirect elections held in November. However, Bhutto's early months in office were marred by family squabbles with her mother Nusrat Bhutto, and her brother Murtaza, who returned to Pakistan in 1993, after 16 years in exile, to contest the October elections. Some critics allege that the Bhutto government's performance also has been hampered by the reemergence of Bhutto's husband, Asif Zardari, in a decision-making role. Zardari's role in the previous Bhutto government was believed to have been a factor in her dismissal. He served two years in jail on corruption charges, of which he has since been acquitted.

Bhutto began her second term in office in a considerably improved position over her first administration. She has the backing of the army; the president is a long-time PPP leader; and many tough economic and social decisions were already made by the Quereshi caretaker government. Nevertheless, the Bhutto government faces serious problems, including a PML-led opposition seemingly bent on its downfall; economic problems made worse by drought-induced power shortages and crop failures; and increasing crime and violence in Sindh Province. Adding to these concerns was the arrest, in September 1995, of 40 army officers accused of plotting an Islamic fundamentalist-led overthrow of the government. In another recent political development, former cricket star Imran Khan announced, in April 1996, the launching of a new political movement, Tehreek-e-Insaaf (Movement for Justice), as a vehicle to fight against corruption and for social reform and justice.

One of the most serious questions facing the Bhutto government is how to end the violence in Karachi, the capital of Sindh Province and the commercial capital and largest city in the country. In early 1996, talks remained stalled between the Pakistan government and the Mohajir Quami Movement (MQM) political party, which represents Urdu-speaking Muslims, and their descendants, who migrated from India at the time of Partition in 1947. More than 1,950 people were killed in Karachi in 1995, and 800 people in 1994, as a result of fighting between government forces and the MQM, as well as fighting between factions of the MQM; Sunni and Shi'ite Muslim factions; rival druglords; and criminal gangs. Killings in late 1995 included the brother of Sindh chief minister Syed Abdullah Shah and the brother and nephew of London-based MQM leader Altaf Hussain. According to the Karachi Chamber of Commerce & Industry, the 28 strike days this year have cost the city $38 million per day. Western business analysts state that the Karachi violence presents a serious disincentive for foreign investors.

Pakistan-U.S. Relations and Bilateral Issues

Security

Nuclear Weapons and Missile Proliferation. Heading the list of U.S. objectives in South Asia is the prevention of nuclear and ballistic missile proliferation, along with the reduction of regional tensions that could trigger the use of such weapons. Both India and Pakistan are believed by analysts to have crossed the nuclear weapons capability threshold, although most open source information suggests that they have not thus far deployed weapons. India conducted an underground test of a nuclear device in 1974. A Pakistani government official acknowledged in February 1992 that his country has the capacity for making at least one nuclear weapon, and some analysts believe it has enough enriched uranium for 10-15 weapons. India is thought to have sufficient fissionable material to produce 75 or more nuclear weapons. Pakistan claims to have stopped enriching uranium during the 1991-92 period. In late August, former Prime Minister Nawaz Sharif, during a speech in Pakistan-controlled Azad Kashmir, stated that Pakistan had produced nuclear weapons. The Bhutto government denied the statement, saying that, although Pakistan has the technological capability to produce nuclear weapons, it has not done so.

Both India and Pakistan have combat aircraft that, with modification, would be capable of delivering nuclear weapons. Both countries are seeking to develop or acquire ballistic missiles with the capability of striking each other's major population centers. India has tested its short-range Prithvi surface-to-surface missile and its Intermediate Range Ballistic Missile (IRBM), Agni. Pakistan also has tested short and intermediate-range missiles, the technology for which was reportedly obtained from China.

In recent months, the United States has become concerned over increasing tension and nuclear and missile proliferation in South Asia. In mid-December 1995, U.S. press reports, based on U.S. intelligence leaks, suggested that India may be preparing to test a nuclear weapon at Pokaran in the Rajasthan desert, where it conducted its first and only nuclear test in 1974. India denied the reports. From January through March, India and Pakistan traded heavy fire along the line of control (LOC) that divides their forces in the disputed area of Kashmir. Pakistan blamed India for a rocket attack that killed twenty persons on January 26 in a village on the Pakistan side of the LOC. India denied responsibility. On January 27, India tested a longer range, nuclear-capable version of its Prithvi missile. The U.S press reported in early February on leaked U.S. intelligence reports that China sold to Pakistan, in 1995, ring magnets that can be used in enriching uranium for nuclear weapons. Pakistan denied the reports, as well as press reports in early March that it was preparing for its first underground nuclear test in the event that India conducts a nuclear explosion.

Although Pakistan joined the 158 nations in the United Nations General Assembly who voted, in September 1996, to adopt the Comprehensive Test Ban Treaty (CTBT), it said it will not sign the treaty unless India does. India, Bhutan, and Libya voted against the treaty, while five other nations abstained. "Pakistan cannot be oblivious to threats to its security which are intensified by India's position on the nuclear test ban treaty," according to a September 12 statement by a Pakistan government spokesman. "Pakistan, in view of its security concerns, cannot accept unilateral commitments," he said.

The China Factor. Neither India nor Pakistan are a party to the Nuclear Nonproliferation Treaty (NPT). Attempts to convince Pakistan to unilaterally abandon its nuclear weapons program have been met by the response that Islamabad will only take this step if India does likewise. India, for its part, insists that it will agree only to a nondiscriminatory global nuclear nonproliferation regime, including the abandonment of nuclear arms by China. India and China fought a brief border war in 1962, and relations between the two remained tense for three decades, each deploying troops along a line of control that serves as the boundary. In September 1993, China and India signed an agreement to reduce troops and maintain peace along the line of control that divides their forces. Despite this thaw in relations, the India-China boundary has yet to be settled, and India remains suspicious of China's military might.

Pakistan and China, on the other hand, have enjoyed a close and mutually beneficial relationship over the same three decades. Pakistan served as a link between Beijing and Washington in 1971, as well as a bridge to the Muslim world for China in the 1980s. China's continuing role as a major arms supplier for Pakistan began in the 1960s, and included helping to build a number of arms factories in Pakistan, as well as supplying arms. In September 1990, China agreed to supply Pakistan with M-11 surface-to-surface missiles, which brought warnings from the United States. Although it is not a member of the Missile Technology Control Regime (MTCR), China agreed to abide by the restrictions of the MTCR, which bans the transfer of missiles with a range of more than 300 kilometers and a payload of more than 500 kilograms. In August 1993, the United States determined that China had transferred to Pakistan prohibited missile technology and imposed trade sanctions on both countries. Under the sanctions, export of high technology equipment to one Pakistan and 11 Chinese entities (government ministries and aerospace companies) was banned for two years. In early October 1994, the United States agreed to end sanctions against China in return for a pledge by China not to export missiles banned under the MTCR.

A July 3, 1995, Washington Post report quoted unnamed U.S. officials as saying that the U.S. intelligence community has evidence that China has given Pakistan complete medium-range ballistic missiles. The officials reportedly claim that U.S. intelligence experts have "incontrovertible" evidence that storage crates at Pakistan's Sargodha Air Force Base, northwest of Lahore, contain more that 30 Chinese-made M-11 missiles. Both Pakistan and China have denied the report. As of mid-1996, the Clinton Administration had not made a formal determination that Pakistan has acquired completed missiles.

Balancing the India-Pakistan Equation. U.S. policymakers often find themselves caught up in the zero-sum game of South Asia politics. U.S. initiatives in the region are invariably described by Pakistan and India as "tilting" toward one or the other. Any warming of U.S.-India relations is viewed as a negative for U.S.-Pakistan relations, and vice versa. The United States was alarmed by the increasing tension between India and Pakistan over Kashmir in early 1990, given the suspected nuclear capabilities of each. The Bush Administration reportedly warned Islamabad and New Delhi and strongly encouraged both governments to adopt some previously-negotiated confidence-building measures in order to reduce the tension. Measures adopted so far include: agreement on advance notice of military movements; establishment of a military commander "hotline"; an exchange of lists of nuclear installations and facilities; agreement not to attack each other's nuclear facilities; a joint ban on use and production of chemical weapons; and measures to prevent air space violations. Although such measures have had some effect, as relations continued to deteriorate over the Kashmir issue, a continuing flow of accusations and rhetoric from both sides have kept tensions high and hampered negotiation.

The United States has held numerous talks in a range of formats on South Asian regional security and nonproliferation issues with Pakistan and India since 1992. U.S. officials have urged Pakistan and India to adopt a number of additional confidence-building measures for the near-term, including an agreement not to conduct nuclear detonations, a cutoff of fissile material production, and the placement of safeguards on nuclear facilities. Recognizing that real regional security is dependent on reduction of underlying tensions, the United States in recent discussions with India and Pakistan has made the following suggestions: that India and Pakistan open a dialogue on Kashmir, leading initially to the demilitarization of the Siachen Glacier area; that both countries reduce conventional arms and defense expenditures; and that both countries agree to stop involving themselves in each other's regional unrest. In 1996, the Clinton Administration has continued to press for the resumption of the foreign secretary talks.

Recent Administration Nonproliferation Initiatives. While Pakistan has been faced with the effects of the post-cold war aid cutoff, U.S policymakers have had to confront the reality that the aid cutoff has done little to deter Pakistan's nuclear program or promote the goal of regional nonproliferation. Pakistan so far has refused to take the necessary steps to permit the Presidential certification required by the Pressler amendment, and India is not affected by the Pressler constraints. Both the Bush and Clinton Administrations have considered good relations with Pakistan as key to U.S. interests in Southwest Asia and have sought more flexibility in dealing with Pakistan for this reason. The Clinton Administration began in October 1993 to explore avenues for breaking the impasse over the aid cutoff. An Administration draft proposal for eliminating "country specific" provisions from the Foreign Assistance Act, including the Pressler amendment, was dropped when it ran into congressional opposition. Congressional and other critics of the Administration's proposal contend that such a move would cast doubt on U.S. determination to pursue a regional and global nonproliferation policy.

In a move to strengthen U.S. security ties with Pakistan and India, U.S. Secretary of Defense William J. Perry visited both countries in early January 1995, the first visit to the region by a U.S. Defense Secretary since the waning days of the Cold War. Prior to the visit, Perry stressed that, rather than contentious issues such as the F-16 sales or the NPT, talks would focus on ways to further peace and stability in the region, as well as expand areas of closer defense cooperation, including peacekeeping efforts. Secretary Perry asserted U.S. intentions to maintain an even-handed approach in its relations with Pakistan and India. He also underscored Washington's understanding of the security concerns of both Islamabad and New Delhi. Rather than stressing the U.S. preference for a rollback of both countries' nuclear programs, Secretary Perry urged India and Pakistan not to deploy short-range missiles capable of carrying nuclear weapons. Both countries were urged to adopt a commitment to greater transparency with each other by exchanging defense budgets and planning, as a means of mutual confidence-building. Noting that a solution to the Kashmir problem is necessary before Pakistan and India can develop a normal relationship, Perry restated the U.S. offer to provide whatever help it can if requested by both parties.

In Islamabad, Secretary Perry announced the reestablishment of the U.S.-Pakistani Consultative Group for discussing security measures. Formed in 1984 and dormant since the 1990 aid cutoff, the group reportedly will serve as the basis for future defense cooperation, including joint military exercises, regional security issues, and exchange of intelligence . Secretary Perry told the Pakistanis that the Defense Department would take on the difficult task of trying to find another buyer for the F-16s, in order to refund Pakistan the $658 million paid so far for the fighter planes. He also stressed Pakistan's key role as a moderate Islamic nation with regard to strategic issues in Central and West Asia. During an official visit to the United States in early April, Pakistan Prime Minister Benazir Bhutto requested the release of the 28 F-16s for which Pakistan has paid or the refund of Pakistan's $658 million. In a joint press conference, President Clinton told Bhutto that he would "ask Congress to show some flexibility" on the aid cut-off "so that we can have some economic and military cooperation." In June 1995, both the House and the Senate acted on legislation that would partially relax the current ban on assistance and transfers of military equipment and technology to Pakistan.

On February 12, 1996, President Clinton signed into law the foreign operations appropriations bill for FY1996 (P.L. 104-107), which includes provisions that significantly relax restrictions on U.S. economic assistance to Pakistan, as well as permit a one-time release of $368 million in military equipment ordered by Pakistan prior to the 1990 aid cutoff. According to a March 20, 1996, Washington Post report, the Clinton Administration had decided to deliver the $368 million in equipment to Pakistan, despite concerns over the alleged ring magnet transfer, in order to improve the relationship and enhance influence with Pakistan on nuclear nonproliferation.

Terrorism. The U.S. State Department warned Pakistan, in January 1993, that on account of its alleged support of terrorist activities in Kashmir and Punjab it was being put under "active continuing review" in order to determine whether it should be placed on the terrorist state list. The terrorist state list, which is maintained pursuant to Section 6(j) of the Export Administration Act of 1979, currently includes Cuba, Iran, Iraq, Libya, North Korea, and Syria. When a state is placed on the terrorist list, it is ineligible for U.S. aid; and U.S. representatives are required to vote against any loans to that country by the multilateral lending agencies, such as the World Bank and the International Monetary Fund. Section 505 of the International Trade and Security Act of 1985 also authorizes the banning of imports of goods and services from any country supporting terrorism.

Pakistan maintained that it lends only diplomatic and moral support to separatist groups in Kashmir and Punjab. Many of the charges against Pakistan appeared to stem from the presence of several thousand Islamic fundamentalists from various countries who went to Pakistan to participate in the Afghanistan war and who remained in the Peshawar area in 1993. Some of these fundamentalist groups allegedly have been involved in assisting the Kashmir separatist movement with Pakistan government support. Algeria and Egypt also charged that Muslim radicals based in Peshawar had been involved in antigovernment terrorist activities in their countries.

In April 1993, the Nawaz Sharif government began rounding up and deporting Muslim radicals illegally residing in the Peshawar area. Islamabad also offered full support to India in apprehending perpetrators of the Bombay bombings, some of whom reportedly fled to Pakistan. The director of Pakistan's Inter-Services Intelligence (ISI), which allegedly had been involved with supporting militants in Kashmir and Punjab, was replaced. Extensive talks on the terrorist issue were held between U.S. and Pakistan government officials both in Washington and Islamabad. In July 1993, Pakistan was removed from the informal terrorist watch list when the State Department determined that Pakistan had implemented "a policy of ending official support for terrorists in India." The State Department informed the Pakistan government, however, that it would continue to monitor the situation. The 1994 State Department terrorism report, released in April 1995, stated, "there were credible reports in 1994 of official Pakistani support to Kashmiri militants who undertook attacks of terrorism in Indian-controlled Kashmir." The report noted, however, that the Bhutto government in 1994 refused to extend the visas of many Arab Afghan war veterans living in the NWFP, closed down some organizations suspected of being used as cover agencies for Islamic militants from the Middle East, and concluded an extradition treaty with Egypt.

Prime Minister Bhutto, who has vowed to crack down on terrorists operating from Pakistan, has appealed to the United States and other countries for assistance in closing the clandestine training centers in the NWFP, stating that Pakistan lacks the resources to carry out the operation on its own. Many religious schools suspected to be fronts for terrorist training activities, reportedly receive funding from Iran and Saudi Arabia. In February 1995, Pakistan and U.S. officials cooperated closely in apprehending in Islamabad the suspected mastermind of the New York World Trade Center bombing, who was quickly extradited to the United States. In a possibly related incident, two Americans on their way to work at the U.S. consulate in Karachi were shot and killed on March 8. In late November, U.S. Federal Bureau of Investigation agents were sent to help investigate the suicide bombing of the Egyptian Embassy in Islamabad that month in which 16 people were killed. The agents reportedly were searching for links between that incident and another November terrorist bombing in Saudi Arabia in which five Americans were killed.

Pakistan-U.S. Military Cooperation. The U.S. and Pakistan militaries have enjoyed a close working relationship for several decades. Although military assistance is barred under the aid cutoff, communication and cooperation has continued. In June 1995, the U.S.-Pakistan Consultative Group met in Washington, for the first time since 1990, to discuss the South Asia security environment, peacekeeping operations, and U.S.-Pakistan security relations. In 1993-95 Pakistan and U.S. commandos held annual joint exercises in Pakistan. Small-scale U.S.-Pakistan joint naval exercises were held in the North Arabian Sea off Karachi in 1992 and early 1994. Pakistan has supported several U.N. peacekeeping efforts in recent years. Some 5,000 Pakistani troops were stationed in Saudi Arabia and the United Arab Emirates as part of the U.S.-led Persian Gulf War efforts in 1990. Pakistani troops played an important role in the U.S.-led humanitarian operations in Somalia from 1992 to 1994. In late 1995, there were 3,000 Pakistani troops participating in U.N. peacekeeping efforts in Bosnia and Croatia and 900 in the United Nations Mission to Haiti.

Although all military aid and delivery of major military equipment was suspended in October 1990, both the Bush and Clinton administrations have continued to allow commercial sales of munitions and spare parts for cash on a case-by-case basis, maintaining that there was precedent in similar situations for doing so. Strongly opposed by a number of Members of Congress, continuation of sales of military spare parts to Pakistan reflects, in part, the desire to maintain relations with a longstanding U.S. ally and to preserve some degree of U.S. influence over Pakistan's nuclear decisionmaking. Reportedly the State Department has issued export licenses totaling more than $100 million since the aid cutoff, including spare parts for F-16 fighter planes and Cobra attack helicopters. In 1992, the United States asked the Pakistan navy to return eight surplus U.S. Navy frigates and a supply ship when their leases ran out in 1993. One of the most serious results of the aid cutoff for Pakistan has been the nondelivery of some 71 F-16 fighter aircraft ordered in 1989, 28 of which Pakistan has already paid for.

Democratization and Human Rights

Democratization Efforts. The United States strongly supports Pakistan's return to the democratic election process since 1988. National elections, judged by domestic and international observers to be generally free and fair, were held in 1988, 1990, and 1993. Key to this development has been the apparent willingness of the Pakistan military to step back and allow the evolution of a democratic polity. During a political crisis in 1992, Chief of Army Staff General Asif Nawaz Janjua (1991-93), stated his full support for the democratic order under a civilian government and ruled out the reimposition of martial law. His successor, General Abdul Waheed Kakar, also demonstrated his commitment to democratic processes by his role in brokering the 1993 crisis, which resulted in new elections. In January 1996, President Farooq Leghari appointed General Jehangir Karamat to succeed General Waheed, in a smooth transition in the country's top military post.

Pakistan's road to full democracy is still lined with many pitfalls, including wide-scale corruption, volatile mass-based politics, and continuing lack of symmetry between the development of the military and civilian bureaucracies and political institutions. Critics contend that Pakistan's democratization efforts are being undermined by the politics of confrontation between parties and leaders that flourishes at the expense of effective government. The lack of constructive debate and frequent walkouts and boycotts of the national and provincial assemblies are part of a situation that has led in the past to paralysis and instability. Although both Sharif and Bhutto have pledged at various times to do away with the 8th amendment provisions that give the president power to dismiss the Parliament and prime minister, they have been unwilling to cooperate on such a move.

Human Rights Problems. The U.S. State Department, in its 1995 Country Reports on Human Rights Practices, stated that "the overall human rights situation in Pakistan remains difficult," noting abuses in areas of arbitrary arrest and detention; torture of prisoners and extrajudicial killings; discrimination against and persecution of religious minorities; repression of political minorities; and abuse of women's and children's rights. In late 1995, the government reported plans to establish a new Ministry for Human Rights, to combat violation of rights of women, children, and minorities.

A report of the Pakistan Human Rights Commission, filed in May 1994, was especially critical of abuses of the rights of women and minorities. According to the report, rape is a serious problem, particularly rape of minors and gang rape. In January 1994, Prime Minister Bhutto inaugurated Pakistan's first all-women police station in Rawalpindi, saying it was a symbolic start to a plan to provide justice to women in a conservative, male-dominated society. Such stations are reportedly needed because women are afraid and uncomfortable with discussing rape and other abuses with male police. Women also suffer discrimination in education, employment, and legal rights. A December 1995 Amnesty International report focused on abuse of women's rights in Pakistan.

Religious minorities -- mainly Christians, Hindus, and Ahmadi Muslims -- are reportedly subjected to discriminatory laws and social intolerance. A 1974 amendment to the Pakistan constitution declared Ahmadis to be a non-Muslim minority because they do not accept Muhammad as the last prophet. The Zia government, in 1984, made it illegal for an Ahmadi to call himself a Muslim or use Muslim terminology. Blasphemy laws, instituted under the Zia regime and strengthened by the Sharif government, carry a mandatory death penalty for blaspheming the Prophet or his family. Blasphemy charges reportedly are usually brought as a result of personal or religious vendettas. More than 100 Ahmadis have been charged with blasphemy since 1986, and four Christians charged with the crime were murdered in 1993. Many major political and judicial leaders who oppose the blasphemy laws reportedly are afraid to speak out for fear of the wrath of religious fundamentalists.

Economic Issues

Economic Reforms and Market Opening. Although Pakistan is a relatively poor country with a per capita GDP of about $400, its annual growth rate has averaged 5-6% since 1980. The country's wealth traditionally has been concentrated in the hands of a relatively few socially dominant large landowners and a small group of commercial and industrial families. As a result of nationalization in the 1970s under Prime Minister Zulfikar Ali Bhutto, about 40% of the country's manufacturing value until recently was produced by public sector industries. After two decades of central planning and public sector dominance, Pakistan, like other South Asian countries, found its economy lagging far behind those of East and Southeast Asia. Spurred by dwindling foreign exchange reserves, growing budget deficits, and prodding by international lenders, in 1991 the Nawaz Sharif government embarked on a program of ambitious economic restructuring. Reforms included liberalizing trade by reducing tariff and non-tariff barriers; encouraging investment through deregulation and incentives; and privatizing 65 of the country's 115 state-owned industries. The reform movement lost some of its momentum by 1993, partly as a result of the political turmoil of that year and serious flooding the previous year that wreaked havoc on homes, crops, and infrastructure. Pakistan's economy grew by only 2.3% in the 1992-93 fiscal year, while the budget deficit rose to 7.5% and inflation to 10%.

In mid-1993, the caretaker government under Prime Minister Moeen Quereshi set reforms back on track by devaluing the rupee; recovering millions of dollars for the government in unpaid taxes, loans, and utility bills; and negotiating a $377 million loan package in September from the International Monetary Fund (IMF). Promising to continue on the reform path, the Bhutto government in February 1994 reached an agreement on a package of $1.5 billion in IMF credits tied to three years of austerity and deficit cutting. Under the agreement, Pakistan was expected to raise its GDP growth in fiscal 1994-95 to 6.5% (from 3.9% in 1993-94), reduce the budget deficit from 6.7% to 5.3%, and cut inflation from 11-12% to 8% in 1994 and 5% thereafter. However, many obstacles lay in the path of this ambitious plan, including rising unemployment, strikes and violence in Karachi, a bloated and inefficient bureaucracy, widespread tax evasion, weak infrastructure, and a defense budget that absorbs nearly 40% of government spending. Moreover, drought resulted in hydroelectric power shortages and seriously reduced wheat crop yields, while the cotton crop was hard hit by a virus. By mid-1995, budget and trade deficits were widening, foreign reserves declining, and inflation running at 13% officially and 20% unofficially. The IMF withheld 1995 disbursements because of Pakistan's failure to meet the agreed targets or propose a 1996 budget that met the lending conditions.

The Bhutto government took several steps in October 1995 to prevent further erosion of foreign reserves, including devaluing the rupee by 7%, levying temporary duties on some imports, raising fuel prices, and providing incentives for exporters. In November, the IMF granted the government a $600 million standby loan. Critics point, however, to the continuing need to broaden the country's tax base in order to provide increased revenue for investment in improved infrastructure, health, and education, all prerequisites for economic development. Less than 1% of Pakistanis currently pay taxes. Agricultural income is not taxed, largely because the parliament and provincial assemblies are dominated by wealthy landlords.

Over the long term, analysts believe Pakistan's resources and comparatively well-developed entrepreneurial skills hold promise for more rapid economic growth and development. This is particularly true for Pakistan's textile industry, which accounts for 60% of Pakistan's exports. As a major producer of cotton cloth and yarn, Pakistan is well positioned to take advantage of the phase-out of textile import quotas under the recent General Agreement on Tariffs and Trade (GATT) formulations. Pakistan and the United States concluded a two-year agreement on textile sales in January 1994 that increased access to U.S. markets. Virtually all of the country's industrial sectors are open to foreign investment. Pakistan allows foreign equity holdings of up to 100% in many sectors, and accords a number of investment incentives as well.

In 1994, the Bhutto government succeeded in attracting significant aid and investment interest to Pakistan's energy sector. U.S. Energy Secretary Hazel O'Leary led a delegation of 80 U.S. businessmen to Pakistan in late September, at which time agreements for 16 projects valued at $4 billion were signed. The projects include an $800 million 880-megawatt power plant in Sind Province, an $850 million 760- megawatt power plant in Punjab province, and a $600 million 584-megawatt project in Baluchistan Province. In late November, British and other international companies agreed to invest $1.6 billion in Pakistan's energy sector. A World Bank $500 million loan for energy projects was also approved in November, along with a $360 million Japanese loan for infrastructure projects. The Asian Development Bank in November announced a $1.5 billion loan to Pakistan for social and environmental projects and developments in finance, industry, and trade. At a signing ceremony during Prime Minister Bhutto's April 1995 visit to Washington, U.S. business leaders signed memoranda of understanding for energy and infrastructure projects in Pakistan worth a reported $6 billion. A September 1996 visit to Islamabad by U.S. Assistant Secretary of Commerce Raymond Vickery marked the establishment of a U.S.-Pakistan Business Development Forum.

Trade and Trade Issues. In 1995, U.S. exports to Pakistan totaled $934 million, while imports from Pakistan were $1.2 billion. Although Pakistan has substantially reformed its restrictive import regime, there are still some barriers to market access. About 75 items are either restricted or banned from importation for reasons related to religion, national security, luxury consumption, or protection of local industries. Despite significant tariff reductions since the late 1980s, tariffs on consumer imports, capital goods, and raw materials remain in the 20-65% range. Under continuing reforms, the highest tariff rate is scheduled to be reduced to 55% by mid1996 .

U.S. companies have complained repeatedly about violations of their intellectual property rights in the areas of patents and copyrights. Pakistan's patent law currently protects only processes, not products, from infringement. In late 1992, Pakistan expanded its copyright law to provide coverage for such works as computer software and videos and strengthened penalties against infringement. A backlog in the court system, however, has so far blocked any significant improvement in enforcement.

Narcotics

Smuggling of heroin into the United States, mainly from Asia, has increased from an estimated five tons annually in the early 1980s to more than 20 tons currently, resulting in falling prices and a higher degree of purity, which leads to increased addiction and incidence of overdose. Recent media reports have warned about the rise of heroin use in the United States. According to these reports, heroin use is as prevalent as cocaine use was in the 1980s. Heroin-caused hospitalizations reportedly have risen steadily since 1993.

In recent years, the Pakistan-Afghanistan border region has supplied a reported 20-40% of heroin consumed in the United States and 70% of that consumed in Europe. The region is second only to Southeast Asia's Golden Triangle as a source of the world's heroin. Opium grown in Afghanistan and Pakistan is processed into heroin in more than 100 illegal laboratories in tribal areas of Pakistan's North-West Frontier Province, where central government control is weak or nonexistent. Although much of the heroin is smuggled by land and sea routes to Europe and the United States, a substantial portion is consumed by Pakistan's rapidly expanding domestic market. The Pakistan government estimates that of the 2.5 million drug addicts in the country, 1.7 million are addicted to heroin. Moreover, according to some experts, Pakistan's drug economy amounts to as much as $20 billion. Drug money reportedly is used to buy influence throughout Pakistan's economic and political systems.

Pakistan's counternarcotics efforts are hampered by a number of factors, including: lack of government commitment; scarcity of funds; poor infrastructure in drug-producing regions; government wariness of provoking unrest in tribal areas; and corruption among police, government officials, and local politicians. U.S. antinarcotics aid to Pakistan administered by the Bureau of International Narcotics Matters (INM) International Narcotics Control Program was reduced from $4.2 million in FY1993 to $2.5 million in FY1996. The major counternarcotics efforts engaged in by the Pakistan government, some of which receive U.S. or U.N. support, include: improved law enforcement; reduction of demand; opium crop destruction and crop substitution; and outreach programs that include supplying roads, irrigation, drinking water, and schools to remote tribal areas. To date, the Pakistan government, which spends less than one% of its budget on antidrug efforts, has lacked the necessary commitment to counter its growing problem of narcotics production, trafficking, and addiction. The Bhutto government claims a serious commitment to eliminating drugs but states that its efforts are hampered by the expansion of poppy cultivation in Afghanistan during and since the war. In July 1994, the Pakistan parliament passed a law raising the maximum penalty for drug trafficking from 25 years imprisonment to death and the minimum penalty from two years imprisonment to 25 years.


CHRONOLOGY

04/06/95 --- Pakistan Prime Minister Benazir Bhutto began a 10-day official visit to the United States, during which she met with President Clinton, Members of Congress, Congressional committees, and U.S. business leaders.

04/08/94 ---U.S. Deputy Secretary of State Strobe Talbott visited Islamabad with a proposal seek from Congress a one-time waiver of the Pressler amendment in order to release to Pakistan 28 F-16 fighter planes in return for a verifiable cap on Pakistan's production of fissile material.

07/14/93 ---Pakistan was removed from the informal terrorist watch list because the State Department had determined that Pakistan had implemented "a policy of ending official support for terrorists in India."

01/09/93 ---The United States warned Pakistan that it was the subject of "active continuing review" for possible inclusion on the State Department list of terrorist states for its alleged support of terrorist activities in the Indian states of Punjab and Kashmir.

10/01/90 ---Pakistan became ineligible for new U.S. assistance when President Bush failed to certify under Section 620E(e) (the "Pressler Amendment") that Pakistan did not possess a nuclear device.

05/15/88 ---Soviet forces began withdrawing from Afghanistan.

10/18/86 ---President Reagan signed a foreign aid bill that included a 6-year, $4 billion package of economic and military aid for Pakistan.

08/08/85 ---The "Pressler Amendment" (Section 620E(e) of the Foreign Assistance Act) was signed into law, requiring the President to certify to Congress that Pakistan does not possess a nuclear explosive device during the fiscal year for which U.S. aid is to be provided.

09/05/81 ---The United States and Pakistan announced agreement on a six-year, $3.2 billion package of economic and military aid.

12/27/79 ---Soviet forces invaded Afghanistan.

04/06/79 ---The Carter Administration invoked Section 669 of the Foreign Assistance Act to suspend U.S. aid to Pakistan because of its acquisition of unsafeguarded uranium enrichment technology.

03/05/59 ---The United States and Pakistan signed a bilateral agreement on military cooperation.

09/08/54 ---The Southeast Asia Treaty Organization (SEATO) was established under a collective defense treaty signed in Manila by the United States, Pakistan, Australia, France, Great Britain, New Zealand, Thailand, and the Philippines.

05/19/54 ---The United States and Pakistan signed a Mutual Assistance Defense Agreement.


FOR ADDITIONAL READING

CRS Issue Briefs

CRS Issue Brief 93097. India-U.S. Relations, by Barbara Leitch LePoer. (Updated regularly)

CRS Issue Brief 90149. Pakistan Aid Cutoff: U.S. Nonproliferation and Foreign Policy Considerations, by Richard P. Cronin. (Updated regularly)

CRS Reports

CRS Report 95-215. India and Pakistan Border Conflict: Background and Ongoing Problems, by Barbara Leitch LePoer.

CRS Report 91-563. The Kashmir Dispute: Historical Background to the Current Struggle, by Richard P. Cronin and Barbara Leitch LePoer.

CRS Report 96-730. The Kashmir Dispute: Recent Developments and U.S. Policy, by Barbara Leitch LePoer.



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