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Weapons of Mass Destruction (WMD)

[CRS Issue Brief for Congress]

93097: India - U.S. Relations

Updated May 21, 1998

Barbara Leitch LePoer

Foreign Affairs and National Defense Division

SUMMARY

Although the end of the Cold War has freed U.S.-India relations from the constraints of a bipolar world, relations continue to be affected by the burden of history, most notably the longstanding India-Pakistan regional rivalry. The main areas of U.S. and congressional interest in India include nuclear weapons and missile proliferation, regional stability, human rights, and economic policy issues.

The major U.S. concern in South Asia is the prevention of nuclear and ballistic missile proliferation and the reduction of tensions between India and Pakistan, which center on their competing claims to the former princely state of Kashmir. India and Pakistan, both of which are believed to have nuclear weapons capability, have so far ignored U.S. and international pressure to sign the Nuclear Nonproliferation Treaty or the Comprehensive Test Ban Treaty (CTBT). Neither sanctions applied to India nor a cutoff of aid to Pakistan appear to have dampened the drive by both countries to acquire weapons of mass destruction and the means to deploy them. Partly through U.S. encouragement, India and Pakistan have adopted some confidence-building measures, such as periodic meetings of senior military commanders and a pledge not to attack each other's nuclear facilities. Despite these steps, India-Pakistan relations continued to deteriorate in 1996.

Congress has been particularly concerned with human rights issues related to regional dissidence and separatist movements in Kashmir, Punjab, and India's Northeast region. Strife in these areas over the past several years has resulted in the deaths of thousands of civilians, militants, and security forces. International human rights groups, as well as Congress and the U.S. State Department, have criticized India for alleged human rights abuses by its security forces, including mass arrests, indiscriminate firing on civilian crowds, rape, burning of business and residential neighborhoods, and torture and execution of prisoners in custody. In recent years, Congress has expressed its concern over human rights violations in Kashmir and Punjab in numerous resolutions, amendments, and committee reports.

The United States has been highly supportive of India's efforts to transform its formerly quasi-socialist economy through fiscal reform and market opening. After coming to power in 1991, the Narasimha Rao government, under the guidance of Finance Minister Manmohan Singh, began reducing inflation and the budget deficit, privatizing state-owned industries, reducing tariffs and industrial licensing controls, and instituting incentives to attract foreign trade and investment. Rapidly expanding U.S.- India economic relations were a major focus of the May 1994 visit of Rao to the United States, as well as subsequent visits to India by several U.S. cabinet-level delegations. A United Front coalition government, led by Prime Minister Deve Gowda, that came to power following Indian parliamentary elections in May-June 1996, continued India on the path of economic reform and market opening. I.K. Gujral, who succeeded Deve Gowda as prime minister in April 1997, pledged to continue economic reforms. However, India's market access barriers in some sectors, as well as its inadequate intellectual property rights protection for pharmaceuticals, books, tapes, and videos, continue to be of concern.

MOST RECENT DEVELOPMENTS

On May 11 and 13, 1998, India conducted a total of five underground nuclear tests, breaking a 24-year self-imposed moratorium on nuclear testing. The tests, which appear to have completely surprised the U.S. intelligence and policy community set off a world-wide storm of protest. President Clinton announced, on May 13, that he was imposing wide-ranging sanctions mandated under U.S. nuclear nonproliferation legislation. Japan and other nations joined the United States in expressing their dismay and condemnation of the tests.

Although the Indian government gave concern about the "deteriorating security [and] nuclear environment," as its reason for testing, many observers believe that domestic political factors may have been responsible for at least the timing of the tests. The current Bharatiya Janata Party (BJP) government is a weak coalition of 13 disparate parties, in power only since late March, following inconclusive parliamentary elections. Observers felt that, by conducting nuclear tests, the BJP hoped to consolidate its power by rallying strong national sentiment that supports development of India's nuclear program.

According to the Indian government, the three nuclear tests conducted on May 11 included a fission device, a low yield device, and a thermonuclear device. Two days later, India announced that it had conducted two additional nuclear tests, each with a yield of less than one kiloton. Many analysts believe that the size and type of weapons tested hold significant implications for India's future intentions, including the likelihood of additional tests, as well as for threat perceptions by China and Pakistan. Analysts also note that these tests validate past intelligence estimates that India has conducted a wide spectrum of nuclear weapons research spanning several decades.

The U.S. response to India's nuclear tests thus far has centered on the imposition of wide-ranging sanctions under the Arms Export Control Act and other legislation. Major aspects of the sanctions include: termination of U.S. development assistance to India; termination of U.S. Government sales of defense articles and service; termination of foreign military financing; denial of credit, credit guarantee, or other financial assistance by the U.S. Government; opposition to loans or assistance by any international financial institution; prohibition on U.S. bank loans or credit to India; and prohibition on exports of "specific goods and technology." The Administration reportedly is reconsidering President Clinton's trip to South Asia, scheduled for late 1998. S.Res. 227 (Feinstein), submitted May 12, expressed the sense of the Senate regarding India's May nuclear tests and resolved that the Senate condemn the Government of India's decision to test in the strongest possible terms.

BACKGROUND AND ANALYSIS

Context of the Relationship

U.S. and Congressional Interest

U.S. and congressional interest in India includes a wide spectrum of issues, ranging from nuclear and missile proliferation concerns through human rights, trade, and economic policy questions. In recent years these interests have been particularly affected by three developments: 1) the end of the Cold War and India's subsequent need to diversify its international relationships; 2) the adoption of sweeping economic policy reforms by the Narasimha Rao government beginning in 1991; and 3) deepening bitterness in ties between India and Pakistan over the Kashmir dispute and ongoing Indian preoccupation with China as a long-term source of strategic threat. Congress has been particularly focused on nuclear proliferation, human rights, and trade issues. A number of Members have backed measures that would seek cuts in U.S. aid to India as a means of expressing dissatisfaction with India's human rights policies.

India's Post-Cold War Adjustments

Foreign Policy Reassessment. Caught off guard by the precipitous end of the Cold War, India has sought over the past several years to adapt to new global realities that have antiquated many of its former policies, roles, and alliances. With the demise of the Soviet Union, India lost a reliable source of economic assistance and military equipment, a key trading partner, and the promise of political support in its adversarial relationships with neighboring China and Pakistan. Moreover, the end of a bipolar world has made India's traditional role as a leader of the nonaligned world something of an anachronism.

Both India and the United States are actively exploring the opportunity presented by the end of the Cold War for a more normal relationship between the world's two largest democracies. The 6-day visit to the United States by Indian Prime Minister Narasimha Rao, in May 1994, marked the beginning of a significant improvement in U.S.-India relations. Rao addressed a joint session of the Congress and met with President Clinton. Although discussions were held on nuclear nonproliferation, human rights, and other issues, the main focus of the visit was rapidly expanding U.S.-India economic relations.

Economic Reform. New Delhi's fixation with quasi-socialist economic planning -- the results of which had, for more than a decade, compared badly with the spectacular growth of the market-oriented East Asian countries -- suffered a further blow in the rejection of that model by the former USSR and its successor states. On taking power in 1991, the Narasimha Rao government inherited a desperate financial situation. India's budget deficit exceeded 10% of its Gross Domestic Product (GDP), and inflation was running above 15%. With only a few weeks' worth of foreign exchange reserves on hand, the country was thought by some analysts to be on the brink of defaulting on its $80 billion foreign debt. All of these factors, however, were symptomatic of deeper economic problems created by decades of central planning and bureaucratic regulation that had stunted economic growth.

Rao's finance minister, Manmohan Singh, immediately embarked on a bold strategy of reforms to

address India's economic problems. Since mid-1991, the government has substantially reduced

inflation and the fiscal deficit, begun privatizing or cutting subsidies to inefficient state-owned

industries, made the rupee convertible in international trade, and reduced tariffs and industrial

licensing controls in order to attract foreign investment. The United States has been very supportive

of India's economic reforms, which have been helped along by International Monetary Fund (IMF)

assistance and prodding.

Baggage from the Past

Despite the lifting of Cold War constraints, in many policy spheres India remains shackled to the past. Rivalries with neighbors, separatist tendencies, and sectarian tensions continue to divert attention and resources from basic needs of economic and social development. Moreover, fallout from these unresolved problems -- particularly nuclear arms proliferation and human rights issues -- presents serious irritants in U.S.- Indian relations.

Strategic Rivalries. 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 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 programs for developing ballistic missile delivery systems. 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 since 1990. Pakistan admits only to lending moral and political support to the rebellion, while accusing India of creating dissension in Pakistan's Sindh province.

Adding to India's bitterness toward Pakistan is the latter's historically close ties with China. India and China fought a short border war in 1962, and China since then has occupied territory claimed by India. Although Sino-Indian relations have greatly improved in recent years, the two countries have yet to reach a boundary agreement. Moreover, India remains suspicious of China's nuclear weapons capability as well as its long-time support for Pakistan. During a visit by Rao to China in September 1993, however, the Indian prime minister and Chinese Premier Li Peng signed an agreement to reduce troops and maintain peace along the line of actual control (LAC) that divides their forces. Agreements on trade, environmental, and cultural cooperation were also signed. In December 1995, after eight rounds of talks by an India-China joint working group, both sides pulled back troops from four points along the eastern sector of the border. A visit by Chinese President Jiang Zemin to India in late November 1996 concluded with an agreement by India and China not to attack each other across their disputed border and to negotiate a partial withdrawal of troops from the border. Despite expanding border trade and continuing meetings of the working group, by early 1998 little progress was apparent on boundary demarcation.

Regional Dissidence. A vastly diverse country in terms of ethnicity, language, culture, and religion, India can be a problematic country in terms of governance. Internal instability resulting from such diversity is further complicated by colonial legacies; international borders in many instances divide ethnic groups, creating flashpoints for regional dissidence and separatism. India's methods of managing such problems -- which do not always meet with international human rights standards -- have further alienated dissident groups.

Kashmir and Punjab are India's two major areas of separatist struggle. In the case of Punjab, Sikh separatists from 1984-94 sought to establish an independent Khalistan (land of the pure community of Sikh believers). In the case of Kashmir, some militant groups, such as the Jammu and Kashmir Liberation Front (JKLF), continue to seek an independent or autonomous Kashmir. Other groups, the largest of which is the Hizbullah Mujahadin (HM), seek union with Pakistan. Between 1984 and 1994, there were more than 20,000 casualties in Punjab, including civilians, militants, and security forces. In Kashmir, a reported 25,000 civilians, militants, and security forces have been killed since 1990.

On a lesser scale, there are similar problems of incomplete national integration in other parts of India, particularly the Northeast, where a number of smaller dissident groups are fighting either for separate statehood, autonomy, or independence. The geographically remote and economically backward Northeast is populated by a mosaic of ethnic and religious groups, both tribal and non-tribal. Migration of nontribal peoples into less populated tribal areas is at the root of many problems in the region. Fighting in Manipur state between government forces and the separatist National Socialist Council for Nagaland (NSCN), which has bases in neighboring Burma, has worsened since 1993. The NSCN has sought for 40 years to establish a separate Naga nation encompassing Nagaland and parts of Manipur and Assam. More than 600 people have been killed in Manipur in recent years as a result of clashes between separatists and security forces and between Christian Naga and Kuki tribes in Manipur. Since 1985, about 1,000 people have been killed in a separatist struggle by Bodo tribes people in Assam State.

Social Tensions and Problems. Since the early 1990s, increasing Hindu nationalism has been a source of tension. Although India is more than 80% Hindu, its Westernized independence leaders, led by Jawaharlal Nehru and M.K. ("Mahatma") Gandhi, sought to establish a secular government with protection for India's many religious minorities, including the 120 million Muslims who comprise 12% of the current population.

The Hindu-led Bharatiya Janata Party (BJP), which has been both a driving force and a beneficiary of increasing Hindu nationalism, claims there is broad support for Hindutva, or an India based on Hindu culture. The well-disciplined BJP mushroomed from just two Parliamentary seats following the 1984 election to winning 119 seats in the 1991 election. In December 1992, a BJP-led march to build a temple dedicated to the Hindu god Ram on the site of the Babri mosque at Ayodhya resulted in the illegal destruction of the 400-year-old mosque. State government forces failed to control the situation and rioting ensued, leaving about 1,200 people, mostly Muslims, dead nationwide. In January 1993, some 600 more people were killed in anti-Muslim riots in Bombay. India's commercial center, Bombay previously had been relatively free of communal violence. Bombay also was the scene of ten synchronized terrorist bombings on March 12, 1993 that targeted the city's stock exchange and major hotels, killing more than 300 and injuring 1,400. By late 1994, the country appeared to have put the episode behind it, and Bombay had returned to its role as the center of India's booming economy. In recent years, the BJP has attempted to tone down its communal image and seek broader support, particularly among the middle class. It has won power in a number of important states and joined coalition governments in other states.

Political Setting

1998 Parliamentary Election Results. In February-March 1998, India held national elections that resulted in a "hung" Parliament -- the most highly fragmented in the country's 50-year history. Some 38 political parties are represented in the newly elected Lok Sabha (lower house). The BJP won 178 seats in the election and with allied parties controls 254 seats. The Congress Party, which has ruled India for 45 of its 50 years, won 140 seats and with its allies controls 166 seats. In terms of popular vote, both Congress and the BJP won about 26%. The 15-member United Front coalition, in power from June 1996 to November 1997, polled 96 seats. When no party won a majority of seats, President K.R. Narayanan consulted with the leaders of the various major parties before offering the opportunity of forming the next government to the BJP, the only party that reported that it had the necessary outside support to sustain a confidence vote. On March 19, BJP leader Atal Behari Vajpayee was sworn in as prime minister by President Narayanan, who gave the new government ten days to secure a vote of confidence in the Lok Sabha, which it did on March 28.

Prospects for Political Stability. The new BJP government -- India's fifth government in two years -- is expected to face serious challenges to its stability. The coalition includes some 13 regional parties and numerous independents, most of which do not share the BJP's Hindu nationalist outlook and have their own locally-driven agendas. The Indian political system is viewed by some analysts as being in a transition period from its years of dominance by the Congress Party to a competitive party system, perhaps a two-party system centered on the Congress and the BJP. In the meantime, however, India appears to be stuck in an unstable period of weak coalition governments. The April-May 1996 elections also resulted in a hung parliament. A minority BJP government that came to power resigned after two weeks when it was unable to attract the necessary support. Subsequently, a United Front coalition of 13 parties formed a government with outside support from the Congress Party. Led first by H.D. Deve Gowda and second by I.K Gujral, United Front rule collapsed after 18 months, when the Congress Party withdrew its support.

Bharatiya Janata Party (BJP). Riding a crest of Hindu nationalism, the BJP increased its strength in Parliament from two seats in 1984 to 119 seats in 1991. In 1992-93, the party's image was tarnished by its alleged responsibility for serious outbreaks of communal violence in which a mosque was destroyed at Ayodha and 2,500 people were killed in anti-Muslim rioting in Bombay and elsewhere. Since then, the BJP has worked to change its image from right-wing Hindu fundamentalist or conservative, secular, and moderate. In the 1996 elections, the BJP won 160 seats. With the support of allied parties it controlled 190 seats and was given the opportunity to form a government with its leader Atal Behari Vajpayee as prime minister. Because of its Hindu nationalist platform and perceived anti-Muslim bias, the BJP couldn't attract sufficient coalition partners and resigned after 13 days. In the run-up to the 1998 elections, the BJP sought to widen its support base geographically by forming electoral alliances with small, regional parties in the south and east, thus extending its presence beyond the Hindi heartland of the northern and central plains. Key to the BJP victory was winning the support of Jayaram Jayalalitha, leader of the All India Anna Dravida Munnetra Kazhagam (AIADMK) party in the southern state of Tamil Nadu. Jayalalitha, controls about 30 seats, between her own party and allied parties. A movie actress-turned-politician with criminal cases of influence-peddling and fraud pending against her, Jayalalitha reportedly has exacted a high price for her support. The BJP also formed post-election alliances with various small parties and independents to bring its parliamentary strength to 264. The BJP won the confidence vote 274-261, thanks to a last minute decision by the Telugu Desam Party (TDP) -- a member of the United Front -- to back the BJP. A TDP member, Ganti Mohan Chandra Balayogi, was elected Speaker of the Lok Sabha as the BJP-nominated candidate.

Since the confidence vote in late March 1998, Prime Minister Vajpayee has had to deal with a continuing round of internal bickering and favor-seeking by BJP coalition members. Jayalitha -- who leads the second largest bloc of votes after the BJP -- has been particularly aggressive in trying to influence decisions on ministerial appointments and other issues. Such distractions have delayed BJP government efforts at focusing on more urgent matters, and also have caused concern for the new government's stability. Factors currently favoring the continuation of the BJP government include: Vajpayee's widespread personal popularity; the feeling that, after lackluster performances by Congress and United Front governments in recent years, the BJP should be given its chance; the lack of interest by the Congress Party in forming a government at this time; and the unwillingness of members of Parliament or the Indian electorate to face another election so soon. All of this is likely to unravel, however, unless the BJP can keep its coalition partners focused, get the economy moving, and win popular and business confidence in the stability of its government.

India-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. In October 1990, the United States cut off aid to Pakistan when President Bush was unable to certify that Pakistan did not possess a "nuclear explosive device," as required under Section 620E(e) of the Foreign Assistance Act (FAA), the so-called "Pressler amendment." A Pakistani government official acknowledged in February 1992 that the country has the capacity for making at least one nuclear weapon, and some analysts believe it has enough enriched uranium for 10-15 weapons. Statements in August 1994 by then former Prime Minister Nawaz Sharif that Pakistan has an atomic bomb were denied by Prime Minister Bhutto. India is thought to have enough enriched uranium for 75 or more nuclear weapons.

To date, the cutoff of U.S. aid to Pakistan and sanctions applied to an Indian space research company for the proposed purchase of Russian booster rockets have done little to slow the pace of either country's nuclear and missile programs. Both India and Pakistan have combat aircraft that, with modification, would be capable of delivering nuclear weapons. Both countries are believed to be seeking to develop or acquire ballistic missiles with the capability of striking each other's major population centers. India has tested both its short-range Prithvi surface-to-surface missile and its Intermediate Range Ballistic Missile (IRBM), Agni. Pakistan also has tested both short and intermediate-range missiles, the technology for which was reportedly obtained from China.

Neither India nor Pakistan are a party to the Nuclear Nonproliferation Treaty (NPT). Attempts to pressure the two countries to sign the NPT so far have been met by India's insistence on a nondiscriminatory global nuclear nonproliferation regime, including the abandonment of nuclear arms by the Chinese, and Pakistan's safe stance that it will sign the NPT when India does. On September 10, 1996, India was one of only three nations to vote against the adoption of the Comprehensive Test Ban Treaty (CTBT) by the United Nations General Assembly. In the 158-3 vote, Libya and Bhutan also voted no, while five other nations abstained. Then Prime Minister Deve Gowda said that India would not sign the treaty in its present form as it was highly discriminatory. This has been reiterated by Prime Minister Gujral on several occasions. Pakistan, which voted for the CTBT, has stated that it will not sign the treaty unless India does.

Brokering an End to the India-Pakistan Rivalry. The United States responded to increasing friction between India and Pakistan over Kashmir, beginning in early 1990, by strongly encouraging both governments to continue to institute confidence- building measures in order to reduce tensions. 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.

Since 1993, the United States has held several rounds of high-level talks on South Asian regional security and nonproliferation issues with both India and Pakistan. U.S. officials have urged the two countries to adopt additional confidence-building measures, 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 has also suggested that India and Pakistan consider the following steps: the opening of an Indo-Pakistani dialogue on Kashmir, leading initially to the demilitarization of the Siachen Glacier area; a mutual reduction of conventional arms and defense expenditures; an agreement by both countries to stop involving themselves in each other's regional unrest; restarting talks at the foreign secretary level; and the opening of trade ties between India and Pakistan.

In a move to strengthen U.S. security ties with India and Pakistan, U.S. Secretary of Defense William J. Perry visited both India and Pakistan in early January 1995, the first visit to the region by a U.S. Defense Secretary since the waning days of the Cold War. Perry's visit focused on ways to further peace and stability in the region, as well as expand areas of closer defense cooperation, including peacekeeping efforts. 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 India and Pakistan can develop a normal relationship, Perry restated the U.S. offer to provide whatever help it can if requested by both parties.

By early 1996, however, the United States had become concerned over signs of increasing tension and nuclear and missile proliferation in South Asia. In December 1995, U.S. press reports, based on U.S. intelligence leaks, suggested that India might 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 promptly denied the reports. In January, 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. Throughout much of 1996, India and Pakistan traded heavy fire along the line of control (LOC) that divides their forces in the disputed area of Kashmir. There also were frequent accusations by both Islamabad and New Delhi of harassment and intimidation of each other's diplomats, as well as expulsions of members of each other's diplomatic corps on charges of espionage.

By early 1997, there were signs of a thaw in India-Pakistan relations related, in part, to changes of leadership in the two countries. Foreign secretary talks, which had been broken off since January 1994, were reinstated, and three sets of talks were held in 1997. Prime Minister Gujral met with Pakistan Prime Minister Sharif several times during the year for talks that were reportedly cordial and upbeat. In May the two leaders agreed to set up a hot line between them; exchange civilian prisoners, including several hundred fishermen; and resume foreign secretary talks.

On June 3, the Washington Post reported that India had moved Prithvi missiles to a site in northwest Punjab State. Pakistan Foreign Minister Gohar Ayub Khan responded to the report on June 4, saying "India has created a dangerous security environment." U.S. State Department spokesman Nicholas Burns stated on June 4, "We would see that the deployment by either [India or Pakistan] of ballistic missiles would be fundamentally contrary to the recent good progress made in the relationship....We hope this will be one of the central issues in their own discussions -- the prevention of a deployment of ballistic missiles in either country." On June 11, Indian Prime Minister I.K. Gujral denied that India had deployed missiles on the border with Pakistan. According to various unconfirmed news reports, fewer than a dozen Prithvi missiles have been stored, but not deployed, in Punjab State.

Despite the reported missile movements, the India and Pakistan foreign secretaries met in June and agreed on an agenda for future talks to set up working groups. These groups are slated to tackle a range of issues, including: peace and security; Jammu and Kashmir; Siachen Glacier; terrorism and drug-trafficking; economic and commercial cooperation; Sir Creek estuary on the Arabian Sea; and Wullar Barrage/Tulbul Navigation project in Kashmir. In November, a political crisis in India resulted in the resignation of the Gujral government. Foreign secretary talks were again put on hold until after the Indian parliamentary elections in February-March 1998.

On September 1997, President Clinton met with both Prime Minister Gujral and Prime Minister Sharif at the United Nations in New York. The meetings were followed by a series of visits to the subcontinent by high-level Clinton Administration officials, including Secretary of State Madeleine Albright, who visited India and Pakistan in November 1997. The visits were billed as part of a Clinton Administration initiative to increase U.S. engagement in South Asia. In New Delhi, Albright met with Prime Minister I.K. Gujral, President K.R. Narayanan, and other officials on the whole range of bilateral and regional issues. Albright signed an updated and expanded Overseas Private Investment Corporation agreement. President Clinton is expected to visit India and Pakistan in September 1998, the first U.S. president to do so since President Carter's visit in 1978.

U.S.-India Security Cooperation. Unlike U.S.-Pakistan military ties, which date back to the 1950s, military cooperation between the United States and India is in the early stages of development. In recent years, joint Indo-U.S. steering committees have been established to coordinate relations between the two countries' armed services, including exchange visits, technical assistance, and military exercises. Naval cooperation so far has included a 20-day special operations joint exercise focused on marine counterterrorism and peacekeeping operations at Ratnagiri in 1994. Indo-U.S. naval forces also conducted joint exercises 1995 and 1996. An Indian naval contingent supported the U.S.-led U.N. peacekeeping mission in Somalia starting in December 1992. India's ground troops in Somalia, which numbered 5,000 in mid-1994, received high praise for their humanitarian as well as peacekeeping efforts. In 1997, India had about 900 U.N. peacekeeping forces, mainly serving in Angola and Bosnia-Hercegovina. In June 1997, a high-level team of Indian officials was in Washington to sign a U.S.-India treaty for the extradition of fugitive offenders. The treaty was described by both sides as an important step in efforts to combat the problems of international terrorism and narcotics trafficking.

Regional Dissidence and Human Rights

U.S. concern over dissidence and human rights problems in India results from its interest in human rights and democratization issues worldwide as well as its concern for regional stability in South Asia. Although there are generalized human rights problems throughout India, such as police abuse, child labor, and discrimination against women and minorities, some of the most serious problems have occurred in Kashmir and Punjab. International human rights organizations, such as Amnesty International and Asiawatch, have documented abuses by Indian security forces, including mass arrests, indiscriminate firing on civilian crowds, burning of business and residential neighborhoods, rape, and torture and execution of prisoners in custody. The Indian government denies most such accusations and points instead to terrorist acts of bombing, kidnaping, and assassination allegedly committed by militant groups. Both Amnesty International and Human Rights Watch have expressed grave concern over numerous reports of human rights abuses by armed militant groups, as well as the flow of arms left over from the Afghan conflict through Pakistan into Punjab and Kashmir.

In dealing with regional dissidence, the Indian government has employed a wide range of security legislation, including laws that permit authorities to search and arrest without warrant and detain persons for a year without charge or bail. Other security laws prescribe sentences of not less than five years for disruptive speech or actions. Special courts have been established that meet in secret and are immune from the usual laws of evidence. In some cases, security forces are given permission to shoot to kill.

International human rights groups also have reported serious abuses by various militant groups in Kashmir and Punjab, including kidnaping, extortion, and killing of civilians. In July 1995, four Western tourists, including American Donald Hutchings, were kidnaped in Jammu and Kashmir state by a previously unknown militant group, Al-Faran. A fifth hostage, Norwegian Hans Christian Ostroe, was found beheaded in August 1995. The Indian government reports it has had no contact since November 1995 with Al- Faran, which initially demanded release of 15 militants being held by India. In November 1996, the U.S. government offered a "substantial" award, under its global rewards program, for information on the whereabouts and welfare of Hutchings. Although there have been reports that the hostages were murdered by their captors in December 1995, the case remains unsolved.

Punjab. Between 1984 and 1994, a reported 20,000 people -- civilians, militants, and security forces -- were killed as a result of a Sikh separatist struggle in Punjab State. Over the last few years, however, a security forces crackdown in the state has virtually halted terrorist and separatist activity. Applying a carrot-and-stick approach, the Indian government deployed some 150,000 army troops to pacify the countryside before state assembly elections were held in November 1991. Probably more effective was the beefing up -- in size and weaponry -- of the Punjabi Sikh- dominated state police under police chief K.P.S. Gill. By early 1993, Gill claimed that the separatist campaign was nearly over; some 800 militants had surrendered and most of the separatist groups were in serious disarray. Separatist-related deaths dropped from nearly 5,000 per year in 1991 and 1992 to less than 100 for 1995.

Popular disillusionment with criminal elements among the militants, and general war-weariness after a decade of violence, reportedly contributed to the turning tide in Punjab. Although voter participation in the 1991 elections was only about 20%, some 70% voted in municipal elections in September 1992; and more than 80% participated in local council elections held in January 1993. Supporters of the crackdown say that, for the first time in many years, peace and freedom of movement have returned to the state, night farming and transport have resumed, and real estate values are up. Detractors, however, call the crackdown a reign of police terror and human rights violations and say that the Indian government has yet to address Sikh economic, political, and social grievances. In August 1995, the chief minister of Punjab state, Beant Singh, along with 12 others, was killed by a suicide bomber in the state capital of Chandigarh. Babbar Khalsa, a Sikh terrorist group, claimed responsibility for the assassination. Elected in 1991, Singh was hailed by his supporters for bringing peace to Punjab, while detractors reviled him for reportedly ruthless methods used by his security.

In Punjab State assembly elections held in February 1997, the predominantly Sikh Akali Dal party won a landslide victory of 74 seats out of 117. Nearly 70% of the voters participated in the free and peaceful elections. The new government, led by Chief Minister Parkash Singh Badal, has raised the longstanding issues of watersharing with the neighboring states of Haryana and Rajasthan and transfer of the city of Chandigarh to Punjab. Chandigarh, currently a union territory, serves as the capital of both Punjab and Haryana State, which was carved out of Punjab in 1966.

The Kashmir problem is rooted in claims by both India and Pakistan 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. Since late 1989, a separatist war, costing more than 25,000 lives, has been waged in the Indian-controlled Kashmir Valley between Muslim guerillas and their supporters and several hundred thousand Indian security forces. India blames Pakistan for fomenting the rebellion, as well as supplying arms, training, and fighters. Pakistan claims only to provide diplomatic and moral support.

A series of kidnapings and general strikes in the Kashmir Valley, beginning in the late 1980s, led India to impose direct rule on the state in 1990, and send in troops to keep order. Following a number of incidents in which Indian troops fired on demonstrators, Kashmiris flocked to support a proliferating number of militant groups, the two major ones being the pro-independence Jammu and Kashmir Liberation Front (JKLF) and the pro-Pakistan Hizbullah Mujahadin (HM). Since 1990, widespread human rights violations by Indian security forces in Kashmir have been documented by both international and Indian human rights organizations, including mass arrests, indiscriminate firing on civilians, rape, the burning of homes and businesses, and torture and execution of prisoners in custody. Documented human rights violations by militant groups include extortion, kidnaping, and killing of civilians.

In 1993, a new Kashmiri political group came to the fore: the All Parties Hurriyat (Freedom) Conference. Formed as an umbrella organization for groups opposed to Indian rule in Kashmir, Hurriyat membership includes about 30 groups and associations, including the JKLF, the HM, Muslim Conference, and People's League. The Hurriyat Conference, which states it is committed to seeking dialogue with the Indian government on a broad range of issues, proposes convening a tripartite conference on Kashmir, including India, Pakistan, and representatives of the Kashmiri people. Hurriyat leaders have also demanded Kashmiri representation at any talks between India and Pakistan on Kashmir.

In 1995, the government of then Prime Minister Narasimaha Rao government began efforts to restart the political process in Kashmir, where state elections had last been held in 1987. President's rule (rule by the central government) was established in July 1990 and extended by Parliament every six months. Plans to hold elections in December 1995 were dropped, however, when the Indian Election Commission refused permission, saying that conditions in Kashmir were "not consistent with the conduct of free and fair elections." Kashmiri separatist groups have rejected repeatedly the holding of Kashmir elections within the framework of the Indian constitution, maintaining that international oversight for any polls is necessary.

In May 1996, elections to fill the six seats for Jammu and Kashmir State were held as part of the general parliamentary elections called by the Rao government. Turnout for the elections in the state was about 40%, with some reports of voters being herded to polling stations by security forces. The elections served as a rehearsal for Jammu and Kashmir State assembly elections, which were held in September 1996, spread over four days. The National Conference (NC), the longstanding mainstream Kashmiri party led by Farooq Abdullah, along with other national and local parties took part in the elections. The Hurriyat Conference, calling the polls a sham, refused to contest. The NC won 57 of 87 seats, and Farooq Abdullah became chief minister of the state in early October. The polling, according to unofficial observers, fell somewhere between the Indian government's description of "a free and fair election" and the Hurriyat characterization of "a military operation."

In March-April 1998, Jammu and Kashmir State again took part in general parliamentary elections. Polling was spread over several days in the state, with one snow-bound constituency scheduled to vote in June. Pre-election violence and a boycott by the Hurriyat kept voter turnout in the state at an estimated 35-40 percent. Omar Abdullah, son of the chief minister, was elected to fill the Srinagar seat. According to the U.S. State Department Human Rights Report for 1997, some 350,000 Indian security forces remain in Jammu and Kashmir. Although insurgency-related deaths have declined in the state, human rights abuses by both security forces and militants continues to be a serious problem. In early 1998, there was a series of terrorist attacks on Hindu Pandit villages in remote areas in which families were brutally killed and their villages burned. The incidents have led to a migration of remaining Hindu families from these areas. Most Kashmiris have expressed shock and outrage at the incidents, which were blamed by some observers on "guest militants" from Afghanistan and other Muslim countries.

Human Rights. The U.S. State Department, in it annual Country Reports on Human Rights Practices, released in January 1998, stated that: "During 1997 India made further progress in resolving human rights problems," but that "there continued to be significant human rights abuses, despite extensive constitutional and statutory safeguards." In recent years, Indian and international human rights groups have continued to criticize the country's human rights situation, particularly in Kashmir. The Congress has expressed its disapproval of human rights abuses in India through various "sense of the Congress" resolutions, amendments to aid bills, and committee reports. In 1989, 1991, and 1993, bills were introduced that sought to cut off most development assistance to India unless Amnesty International was allowed to monitor the human rights situation there. In June 1996, an amendment to H.R. 3540 that would have limited development aid for India on human rights grounds, was rejected, 126-297. On September 4, 1997, the House of Representatives rejected, by a vote of 82 to 342, an amendment (H.Amdt. 317, Burton) that sought to limit FY1998 development assistance to India to $41.7 million, in order to censure India for alleged human rights violations. The proposed amendment to the Foreign Operations Appropriations Act (H.R. 2159), would have reduced by about one-quarter the FY1998 development request for India.

There is evidence of increasing Indian government sensitivity to pressure on the issue of human rights. A National Human Rights Commission, established in 1993, has investigated abuses in Punjab, Kashmir, and the Northeast and issued reports and recommendations. In 1994, the Commission urged the government to repeal the Terrorist and Disruptive Activities (Prevention) Act (TADA), under which persons may be detained for years without due process. Since 1985, an estimated 67,000 people throughout India have been detained under the TADA, often for offenses unrelated to terrorist activities. Although the Rao government allowed the TADA to lapse in May 1995, some of the TADA provisions remain in other existing security laws. The Supreme Court also has become more active in combating the custodial excesses of the police by placing stringent requirements on arrest procedures and granting compensation for police abuse victims. In January 1997, the Supreme Court ordered sweeping prison reforms, including ending overcrowding, torture, and neglect of health and hygiene of prisoners. In 1997, India signed the U.N. Convention Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment.

In general, India has denied international human rights groups official access to Kashmir, Punjab, and other sensitive areas. In March 1994, the Indian government allowed an ICRC team to visit Jammu and Kashmir and in late September gave the ICRC permission to begin its humanitarian programs, which reportedly include visiting jails and detention centers, setting up medical outposts, and providing specialized training for security forces in Kashmir. A reported 5,000 Kashmiris currently are in jail under anti-terrorist laws. In 1995, the Indian government signed a memorandum of understanding with the ICRC to allow it "access to all persons arrested and detained in relation with the current situation in Jammu and Kashmir" in order "to monitor the conditions of detention and treatment of detainees." Although an Amnesty International team was allowed to visit Bombay in 1994, in order to investigate the 1993 bombings there, it has not yet been given permission to visit Kashmir or Punjab.

India's Economic Reforms and Market Opening

According to many economic observers, India's most pressing need is for a stable government that will complete its five-year term and be strong enough to make tough economic decisions. The political uncertainty of four prime ministers in less than two years reportedly has cast a pall over foreign investor confidence and weakened the rupee. The Congress Party is credited with instituting economic reforms in 1991, and turning around the Indian economy, which had been on the brink of default. Under Finance Minister Manmohan Singh, India at that time began the task of restructuring its economy and opening its markets to foreign trade and investment. As a result of these policy changes, annual direct foreign investment rose from about $100 million in 1990 to $2.4 billion in 1996. More than one-third of these investments were by U.S. companies, including IBM, Motorola, Enron, Coca Cola, Pepsico, Morgan, Stanley, Merrill Lynch, AT& T, Raytheon, Kellogg, Procter & Gamble, Ford, and Mobil. Most analysts expect economic reforms to remain in place, but question the rate at which they will move forward.

The new BJP government is faced with an economy in the midst of a slowdown. Gross domestic product (GDP) grew an estimated 5% for the fiscal year ending March 31, 1998, down from 7.5% in 1996-97. The agriculture-fishing-forestry sector growth rate slumped to an estimated -2% compared to 7.9% the previous year. The manufacturing growth rate declined from 7.4% in 1996-97 to an estimated 6.1% for 1997-98. Foreign direct investment for the period April-December 1997 reportedly was $2.5 billion, compared to $2.7 billion for the same period in 1996. India's foreign reserves dropped from $30 billion in August 1997 to $27.3 billion in late February 1998. The Center for Monitoring Indian Economy recently reported some 150 new public and private sector projects were stalled or abandoned in the past two years, including power and industrial projects, for causes ranging from political and environmental opposition to a slowdown in economic reforms and sluggish market conditions.

The BJP, a pro-business party, by and large has supported India's economic reforms -- but with a nationalist caveat. The party supports foreign investment in such areas as infrastructure but opposes any foreign investment where it would compete with Indian industry, such as in consumer goods production. BJP leaders have stated that they would prefer to slow down the pace of India's globalization in order to give domestic industry 5-10 years to integrate with the global economy. The new BJP government, formed in late March 1998, has sent out mixed signals on its economic game lan. The new finance minister, Yashwant Sinha, served in that post in a short-lived socialist coalition government in 1990, and is viewed as a moderate, but not a strong economic reformer. In his early statements, he promised to cut red tape and streamline policies in order to woo foreign investment -- ut mainly in the infrastructure sectors. A clearer vision of the BJP government's economic policy -- as well as its chances for political survival -- will emerge when it puts forth, and attempts to pass, its first budget in June.

Trade Issues

Market Access Barriers. U.S. exports to India for 1997 were $3.6 billion, while U.S. imports from India for 1997 totaled $7.3 billion. Despite significant tariff reductions and other measures taken by India to improve market access, according to the report of the United States Trade Representative (USTR) for 1997, a number of foreign trade barriers remain. U.S. exports that reportedly would benefit from lower Indian tariffs include fertilizers, wood products, computers, medical equipment, scrap metals, and agricultural products. The import of consumer goods is restricted, and other items, such as agricultural commodities and petroleum products, may only be imported by government trading monopolies. The USTR also cited barriers that continue to exist in India's financial services sector. Almost all insurance companies are government owned, as are most banks. Largely dominated by the state, India's banking industry has been widely criticized for its inefficiency and poor service and regarded as a stumbling block in India's efforts to open up the economy. Public sector banks, which include 90% of India's bank branches, handle 85% of the country's banking business. In a sign that India's banking industry may be opening up, approval has been given for 25 new foreign banks and bank branches to operate in India since 1993. Five U.S. banks now have a total of 16 branches in India.

Intellectual Property Rights Protection. Inadequate intellectual property rights protection, by means of patents, trademarks and copyrights, has been a long-standing issue between the United States and India. Major areas of irritation have included pirating of U.S. pharmaceuticals, books, tapes, and videos. U.S. motion picture industry representatives estimated their annual losses due to audiovisual piracy in 1997 to be $66 million. In May 1991, the USTR cited India as a "priority foreign country" under the Special 301 provision of the 1988 Trade Act for its lack of protection and enforcement of intellectual property rights. After a 9-month investigation, the USTR further determined that, although India had strengthened its trademark and copyright laws, patent protection remained weak, adversely affecting U.S. commerce. As a result, the Bush Administration in 1992 suspended duty-free privileges under the Generalized System of Preferences (GSP) for about $80 million in Indian exports of pharmaceutical and related products. In April 1993, the USTR again named India as a "priority foreign country" under "special 301." The Indian Parliament, in May 1994, passed amendments to the country's copyright law designed to strengthen intellectual property rights protection. In view of the new copyright laws and proposed legislation on trademarks, the USTR in June 1994 moved India from the priority foreign country list to the less stringent "priority watch list," while continuing to urge India's adoption of patent protection legislation. India remained on the priority watch list in 1998.

U.S. Aid

The relatively small U.S. aid program for India for FY1998 includes an estimated $51.35 million in development assistance, $91.874 million in P.L.480 funds, and $475,000 for International Military Education and Training (IMET). For FY1999, the Clinton Administration has requested $56.5 million for development assistance, $91.752 million in P.L 480 funds, and $450,000 for IMET. In recent years, the U.S. Agency for International Development (AID) increasingly has focused on sustainable development programs that support India's efforts to restructure and privatize its economy. The major AID goals in India for FY1997 include: encouraging broad-based economic growth; stabilizing population growth; enhancing food security and nutrition; protecting the environment; reducing transmission of HIV infection; and expanding the role and participation of women in decision-making. P.L. 480 funds go to providing food assistance, largely through private voluntary agencies. First Lady Hillary Clinton visited India in 1995 as part of a five-nation tour of South Asian projects in support of women's economic and social development. The First Lady announced that India would receive the first grant, for $500,000, of a new U.S. Agency for International Development initiative for educating girls and women. In 1997-98, the United States provided about 2.5% of the $6.6 billion in donor assistance to India and is its sixth largest donor. Major donors include, the World Bank, the Asian Development Bank, the European Union, Japan, Germany, and the United States.

Narcotics

India is the world's largest producer of opium for pharmaceutical purposes, some of which reportedly is diverted illegally to heroin production. The country has an estimated 1.2 million heroin addicts and 4.5 million who are addicted to opium. India serves as a major transit route for drugs originating in both Pakistan and Burma, and also is a major supplier to both countries of the chemical used in manufacturing heroin. Thousands of gallons of acetic anhydride reportedly are shipped by camel through Rajasthan state to Pakistan, where some of it is passed on to drug manufacturers in Afghanistan. Smaller amounts of the chemical, which is produced in the New Delhi area, are also smuggled through India's Northeast to heroin producers in Burma.

Counternarcotics efforts in both India and Pakistan are hampered by lack of political and budgetary support, lack of infrastructure in drug-producing areas, and corruption among police, government officials, and local politicians. U.S. counternarcotics assistance to India consists mainly of funding training programs for enforcement personnel and the Indian Coast Guard. Major counternarcotics efforts by the Indian government in 1996 included improved cooperation with Pakistan on counternarcotics efforts and implementation of new policies aimed at reducing the diversion of legally produced opium to the illegal market. Although the Indian government is becoming more concerned about the drug problem, observers note there needs to be an increase in political support and resources for counternarcotics efforts.



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