IN THE WEEKS following their May nuclear tests, India and Pakistan appear to be responding positively to international calls that both countries participate more fully in global non-proliferation efforts and move to diffuse South Asia's most dangerous nuclear crisis to date. The United States, which took the lead in galvanizing international condemnation of the tests and imposed the harshest economic sanctions, has initiated new bilateral talks with both countries and has sought to soften the application of U.S. sanctions to induce New Delhi and Islamabad to move quickly.
Insistent that India and Pakistan not be allowed to "test their way" to nuclear-weapon-state status, the Clinton administration has said that sanctions will not be lifted unless India and Pakistan make progress on the international arms control agenda agreed to by the five permanent members of the UN Security Council (the five recognized nuclear-weapon states) and the Group of Eight (G-8) industrialized countries. (See ACT, May 1998.) Included on that agenda are India's and Pakistan's immediate and unconditional signing of the Comprehensive Test Ban Treaty (CTBT); their participation in negotiations at the Conference on Disarmament (CD) on a treaty to ban the production of fissile material for weapons purposes; their renewal of bilateral talks, including the issue of Kashmir; and steps to de-escalate their nuclear weapon and ballistic missile rivalry, particularly the non-deployment of nuclear weapons and a halt to missile testing.
Deputy Secretary of State Strobe Talbott completed a third round of separate talks with Indian and Pakistani officials July 19 to 23, spending two and a half days in New Delhi before going to Islamabad on July 21. On July 30, Munir Akram, Pakistan's ambassador to the Geneva-based Conference on Disarmament announced that during Talbott's July 21–23 meetings, Islamabad agreed to support the commencement of cutoff talks at the CD. (See p. 27.) Negotiating principally with Jaswant Singh, the Indian prime minister's special envoy, and Pakistani Foreign Secretary Shamshad Ahmed, Talbott held earlier meetings in India on June 12 and July 9-10 with Singh, and on June 29 with Ahmed and on July 6 with Pakistani special envoy Sahabzada Yaqub Khan. On July 11, Pakistani Prime Minister Nawaz Sharif announced that a decision to sign the CTBT would be made independently of what India does—a significant departure from past Pakistani policy.
India is intent on deploying a "minimum deterrent" and, according to a July 7 New York Times report, an official of the prime minister's office said New Delhi will reject proposals that it not test ballistic missiles or develop a nuclear force. India has already declared a unilateral moratorium on further nuclear testing (as has Pakistan). The official said India would sign the CTBT without demanding the treaty be rewritten once it had determined "what we can get," and that New Delhi is ready to make a binding international pledge not to transfer nuclear technology and is willing to participate in cutoff talks at the CD. On July 21, The Washington Times reported that India will continue to insist that the United States recognize India as a nuclear power, support its campaign to win a permanent seat on the Security Council, lift all proliferation-related sanctions and end the prohibition on civil nuclear commerce with India.
New Delhi and Islamabad are not only seeking to mend relations damaged by their nuclear tests, but are trying to expedite the lifting of international economic sanctions, whose total cost has been estimated by Washington at $4 billion for Pakistan and $20 billion for India.
Under U.S. law, any state other than a nuclear-weapon state (as defined by the nuclear Non-Proliferation Treaty) that tests a nuclear explosive device must be cut off indefinitely from all U.S. government assistance, including all military assistance, trade subsidies and non-humanitarian types of foreign aid; to be excluded from U.S. military sales and purchases of dual-use or Munitions List items; to be blocked from borrowing from U.S. commercial banks; and to face mandatory U.S. opposition to loans from international financial institutions such as the World Bank and International Monetary Fund (IMF).
In determining how the never-before-implemented legislation would be put into effect, the Clinton administration has made a number of decisions to moderate the sanctions' effect. First, while the G-8 decided in June to oppose lending to India and Pakistan by international financial institutions, an exception was made for loans to address "basic human needs." Although most World Bank loans fall into this category, Treasury Undersecretary David Lipton said June 18 that India would lose roughly $2.5 billion in World Bank loans while Pakistan would be blocked from about $1.5 billion in assistance. On June 25, the World Bank resumed lending to India with a $543 million package of loans for humanitarian projects.
Second, while U.S. banks are prohibited from lending to the Indian or Pakistani governments, the Clinton administration will allow them to continue doing business in India despite New Delhi's requirement that foreign banks hold part of their reserves in Indian government bonds. Third, the Commerce Department will continue to give favorable consideration for exports of high-technology dual-use items (such as advanced machine tools or supercomputers) on a case-by-case basis for public and private entities not involved in "nuclear, missile or inappropriate military activities."
Finally, on July 21, State Department spokesman James Rubin announced that Washington's opposition to IMF lending to Pakistan would be implemented by abstaining from votes; in effect authorizing the rest of the G-8 countries to support loans to Islamabad. "We have not softened or somehow waived sanctions," Rubin said. "We are abstaining and using the flexibility that the law currently allows." According to Rubin, "India neither seeks nor receives support from the IMF."
The Clinton administration has also sought congressional support in adjusting the sanctions. On July 14, the House of Representatives and the Senate rushed through legislation modifying U.S. sanctions legislation to exempt U.S. government agricultural credits for one year, just in time to allow U.S. wheat farmers to bid on a $250 million Pakistani wheat tender. President Clinton signed the bill into law the same evening, saying, "We need to make sure our sanctions policy furthers our foreign policy goals without imposing undue burdens on our farmers."
The next day the Senate unanimously passed an amendment to the fiscal year 1998 agriculture appropriations bill that would provide the president with waiver authority for all sanctions (with the exception of military sales and exports of dual-use and Munitions List items) for one year. The measure now awaits action by a House-Senate conference committee, as the version of the agriculture appropriations bill passed by the House doesn't include the waiver provision.