Sanctions eased but Pakistan is priority

Negotiations on the nuclear matter has produced progress, though there is potential for further progress on the benchmarks to be achieved. “We fully realise this is a two-way street and we hope this would move the countries towards joining the international non-proliferation regime,” US Assistant Secretary of State for South Asia Rick Inderfurth told journalists in a briefing on Saturday.

The easing of sanctionsappeared to be more symbolic and subservient to the more urgent task of bailing out Pakistan from a serious economic collapse.As per the decision on sanctions, Washington will remove restrictions on US investment and trade promotion in the two countries including loan guarantees by the Overseas Private Investment Corporation (OPIC) and Ex-Im Bank.

The President will also authorise Pentagon to resume International Military Education and Training (IMET) programmes to both countries. IMET facilitates exchange of military personnel, a programme that has benefited Pakistan in the past and which the Indian armed forces had also begun to appreciate more recently.

Pakistan had been deprived of IMET since 1990 under the Pressler Amendment. The US spent a modest $ 500,000 on India-related IMET activities last year.However the waiver will not remove other aspects of the Glenn, Pressler and Symington Amendments under which there is ban on the two countries relating to export of high-tech, dual use equipment andforeign military sales.

In fact, senior administration officials said the US would shortly release a entities list which would name up to 200 private and government outfits in India and Pakistan with which American businesses would be cautioned against doing business. These entities mostly had to do with nuclear and missile matters.

The list would include a dozen large private companies in India and Pakistan, some 20 government departments in India, 15 in Pakistan, and a host of subsidiaries, officials said.

Signalling what is clearly a carrot-and-stick approach, one senior administration official said: “This is not business as usual. We have more work to do.” Officials also took pains to point out that the waiver of sanctions was for a limited period since the Brownback Amendment, which gave the President powers in this regard, was valid for only one year. The administration could go back to the Congress to seek more relaxation only if there was further progress in the talks.

In his briefing,Inderfurth also made it abundantly clear that the sanctions waiver was primarily aimed at bailing out Pakistan from desperate economic straits. “We are concerned about Pakistan’s economic crisis and we will fully support the IMF’s effort to forestall a default by that country”, he said.

But for this to happen, Pakistan would have to reach agreement on a credible reform programme including resolving its problems with the independent power producers, he added. Islamabad’s spat with the mostly-foreign IPPs has irked Western companies and governments.

Washington’s backing for IMF’s Pakistan bailout plan will also include support for loans from the World Bank and the Asian Development Bank. At the same time, Washington will contine to oppose non-humanitarian developmental loans to India from the World Bank, senior administration officials said.

Asked if this was not discriminatory, officials said the US view was that the Indian economy was far stronger as India was not at risk like Pakistan.

Asked if itdid not amount to rewarding a country for mismanaging its economy while punishing another country’s prudence, the official said: “Mismanagement may be a factor. But this decision is only in response to Pakistan’s financial emergency. The implications of a Pakistani collapse are too serious not to be addressed and we are sure India will also agree with us on that.”

The US move comes ahead of the visit to Washington of Prime Minister Nawaz Sharif on December 1 and 2, when he will meet with President Clinton. US Deputy Secretary of State Strobe Talbott is holding a further round of talks with India’s special envoy Jaswant Singh in Rome on November 19.