Order Code IB94041
Issue Brief for Congress
Received through the CRS Web
Pakistan-U.S. Relations
Updated September 24, 2002
K. Alan Kronstadt
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Historical Background
Pakistan-India Rivalry
The China Factor
Pakistan Political Setting
Background
Pakistan-U.S. Relations and Bilateral Issues
Security
Nuclear Weapons and Missile Proliferation
U.S. Nonproliferation Efforts
Congressional Action
Pakistan-U.S. Military Cooperation
Democratization and Human Rights
Democratization Efforts
Human Rights Problems
Economic Issues
Trade and Trade Issues
Narcotics
Terrorism


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Pakistan-U.S. Relations
SUMMARY
The major areas of U.S. concern in Paki-
Pakistan following its 1999 military coup.
stan include nuclear nonproliferation; counter-
terrorism; regional stability; democratization
Both Congress and the Administration
and human rights; and economic reform and
consider a stable, democratic, economically
development. A potential Pakistan-India
thriving Pakistan as key to U.S. interests in
nuclear arms race, fueled by rivalry over
South, Central, and West Asia. Although
Kashmir, continues to be the focus of U.S.
ruled by military regimes for half of its exis-
nonproliferation efforts in South Asia and a
tence, between 1988 and 1999 Pakistan had
major issue in U.S. relations with both coun-
democratic governments as a result of national
tries. This attention intensified following
elections in 1988, 1990, 1993, and 1997.
nuclear tests by both India and Pakistan in
During that time, Benazir Bhutto, leader of the
May 1998. South Asia is viewed by some
Pakistan People’s Party, and Nawaz Sharif,
observers as a likely prospect for use of such
leader of the Pakistan Muslim League, each
weapons. India has developed short- and
served twice as prime minister. Neither leader
intermediate-range missiles, and Pakistan has
served a full term, being dismissed by the
acquired short-range missiles from China and
president under constitutional provisions that
medium-range missiles from North Korea.
have been used to dismiss four governments
India and Pakistan have fought three wars
since 1985.
since 1947.


In October 1999, the government of
U.S.-Pakistan cooperation began in the
Prime Minister Nawaz Sharif was ousted in a
mid-1950s as a security arrangement based on
bloodless coup led by Chief of Army Staff
U.S. concern over Soviet expansion and Paki-
Gen. Pervez Musharraf, who suspended the
stan’s fear of neighboring India. Cooperation
parliament and declared himself chief
peaked during the 1979-89 Soviet occupation
executive. In June 2001, General Musharraf
of Afghanistan. U.S.-Pakistan ties weakened
assumed the title of President, a move
following the October 1990 cutoff of U.S. aid
ostensibly legitimized by an April 2002 refer-
and arms sales, which were suspended by
endum. The United States has strongly urged
President Bush under Section 620E(e) of the
the Pakistan military government to restore
Foreign Assistance Act (FAA) (the so-called
the country to civilian democratic rule. Presi-
“Pressler amendment”). Further U.S. sanc-
dent Musharraf has scheduled national elec-
tions were imposed on Pakistan (and India) as
tions for October 10, 2002. The Musharraf
a result of their 1998 nuclear tests. The see-
government has begun to address Pakistan’s
saw Pakistan-U.S. relationship has been on the
many pressing and longstanding problems,
upswing following Pakistan’s enlistment as a
including the beleaguered economy, corrup-
frontline state in the U.S.-led war on terrorism
tion, terrorism, and poor governance. Paki-
resulting from the September 2001 attacks on
stan will receive well over one billion dollars
New York and Washington. Nuclear sanc-
in U.S. assistance and several billion dollars
tions on Pakistan and India have been waived;
from international organizations to help
Congress also has given the President author-
strengthen the country as a key member of the
ity to waive, for 2 years, sanctions imposed on
U.S.-led anti-terrorism coalition.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
In early September, Pakistani President Musharraf visited the United States, where he
addressed the UN General Assembly and met with President Bush. In a strongly-worded
speech, the Pakistani President blamed India for holding peace hostage through its
“belligerence” and sponsorship of “state terrorism” in Kashmir. In their meeting, President
Bush urged that Pakistan be returned to full democracy while putting a stop to militant
movements across the Kashmiri Line of Control (LOC).

Tensions between Pakistan and India have stabilized at moderate, but still dangerous
levels, though election-related violence in Kashmir may lead to renewed rancor on the
subcontinent. There are indications that exfiltration across the LOC is increasing after an
apparent lull during the early summer months. These movements may be taking place with
the active support of Pakistan’s intelligence service. President Musharraf continues to deny
any Pakistani role in such exfiltration.

Pakistani security forces, reportedly assisted by U.S. military and law enforcement
personnel, have had success in capturing Al Qaeda fugitives and other militants, most
notably with the September seizure of Ramzi bin al-Shibh, said to be a key figure in the
planning of the September 2001 terror attacks on the United States, and Sharib Ahmad, the
most-wanted militant in Pakistan and alleged organizer of the June 2002 car bomb attack
on the U.S. consulate in Karachi. Islamabad claims to have captured and remanded to U.S.
custody 422 Al Qaeda operatives to date.

In August, President Musharraf announced major and unilaterally-imposed changes
to the country’s constitution, changes that appear meant to institutionalize a permanent
governing role for the military. The United States has expressed concern that this
development will make the path to restore democracy in Pakistan more difficult, and U.S.
officials urge Musharraf to ensure that October 2002 elections are free and fair. Pakistan’s
two leading civilian politicians—Benazir Bhutto and Nawaz Sharif—have been legally
barred from participation in the elections.

BACKGROUND AND ANALYSIS
Historical Background
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 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 from 1955 to 1965. U.S.
economic aid to Pakistan between 1951 and 1982 totaled more than $5 billion.
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Differing expectations of the security relationship have long bedeviled bilateral 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.
Limited U.S. military aid was resumed in 1975, but it was suspended again by the Carter
Administration in April 1979 in response to Pakistan’s covert construction of a uranium
enrichment facility.
Following the Soviet invasion of Afghanistan in December 1979, Pakistan was again
viewed as a frontline state in the effort to block Soviet expansionism. In September 1981,
the Reagan Administration negotiated a $3.2 billion, 5-year economic and military aid
package with Islamabad. 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. Concern was based in part on evidence of U.S.
export control violations that suggested a crash Pakistani program to acquire a nuclear
weapons capability. In 1985, Section 620E(e) (the “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. This 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. A $4 billion, 6-year aid package for Pakistan was signed in 1986.
With Soviet withdrawal from Afghanistan beginning in May 1988, Pakistan’s nuclear
activities again came under closer U.S. scrutiny. In October 1990, President Bush suspended
aid to Pakistan. Under the provisions of the Pressler amendment, most economic and all
military aid to Pakistan was stopped and deliveries of major military equipment suspended.
Narcotics assistance of $3-5 million annually was exempted from the aid cutoff. In 1992,
Congress partially relaxed the scope of the aid cutoff to allow for P.L.480 food assistance
and continuing support for nongovernmental organizations (NGOs).
One of the most serious results of the aid cutoff for Pakistan was the nondelivery of
some 71 F-16 fighter aircraft ordered in 1989. In December 1998, the United States agreed
to pay Pakistan $324.6 million from the Judgment Fund of the U.S. Treasury – a fund used
to settle legal disputes that involve the U.S. government – as well as provide Pakistan with
$140 million in goods, including agricultural commodities.
Pakistan-India Rivalry
Three wars – in 1947-48, 1965, and 1971 – 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. Both
Pakistan and India have built large defense establishments at the cost of economic and social
development. The Kashmir problem is rooted in claims by both countries to the former
princely state, divided since 1948 by a military line of control into the Indian state of Jammu
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and Kashmir and Pakistan-controlled (Free) Kashmir. India blames Pakistan for supporting
a separatist rebellion raging in the Muslim-dominated Kashmir Valley that has claimed
30,000 lives 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. (For
further discussion see below.)
The China Factor
India and China fought a brief border war in 1962, and an oftentimes tense border
dispute remains unresolved. A strategic rivalry also exists between these two large nations.
Pakistan and China, on the other hand, have enjoyed a generally close and mutually
beneficial relationship over recent decades. Pakistan served as a link between Beijing and
Washington in 1971, as well as a bridge to the Muslim world for China during 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
complete weapons systems. In September 1990, China agreed to supply Pakistan with
components for 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 regime. In August 1993, the United States
determined that China had transferred to Pakistan prohibited missile technology and imposed
trade sanctions on one Pakistan and 11 Chinese entities (government ministries and
aerospace companies) for 2 years. The U.S. intelligence community reportedly has evidence
of PRC provision of complete M-11 ballistic missiles to Pakistan. In February 1996, leaked
U.S. intelligence reports alleged that China in 1995 sold ring magnets to Pakistan that could
be used in enriching uranium for nuclear weapons. Pakistan denied the reports.
On November 21, 2000, the United States imposed 2-year sanctions on the Pakistan
Ministry of Defense and Pakistan’s Space and Upper Atmosphere Research Organization,
as well as on Iranian entities, as a result of past Chinese assistance to Pakistani and Iranian
missile programs. In September 2001, the U.S. State Department again imposed 2-year
sanctions on a PRC company and Pakistan’s National Development Complex. The PRC
company reportedly delivered 12 shipments of components for Pakistan’s Shaheen missiles
in early 2001. (For background and updates on China-Pakistan technology transfer, see CRS
Issue Brief IB92056, Chinese Proliferation of Weapons of Mass Destruction: Current Policy
Issues
.)
Pakistan Political Setting
On August 21, 2002, President Musharraf’s government announced sweeping changes
in the Pakistani constitution, changes that would provide the office of President with
amounts of power previously unseen in the country’s constitutional history. These
amendments would include provisions for Presidential dissolution of the National Assembly,
and appointment of the Army Chief and provincial governors, among others. The Supreme
Court recently upheld a provision requiring all candidates for National Assembly seats to be
college graduates. This amendment disqualifies more than 98% of all Pakistanis (and more
than half of the politicians who served in the last parliament) from holding national office,
and will make it difficult for opposition parties to field candidates for the scheduled October
elections.
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While the Musharraf government states that such changes will “lay the foundation for
real democracy in Pakistan,” critics contend that such amendments will make a “near puppet”
of the Prime Minister and almost certainly “ring the death knell of democracy in Pakistan.”
All major political parties, including those of a pro-government bent, have registered their
opposition to the amendments. The country’s two main political parties have recently called
on Musharraf to resign and allow a caretaker government to oversee parliamentary elections
scheduled for next October.
On April 30, 2002, Pakistanis went to the polls in a national referendum to extend
President Musharraf’s term by 5 years. The referendum question was, “For the survival of
the local government system, establishment of democracy, continuity of reforms ... would
you like to elect President General Pervez Musharraf as president of Pakistan for five years?”
The president won 98% of the vote from an officially reported 50% voter turnout. The
Alliance for the Restoration of Democracy, a coalition of political parties that are opposed
to the election, claimed that turnout was closer to 5%. These parties denounced the
referendum as fraudulent and urged Pakistanis to boycott the poll. Post-referendum
protestations were such that within weeks President Musharraf publically acknowledged and
apologized for irregularities in the voting.
In a post-October governmental structure likely to be instituted by Musharraf, the Prime
Minister is not to have control over Pakistan’s National Security Council – an institution that
is to be dominated by the President and the military. As envisaged, the Prime Minister
would not cast a binding vote. The current National Security Council has a wide range of
authority and advises the president on issues relating to national security, sovereignty,
Islamic ideology, and the integrity and solidarity of the country.
There is also concern about the legitimacy of the scheduled October 2002 elections.
President Musharraf has refused to allow former prime ministers and leading politicians
Benazir Bhutto and Nawaz Sharif to participate in the elections, issuing decrees that make
illegal their candidacy and threatening both with imprisonment should either return to
Pakistan. Senior government sources have also stated that Pakistan’s political parties will
face crucial reforms under the Political Parties Act, which could see a purge of their senior
leaders. To replace them, President Musharraf apparently plans to groom a new generation
of political leaders under his patronage.
At the same time, there has there has been an easing of pressure on Islamic
fundamentalist groups in Pakistan. The leader of the pro-Taliban Jamiat-e-Ulema Islam was
released from prison, while the head of the banned terrorist organization Jaish-e-Mohammad
was released from prison and placed under house arrest. On Pakistan’s national day, the
Jamaat-i-Islami was allowed to hold a public gathering in Rawalpindi, seat of the army’s
General Headquarters. Leaders and activists of the moderate and secular Alliance for the
Restoration of Democracy were arrested in Lahore when they tried to exercise their right of
association.
Changes have also taken place in Pakistan’s Kashmir policy. In an effort to assuage
international concerns, President Musharraf has moved away from direct support of the
banned Jaish-e-Mohammed and Lashkar-e-Taiba groups. Instead, it is expected that he will
call for the people of Kashmir to determine their own future without the support of the
Pakistan-based Islamic jihadi network. A recent meeting in Azad Kashmir reflects
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Pakistan’s changing Kashmir policy: the meeting was attended by the All-Parties Hurriyat
Conference (an umbrella organization of 23 separatist groups), leading Kashmiri
intellectuals, and three Pakistani brigadiers. Participants concluded that the policies of
Kashmir fighters should represent Kashmiri interests rather than those of Pakistan.
Background. Military regimes have ruled Pakistan for half of its 55 years,
interspersed with periods of generally weak civilian governance. After 1988, Pakistan had
democratically elected governments, and the army appeared to have moved from its
traditional role of power wielder or kingmaker to one of power broker or referee. During the
past decade, Benazir Bhutto and Nawaz Sharif each served twice as prime minister. Bhutto
was elected prime minister in October 1988, following the death of military ruler
Mohammad Zia-ul Haq in a plane crash. General Zia had led a coup in 1977 deposing
Bhutto’s father, Prime Minister Zulfiqar Ali Bhutto, who was later executed. Despite the
restoration of democratic process to Pakistan in 1988, the succeeding years were marred by
political instability, economic problems, and ethnic and sectarian violence. In August 1990,
President Ishaq Khan dismissed Bhutto for alleged corruption and inability to maintain law
and order. The president’s power to dismiss the prime minister derived from Eighth
Amendment provisions of the Pakistan constitution, which dated from the era of Zia’s
presidency.
Elections held in October 1990 brought to power Nawaz Sharif, who himself was ousted
in 1993 under the Eighth Amendment provisions. The 1993 elections returned Bhutto and
the PPP to power. The new Bhutto government faced serious economic problems and,
according to some observers, performance also was hampered by the reemergence of
Bhutto’s husband, Asif Ali Zardari, in a decisionmaking role. In November 1996, President
Farooq Leghari dismissed the Bhutto government for “corruption, nepotism, and violation
of rules in the administration of the affairs of the Government,” and scheduled new elections
for February 1997.
Nawaz Sharif’s PML won a landslide victory in the February 1997 parliamentary
elections, which, despite low voter turnout, were judged by international observers to be
generally free and fair. Sharif moved quickly to consolidate his power by curtailing the
powers of the President and the judiciary. In April 1997, the Parliament passed the
Thirteenth Amendment to the constitution, deleting the President’s former Eighth
Amendment powers to dismiss the government and to appoint armed forces chiefs and
provincial governors. The new amendment was passed unanimously by both houses of
parliament and signed by President Leghari. As the result of a power struggle, Sharif
replaced the Supreme Court Chief Justice in November; Leghari resigned; and Sharif chose
Mohammad Rafiq Tarar as president. As a result of these developments and the PML
control of the Parliament, Nawaz Sharif emerged as one of Pakistan’s strongest elected
leaders since independence. Critics accused him of further consolidating his power by
intimidating the opposition and the press. In April 1999, a two-judge Bench of the Lahore
High Court convicted former Prime Minister Benazir Bhutto and her husband of corruption
and sentenced them each to 5 years in prison, fined them $8.6 million, and disqualified them
from holding public office. Bhutto was out of the country at the time. Some analysts believe
that Sharif acted out “political vindictiveness.” In April 2001, the Pakistan Supreme Court
ruled that former Prime Minister Benazir Bhutto’s 1999 conviction for corruption was biased
and ordered a retrial.
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Pakistan-U.S. Relations and Bilateral Issues
U.S. policy interests in Pakistan encompass a wide range of issues, including nuclear
weapons and missile proliferation; South Asian regional stability; democratization and
human rights; economic reform and market opening; and efforts to counter terrorism and
narcotics. These concerns have been affected by several developments in recent years,
including: 1) the cutoff of U.S. aid to Pakistan in 1990, 1998, and 1999 over nuclear and
democracy issues; 2) India and Pakistan’s worsening relationship over Kashmir since 1990,
and their continuing nuclear standoff; 3) Pakistan’s see-saw attempts to develop a stable
democratic government and strong economy in the post-Cold War era; and, most recently,
4) the terrorist attacks of September 11, 2001 on New York and Washington.
The Bush Administration has identified exiled Saudi dissident Osama bin Laden, who
had long been harbored by the Taliban government in Afghanistan, as the prime suspect in
the terrorist attacks on the United States. On September 13, President Musharraf – under
strong U.S. diplomatic pressure – offered President Bush Pakistan’s “unstinted cooperation
in the fight against terrorism.” Because of its shared border with Afghanistan and former
close ties with the Taliban, Pakistan is considered key to U.S.-led efforts to combat terrorism
in the region. The Taliban and bin Laden enjoy strong support among a substantial
percentage of the Pakistan population, who share not only conservative Islamic views but
also ethnic and cultural ties with Afghanistan. A major issue facing the Administration is
how to make use of Pakistan’s support — including for military operations in Afghanistan
— without seriously destabilizing an already fragile state that has nuclear weapons and
ballistic missiles.
In an effort to shore up the Musharraf government, sanctions relating to Pakistan’s (and
India’s) 1998 nuclear tests and Pakistan’s 1999 military coup were waived in September and
October of last year. In October 2001, a State Department official pledged well over one
billion dollars in U.S. assistance for Pakistan and several billion dollars from international
organizations to help strengthen it as a key member of the U.S.-led anti-terrorism coalition.
Direct assistance programs will include aid for health, education, food, democracy
promotion, child labor elimination, counter-narcotics, border security and law enforcement,
as well as trade preference benefits. The United States also will support grant, loan, and debt
rescheduling programs for Pakistan by the various international financial institutions,
including the World Bank, International Monetary Fund, and Asian Development Bank. In
addition, Pakistan has received promises of substantial aid, debt relief, and trade concessions
from Japan and the European Union in recognition of its support for the international anti-
terrorism coalition. Japan, Pakistan’s largest bilateral aid donor, announced on October 26,
2001, that it was suspending sanctions imposed on Pakistan and India following their 1998
nuclear tests.
On September 12, 2002, President Bush met with President Musharraf in New York
City, after both leaders had addressed the U.N. General Assembly. The U.S. President
reportedly urged his Pakistani counterpart to ensure that his government take all necessary
steps to end the movement of militants into Indian-controlled Kashmir, and also to see that
the country remain on the path to full democracy.

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Security
Nuclear Weapons and Missile Proliferation. Since the September 2001 terrorist
attacks on the United States, U.S. and Pakistan officials have held talks on improving
security and installing new safeguards on Pakistan’s nuclear weapons and nuclear power
plants. Fears that Pakistan could become destabilized by the U.S. anti-terrorism war efforts
in Afghanistan have heightened U.S. nuclear proliferation concerns in South Asia. 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. Despite U.S. and world efforts to dissuade
it, Pakistan followed, claiming five tests on May 28, 1998, and an additional test on May 30.
The unannounced tests created a global storm of criticism, as well as a serious setback for
two decades of U.S. nuclear nonproliferation efforts in South Asia. (See also CRS Report
98-570, India-Pakistan Nuclear Tests and U.S. Response and CRS Report RL30623, Nuclear
Weapons and Ballistic Missile Proliferation in India and Pakistan: Issues for Congress
.)
On May 13, 1998, President Clinton imposed economic and military sanctions on India,
mandated by section 102 of the Arms Export Control Act (AECA), and applied the same
sanctions to Pakistan on May 30. Humanitarian assistance, food, or other agricultural
commodities are excepted from sanctions under the law. In November1998, the U.S.
Department of Commerce published a list of more than 300 Indian and Pakistani government
agencies and companies suspected of working on nuclear, missile, and other weapons
programs. Any U.S. exports to these entities required a Commerce Department license, and
most license requests reportedly were denied. On the one hand, Pakistan was less affected
than India by the sanctions, since most U.S. assistance to Pakistan had been cut off since
1990. On the other hand, Pakistan’s much smaller—and currently weaker—economy was
more vulnerable to the effects of the sanctions.
U.S. policy analysts consider the apparent arms race between India and Pakistan as
posing perhaps the most likely prospect for the future use of nuclear weapons. India
conducted its first, and only, previous nuclear test in May 1974, following which it
maintained ambiguity about the status of its nuclear program. Pakistan probably gained a
nuclear weapons capability sometime in the 1980s. India is believed to have enough
plutonium for 75 or more nuclear weapons. Pakistan may have enough enriched uranium for
25 nuclear weapons. Both countries have aircraft capable of delivering weapons. India has
short-range missiles (Prithvi) and is reported to have inducted an intermediate-range ballistic
missile (Agni) with enough payload to carry a nuclear warhead. Pakistan reportedly has
acquired technology for short-range missiles (Shaheen) from China and medium-range
missiles (Ghauri) from North Korea, both capable of carrying small nuclear warheads.
Proliferation in South Asia may be part of a chain of rivalries—India seeking to achieve
deterrence against China, and Pakistan seeking to gain an “equalizer” against a larger and
conventionally stronger India. India began its nuclear program in the mid-1960s, after its
1962 defeat in a short border war with China and China’s first nuclear test in 1964. Despite
a 1993 Sino-Indian troop reduction agreement and some easing of tensions, both nations
continue to deploy forces along their border. Pakistan’s nuclear program was prompted by
India’s 1974 nuclear test and by Pakistan’s defeat by India in the 1971 war and consequent
loss of East Pakistan, now independent Bangladesh.
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U.S. Nonproliferation Efforts. Neither India nor Pakistan are signatories to the
Nuclear Nonproliferation Treaty (NPT) or the Comprehensive Test Ban Treaty (CTBT).
India has consistently rejected both treaties as discriminatory, calling instead for a global
nuclear disarmament regime. Pakistan traditionally has maintained that it will sign the NPT
and CTBT only when India does so. Aside from security concerns, the governments of both
countries are faced with the prestige factor attached to their nuclear programs and the
domestic unpopularity of giving them up. Following the 1998 tests, the United States set
forth five nonproliferation “benchmarks” for India and Pakistan. They include the following:
halt further nuclear testing and sign and ratify the Comprehensive Test Ban Treaty; halt
fissile material production and pursue Fissile Material Control Treaty negotiations; refrain
from deploying nuclear weapons and testing ballistic missiles; restrict totally the exportation
of any nuclear materials or technologies; and take steps to reduce bilateral tensions,
especially on the issue of Kashmir.
The prospects for India-Pakistan detente suffered a severe setback in May-July 1999,
when the two countries teetered on the brink of their fourth war, once again in Kashmir. In
the worst fighting since 1971, Indian soldiers sought to dislodge some 700 Pakistan-
supported infiltrators who were occupying fortified positions along mountain ridges
overlooking a supply route on the Indian side of the line of control (LOC) near Kargil.
Following a meeting between then Pakistan Prime Minister Nawaz Sharif and President
Clinton in Washington on July 4, the infiltrators withdrew across the LOC. (See CRS Report
RS20277, Recent Developments in Kashmir and U.S. Concerns.)
Tensions between India and Pakistan remained extremely high in the wake of the Kargil
conflict, which cost more than 1,100 lives. Throughout 2000, cross-border firing and
shelling continued at high levels. India accused Pakistan of sending a flood of militants into
Kashmir and increasingly targeting isolated police posts and civilians. Pakistan also accused
India of human rights violations in Kashmir. The United States strongly urged India and
Pakistan to create the proper climate for peace, respect the LOC, reject violence, and return
to the Lahore peace process. In November 2000, India announced a unilateral halt to its
military operations in Kashmir during the Muslim holy month of Ramadan. In December,
the Pakistan government announced that its forces deployed along the LOC in Kashmir
would observe maximum restraint and that some of its troops would be pulled back from the
LOC. Indian army officials noted that clashes between Indian and Pakistani forces along the
LOC had virtually stopped since the cease-fire began and that there had been a definite
reduction of infiltration of militants from Pakistan. In February, Prime Minister Vajpayee
extended the cease-fire until the end of May 2001. Kashmir’s main militant groups,
however, rejected the cease-fire as a fraud and continued to carry out attacks on military
personnel and government installations. As security forces conducted counter-operations,
deaths of Kashmiri civilians, militants, and Indian security forces continued to rise.
In May 2001, the Indian government announced that it was ending its unilateral cease-
fire in Kashmir but that Prime Minister Vajpayee would invite President Musharraf to India
for talks. The July summit talks in Agra between Musharraf and Vajpayee failed to produce
a joint communique, reportedly as a result of pressure from hardliners on both sides. Major
stumbling blocks were India’s refusal to acknowledge the “centrality of Kashmir” to future
talks and Pakistan’s objection to references to “cross-border terrorism.” Since the Agra talks,
tensions have continued to rise. According to Indian government reports, more than 2,000
people have died since January 2001 as a result of the fighting in Jammu and Kashmir state,
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including 618 civilians, 1,133 militants, and 228 security forces. According to Amnesty
International, more than 1,100 people have disappeared in Kashmir since the revolt began
in 1990.
On October 16-17, 2001, U.S. Secretary of State Colin Powell visited Pakistan and India
in an effort partly aimed at easing the seriously escalating tensions over Kashmir. India
responded to an October 1 terrorist attack by the Pakistan-based Jaish-e-Muhammad, which
killed 38 people in Kashmir, by resuming heavy firing across the line of control that divides
the disputed territory. Cross-border firing between India and Pakistan had been largely
suspended since November 2000. Powell urged both countries to seek a peaceful resolution
of the Kashmir dispute. On October 29, the chief of the U.N. Military Observers Group in
India and Pakistan (UNMOGIP) accused both countries of playing “political games” on the
issue of Kashmir. In reportedly the first instance of a public statement by the UNMOGIP in
50 years, Maj. Gen. Hermann K. Loidolt stated further: “My assessment is that the situation
will become more tense in the time coming, not only along the LOC [Line of Control] but
also in the whole of Jammu and Kashmir state.”
An attack against the Indian parliament on December 13, 2001, thought to have been
carried out by Pakistan-based Islamic militants, left 14 dead and brought India and Pakistan
to the brink of war. India blamed the suicide attack on two militant groups that Indian
leaders believe were sponsored by Pakistan: Jaish-e-Muhammad and Lashkar-e-Taiba.
These two groups allegedly have been fighting from bases in Pakistan to end Indian rule in
part of the disputed Himalayan region of Kashmir. Following the attack, Indian Prime
Minister Vajpayee stated “We do not want war, but war is being thrust on us, and we will
have to face it.” Pakistani leaders, in turn, accused India of ratcheting up tensions between
the two countries and said that Pakistan would make India pay “a heavy price for any
misadventure.” In the weeks following the attack on the Indian parliament, both India and
Pakistan have, in a “tit-for-tat” fashion, issued threats, conducted military maneuvers and
repositioned missile batteries along their border, and levied sanctions against each other.
The events of May seemed to be pushing India and Pakistan to escalate the standoff on
their border to a full-scale military conflict. The attack by Kashmiri militants on the army
base in Kaluchak, Jammu was viewed as a serious provocation by the Indian government and
it intensified war plans. In response, the Pakistani government began to reassign troops from
the Afghanistan border to the eastern border with India. It also recalled all Pakistani troops
engaged in international peacekeeping operations.
Pakistan tested three ballistic missiles, the intermediate range Ghauri and the short-
range Ghaznavi and Abdali, from May 25-28, 2002, sending a message to India that it would
not hesitate to use nuclear weapons in a forthcoming conflict. Pakistan’s representative to
the United Nations also made it clear that in the event of a conflict the country had not ruled
out the first use of nuclear weapons. President Musharraf added that Pakistan would not start
a war, but it would respond forcefully to aggression and carry out “offensive defense”—take
the war into Indian territory. The thinking in Pakistan, reportedly, is that should a conflict
take place, India’s Muslim minority would rise in rebellion—particularly in the state of
Kashmir. This would complicate Indian warfighting efforts.
Congressional Action. Through a series of legislative measures, Congress has
incrementally lifted sanctions on Pakistan and India resulting from their 1998 nuclear tests.
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In October 1999, Congress passed H.R. 2561, the Department of Defense Appropriations
Act, 2000, and it was signed by the President as P.L. 106-79 on October 29 of that year.
Title IX of the act gives the President authority to waive sanctions applied against Pakistan
and India in response to the nuclear tests. In a presidential determination on Pakistan and
India issued on October 27, 1999, the President waived economic sanctions on India.
Pakistan, however, remained under sanctions triggered under Section 508 of the annual
foreign assistance appropriations act as a result of the October 1999 coup. The Foreign
Operations Export Financing and Related Appropriations Agencies Act, 2001 provided an
exception under which Pakistan could be provided U.S. foreign assistance funding for basic
education programs (P.L. 106-429; Section 597). The U.S. Agency for International
Development request for FY2002 includes $7 million for programs to strengthen civil society
and reform public education in Pakistan.
After the terrorist attack on the United States on September 11, 2001, and in recognition
of Pakistan’s cooperation with the U.S.-led coalition being assembled, policymakers
searched for new means of providing assistance to Pakistan. President Bush’s issuance of
a final determination on September 22, 2001, removed remaining sanctions on Pakistan and
India resulting from their 1998 nuclear test, finding that denying export licences and
assistance was not in the national security interests of the United States. Also, on October
27, President Bush signed into law S. 1465 (P.L. 107-57), which gives the President 2-year
waiver authority to lift sanctions on foreign assistance imposed on Pakistan following the
1999 military coup if he determines that such a waiver would facilitate the transition to
democratic rule in Pakistan and is important to U.S. efforts to combat international terrorism.
The law not only gives the president authority to waive sanctions related to democracy but
to waive sanctions imposed on Pakistan for its debt servicing arrearage to the United States
under the terms of the Foreign Operations Appropriations Act. At the end of 2000,
Pakistan’s international debt was estimated at $38 billion. P.L. 107-57 allowed for an
agreement of Pakistan to reschedule $379 million of its debt to the United States thereby
enabling it to cancel its arrearage. After President Musharraf’s visit to Washington, D.C. in
February 2002, President Bush wrote a letter to Congress stating that he had ordered $220
million in emergency funds that had been given to the Defense Department for warfighting
and to the State Department for security upgrades, be reallocated to Pakistan “for costs
incurred in aiding U.S. military forces in Operation Enduring Freedom.”
For FY2003, the Bush Administration has proposed increased funding for Pakistan that
includes $50 million for development assistance (up from an estimated $15 million in 2001),
$200 million in the Economic Support Fund (up from $9.5 million in 2001), $1 million for
International Military Education and Training (same as 2001), $50 million for Foreign
Military Financing (up from zero in 2001), and $4 million for International Narcotics Control
(up from $2.5 million in 2001). (For details, see CRS Report RS20995, India and Pakistan:
Current U.S. Economic Sanctions
, by Dianne E. Rennack.)
Pakistan-U.S. Military Cooperation. The close U.S.- Pakistan military ties of the
Cold War era—which had come to near halt after the 1990 aid cutoff—are in the process of
being restored as a result of Pakistan’s role in the U.S. anti-terrorism operations in
Afghanistan. Pakistan also has been a leading country in supporting U.N. peacekeeping
efforts with troops and observers. 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
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Somalia from 1992 to 1994. In August 2002, over 4,700 Pakistani troops and observers
participating in U.N. peacekeeping efforts in Sierra Leone, East Timor, Kosovo, Congo, and
other countries, making Pakistan the leading contributor of such forces by any member
nation save Bangladesh.
In the wake of the September 11, 2001 attacks and President Musharraf’s participation
in the anti-terror coalition, U.S. law enforcement agents have assisted in tracking and
capturing Al Qaeda and Taliban fugitives that have sought refuge in Pakistani cities. U.S.
special operations soldiers are reportedly working with Pakistani security forces in their
efforts to track and capture those fugitive militants who remain in the mountainous region
of western Pakistan near the Afghani border.
In July 2002, Congress was notified of two Foreign Military Sales arrangements with
Pakistan reportedly worth $230 million. Under the deals, Pakistan is to receive seven used
C-130E transport aircraft (one being for spare parts) and six Aerostats (sophisticated,
balloon-mounted surveillance radars). These mark the first notable arms sales to Pakistan
in more than a decade and are intended to bolster Islamabad’s efforts to move troops quickly
and detect infiltration (thus aiding in anti-terror operations). Islamabad continues to seek
U.S. weapons and technology, especially in an effort to bolster its air forces. Several
Members of Congress are reported to be supportive of these efforts. A revived high-level
U.S.-Pakistan defense consultative group—moribund for the past 5 years—is scheduled to
meet in late-September 2002.
Democratization and Human Rights
Democratization Efforts. The United States considers the October 1999 Pakistan
military coup to be a serious setback to the country’s efforts to return to the democratic
election process beginning in 1988. National elections, judged by domestic and international
observers to be generally free and fair, were held in 1988, 1990, 1993, and 1997. Pakistan
democracy between 1988 and 1999, however, was marred by wide-scale corruption, volatile
mass-based politics, and a continuing lack of symmetry between the development of the
military and civilian bureaucracies and political institutions. The politics of confrontation
between parties and leaders flourished at the expense of effective government; frequent
walkouts and boycotts of the national and provincial assemblies often led to paralysis and
instability. The major political parties lacked grassroots organization and failed to be
responsive to the electorate.
There have been hopes that upcoming national elections in October 2002 would reverse
the trend and set Pakistan back on the path toward democratic governance. Such hopes have
been eroded by the passage of a number of highly restrictive election laws—including those
that apparently will prevent the country’s two leading civilian politicians from participating
—as well as President Musharraf’s unilateral imposition of major constitutional amendments
in August 2002. The United States has expressed concern that these developments may
make the realization of true democracy in Pakistan more elusive.
Human Rights Problems. The U.S. State Department, in its Pakistan Country
Report on Human Rights Practices for 2001 (issued March 4, 2002), noted that, although
Pakistan’s human rights record remained poor under the military government, there were
improvements in some areas, including freedom of the press. The government bureaucracy
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continued to function but was “monitored” by the military. The judiciary continued to be
subject to the executive branch but in May 2000, President Musharraf promised to abide by
a Supreme Court ruling that national elections will be held no later than 90 days after
October 12, 2002. The State Department report cited continuing problems of police abuse,
religious discrimination, and child labor. Security forces were cited for committing
extrajudicial killings and for using arbitrary arrest and detention, torturing and abusing
prisoners and detainees, and raping women. Political and religious groups also engaged in
killings and persecution of their rivals and ethnic and religious minorities. Politically
motivated violence and a deteriorating law and order situation reportedly continued to be a
serious problem.
In recent years, the Human Rights Commission of Pakistan and Amnesty International
have issued reports critical of abuses of the rights of women and minorities. According to
the reports, rape is a serious problem, particularly rape of minors and gang rape. The State
Department human rights report also noted a high rate of abuse of female prisoners—
including rape and torture—by male police officers. Women also suffer discrimination in
education, employment, and legal rights. Discrimination against women is widespread, and
traditional constraints—cultural, legal, and spousal—have kept women in a subordinate
position in society. The adult literacy rate for men in Pakistan is about 50% and for women
about 24%. Religious minorities—mainly Christians, Hindus, and Ahmadi Muslims—
reportedly are 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. In 1984, the Zia government made it illegal for
an Ahmadi to call himself a Muslim or use Muslim terminology. Blasphemy laws, instituted
under the Zia regime and strengthened in 1991, 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.
Economic Issues
Pakistan’s current military government inherited an economy in recession. The fiscal
year from July 2000-June 2001 saw the economy grow by only 2.7%, a significant decline
from the previous year. A decade of political instability left a legacy of soaring foreign debt,
declining production and growth rates, failed economic reform policies, and pervasive
corruption. Foreign debt totals nearly $38 billion, though foreign reserves are up
significantly in recent years. Output from both the industrial and service sectors grew in
2001, but the agricultural sector’s output has continued to decline enough to significantly
slow growth overall. Agricultural labor accounts for nearly half of the country’s work force.
Over the long term, most analysts believe that 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. Analysts point to the pressing 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 income taxes. Agricultural income has not been taxed in the past, largely
because of the domination of parliament and the provincial assemblies by wealthy landlords.
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Successive Bhutto and Sharif governments made agreements with the International
Monetary Fund (IMF), promising austerity, deficit reduction, and improved tax collection
in return for loans and credits. The promised reforms, however, fell victim to political
instability and a host of other problems, including floods, drought, crop viruses, strikes, a
bloated and inefficient bureaucracy, widespread tax evasion, weak infrastructure, and a
swollen defense budget. The Musharraf government has had some modest successes in
effecting economic reform, and participation in the post-September 2001 anti-terror coalition
appears to have eased somewhat Islamabad’s severe national debt situation, with many
countries, including the United States, boosting bilateral assistance efforts. In December
2001, the Paris Club of creditor nations agreed to reschedule $12.5 billion in repayments on
Pakistan’s external debt—one-third of the country’s total burden. A June 2002 International
Monetary Fund report states that Pakistan is making progress toward stated macroeconomic
objectives, as well as on the structural front. It notes particular successes in the areas of tax
administration, fiscal transparency, and privatization.
The Pakistani government has stabilized the country’s external debt at $38 billion and
the country’s hard currency reserves grew to $6.41 billion by July 2002—an increase of more
than $4 billion since October 1999. At the same time, the IMF and the World Bank urged
the Pakistani government to cut defense expenditures from the current 3.5% GDP to 3.3%
of GDP by 2003-2004. The World Bank said that if regional tensions subsided and the
Kashmir dispute was resolved, this would provide a further fiscal cushion for a peace
dividend. Most recently, a “structural adjustment credit” of $500 million and four projects
totaling $237 million were approved to support Pakistan’s ongoing reform program. A new
arms race with India, however, could be fiscally disastrous.
On the positive side, Pakistan’s economic reforms and a more prudent fiscal policy have
reduced the fiscal deficit from 7% of GDP to about 5.2% of GDP. Foreign remittances have
exceeded $1.6 billion—$772 million more than in 2000. Exports exceeded $9 billion for the
first time in 7 years, and inflation, at 3%, was the lowest in 3 decades. Interest on public debt
together with defense spending, however, consume 70% of total revenues, thus squeezing
out development expenditure, including social spending.
In the view of the International Financial Institutions — the World Bank, the IMF, and
the Asian Development Bank—the major risk to economic reforms and to future investment
was the possibility that there might be a break in the continuity of policy after the October
2002 elections for the national and provincial assemblies. President Musharraf’s “victory”
in the April 30, 2002 referendum (he had no opponents) has had some effect of boosting
investor and international financial institution confidence that the economic and political
reforms will stay the course.
Trade and Trade Issues. During January-June 2002, total U.S. imports from
Pakistan were worth just over $1 billion, nearly identical to the previous year’s amount.
More than half of this value came from the purchase of textiles and clothing. U.S. exports
to Pakistan during this period were worth only $316 million, but this represents a major
increase of 50% over the first half of 2001. Pakistan ranked as the 65th largest U.S. trade
partner in 2001, with the United States consuming $2.2 billion worth of Pakistani goods and
exporting $556 million worth in return, for a negative trade balance of approximately $1.7
billion.
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According to the report of the U.S. Trade Representative for 2002, Pakistan has made
progress in reducing import tariff schedules, though a number of trade barriers remain. Some
items are either restricted or banned from importation for reasons related to religion, national
security, luxury consumption, or protection of local industries. The U.S. pharmaceutical
industry believes that Pakistan maintains discriminatory practices that impede U.S.
manufacturer profitability. Other American companies have repeatedly complained about
violations of their intellectual property rights in the areas of patents and copyrights. The
International Intellectual Property Alliance estimated trade losses of $143.3 million in 2001,
and widespread piracy, especially of copyrighted materials, has kept Pakistan on the “Special
301” watch list for 13 consecutive years.
Narcotics
Pakistan is a major transit country for opiates that are grown and processed in
Afghanistan and western Pakistan, then distributed throughout the world by Pakistan-based
traffickers. The region has supplied a reported 20%-40% of heroin consumed in the United
States and 70% of that consumed in Europe, and is second only to Southeast Asia’s Golden
Triangle as a source of the world’s heroin. 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 growing domestic market. The Pakistan government estimates the 4
million drug addicts in the country include 1.5 million addicted to heroin. 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.
The U.S. Department of State calls “excellent” Pakistan’s cooperation on drug control
with the United States. In March 2002, Pakistan was among the countries certified by
President Bush as having cooperated fully with the United States in counter-narcotics efforts,
or to have taken adequate steps on their own. The Islamabad government has made
impressive strides in eradicating opium poppy cultivation. Estimated production in 2001 was
only 5 metric tons, down 59% from 2000 and less than one-thirtieth of the estimated 155 tons
produced in 1995.
Pakistan’s counter-narcotics efforts continue to be hampered by a number of factors,
including lack of total 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. counter-narcotics
aid to Pakistan, administered by the State Department’s Bureau of International Narcotics
and Law Enforcement Affairs, totaled $3.5 million in FY2001 and is estimated to be $2.5
million for FY2002 (this does not include the $73 million emergency supplemental
appropriation for border security projects that will continue in FY2003). The request for
FY2003 stands at $4 million. The major counter-narcotics efforts engaged in by the Pakistan
government, many 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.
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Terrorism
After the September 2001 attacks on the United States, Pakistan pledged and has
provided support for the anti-terror coalition effort. According to the U.S. State Department
report on global terrorism for 2001, Pakistan has afforded the United States unprecedented
levels of cooperation by allowing the U.S. military to use bases within the country, helping
to identify and detain extremists, and tightening the border between Pakistan and
Afghanistan.
In a landmark, nationally-televised speech on January 12, 2002, Musharraf vowed to
end Pakistan’s use as a base for terrorism of any kind, criticized religious extremism and
intolerance in the country, set new rules to govern religious schools that have been viewed
as hothouses for Islamic militancy, and banned numerous militant groups, including Lashkar-
e-Taiba and Jaish-e-Muhammad, both blamed for terrorist violence in Kashmir and India.
The Islamabad government also instituted sweeping police reforms, upgraded its immigration
control system, and began work on new anti-terrorist finance laws. In the wake of the
speech, thousands of extremists were arrested and detained, though many if not most of these
have since been released.
In May 2002, a bomb blast in Karachi killed 14 people, including 11 French military
technicians. One month later, a car bomb was detonated outside the U.S. consulate in
Karachi, killing 12 Pakistani nationals. These attacks are widely viewed as expressions of
militants’ anger with the Musharraf regime for its cooperation with U.S. anti-terror
operations, and have raised fears that terrorist groups would further complicate the law and
order situation within the country. Both incidents were linked to Al Qaeda, as well as to
indigenous militant groups. In September 2002, Pakistani authorities announced a series of
high-profile arrests of those deemed responsible for the car bombings, and they claim to have
“broken the back” of the Al Qaeda network in Pakistan.
For the first time since independence, Pakistani army troops have been operating in
tribal areas of the country’s mountainous western border regions. These units have made
raids on suspected Al Qaeda and Taliban hideouts in an area that is ethnically Pashtun and
where the people can be sympathetic toward militants and hostile toward Westerners and
anyone seen to be cooperating with them. Small teams of U.S. special operations soldiers
are reported to be assisting the Pakistani regulars on these missions.
Islamabad has been under continuous pressure from various nations to terminate the
infiltration of insurgents from Pakistani Kashmir into Indian Kashmir. Such pressure elicited
an explicit promise from President Musharraf to Deputy Secretary of State Armitage that all
such movements would cease. After confirmations from both U.S. and Indian government
officials that infiltration was down significantly in June and July of 2002, reports are
indicating that the number of militants crossing into Indian-controlled Kashmir is again on
the rise. President Musharraf adamantly insists that his government is doing everything
possible to stop such movements. Critics contend, however, that Islamabad has renewed
implicit, if not active support for the insurgents in Kashmir as a means of both maintaining
strategically the domestic support of Islamists who view the Kashmir issue as fundamental
to the Pakistani national idea, as well as to disrupt tactically the current state elections being
held in Kashmir and so seek to erode New Delhi’s legitimacy.
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