Order Code IB94041
CRS Issue Brief for Congress
Received through the CRS Web
Pakistan-U.S. Relations
Updated November 3, 2003
K. Alan Kronstadt
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Historical Background
Pakistan-India Rivalry
The China Factor
Pakistan’s Political Setting
Pakistan-U.S. Relations and Key Country Issues
Security
International Terrorism
Domestic Terrorism
Pakistan-U.S. Security Cooperation
Nuclear Weapons and Missile Proliferation
U.S. Nonproliferation Efforts
Kashmir Dispute
Islamization and Anti-American Sentiment
Democratization and Human Rights
Democracy and Governance
Human Rights Problems
Narcotics
Economic Issues
Overview
Trade and Investment
U.S. Aid and Congressional Action
U.S. Assistance
Proliferation-Related Legislation
Coup-Related Legislation
Other Legislation

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Pakistan-U.S. Relations
SUMMARY
Key areas of U.S. concern regarding
strongly encourages a cease-fire along the
Pakistan include regional terrorism; weapons
Line of Control and renewed dialogue be-
proliferation; the ongoing Kashmir dispute
tween Islamabad and New Delhi.
and Pakistan-India tensions; human rights
protection; and economic development. A
A stable, democratic, economically
U.S.-Pakistan relationship marked by periods
thriving Pakistan is vital to U.S. interests in
of both cooperation and discord was trans-
South and Central Asia.
Democracy has
formed by the September 2001 terrorist at-
faired poorly in Pakistan; the country has
tacks on the United States and the ensuing
endured three military coups and military rule
enlistment of Pakistan as a pivotal ally in
for half of its existence. In October 1999, the
U.S.-led anti-terrorism efforts.
Top U.S.
government of Prime Minister Nawaz Sharif
officials regularly praise Pakistan for its
was ousted in an extra-constitutional coup led
ongoing cooperation, although doubts exist
by Army Chief Gen. Pervez Musharraf.
about Islamabad’s commitment to core U.S.
Musharraf has since assumed the title of
interests in the region. Pakistan continues to
President, a move ostensibly legitimized by a
face serious problems, including widespread
controversial April 2002 referendum. The
poverty and domestic terrorism.
United States strongly urges the Musharraf
government to restore the country to civilian
A potential Pakistan-India arms race has
democratic rule. National elections held in
been the focus of U.S. nonproliferation efforts
October 2002 resulted in no clear majority
in South Asia. Attention to this issue intensi-
party emerging but were marked by significant
fied following nuclear tests by both countries
gains for a coalition of Islamic parties. A
in May 1998; the tests triggered restrictions on
National Assembly and Prime Minister Jamali
U.S. aid to both countries (remaining nuclear-
were seated in November 2002, but the civil-
related sanctions on Pakistan were waived in
ian government remains stalled on procedural
October 2001). South Asia is viewed by many
issues related to the legality of constitutional
analysts as a high-risk arena for the use of
changes made by Musharraf in August 2002
nuclear weapons, as both countries have
and his status as Army Chief. The U.S. Con-
institutionalized nuclear command structures
gress granted the President authority to waive
and deployed nuclear-capable ballistic mis-
coup-related sanctions on Pakistan through
siles. Pakistan and India have fought three
FY2003; pending legislation may extend this
full-scale wars since 1947.
authority though FY2005.
Separatist violence in the disputed Kash-
Pakistan received more than $1.5 billion
mir region has continued unabated since 1989.
in U.S. assistance for FY2002 and FY2003.
India blames Pakistan for the ongoing infiltra-
In June 2003, President Bush pledged to work
tion of Islamic militants into Indian Kashmir,
with Congress on establishing a five-year, $3
a charge Islamabad denies. The United States
billion aid package for Pakistan to begin in
received a June 2002 pledge from Islamabad
FY2005.
See also CRS Report RS21584,
that all “cross-border terrorism” would cease,
Pakistan: Chronology of Events, CRS Report
along with a May 2003 pledge that any
RS21299, Pakistan’s Domestic Political
terrorist training camps in Pakistani-controlled
Developments, and CRS Report RL31624,
areas would be closed. The United States
Pakistan-U.S. Anti-Terrorism Cooperation.
Congressional Research Service
˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
During October, top U.S. government officials urged Pakistan to “redouble its efforts”
to combat terrorist infiltration into neighboring regions. The Pakistani government has taken
action to secure its border with Afghanistan through increased security operations, including
the deployment of thousands of troops in traditionally autonomous tribal areas. On October
2, the Pakistan Army reported killing 8 suspected Al Qaeda fighters and capturing 18 others.
Top State Department officials were in Pakistan in early October, reportedly in an attempt
to reinvigorate a flagging bilateral Pakistan-India peace initiative and to underscore the U.S.
commitment to assist in the social development of Pakistan through ongoing aid programs.
Heated rhetoric between Pakistani and Indian leaders in late September grew in part
from a surge of separatist violence in Kashmir. The developments eroded hopes that a peace
initiative begun in April could progress further, but on October 22, New Delhi unveiled 12
proposals aimed at improving bilateral relations, especially with increased people-to-people
contacts. The United States warmly welcomed the Indian initiative. After consideration,
Islamabad also welcomed the proposals and accepted several –– including a restoration of
sporting ties, the establishment of a joint coast guard hot-line, and the resumption of travel
negotiations –– while expressing disappointment that India continues to shun direct dialogue.
The United States in October 2003 designated the Pakistan-based Al Akhtar Trust as
a terrorist support organization. Al Akhtar is said to be carrying on support for Al Qaeda and
Taliban terrorist activities funded by the previously-designated Al Rashid Trust. The United
States also identified Indian crime figure Dawood Ibrahim as a “global terrorist” with links
to both Al Qaeda and Lashkar-e-Taiba. Ibrahim, wanted by the Indian government for 1993
Bombay bombings that killed and injured thousands, is believed to be in Pakistan.
Sectarian violence flared in Pakistan during October: On the 3rd, gunmen fired on a
Karachi bus, killing 7 Shia Muslims and injuring 7 others. Three days later, Pakistani Sunni
militant leader and National Assembly member Maulana Azam Tariq was shot dead along
with four others in Islamabad. Pakistan continues to give mixed signals on the question of
whether it will contribute troops to a potential Iraq stabilization force, saying that such a
move would require UN backing and the participation of other Muslim nations.
For more information, see CRS Report RS21584, Pakistan: Chronology of Events.
BACKGROUND AND ANALYSIS
Historical Background
The long and checkered Pakistan-U.S. relationship has its roots in the Cold War and
South Asia regional politics of the 1950s. U.S. concerns about Soviet expansionism 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 1954. By the end of
1955, Pakistan had further aligned itself with the West by joining two regional defense pacts,
the South East Asia Treaty Organization and the Central Treaty Organization. As a result
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of these alliances, and a 1959
PAKISTAN IN BRIEF
U.S.-Pakistan cooperation agreement,
Population: 151 million; growth rate: 2.01% (2003 est.)
Islamabad
received
about
$508
Area: 803,940 sq. km. (slightly less than twice the size
million in U.S. military assistance
of California)
from 1953 to 1961.
Total U.S.
Capital: Islamabad
economic and military assistance to
Ethnic Groups:
Punjabi, Sindhi, Pashtun (Pathan),
Baloch, Muhajir (immigrants from India at the
Pakistan from 1947-2001 was just
time of partition and their descendants)
under $12 billion.
Language: Punjabi 58%, Sindhi 12%, Pashtu 8%, Urdu
(official) 8%, other 14%; English widely used
Differing expectations of the
Religion:
Muslim 97% (Sunni 77%, Shia 20%),
security
relationship
have
long
Christian, Hindu, and other 3%
Life Expectancy at Birth: female 63.1 years; male
bedeviled bilateral ties. During the
61.3 years (2003 est.)
Indo-Pakistani wars of 1965 and
Literacy: female 31%; male 60% (2003 est.)
1971, the United States suspended
Gross Domestic Product (at PPP): $311 billion; per
military assistance to both sides,
capita: $2,050; growth rate 4.5% (2002 est.)
resulting in a cooling of the Pakistan-
Inflation: 3.9% (2002)
U.S. Trade: exports to U.S. $2.3 billion; imports from
U.S. relationship and a perception
U.S. $694 million (2002)
among some in Pakistan that the
Sources: CIA World Factbook; U.S. Department of Commerce
United States was not a reliable ally.
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 nuclear
weapons capability. Limited U.S. military aid was resumed in 1975 but 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 5-year, $3.2
billion economic and military aid package with Islamabad. Pakistan became a key transit
country for arms supplies to the Afghan resistance, as well as a camp for some three million
Afghan refugees, many of whom have yet to return home.
Despite the renewal of U.S. aid and close security ties, many in Congress remained
concerned about Pakistan’s nuclear weapons program. Concern was based in part on
evidence of U.S. export control violations that suggested a crash Pakistani program to
acquire a nuclear capability. In 1985, Section 620E(e) (the Pressler amendment) was added
to the Foreign Assistance Act, 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.
With the Soviet withdrawal from Afghanistan beginning in May 1988, Pakistan’s
nuclear activities again came under closer U.S. scrutiny, and 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. 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. One of the most serious results of
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the aid cutoff for Pakistan was the nondelivery of some 71 F-16 fighter aircraft ordered by
Pakistan in 1989. In December 1998, the United States agreed to pay Pakistan $324.6
million from the U.S. Treasury’s Judgment Fund, a fund used to settle legal disputes that
involve the U.S. government, as well as provide Pakistan with $140 million in goods.
Pakistan-India Rivalry
Three full-scale 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 and Kashmir and Pakistan-held Azad (Free) Kashmir. India
blames Pakistan for supporting a violent separatist rebellion in the Muslim-dominated
Kashmir Valley that has taken at least 40,000, and as many as 90,000, lives since 1989.
Pakistan admits only to lending moral and political support to the rebellion.
The China Factor
India and China fought a brief border war in 1962, and an occasionally 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 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 repeatedly has
agreed to abide by the restrictions of the regime. In 1993, the United States determined that
China had transferred to Pakistan prohibited missile technology and imposed trade sanctions
on one Pakistani 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 1996, leaked U.S. intelligence reports
alleged that in 1995 China sold ring magnets to Pakistan that could be used in enriching
uranium for nuclear weapons. Pakistan denied the reports. (See CRS Report RL31555,
China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues).
Pakistan’s Political Setting
Military regimes have ruled Pakistan for more than half of its 55 years of existence,
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 “kingmaker” to one of power broker or referee. Benazir Bhutto and Nawaz
Sharif each served twice as prime minister. Bhutto was elected in October 1988, following
the death of military ruler Mohammad Zia-ul Haq in a plane crash. Gen. Zia had led a coup
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in 1977 deposing Bhutto’s father and founder of the Pakistan People’s Party (PPP), Prime
Minister Zulfiqar Ali Bhutto, who was later executed. Despite the restoration of democratic
process to Pakistan, 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. Ensuing elections returned Bhutto and the PPP to power.
The new Bhutto government faced even more 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 and nepotism.
Nawaz Sharif’s Pakistan Muslim League won a landslide victory in the February 1997
parliamentary elections, which 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, removing the President’s Eighth Amendment powers to dismiss the
government and to appoint armed forces chiefs and provincial governors. After replacing
the chief Justice of the Supreme Court and seeing the resignation of President Leghari, and
with the Pakistan Muslim League in control of parliament, 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 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.
Six months later, in response to Sharif’s attempt to remove him, Chief of Army Staff Gen.
Pervez Musharraf overthrew the Sharif government, dismissed the National Assembly,
installed a National Security Council, and appointed himself “Chief Executive.” He declared
a state of emergency, suspended the constitution, and, by special decree, ensured that his
actions could not be challenged by any court, thus essentially imposing martial law.
Pakistan-U.S. Relations and Key Country 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 traffic. These concerns have been affected by several key developments in recent
years, including the cutoff of U.S. aid to Pakistan in 1990, 1998, and 1999 over nuclear and
democracy issues; a worsening Pakistan-India relationship over Kashmir since 1989 and a
continuing bilateral nuclear standoff; and, most recently, the September 2001 terrorist attacks
against the United States.
On September 13, 2001, 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
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and Osama 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, nuclear-armed state.
In an effort to shore up the Musharraf government, sanctions relating to Pakistan’s
1998 nuclear tests and 1999 military coup were waived in the autumn of 2001. In October
2001, large amounts of U.S. aid began flowing into Pakistan. Direct assistance programs
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 has supported 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 June 2003, President Bush
met with President Musharraf in Washington. 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 ensure that the country
remain on the path to full democracy. President Bush vowed to work with Congress on
establishing a 5-year, $3 billion aid package for Pakistan to begin in FY2005.
Security
International Terrorism. After the September 2001 terrorist attacks on the United
States, Pakistan pledged and has provided support for the U.S.-led anti-terror coalition.
According to the U.S. Departments of State and Defense, 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. Top U.S. officials regularly praise Pakistani anti-terrorism efforts.
In the spring of 2002, U.S. military and law enforcement personnel reportedly began
engaging in direct, low-profile efforts to assist Pakistani security forces in tracking and
apprehending fugitive Al Qaeda and Taliban fighters on Pakistani territory. Press reports
indicate that Pakistan has remanded to U.S. custody nearly 500 such fugitives to date. In a
landmark speech in January 2002, President Musharraf vowed to end Pakistan’s use as a base
for terrorism of any kind, and he banned numerous militant groups, including Lashkar-e-
Taiba and Jaish-e-Muhammad, both blamed for terrorist violence in Kashmir and India and
designated as Foreign Terrorist Organizations under U.S. law. In the wake of the speech,
thousands of Muslim extremists were arrested and detained, though many of these have since
been released. (See also CRS Reports RL31624, Pakistan-U.S. Anti-Terrorism Cooperation,
and RS21658, International Terrorism in South Asia.)
In September 2002, Pakistani authorities announced a series of high-profile arrests of
those deemed responsible for terrorism, and they claimed to have “broken the back” of the
Al Qaeda network in Pakistan. Pivotal Al Qaeda-related arrests in Pakistan have included
Abu Zubaydah (March 2002), Ramzi bin al-Shibh (September 2002), and Khalid Mohammed
(March 2003). Yet press reports indicate that Al Qaeda and Taliban fugitives still are
numerous in Pakistan and may have re-established their organizations in Pakistani cities such
as Karachi and Peshawar. Al Qaeda founder Osama bin Laden may himself be in Pakistan.
Meanwhile, numerous banned groups continue to operate under new names: Lashkar-e-
Taiba is now Jamaat al-Dawat; Jaish-e-Mohammed is now Khudam-ul Islam.
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Islamabad has been under continuous pressure from the United States and numerous
other governments to terminate the infiltration of insurgents across the Kashmiri Line of
Control. Such pressure reportedly elicited an explicit promise from President Musharraf to
U.S. 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 the summer of 2002, the rate reportedly rose again and, in July 2003, the U.S.
envoy to New Delhi declared that, “There are still terrorists coming across the [Kashmiri]
Line of Control.” During a May 2003 visit to Islamabad, Deputy Secretary Armitage is said
to have received another pledge from the Pakistani President, this time an assurance that any
existing terrorist camps in Pakistani Kashmir would be closed.
President Musharraf
adamantly insists that his government is doing everything possible to stop such movements
and shut down militant base camps in Pakistani-controlled territory. Critics contend,
however, that Islamabad has provided active support for the insurgents in Kashmir as a
means to both maintain strategically the domestic backing of Islamists who view the Kashmir
issue as fundamental to the Pakistani national idea, as well as to disrupt tactically the state
government in Indian Kashmir and so seek to erode New Delhi’s legitimacy there.
A more recent development is the increased infiltration of terrorists and their supporters
across the Afghanistan-Pakistan border.
Beginning in early 2003, top U.S. military
commanders overseeing Operation Enduring Freedom have complained that renegade Al
Qaeda and Taliban fighters are able to attack coalition troops in Afghanistan, then escape
across the Pakistani frontier. They have expressed dismay at the slow pace of progress in
capturing wanted fugitives in Pakistan and have urged Islamabad to do more to secure its
rugged western border area. U.S. government officials, including CIA Director Tenet,
Special Envoy to Afghanistan Khalilzad, Senator Lugar, Senator Biden, and Senator McCain,
have voiced similar worries, even expressing concern that members of Pakistan’s powerful
Inter-Services Intelligence agency might be assisting members of the Taliban and Al Qaeda.
In July 2003, and continuing though the following months, tensions between the Kabul and
Islamabad governments reached alarming levels, with some top Afghan officials accusing
Pakistan of manipulating Islamic militancy in the region to destabilize Afghanistan.
Domestic Terrorism. Pakistan continues to suffer from anti-Shia, anti-Christian, and
anti-Western terrorism at home. In January 2002, Wall Street Journal reporter Daniel Pearl
was kidnaped in Karachi and later found murdered. Spring 2002 car bomb attacks on
Western targets, including the U.S. consulate in Karachi, killed 29 people, among them 11
French military technicians. A March 2002 grenade attack on a Protestant church in
Islamabad killed five, including a U.S. Embassy employee and her daughter. These attacks
were viewed as expressions of militants’ anger with the Musharraf regime for its cooperation
with the United States. The incidents were linked to Al Qaeda, as well as to indigenous
militant groups. During 2003, the worst domestic terrorism has been directed against
Pakistan’s Shia minority: in February, gunmen sprayed automatic weapons fire into a Shiite
mosque, killing 9; in June, gunmen killed 11 police recruits, most of them Shiites; and, in
what likely is the most lethal case of terrorism in Pakistani history, suicide bombers attacked
a Shiite mosque in July, killing at least 53. Indications are that the indigenous Lashkar-i-
Jhangvi Sunni militant group was responsible. The United States helped to fund a new 650-
officer Diplomatic Security Unit in early 2003 and assists with numerous programs designed
to improve the quality of Pakistan’s internal police forces through the provision of equipment
and training.
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Pakistan-U.S. Security Cooperation. The close U.S.- Pakistan security ties of the
cold war era — which had come to near halt after the 1990 aid cutoff — appear to be in the
process of restoration as a result of Pakistan’s role in U.S.-led anti-terrorism campaign. In
July 2003, U.S. Ambassador to Pakistan Powell announced that Islamabad will purchase six
C-130 military transport aircraft from Lockheed Martin for approximately $75 million under
a Foreign Military Financing grant. Congress also was notified of another pending Foreign
Military Sale arrangement with Pakistan reportedly worth $155 million. Under this deal,
Pakistan is to receive six Aerostat surveillance radars. These mark the first major arms sales
to Pakistan in more than a decade and are intended to bolster Islamabad’s counterterrorism
capabilities. Islamabad continues to seek U.S. weapons and technology, especially in an
effort to bolster its air forces. Pakistani officials reportedly are eager to purchase of major
U.S. weapons platforms, including F-16s fighter jets, P-3 maritime surveillance aircraft, and
Harpoon anti-ship missiles. The Bush Administration and several Members of Congress are
reported to be supportive of these efforts. A revived high-level U.S.-Pakistan Defense
Consultative Group (DCG) — moribund since 1997 — met in September 2002 and included
high-level discussions of military cooperation, security assistance, and anti-terrorism.
Another meeting in September 2003 set a schedule for joint military exercises and training,
discussed how the U.S. military can assist Pakistan in improving its counterterrorism
capabilities, and included a U.S. vow to expedite future security assistance. A Pentagon
statement called the meetings “substantive, cordial, [and] useful.” During the same month,
the Pentagon notified Congress of three pending major arms sales to Pakistan potentially
worth more than $300 million. The 6 air surveillance, 6 air traffic control radars, and 40 Bell
407 helicopters are meant to enhance Pakistan’s ability to support Operation Enduring
Freedom and to secure its borders.
Nuclear Weapons and Missile Proliferation. 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. In May 1998, India conducted five underground
nuclear tests, breaking a 24-year, self-imposed moratorium on such testing. Despite U.S. and
world efforts to dissuade it, Pakistan quickly followed, claiming five tests of its own before
month’s end. The tests created a global storm of criticism, and represented a serious setback
to two decades of U.S. nuclear nonproliferation efforts in South Asia. Both countries have
aircraft capable of delivering nuclear bombs, which may number 35-100 on each side.
India’s military has inducted short- and intermediate-range ballistic missiles, while Pakistan
itself possesses short- and medium-range missiles (allegedly acquired from China and North
Korea). All are assumed to be capable of delivering nuclear warheads over significant
distances. In 2000, Pakistan placed its nuclear forces under the control of a National
Command Authority led by the president.
Press reports in late 2002 suggested that Pakistan assisted Pyongyang’s covert nuclear
weapons program by providing North Korea with uranium enrichment materials and
technologies beginning in the mid-1990s and as recently as July 2002. Islamabad adamantly
rejects such reports as “baseless,” and Secretary of State Powell has been assured that no
such transfers are occurring. If such assistance is confirmed by President Bush, all non-
humanitarian U.S. aid to Pakistan may be suspended, although the President has the authority
to waive any sanctions that he determines would jeopardize U.S. national security. In March
2003, the Administration determined that the relevant facts “do not warrant imposition of
sanctions under applicable U.S. laws.” August 2003 press reports suggested that Iran
benefitted from Pakistani nuclear assistance, and the International Atomic Energy Agency
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has implicated Pakistani companies in providing “critical technology and parts” to Tehran’s
nascent nuclear weapons program. Islamabad denies any nuclear cooperation with Iran.
Since the September 2001 terrorist attacks on the United States, U.S. and Pakistani
officials have held talks on improving security and installing new safeguards on Pakistan’s
nuclear weapons and nuclear power plants. Concerns about onward proliferation and fears
that Pakistan could become destabilized by the U.S. anti-terrorism war efforts in Afghanistan
have heightened U.S. attention to WMD proliferation in South Asia (see CRS Reports
RS21237, Indian and Pakistani Nuclear Weapons Status, and RL30623, Nuclear Weapons
and Ballistic Missile Proliferation in India and Pakistan).
U.S. Nonproliferation Efforts. In May 1998, following the South Asian nuclear
tests, President Clinton imposed full restrictions on all non-humanitarian aid to both India
and Pakistan as mandated under Section 102 of the Arms Export Control Act. In some
respects, Pakistan was less affected by the sanctions than was India, as most U.S. assistance
to Pakistan had been cut off in 1990. At the same time, Pakistan’s smaller and more fragile
economy was more vulnerable to the negative effects of aid restrictions. However, Congress
and the President acted almost immediately to lift certain aid restrictions, and after October
2001 all remaining nuclear-related sanctions on Pakistan (and India) were removed.
During the latter years of the Clinton administration, the United States set forth five
nonproliferation “benchmarks” for India and Pakistan, including halting further nuclear
testing and signing and ratifying the Comprehensive Test Ban Treaty (CTBT); halting fissile
material production and pursuing Fissile Material Control Treaty negotiations; refraining
from deploying nuclear weapons and testing ballistic missiles; restricting any and all
exportation of nuclear materials or technologies; and taking steps to reduce bilateral tensions,
especially on the issue of Kashmir. The results of U.S. efforts have been mixed, at best, and
neither India nor Pakistan are signatories to the Nuclear Nonproliferation Treaty (NPT) or
the CTBT. The Bush Administration makes no reference to the benchmark framework. (See
CRS Reports RL31559, Proliferation Control Regimes; RS20995, India and Pakistan:
Current U.S. Economic Sanctions; and RL31589, Nuclear Threat Reduction Measures for
India and Pakistan).
Kashmir Dispute. Bilateral relations between Pakistan and India remain deadlocked
on the issue of Kashmiri sovereignty, and a separatist rebellion has been underway in the
region since 1989. The prospects for India-Pakistan detente suffered a severe setback in mid-
1999, when the two countries teetered on the brink of their fourth full-scale war, once again
in Kashmir. In the worst fighting since 1971, Indian soldiers sought to dislodge up to 1,000
Pakistan-supported infiltrators who were occupying fortified positions along mountain ridges
on the Indian side of the Line of Control (LOC) near Kargil. Pakistani Army regulars were
later reported to be involved in the fighting. Following a meeting between then Pakistani PM
Sharif and President Clinton in Washington in July 1999, the infiltrators withdrew across the
LOC. New Delhi accuses Pakistan of sponsoring the movement of “terrorists” into Indian
Kashmir; Islamabad accuses India of human rights violations there. The United States
strongly urges India and Pakistan to create the proper climate for peace, respect the LOC and
institute a cease-fire there, reject violence, and return to the Lahore peace process.
Tensions between India and Pakistan remained extremely high in the wake of the Kargil
conflict, which cost thousands of lives. Throughout 2000 and 2001, cross-border firing and
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shelling caused scores of both military and civilian deaths. A 6-month-long unilateral cease-
fire and halt to offensive military operations in Kashmir was undertaken by India in 2000-
2001, and the Pakistani government responded by announcing that its forces deployed along
the LOC in Kashmir would observe “maximum restraint.” 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 PM Vajpayee would invite President Musharraf to India for talks.
A July summit meeting in Agra 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.” U.S. Secretary of State Colin Powell visited the
region in an effort to ease escalating tensions over Kashmir, but an October terrorist attack
on the Jammu and Kashmir state assembly was followed by a December terrorist attack on
the Indian Parliament in New Delhi. Both incidents were blamed on Pakistan-based terrorist
groups. The Indian government responded by mobilizing some 700,000 troops to forward
stations along the Pakistan-India frontier and threatening war unless Islamabad put an end
to all cross-border infiltrations of Islamic militants.
Under significant international
diplomatic pressure and the threat of India’s use of possibly massive force, President
Musharraf in January 2002 vowed to end the presence of terrorist entities on Pakistani soil
and he outlawed five militant groups, including Lashkar-e-Taiba and Jaish-e-Mohammed.
Despite the Pakistani pledge, infiltrations into Indian-held Kashmir continued, and a
May 2002 terrorist attack on an Indian army base at Kaluchak killed 34, most of them women
and children. This event again brought Pakistan and India to the brink of full-scale war, and
caused Islamabad to recall army troops from both patrol operations along the Pakistan-
Afghanistan border as well as from international peacekeeping operations. Pakistan also
tested three ballistic missiles in late-May 2002, sending an implicit message to India that it
would employ nuclear weapons in a conflict. A flurry of intensive diplomatic missions to
South Asia appears to have reduced tensions during the summer of 2002 and prevented the
outbreak of war. Numerous top U.S. diplomats were involved in this effort.
The U.S. government continues strenuously to urge the two countries to renew a
bilateral dialogue that has been moribund since the summer of 2001. New Delhi refuses to
engage such dialogue until it is satisfied that Pakistan has ended all militant infiltration into
its Jammu and Kashmir state. A “hand of friendship” offer by the Indian Prime Minister in
April 2003 led to the restoration of full diplomatic relations in July, but only halting
movement toward further improvements in bilateral relations. Surging separatist violence
in September led to an exchange of sharp rhetoric between Pakistani and Indian leaders at
the United Nations, casting further doubt on the current peace initiative, but an October
initiative may get Pakistan and India back on track toward improved relations.
Islamization and Anti-American Sentiment
In June 2003, the Islamist coalition in the NWFP passed a Shariat bill in the provincial
assembly. These laws seek to replicate in Pakistan the harsh enforcement of Islamic law seen
in Afghanistan under the Taliban.
As such, the development has alarmed Pakistan’s
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secularists, and President Musharraf has decried any attempts to “Talibanize” regions of
Pakistan.
The Islamists are notable for their virulent expressions of anti-American
sentiment; they have at times called for “jihad” against what they view as the existential
threat to Pakistani sovereignty that alliance with Washington entails. Anti-American
sentiment is not limited to Islamic groups, however. A U.S. Senator returned from the region
in February 2003 to report “extremely high” levels of anti-Americanism there, and a June
public opinion survey found that 45% of Pakistanis had at least “some confidence” in Osama
bin Laden’s ability to “do the right thing regarding world affairs.”
Democratization and Human Rights
Democracy and Governance. There had been hopes that national elections in
October 2002 would reverse Pakistan’s historic trend toward unstable governance and
military interference in democratic institutions. Such hopes were eroded by the passage of
some highly restrictive election laws, including those that prevented the country’s two
leading civilian politicians from participating, as well as President Musharraf’s unilateral
imposition of major constitutional amendments in August 2002. In 2003, and for the
eleventh straight year, the nonpartisan Freedom House rated Pakistan as “not free” in the
areas of political rights and civil liberties. An October 2003 report from Human Rights
Watch claimed that four years of military rule has “led to serious human rights abuses.”
While praising Pakistan’s electoral exercises as moves in the right direction, the United
States has expressed concern that seemingly nondemocratic developments may make the
realization of true democracy in Pakistan more elusive.
Gen. Musharraf’s April 2002 assumption of the title of President ostensibly was
legitimized by a controversial referendum that many observers claimed was marked by
“excessive fraud and coercion.” In August 2002, the Musharraf government announced
sweeping changes in the Pakistani constitution under a “Legal Framework Order” (LFO).
These changes provide the office of President and the armed forces powers not previously
available in the country’s constitutional history, including provisions for Presidential
dissolution of the National Assembly and appointment of the Army Chief and provincial
governors, among others. The United States expressed concerns that the changes “could
make it more difficult to build strong, democratic institutions in Pakistan.” In October 2002,
the country held its first national elections since 1997, fulfilling in a limited fashion
Musharraf’s promise to restore the National Assembly that was dissolved in the wake of his
extra-constitutional seizure of power in October 1999.
Numerous credible observers
complained that the exercise was “deeply flawed.” No party won a majority of parliamentary
seats, though the pro-Musharraf Pakistan Muslim League-Quaid-e-Azam (PML-Q) won a
plurality. In November 2002, the new National Assembly chose Musharraf supporter and
former Baluchistan Chief Minister Mir Zafarullah Jamali to serve as Pakistan’s Prime
Minister. Jamali’s coalition later won a required vote of confidence. Yet, as of early
November 2003, the civilian government remains hamstrung by a fractious dispute over
Musharraf’s continued role as Army Chief and the legality of the LFO amendments to the
constitution. Some analysts express concern that President Musharraf may launch a “second
coup” by dissolving the fledgling Assembly.
An unexpected outcome of the 2002 elections saw the Muttahida Majlis-e-Amal (MMA
or United Action Forum), a coalition of six Islamic parties, win 68 seats — about 20% of the
total — in the national assembly. It also controls the provincial assembly in the North West
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Frontier Province (NWFP) and leads a coalition in the Baluchistan assembly. These western
provinces are Pashtun-majority regions that border Afghanistan where important U.S. anti-
terrorism operations are ongoing. This result has led to concerns that a shift in Pakistan’s
foreign policy might be in the offing, most especially with growing anti-American sentiments
and renewed indications of the “Talibanization” of western border regions. Thus far,
however, Islamabad’s foreign and economic policies have remained fairly consistent. (See
CRS Report RS21299, Pakistan’s Domestic Political Developments.)
Human Rights Problems. The U.S. State Department, in its Pakistan Country
Report on Human Rights Practices, 2002 (issued March 2003), determined that the
Islamabad government’s record on human rights remains “poor.” Along with concerns about
anti-democratic practices, the United States identifies “acute” corruption, extrajudicial
killings, lack of judicial independence, “extremely poor” prison conditions, and increased
violence against Christians as serious problems. Police have abused and raped citizens with
apparent impunity. Improvement in some areas is noted, however, particularly with press
freedoms and governmental efforts to curb religious extremism.
The Human Rights Commission of Pakistan, Amnesty International, and Human Rights
Watch have issued reports critical of Pakistan’s lack of political freedoms and of the
country’s perceived abuses of the rights of women and minorities. Discrimination against
women is widespread, and traditional constraints — cultural, legal, and spousal — have kept
women in a subordinate position in society. “Honor killings” continue to occur throughout
the country. The adult literacy rate for men in Pakistan is 60%, while only half as many
women can read and write. Religious minorities, mainly Christians and Ahmadi Muslims,
reportedly are subjected to discriminatory laws and social intolerance. 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 commonly
brought as a result of personal or religious vendettas. Anti-Christian and anti-Western
violence, which peaked in the summer of 2002, has cost scores of lives. In 2003, Islamist
lawmakers in the NWFP have launched efforts to impose harsh penalties under Sharia, such
as amputating the hands of thieves and stoning adulterers, as well as establish a Department
of Vice and Virtue to implement Islamic law.
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 in the past supplied up to 40% of heroin consumed in the United
States and 70% of that consumed in Europe, and has been second only to Southeast Asia’s
Golden Triangle as a top source of the world’s heroin. The U.S. Department of State
indicates that Pakistan’s cooperation on drug control with the United States “remains
excellent.” 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. In March 2003,
a State Department official claimed that Pakistan had “essentially eliminated opium
production.” However, numerous press reports indicate that opium production has spiked
in post-Taliban Afghanistan and, in September 2003, President Bush formally identified
Pakistan as being among the world’s “major illicit drug producing or drug-transit countries.”
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Pakistan’s powerful Inter-Services Intelligence agency (ISI) is suspected of involvement in
drug trafficking; in March 2003, former U.S. Ambassador to Pakistan Wendy Chamberlain
stated that the role of the ISI in the heroin trade over the past six years has been “substantial.”
Some reports indicate that profits from drug sales are financing the activities of Islamic
militant groups in both Pakistan and Kashmir.
Pakistan’s counter-narcotics efforts continue to be hampered by a number of factors,
including lack of full government commitment; scarcity of funds; poor infrastructure in
drug-producing regions; government wariness of provoking unrest in tribal areas; and “acute”
corruption. Direct U.S. counter-narcotics aid to Pakistan totaled $2.4 million in 2002. The
State Department’s Bureau of International Narcotics and Law Enforcement Affairs (INL)
oversaw Pakistani projects with more than $90 million in FY2002, including $73 million in
emergency supplemental appropriations for border security efforts that continue in FY2003.
The INL allocation for FY2003 was $6 million, rising to $38 million requested for FY2004.
Economic Issues
Overview. Pakistan is a poor country with great extremes in the distribution of wealth.
Per capita GDP is about $2,060 when accounting for purchasing power parity. The long-
term economic outlook for Pakistan is notably improved in 2003, but remains clouded in a
country highly dependent on foreign lending and the importation of basic commodities
(public debt is equal to more than 70% of GDP). In the middle term, greater political
stability following 2002 elections brightened the outlook by providing President Musharraf
with a political base for the further pursuit of economic reform, but a hamstrung National
Assembly and ongoing tensions with India have hampered progress. In the short-run,
substantial fiscal deficits and the still urgent dependency on external aid donations
counterbalance a major overhaul of the tax collection system and what have been notable
gains in the Karachi Stock Exchange, the world’s best performer in 2002 and up more than
60% in 2003. Output from both the industrial and service sectors grew in 2002, but the
agricultural sector’s performance slowed growth overall (in part due to severe drought).
Agricultural labor accounts for nearly half of the country’s work force. Pakistan’s real GDP
for the fiscal year ending June 2003 grew by an estimated 5.8%, up from 3.6% growth in
FY2002. An industrial sector recovery and the end of a 3-year drought have some foreseeing
continued growth ahead, with most predictions putting the FY2004 rate above 5%.
The Pakistani government stabilized the country’s external debt at about $33 billion by
June 2003. The country’s total liquid reserves topped $11 billion by August 2003, an all-
time high and an increase of more than $8 billion since October 1999. Foreign remittances
for FY2003 exceeded $4.2 billion, nearly quadrupling the amount in 2001. Inflation,
hovering below 3%, is low due largely to weak consumer demand, but is expected to rise in
2004. Defense spending and interest on public debt together consume 70% of total revenues,
thus squeezing out development expenditure. Pakistan’s resources and comparatively
well-developed entrepreneurial skills may hold promise for more rapid economic growth and
development in coming years. 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. Only 1-2%
of Pakistanis currently pay income taxes.
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Attempts at economic reform historically have floundered due to political instability.
The Musharraf government has had some modest successes in effecting economic reform.
Pakistan’s participation in the post-September 2001 anti-terror coalition had the effect of
easing somewhat its severe national debt situation, with many countries, including the United
States, boosting bilateral assistance efforts and large amounts of external aid flowing into the
country. A December 2002 World Bank report claimed that “Pakistan’s economic revival
program is beginning to produce good results,” but also noted numerous problems that
seemed to require further implementation of structural reforms. An April 2003 report of the
Asian Development Bank noted that continued macroeconomic stability enhanced Pakistan’s
medium-term economic prospects, but warned that renewed tensions with India and/or
domestic political instability could quickly dampen optimism. In June 2003, World Bank
President Wolfensohn lauded several years of Pakistani economic reforms and said the
country’s “dramatically improved financial position” put it on a “strong footing to really
tackle poverty.” In October, the IMF approved a $248 million loan for Pakistan and noted
“strong improvement in Pakistan’s external and fiscal prospects” while encouraging further
economic reforms. The national budget for 2003/04 largely reflected the need to meet IMF
poverty reduction and growth facility conditions that end in 2004.
Trade and Investment. Pakistan’s primary exports are cotton, textiles and apparel,
rice, and leather products. During 2002, total U.S. imports from Pakistan were worth about
$2.3 billion. Nearly 90% of this value came from the purchase of textiles, clothing, and
related articles. U.S. exports to Pakistan during 2002 were worth $694 million, an increase
of 28% over 2001. The U.S. trade deficit with Pakistan has been approximately $1.7 billion
for each of the past three years. The State Bank of Pakistan reports a steady increase in
foreign investment in the country since 2001, with a total of $820 million for the year ending
June 2003. More than one-quarter of this amount came from the United States.
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, while several U.S. companies have complained about Pakistani
violations of their intellectual property rights.
The International Intellectual Property
Alliance estimated trade losses of $116 million in 2002, and widespread piracy (Pakistan
is a world leader in the pirating of CDs) has kept Pakistan on the U.S. Trade Representative’s
“Special 301” watch list for 13 consecutive years. The Heritage Foundation’s 2003 Index
of Economic Freedom rated Pakistan as being “mostly unfree,” highlighting an especially
restrictive set of trade policies, weak property ownership protections, and a high level of
black market activity.
U.S. Aid and Congressional Action
U.S. Assistance. Actual U.S. assistance to Pakistan in FY2002 was just over $1
billion, up from less than $5 million in FY2001 (excluding food aid).
The Bush
Administration requested a total of $505 million in assistance to Pakistan for FY2003,
including supplemental appropriations. Congress allocated about $295 million of this in the
Consolidated Appropriations Resolution, 2003 (P.L. 108-7). This included security-related
assistance in the amount of $56.5 million and $188 million in Economic Support Funds
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(ESF) that Congress authorized Pakistan to use to cancel approximately $1 billion in
concessional debt to the U.S. government. (At the end of 2002, Pakistan’s international debt
was estimated at $36.3 billion. P.L. 107-57 allowed Pakistan to reschedule $379 million of
its debt to the United States thereby enabling it to cancel its arrearage.) In April 2003,
President Bush signed into law the Emergency Wartime Supplemental Appropriations Act,
2003 (P.L. 108-11 ), allocating $200 million in additional security-related assistance to
Pakistan for FY2003. The current Administration request for FY2004 stands at $395
million, including about $120 million for security-related programs (see Table 1, below).
During a June 2003 visit to Washington by President Musharraf, President Bush vowed to
work with Congress on establishing a 5-year, $3 billion aid package for Pakistan. Five
annual installments of $600 million each are meant to begin in FY2005 and be evenly split
between military and economic aid.
Proliferation-Related Legislation. Through a series of legislative measures,
Congress incrementally lifted sanctions on Pakistan and India resulting from their nuclear
weapons proliferation activities. The Agricultural Export Relief Act of 1998 (P.L. 105-194)
allowed U.S. wheat sales to Pakistan after July 1998. The India-Pakistan Relief Act of 1998
(incorporated into P.L. 105-277) authorized a one-year sanctions waiver exercised by
President Clinton in November 1998. Title IX of the Department of Defense Appropriations
Act, 2000 (P.L. 106-79) gave the President permanent authority after October 1999 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 remained under sanctions as a result of the October
1999 coup). The Foreign Operations Export Financing and Related Appropriations Agencies
Act, 2001 (P.L. 106-429; Section 597) provided an exception under which Pakistan could
be provided U.S. foreign assistance funding for basic education programs. (See also CRS
Report RS20995, India and Pakistan: Current U.S. Economic Sanctions.)
After the September 2001 terrorist attacks on the United States, 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 tests, finding that denying export licences and assistance
was not in the national security interests of the United States. Some Members of the 108th
Congress have urged reinstatement of proliferation-related sanctions in response to press
reports of Pakistani assistance to the North Korean and Iranian nuclear weapons programs,
though no country-specific legislation is pending. The Missile Threat Reduction Act of 2003
(H.R. 1875) would strengthen U.S. missile proliferation laws in ways that could affect
Pakistan, among other countries. H.R. 2063 would authorize the use of Cooperative Threat
Reduction funds for projects and activities to address proliferation threats outside the states
of the former Soviet Union, potentially including Pakistan and India.
Coup-Related Legislation. The October 1999 coup in Pakistan triggered U.S. aid
restrictions under Section 508 of the annual Foreign Assistance Appropriations Act. The
new geopolitical circumstances after September 2001 spurred Congress to take action on
democracy-related aid restrictions on Pakistan.
P.L. 107-57 (October 2001) granted
presidential authority to waive coup-related sanctions on Pakistan through FY2003.
President Bush exercised this authority in March 2003. Some Members of the 107th
Congress had introduced legislation to reimpose restrictions on aid to Pakistan in light of
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perceived continuing anti-democratic practices by the Musharraf government.
These
resolutions did not see floor action. In the 108th Congress, pending legislation includes H.R.
1403, which seeks to remove the President’s waiver authority with regard to Section 508
sanctions on Pakistan; Section 608 of the Foreign Relations Authorization Act, FY2004-
2005 (S. 790), which would extend the President’s waiver authority through FY2005; and
H.R. 3289 (see below) which would limit the extension through FY2004 only. (See also
CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions.)
Other Legislation. In November 2003, Congress approved a presidential request for
emergency supplemental funding for FY2004 (H.R. 3289). The bill includes provisions that
$1.15 billion in additional defense spending may be used “for payments to reimburse
Pakistan, Jordan, and other key cooperating nations” for their support of U.S. military
operations; that would extend the President’s P.L. 107-57 waiver authority through FY2004;
and that –– upon Presidential determination that Pakistan is cooperating with the United
States in the global war on terrorism –– up to $200 million in FY2004 Economic Support
Funds may be used for the modification of direct loans and guarantees for Pakistan. Another
pending bill, the Foreign Operations Appropriations Act, 2004 (H.R. 2800, incorporated in
H.J.Res. 73) would provide a maximum of only $65 million in ESF for debt forgiveness.
In July 2003, the Foreign Relations Authorization Act, FY2004-2005 (H.R. 1950) was
passed by the House. Section 709 of the Act would require the President to report to
Congress on actions taken by Islamabad to close terrorist camps in Pakistan-controlled areas,
prohibit the infiltration of militants at the Kashmiri Line of Control, and cease the transfer
of WMD or related technologies to any third parties. Many Pakistanis held the “India
lobby” responsible for the legislation of “conditions” on future U.S. aid to Pakistan. When
considered alongside a senior White House official’s June assertion that long-term U.S. aid
requires that the United States be “satisfied” with Pakistan’s progress on nonproliferation,
anti-terrorism, and democratization — and a July letter to President Bush signed by 16
Members of Congress outlining their concerns on these same issues — the legislation is seen
to reflect ongoing congressional attention to developments in Pakistan, and also has renewed
Pakistani worries about the reliability of U.S. pledges of assistance.
In a July 2003 report accompanying the Foreign Operations Appropriations Act, 2004
(S. 1426), the Senate Committee on Appropriations praised Pakistan’s efforts to combat
international terrorism, and earmarked not less than $15 million in Economic Support Funds
for indigenous Pakistani human development organizations.
The Committee also
recommended “continued vigilance” by U.S. agencies on the use of U.S. foreign assistance
to Pakistan and expressed concern about “reports of Taliban activity inside Pakistan’s
borders.”
Legislation in the 107th Congress included S. 1675 to authorize the President to reduce
or suspend duties on Pakistani textiles. The bill did not see floor action.
In the 108th
Congress, H.R. 2267, H.R. 2467, and S. 1121 seek to extend certain trade benefits that are
meant to increase trade and investment with eligible countries of the greater Middle East,
including Pakistan. Section 1705 of the Miscellaneous and Technical Corrections Act of
2003 (S. 671) would authorize the President to designate certain hand-made or hand-woven
carpets as eligible articles for duty-free treatment under the Generalized System of
Preferences, a move that the Senate Committee on Finance believes would be of particular
benefit to Pakistan. During a February 2003 visit to the United States, the Pakistani foreign
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minister requested greater access to U.S. markets as a means of reducing poverty and thus
also the forces of extremism in Pakistan. He made a direct link between poverty and the
continued existence of Islamic schools (madrassas) that are implicated in teaching militant
anti-American values.
Table 1. U.S. Assistance to Pakistan, FY2001-FY2004
(in millions of U.S. dollars)
Program or Account
FY2001
FY2002
FY2003
FY2004
Actual
Actual
Allocation
Request
CSH
-.-
14.0a
15.6
25.0
DA
-.-
10.0
34.5
50.0
ERMA
-.-
25.0
-.-
-.-
ESF
-.-
624.5
188.0b
200.0
FMF
-.-
75.0
224.5
75.0
IMET
-.-
0.9
1.0
1.3
INCLE
3.5
90.5c
31.0
38.0
NADR
-.-
10.1
-.-
5.0
PKO
-.-
220.0
-.-
-.-
Subtotal
$3.5
$1,070.0
$494.6
$394.3
P.L.480 Title Ie
0.5
10.0
15.0
-.-
P.L.480 Title IIe
1.9
5.1
12.4
(d)
Section 416(b)e
85.1
75.7
-.-
-.-
Total
$91.0
$1,160.8
$522.0
$394.3
Sources: U.S. Departments of State and Agriculture; U.S. Agency for International Development.
Abbreviations:
CSH:
Child Survival and Health
DA:
Development Assistance
ERMA:
Emergency Refugee and Migration Assistance
ESF:
Economic Support Fund
FMF:
Foreign Military Financing
IMET:
International Military Education and Training
INCLE:
International Narcotics Control and Law Enforcement (includes border security)
NADR:
Nonproliferation, Anti-Terrorism, Demining, and Related
PKO:
Peacekeeping Operations
P.L.480 Title I:
Trade and Development Assistance food aid (loans)
P.L.480 Title II: Emergency and Private Assistance food aid (grants)
Section 416(b):
The Agricultural Act of 1949, as amended (surplus agricultural commodity donations)
Notes:
a. Includes $9 million in U.N. Family Planning Funds that currently are on hold pending presidential
determination.
b. Congress authorized Pakistan to use this ESF allocation to cancel approximately $1 billion in concessional
debt to the U.S. government.
c. Includes $73 million for border security projects continuing in FY2003.
d. Title II food aid accounts generally are held in reserve.
e. Food aid amounts do not include what can be significant transportation costs.
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