Order Code IB94041
CRS Issue Brief for Congress
Received through the CRS Web
Pakistan-U.S. Relations
Updated May 14, 2004
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
The Kashmir Issue
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
Trade-Related Legislation
Other Legislation

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Pakistan-U.S. Relations
SUMMARY
Key areas of U.S. concern regarding
any terrorist facilities in Pakistani-controlled
Pakistan include regional terrorism; weapons
areas would be closed. The United States
proliferation; the ongoing Kashmir dispute
strongly encourages maintenance of a cease-
and Pakistan-India tensions; human rights
fire along the Kashmiri Line of Control and
protection; and economic development. A
dialogue between Islamabad and New Delhi.
U.S.-Pakistan relationship marked by periods
of both cooperation and discord was trans-
A stable, democratic, economically
formed by the September 2001 terrorist at-
thriving Pakistan is vital to U.S. interests in
tacks on the United States and the ensuing
Asia. The country’s macroeconomic indica-
enlistment of Pakistan as a pivotal ally in
tors have turned positive since 2001, but
U.S.-led counterterrorism efforts in Southwest
widespread poverty persists, and democracy
Asia. Top U.S. officials regularly praise
has fared poorly in Pakistan; the country has
Islamabad for its ongoing cooperation, al-
endured military rule for half of its existence.
though doubts exist about Islamabad’s com-
In 1999, the elected government of Prime
mitment to some core U.S. interests in the
Minister Nawaz Sharif was ousted in an extra-
region. Pakistan is identified as a base for
constitutional coup led by Army Chief Gen.
terrorist groups and their supporters operating
Pervez Musharraf, who has since assumed the
in Kashmir, India, and Afghanistan. Pakistan
title of President. National elections in Octo-
continues to face serious problems, including
ber 2002 resulted in no majority party
religious sectarianism and domestic terrorism.
emerging but were marked by significant
gains for a coalition of Islamic parties. A
A potential Pakistan-India nuclear arms
National Assembly and Prime Minister Jamali
race has been the focus of U.S. nonproliferati-
were seated in November 2002, but the civil-
on efforts in South Asia. Attention to this
ian government remained stalled on issues
issue intensified following nuclear tests by
related to the legality of constitutional changes
both countries in May 1998; the tests triggered
made by Musharraf (and ratified in December
restrictions on U.S. aid to both countries
2003) and to his continued status as Army
(remaining nuclear-related sanctions on Paki-
Chief. The United States strongly urges the
stan were waived in October 2001). Pakistan
Musharraf government to restore the country
and India have fought three wars since 1947.
to civilian democratic rule. Congress has
Recently, the United States has been troubled
granted the President authority to waive coup-
by evidence of “onward” proliferation of
related sanctions on Pakistan through FY2004.
Pakistani nuclear technology to third parties,
including North Korea, Iran, and Libya. Such
Pakistan received nearly $2 billion in
evidence became stark in early 2004.
U.S. assistance for FY2002-FY2004. In June

2003, President Bush pledged to work with
Separatist violence in the Kashmir region
Congress on establishing a five-year, $3 bil-
has continued unabated since 1989. India
lion aid package for Pakistan to begin in
blames Pakistan for the ongoing infiltration of
FY2005. See also CRS Report RS21584,
Islamic militants into Indian Kashmir, a
Pakistan: Chronology of Recent Events, CRS
charge Islamabad denies. The United States
Report RS21299, Pakistan’s Domestic Politi-
has received pledges from Islamabad that all
cal Developments, and CRS Report RL32259,
“cross-border terrorism” would cease and that
Terrorism in South Asia.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
During March, the United States, Pakistan, and Afghanistan intensified their
coordinated military operations in the mountainous Afghan-Pakistani border region, and
Pakistani troops fought a pitched 12-day battle with Islamic militants in a traditionally
autonomous tribal area. In April, however, Islamabad took a new tack of seeking
“reconciliation” with Pashtun militants and the foreign radicals they are accused of
harboring. It is unclear whether such a strategy can succeed, but the top U.S. military
commander in Afghanistan has expressed doubt. Reports indicate that the United States is
providing significant surveillance and intelligence assistance to the Pakistani military, along
with more than $70 million per month in logistics reimbursement payments.
During a March visit to Islamabad, Secretary of State Powell said that the United States
will designate Pakistan as a “major non-NATO ally” under Section 517 of the Foreign
Assistance Act of 1961, spurring some Pakistanis to anticipate new sales of major U.S.
weapons platforms. Six days later, H.R. 4021 was introduced in the House. The bill seeks
to amend the Foreign Assistance Act to require that only countries that have a democratic
form of government and that support U.S. nonproliferation objectives may be designated as
major non-NATO allies.
In April, Pakistan’s Parliament established a National Security Council that has been
harshly criticized by opposition leaders as institutionalizing a permanent governance role for
the Pakistani military, and President Musharraf said that he may not resign his military
commission by the end of 2004 as previously indicated. Also, opposition political figure and
Alliance for the Restoration of Democracy leader Javed Hashmi was sentenced to 23 years
in prison for sedition, mutiny, and forgery. In May, Shabaz Sharif, a former Punjab Chief
Minister and brother of deposed PM Nawaz Sharif, attempted to return to Pakistan from
exile, but was “dragged away by commandos” and deported to Saudi Arabia after less than
two hours in Lahore. Police arrested as many as 2,200 supporters from Sharif’s PML-N
party who had gathered to welcome him.
On May 7, a suspected suicide bombing at a Karachi mosque killed 14 Shia worshipers
and injured at least 200 others. Sunni militants were suspected of being behind the attack.
On May 3, a car bomb exploded in the port city of Gwadar, killing three Chinese engineers.
More information is in CRS Report RS21584, Pakistan: Chronology of Recent 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 U.S.-Pakistan
PAKISTAN IN BRIEF
cooperation agreement, Islamabad received
Population: 151 million; growth rate:
about $508 million in U.S. military assistance
2.01% (2003 est.)
from 1953 to 1961.
Area: 803,940 sq. km. (slightly less than
twice the size of California)
Differing expectations of the security
Capital: Islamabad
Ethnic Groups: Punjabi, Sindhi, Pashtun
relationship have long bedeviled bilateral ties.
(Pathan), Baloch, Muhajir (immigrants
During and immediately after the
from India at the time of partition and
Indo-Pakistani wars of 1965 and 1971, the
their descendants)
United States suspended military assistance to
Languages: Punjabi 58%, Sindhi 12%,
both sides, resulting in a cooling of the
Pashtu 8%, Urdu (official) 8%, other
14%; English widely used
Pakistan-U.S. relationship and a perception
Religions: Muslim 97% (Sunni 77%, Shia
among some in Pakistan that the United States
20%), Christian, Hindu, and other 3%
was not a reliable ally. In the mid-1970s, new
Life Expectancy at Birth: female 63.1
strains arose over Pakistan’s efforts to respond
years; male 61.3 years (2003 est.)
to India’s 1974 underground test of a nuclear
Literacy: female 31%; male 60% (2003
est.)
device by seeking its own nuclear weapons
Gross Domestic Product (at PPP): $333
capability. Limited U.S. military aid was
billion; per capita: $2,080; growth
resumed in 1975, but was suspended again in
rate 5.8% (2003)
1979 by the Carter Administration in response
Inflation: 3.9% (2002)
U.S. Trade: exports to U.S. $2.53 billion;
to Pakistan’s covert construction of a uranium
imports from U.S. $840 million (2003)
enrichment facility. Following the Soviet
Sources: CIA World Factbook; U.S. Commerce Dept.
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 five-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
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
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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 their mutual 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 between 40,000 and 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. After the 1990 imposition of U.S. sanctions on Pakistan, the
Islamabad-Beijing arms relationship was further strengthened (see CRS Report RL31555,
China and Proliferation of Weapons of Mass Destruction and Missiles). Although relations
between India and China warmed significantly in 2003, India’s External Affairs Minister
stated in November that the Islamabad-Beijing nuclear and missile proliferation “nexus”
continued to cause serious concerns in New Delhi.
Pakistan’s Political Setting
Military regimes have ruled Pakistan for more than half of its 57 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 (leader of
the Pakistan People’s Party) and Nawaz Sharif (leader of the Pakistan Muslim League) each
served twice as prime minister between 1988 and 1999. President Farooq Leghari dismissed
the Bhutto government for corruption and nepotism in 1996, and Nawaz Sharif won a
landslide victory in February 1997 parliamentary elections, which were judged generally free
and fair by international observers. Sharif moved quickly to consolidate his power by
curtailing the powers of the President and the judiciary. In April 1997, the Parliament passed
the 13th Amendment to the constitution, removing the President’s 8th 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
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Leghari, 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 PM
Bhutto and her husband of corruption and sentenced them each to five 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, Army
Chief Gen. Pervez Musharraf overthrew the 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. In April
2002, Musharraf assumed the title of President. National elections were held in October of
that year, as ordered by the Supreme Court (see section on “Democratization” below).
Pakistan-U.S. Relations and Key Country Issues
U.S. policy interests in Pakistan encompass a wide range of issues, including
counterterrorism, nuclear weapons and missile proliferation, South Asian regional stability,
democratization and human rights, economic reform and market opening, and efforts to
counter narcotics trafficking. These concerns have been affected by several key
developments in recent years, including proliferation- and democracy-related sanctions; a
Pakistan-India conflict over Kashmir and a continuing bilateral nuclear standoff; and, most
recently, the September 2001 terrorist attacks against the United States. In the wake of those
attacks, President Musharraf — under strong U.S. diplomatic pressure — offered President
Bush Pakistan’s “unstinted cooperation in the fight against terrorism.” Pakistan became a
“vital ally” in the U.S.-led anti-terrorism coalition. In a U.S. effort to shore up the Musharraf
government, sanctions relating to Pakistan’s 1998 nuclear tests and 1999 military coup were
soon waived. 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 supports grant, loan, and debt rescheduling
programs for Pakistan by the various major international financial institutions. While
visiting Islamabad in March 2004, Secretary of State Powell said that the United States will
designate Pakistan as a “major non-NATO ally” under Section 517 of the Foreign Assistance
Act of 1961. Revelations that Pakistan has been a source of onward nuclear proliferation to
North Korea, Iran, and Libya may complicate future Pakistan-U.S. relations.
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. Pakistani
authorities have remanded to U.S. custody nearly 500 such fugitives to date. In a landmark
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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 Report RL31624, Pakistan-U.S. Anti-Terrorism Cooperation,
and CRS Report RL32259, Terrorism in South Asia.)
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
Al Qaeda and Taliban fugitives still are numerous in Pakistan and appear to have re-
established their organizations in Pakistani cities such as Karachi, Peshawar, and Quetta. Al
Qaeda founder Osama bin Laden may himself be in Pakistan. Meanwhile, numerous banned
groups have continued to operate under new names: Lashkar-e-Taiba became Jamaat al-
Dawat; Jaish-e-Mohammed was re-dubbed Khudam-ul Islam. 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.
Infiltration Into Kashmir. 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 infiltrations
continued. During a May 2003 visit to Islamabad, Deputy Secretary Armitage reportedly
received another pledge from the Pakistani President, this time an assurance that any existing
terrorist camps in Pakistani Kashmir would be closed. President Musharraf insists that his
government is doing everything possible to stop infiltration 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, and to disrupt tactically the state government in Indian
Kashmir in seeking to erode New Delhi’s legitimacy there. Positive indications growing
from the latest Pakistan-India peace initiative include a cease-fire at the LOC that has held
since November 2003, and January 2004 statements from top Indian officials indicating that
rates of militant infiltration are down significantly.
Infiltration Into Afghanistan. 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 complained that renegade Al Qaeda and Taliban fighters were able to attack
coalition troops in Afghanistan, then escape across the Pakistani frontier. They 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. Numerous top U.S.
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government officials 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. During the summer of 2003, tensions between the Kabul and
Islamabad governments reached alarming levels, with some top Afghan officials accusing
Pakistan of tolerating or even supporting Taliban forces and manipulating Islamic militancy
in the region to destabilize Afghanistan. In December 2003, U.S. forces in Afghanistan
announced launching another major operation against Taliban and Al Qaeda forces near the
Pakistan border. The opening months of 2004 saw an escalation of Pakistani Army
operations near the Afghan border and, in March, the United States, Pakistan, and
Afghanistan re-invigorated military efforts to neutralize Islamic militant forces that remain
in the mountainous, Pashtun-majority regions near the Afghan border. A major battle in
Pakistan’s traditionally autonomous South Waziristan resulted in many deaths, but the
capture of no “high-value targets.” The battle also served to exacerbate already volatile anti-
Musharraf sentiments held by many Pakistani Pashtuns.
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 and 2004, the worst domestic terrorism has been directed
against Pakistan’s Shia minority, including what likely was the most lethal case of terrorism
in Pakistani history when suicide bombers attacked a Shiite mosque in July, killing at least
53. A March 2004 machine gun and grenade attack on a Shia procession in Quetta killed at
least 47 and injured another 160. Indications are that the indigenous Lashkar-i-Jhangvi Sunni
militant group was responsible for the most deadly incidents. 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. Two deadly attempts to kill Musharraf in December
2003 may have been linked to Al Qaeda and illuminated the danger presented by the
determined extremists. The United States has played a direct role in training the security
detail of the Pakistani President.
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 2002, the United States began allowing commercial sales that enabled Pakistan to
refurbish at least part of its fleet of American-made F-16 fighter aircraft. One year later, U.S.
Ambassador to Pakistan Nancy 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 are eager to purchase of major U.S.
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weapons platforms, including F-16s fighters, 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 for high-level discussions
on 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. During the same month, the Pentagon
notified Congress of three pending major arms sales to Pakistan potentially worth more than
$300 million. The 12 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 rejected
such reports as “baseless,” and Secretary of State Powell was 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.” Press reports during 2003 and into 2004 suggested that both
Iran and Libya have benefitted from Pakistani nuclear assistance; the International Atomic
Energy Agency has implicated Pakistani companies in providing “critical technology and
parts” to Iran’s uranium enrichment program. Islamabad denied any nuclear cooperation
with Tehran or Tripoli, although it conceded in December 2003 that certain senior scientists
were under investigation for possible independent proliferation activities.
That investigation led to the February 2004 “public humiliation” of Abdul Qadeer Khan,
known as the founder of Pakistan’s nuclear weapons program and national hero, when he
openly confessed to having sold nuclear materials and technology abroad. Khan and at least
seven associates are said to have sold significant nuclear weapons technology and uranium-
enrichment materials to North Korea, Iran, and Libya. President Musharraf, citing Khan’s
contributions to his nation, issued a pardon that has since been called conditional. The
United States has been assured that the Islamabad government had no knowledge of such
activities and indicated that the decision to pardon is an internal Pakistani matter. Musharraf
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has promised President Bush that he will share all information learned about the Khan’s
proliferation network. Director of Central Intelligence Tenet indicated that the network had
been active on four continents and was penetrated by U.S. and British intelligence agents
years ago. Some press reports have suggested that several Pakistani Army Chiefs, perhaps
including General Musharraf, were aware of the proliferation activities. (See CRS Report
RL32115, Missile Proliferation and the Strategic Balance in South Asia, and CRS Report
RL31900, Weapons of Mass Destruction: Trade Between North Korea 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. In April
2004, the U.S. Assistant Secretary of State for Proliferation urged Pakistan and India to join
the Nuclear Nonproliferation Treaty (NPT) as non-nuclear weapon states, saying that the
United States does not accept either country as a nuclear weapon state under the NPT.
During the latter years of the Clinton administration, the United States set forth
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; and restricting any and all
exportation of nuclear materials or technologies. The results of U.S. efforts were mixed, at
best, and neither India nor Pakistan are signatories to the CTBT or NPT. The Bush
Administration makes no reference to the benchmark framework. Senator Richard Lugar,
Chairman of the Senate Foreign Relations Committee, has called upon the United States to
promote nuclear confidence-building measures in South Asia, including “assistance on
export controls, border security, and the protection, control, and accounting of nuclear
stockpiles and arsenals.” 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 weapons
proliferation in South Asia. (See CRS Report RL31559, Proliferation Control Regimes;
CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions; and CRS
Report RL31589, Nuclear Threat Reduction Measures for India and Pakistan.)
The Kashmir Issue. 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. Tensions between India and Pakistan remained
extremely high in the wake of the Kargil conflict. Throughout 2000 and 2001, cross-border
firing and shelling caused scores of both military and civilian deaths. A six-month-long
unilateral cease-fire and halt to offensive military operations in Kashmir was undertaken by
India in late 2000 and the Pakistani government vowed that its military 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.
In May 2001, the Indian government announced that it was ending its unilateral cease-fire
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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.” Secretary of State 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 along the Pakistan-
India frontier and threatening war unless Islamabad ended all cross-border infiltration 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. 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 and continued strenuously to urge the two countries to renew bilateral dialogue. A
“hand of friendship” offer by the Indian Prime Minister in April 2003 led to the restoration
of full diplomatic relations in July, but surging separatist violence in September contributed
to an exchange of sharp rhetoric between Pakistani and Indian leaders at the United Nations,
casting doubt on the latest peace effort. However, an October confidence-building initiative
got Pakistan and India back on track toward improved relations, and a November cease-fire
was initiated after a proposal by Pakistani PM Jamali. In December, President Musharraf
suggested that Pakistan might be willing to “set aside” its long-standing demand for a
plebiscite in Kashmir, a proposal welcomed by the United States, but called a “disastrous
shift” in policy by Pakistani opposition parties.
Although militant infiltration did not end, the Indian government acknowledged that it
was significantly decreased and, combined with other confidence-building measures,
relations were sufficiently improved that the Indian PM attended a three-day summit meeting
of the South Asian Association for Regional Cooperation (SAARC) in Islamabad in January
2004. On January 6, Pakistan and India issued a joint “Islamabad Declaration” calling for
a “composite dialogue” to begin in February 2004 to bring about “peaceful settlement of all
bilateral issues, including Jammu and Kashmir, to the satisfaction of both sides.” Musharraf
declared that “history has been made” with the dialogue agreement, a characterization echoed
by the United States. Pakistan-based militant groups expressed their determination to
continue fighting against Indian forces in Kashmir despite the agreement.
Islamization and Anti-American Sentiment
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.-led
counterterrorism 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.
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 more
secular moderates, and President Musharraf has decried any attempts to “Talibanize” regions
of Pakistan. 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 June 2003 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,” and a March 2004 survey found that only 6% of Pakistan’s believe
that the United States is sincere in its efforts to combat terrorism; 55% of the remainder
believe that the United States is seeking to “dominate the world.” Most analysts contend that
two December 2003 attempts to assassinate President Musharraf were carried out by Islamic
militants angered by Pakistan’s post-September 2001 policy shift. In January 2004 testimony
before the Senate Foreign Relations Committee, one senior expert opined that “Pakistan is
probably the most anti-American country in the world right now, ranging from the radical
Islamists on one side to the liberals and Westernized elites on the other side.”
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,
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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 observers complained that
the exercise was 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.
For more than one year the civilian government remained hamstrung by a fractious
dispute between Musharraf’s allies and opposition parties in the National Assembly over
Musharraf’s continued role as Army Chief and the legality of the LFO amendments to the
constitution. Some analysts even expressed concern that President Musharraf would launch
a “second coup” by dissolving the fledgling Assembly. Yet the dispute came to an end with
a surprise December 2003 deal between Musharraf and the Islamist MMA. Under the
arrangement, Musharraf pledged to resign his military commission by the end of 2004. He
also agreed to put a slightly altered version of the LFO before Parliament. It was passed and,
on the final day of 2003, became the 17th Amendment to the Constitution. Finally, Musharraf
submitted to and won a vote of confidence by Pakistan’s Electoral College (comprised of the
membership of all national and provincial legislatures). The victory legitimized Musharraf’s
presidency through 2007. Officials in Islamabad contend that the developments augur well
for Pakistani democracy and stability, but secular opposition parties unified under the
Alliance for the Restoration of Democracy (ARD) have accused the MMA of betrayal and
insist that the new arrangement merely institutionalizes military rule in Pakistan, especially
after the April 2004 establishment of a new national Security Council. (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, 2003, determined that the Islamabad government’s
record on human rights “remained poor; although there were some improvements in a few
areas, serious problems remained.” Along with concerns about ongoing anti-democratic
practices, the report lists “acute” corruption, extrajudicial killings, lack of judicial
independence, political violence, terrorism, and “extremely poor” prison conditions among
the serious problems. Police have abused and raped citizens with apparent impunity.
Improvement in a few areas was noted, however, particularly with press freedoms and the
punishment of some security officials who were found guilty of abuses. 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.
The State Department’s International Religious Freedom Report for 2003 indicated that the
Pakistani government continues to impose limits on freedom of religion, to fail in many
respects to protect the rights of religious minorities, and to fail at times to intervene in cases
of sectarian violence. Religious minorities are subjected to discriminatory laws and social
intolerance. Blasphemy laws, instituted under the Zia regime and strengthened in 1991, are
commonly brought as a result of personal or religious vendettas and carry a mandatory death
penalty. Anti-Christian and anti-Western violence, which peaked in the summer of 2002, has
cost scores of lives, as have attacks on Pakistan Shiites in 2003 and 2004.
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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 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, less than one-thirtieth of the estimated 155 tons produced in 1995.
However, opium production has spiked in post-Taliban Afghanistan and, in September 2003,
President Bush again identified Pakistan as being among the world’s “major illicit drug
producing or drug-transit countries.” Pakistan’s powerful Inter-Services Intelligence agency
(ISI) is suspected of involvement in drug trafficking; in March 2003, a former U.S.
Ambassador to Pakistan told a House International Relations Committee panel that the role
of the ISI in the heroin trade over the past six years had 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 factors such as 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
continued in FY2003. INL was budgeted $6 million for FY2003, rising to $36.5 million
estimated for FY2004 and $40 million requested for FY2005.
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 was much improved in 2003, but has remained 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 tensions with India hampered progress (although developments in late 2003
and early 2004 may resolve these latter issues). 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 5.1%, up from 3.6% growth during the previous year. An industrial sector recovery
and the end of a 3-year drought have some foreseeing continued growth ahead, with most
predictions putting the FY2003/04 rate above 5%.
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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 nearly 400% since October 1999. Foreign remittances for
FY2003 exceeded $4.2 billion, nearly quadrupling the amount in 2001. Inflation, hovering
around 4%, 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 further
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.
Attempts at economic reform historically have floundered due to political instability.
The Musharraf government has had notable successes in effecting macroeconomic reform,
although efforts to reduce poverty have made little headway. The January 2004 sale of Habib
Bank, the country’s second-largest, was Pakistan’s largest-ever privatization move. Rewards
for its participation in the post-September 2001 anti-terror coalition eased somewhat
Pakistan’s 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. In October 2003, the IMF 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). A March 2004 report from the Asian Development Bank
confirmed a strong economic recovery for Pakistan during the latter half of 2003, led by
“substantial improvement” in the country’s two main commodity producing sectors,
agriculture and large-scale manufacturing.
Trade and Investment. Pakistan’s primary exports are cotton, textiles and apparel,
rice, and leather products. During 2003, total U.S. imports from Pakistan were worth about
$2.53 billion. Three-quarters of this value came from the purchase cotton apparel, cotton
cloth, and related articles. U.S. exports to Pakistan during 2003 were worth $840 million,
an increase of 21% over 2002. The leading U.S. export to Pakistan was raw cotton. The
U.S. trade deficit with Pakistan has been approximately $1.7 billion for each of the past four
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. During a February 2003 visit to the
United States, the Pakistani foreign 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.
According to the most recent report of the U.S. Trade Representative, 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, and some U.S. companies have complained about
Pakistani violations of intellectual property rights. The International Intellectual Property
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Alliance estimated trade losses of $126 million in 2003 due to copyright piracy and criticized
Islamabad for “ignoring” a problem — Pakistan is a world leader in the pirating of CDs —
that has kept Pakistan on the U.S. Trade Representative’s “Special 301” watch list for 14
consecutive years. The Heritage Foundation’s 2004 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. Heritage also
noted an increase in Islamabad’s domination of the banking system and influence over credit
allocation, but credited the government with improved monetary policies.
U.S. Aid and Congressional Action
U.S. Assistance. Total U.S. economic and military assistance to Pakistan from 1947-
2003 was just under $14 billion. Actual U.S. assistance to Pakistan in FY2002 was just
above $1 billion, up substantially over the $3.5 million for FY2001 (excluding food aid).
The Bush Administration requested $305 million in assistance to Pakistan for FY2003.
Congress allocated about $295 million of this in the Consolidated Appropriations Resolution,
2003 (P.L. 108-7). In April 2003, the Emergency Wartime Supplemental Appropriations
Act, 2003 (P.L. 108-11) allocated $200 million in additional FY2003 security-related
assistance to Pakistan. The current estimate for total FY2004 aid stands at $385 million. In
June 2003, President Bush vowed to work with Congress on establishing a five-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. The aid request
for FY2005 is $701 million (see Table 1, below).
In November 2003, Congress approved a presidential request for emergency
supplemental funding for FY2004 (P.L. 108-106). The law provides that $1.15 billion in
additional defense spending may be used for payments to reimburse Pakistan and other
cooperating nations for their support of U.S. military operations. The Asian Development
Bank reported that Pakistan received $581 million in U.S. logistics support for the latter half
of 2003, an amount equal to 38% of Pakistan’s total defense expenditures during that period.
P.L. 108-106 also provides that up to $200 million in FY2004 Economic Support Funds may
be used for the further modification of direct loans and guarantees for Pakistan. This could
reduce Pakistan’s concessional debt to the United States by some $460 million, leaving a
balance of around $1.3 billion.
Proliferation-Related Legislation. Through a series of legislative measures,
Congress incrementally lifted sanctions on Pakistan and India resulting from their nuclear
weapons proliferation activities.* After the September 2001 terrorist attacks on the United
* 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 (in P.L. 105-277) authorized a one-year
sanctions waiver exercised by President Clinton in November 1998. The Department of Defense
Appropriations Act, 2000 (P.L. 106-79) gave the President permanent authority after October 1999
to waive nuclear-test related sanctions applied against Pakistan and India. On October 27, 1999,
President Clinton 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
(continued...)
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States, policymakers searched for new means of providing assistance to Pakistan. President
Bush’s issuance of a final determination (September 22, 2001) removed remaining sanctions
on Pakistan (and India) resulting from the 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, Iranian, and Libyan
nuclear weapons programs, though no country-specific legislation is pending. The National
Defense Authorization Act, 2004 (P.L. 108-136) authorizes the President to use 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. 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.
Coup-Related Legislation. The October 1999 coup in Pakistan triggered U.S. aid
restrictions under Section 508 of the annual Foreign Assistance Appropriations Act. 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. In the 108th Congress, P.L. 108-106
(November 2003) extended the President’s waiver authority through FY2004; this was
exercised by President Bush in March 2004. Pending legislation includes H.R. 1403, which
seeks to remove the President’s waiver authority, and S. 2144, which would extend that
authority through FY2005. (See also CRS Report RS20995, India and Pakistan: Current
U.S. Economic Sanctions.)
Trade-Related Legislation. 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. H.R. 3496 would
extend trade benefits to certain tents imported into the United States from eligible countries,
including Pakistan. Section 1705 of the Miscellaneous and Technical Corrections Act of
2004 (H.R. 1047) 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.
Other Legislation. In July 2003, House passed the Foreign Relations Authorization
Act, FY2004-2005 (H.R. 1950). 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. When considered alongside
a senior White House official’s June 2003 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
* (...continued)
RS20995, India and Pakistan: Current U.S. Economic Sanctions.)
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congressional attention to developments in Pakistan. It also renewed Pakistani worries about
the reliability of U.S. assistance pledges.
Following Secretary of State Powell’s March 2004 announcement that the United States
would designate Pakistan as a “major non-NATO ally,” H.R. 4021 was introduced in the
House. The bill seeks to amend the Foreign Assistance Act of 1961 to require that only
countries that have a democratic form of government and that support U.S. nonproliferation
objectives may be designated as major non-NATO allies.
Table 1. U.S. Assistance to Pakistan, FY2001-FY2005
(in millions of dollars)
Program or
FY2001
FY2002
FY2003
FY2004
FY2005
Account
Actual
Actual
Actual
Estimate
Request
CSH
-.-
5.0
15.6
25.6
21.1
DA
-.-
10.0
34.5
42.4
29.0
ERMA
-.-
25.0
-.-
-.-
-.-
ESF
-.-
624.5
188.0a
200.0a
300.0
FMF
-.-
75.0
224.5
74.6
300.0
IMET
-.-
0.9
1.0
1.3
2.0
INCLE
3.5
90.5b
31.0
36.5
40.0
NADR
-.-
10.1
-.-
5.0
8.0
PKO
-.-
220.0
-.-
-.-
-.-
Subtotal
$3.5
$1,061.0
$494.6
$385.4
$700.1
P.L.480 Title Ic
0.5
10.0
9.0
5.8
-.-
P.L.480 Title IIc
1.9
5.1
9.7
(d)
(d)
Section 416(b)c
85.1
75.7
-.-
-.-
-.-
Total
$91.0
$1,151.8
$513.3
$391.2
$700.1
Sources: U.S. Departments of State and Agriculture; U.S. Agency for International Development.
Abbreviations:
CSH:
Child Survival and Health
NADR:
Nonproliferation, Anti-Terrorism,
DA:
Development Assistance
Demining, and Related
ERMA:
Emergency Refugee and Migration
PKO:
Peacekeeping Operations
Assistance
P.L.480 Title I:
Trade and Development Assistance
ESF:
Economic Support Fund
food aid (loans)
FMF:
Foreign Military Financing
P.L.480 Title II: Emergency and Private Assistance
IMET:
International Military Education and
food aid (grants)
Training
Section 416(b):
The Agricultural Act of 1949, as
INCLE:
International Narcotics Control and Law
amended (surplus agricultural
Enforcement (includes border security)
commodity donations)
Notes:
a. Congress authorized Pakistan to use the FY2003 ESF allocation to cancel $988 million and the FY2004 ESF
allocation to cancel up to $460 million in concessional debt to the U.S. government.
b. Included $73 million for border security projects that continued in FY2003.
c. Food aid amounts do not include what can be significant transportation costs.
d. Title II food aid accounts generally are held in reserve.
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