Order Code RL33498
Pakistan-U.S. Relations
Updated June 6, 2007
K. Alan Kronstadt
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

Pakistan-U.S. Relations
Summary
A stable, democratic, economically thriving Pakistan is considered vital to U.S.
interests. U.S. concerns regarding Pakistan include regional terrorism; Afghan
stability; weapons proliferation; the ongoing Kashmir problem and Pakistan-India
tensions; human rights protection; and economic development. A U.S.-Pakistan
relationship marked by periods of both cooperation and discord was transformed by
the September 2001 terrorist attacks on the United States and the ensuing enlistment
of Pakistan as a key ally in U.S.-led counterterrorism efforts. Top U.S. officials
regularly praise Pakistan for its ongoing cooperation, although doubts exist about
Islamabad’s commitment to some core U.S. interests. Pakistan is identified as a base
for terrorist groups and their supporters operating in Kashmir, India, and Afghanistan.
In late 2003, Pakistan’s army began conducting unprecedented counterterrorism
operations in the country’s western tribal areas. In 2006, Islamabad shifted to a
strategy of negotiation with the region’s pro-Taliban militants (combined with
longer-term economic and infrastructure development in the region), a tack that has
elicited scepticism in Western capitals and that appears to be failing.

Separatist violence in India’s Muslim-majority Jammu and Kashmir state has
continued unabated since 1989, with some notable relative decline in recent years.
India blames Pakistan for the infiltration of Islamic militants into Indian Kashmir, a
charge Islamabad denies. The United States reportedly has received pledges from
Islamabad that all “cross-border terrorism” would cease and that any terrorist
facilities in Pakistani-controlled areas would be closed. Similar pledges have been
made to India. The United States strongly encourages maintenance of a bilateral
cease-fire and continued, substantive dialogue between Islamabad and New Delhi.
Pakistan and India have fought three wars since 1947. A potential Pakistan-India
nuclear arms race has been the focus of U.S. nonproliferation efforts in South Asia.
Attention to this issue intensified following nuclear tests by both countries in May
1998. More recently, the United States has been troubled by evidence of the transfer
of Pakistani nuclear technologies and materials to third parties, including North
Korea, Iran, and Libya. Such evidence became stark in early 2004.
Pakistan’s macroeconomic indicators have turned positive since 2001 and some
meaningful poverty reduction has been seen in this still poor country. President Bush
seeks to expand U.S.-Pakistan trade and investment relations. Democracy has fared
poorly in Pakistan; the country has endured direct military rule for more than half of
its existence. In 1999, the elected government was ousted in a coup led by Army
Chief General Pervez Musharraf, who later assumed the title of president. Supreme
Court-ordered elections in 2002 seated a new civilian government (Musharraf ally
Shaukat Aziz serves as prime minister), but it remains weak, and Musharraf has
retained his position as army chief. The United States urges restoration of democracy
and expects Pakistan’s planned 2007 general elections to be free and fair. Congress
has annually granted one-year presidential authority to waive coup-related aid
sanctions. Pakistan is among the world’s leading recipients of U.S. aid, obtaining
about $3.4 billion in direct U.S. assistance for FY2002-FY2006, including nearly
$1.5 billion in security-related aid. Pakistan also has received nearly $5 billion in
reimbursements for its support of U.S.-led counterterrorism operations since 2001.

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Setting and Regional Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Historical Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current U.S.-Pakistan Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Political Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regional Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Pakistan-India Rivalry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The “IPI” Pipeline Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Afghanistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The China Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Pakistan-U.S. Relations and Key Country Issues . . . . . . . . . . . . . . . . . . . . . . . . 11
Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Continuing Hunt for Top Al Qaeda Leaders . . . . . . . . . . . . . . . . . 13
Infiltration Into Afghanistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Infiltration into Kashmir and India . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Domestic Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Other Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Pakistan-U.S. Security Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Nuclear Weapons and Missile Proliferation . . . . . . . . . . . . . . . . . . . . 22
U.S. Nonproliferation Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Pakistan-India Tensions and the Kashmir Issue . . . . . . . . . . . . . . . . . . 24
Baluchistan Unrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Narcotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Islamization, Anti-American Sentiment, and Madrassas . . . . . . . . . . . . . . . 28
Democratization and Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Democracy and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Human Rights Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Economic Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
U.S. Aid and Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
U.S. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Proliferation-Related Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Coup-Related Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Other Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9/11 Commission Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 42
List of Figures
Figure 1. Map of Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

List of Tables
Table 1. Overt U.S. Assistance to Pakistan, FY2001-FY2008 . . . . . . . . . . . . . . 44

Pakistan-U.S. Relations
A stable, economically thriving Pakistan is considered vital to U.S. interests.
Current top-tier U.S. concerns regarding Pakistan include regional and global
terrorism; Afghan stability; and democratization. Pakistan remains a crucial U.S. ally
in regional and global U.S.-led anti-terrorism efforts. Yet the outcomes of U.S.
policies toward Pakistan since 9/11, although not devoid of meaningful successes,
have neither neutralized anti-Western militants and reduced religious extremism in
that country, nor have they contributed sufficiently to the stabilization of neighboring
Afghanistan. Many observers thus urge a broad re-evaluation of such policies,
especially in light of a recent judicial and political crisis that threatens to undermine
and potentially bring down the military-dominated government of President Gen.
Pervez Musharraf. There are indications that anti-American sentiments remain
widespread in Pakistan and that a significant segment of the populace views U.S.
support for the Musharraf government as being an impediment to, rather than
facilitator of, the process of democratization there. To date, the Bush Administration
publicly proclaims strong support for Musharraf and vows to continue to do so.
There is legislation in the 110th Congress containing Pakistan-specific provisions,
including some that could place limits on U.S. assistance to Islamabad in lieu of
presidential certifications (see “U.S. Aid and Congressional Action” section below).
Most Recent Developments
The Judicial and Political Crisis. A judicial crisis in Pakistan began with
President Musharraf’s summary March 9 dismissal of the country’s Chief Justice,
Iftikhar Chaudhry. Several judges and a deputy attorney general resigned in protest,
ensuing street protests by lawyers grew in scale and were joined by both secular and
Islamist opposition activists. By providing an issue upon which anti-Musharraf
sentiments could coalesce, the imbroglio soon morphed into a full-fledged political
crisis and the greatest threat to Musharraf’s government since it was established in
1999. Numerous Pakistani and Western analysts now assert that Musharraf is
significantly weakened and discredited and that the viability of his continued rule is
in question (see also “Democracy and Governance” section below). In a June 1 letter
to Secretary of State Condoleezza Rice, several senior Members of Congress decried
the “spiral of civil unrest and harshly suppressed protest in Pakistan” and asserted
that U.S. and Pakistani national interests “are both served by a speedy restoration of
full democracy to Pakistan and an end to state-sponsored intimidation — often
violent — of Pakistani citizens protesting government actions in a legal and
peaceful manner.”
Chaudhry, who now faces a hearing by a Supreme Justice Council, refused to
be cowed by the Musharraf government and voluntarily resign his post. This,
coupled with subsequent speeches in which he issued strong but veiled criticisms of
the Musharraf government have made him a popular figure in Pakistan. On May 5,

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tens of thousands of supporters lined the streets as Chaudhry drove from Islamabad
to Lahore to address the High Court there. On May 12, Chaudhry flew to Karachi but
was blocked from leaving the city’s airport, reportedly by activists of the
government-allied MQM party. Ensuing street battles between pro- and anti-
government activists left at least 40 people dead, most of them members of Benazir
Bhutto’s People’s Party. Reports had local police and security forces standing by
without intervening while the MQM attacked anti-Musharraf protesters, leading
many observers to charge the government with complicity in the bloody rioting. The
May 12 incidents did significant further damage to President Musharraf’s standing.
At present, Musharraf is showing no signs of compromising on the judicial
issue, and his government has cracked down on media outlets and warned them
against “defaming” the country’s military. On June 1, the army’s corp commanders
issued a statement reaffirming their full support for Musharraf’s continued rule and
warning against a “malicious campaign against the institutions of the state” being
undertaken by a “small minority.” Three days later, Musharraf issued an ordinance
expanding government authority to restrict press freedom. Tens of thousands of
people have turned out for anti-Musharraf street protests in the months since March
9, the most recent being a June 2 rally in support of Chaudhry, a rally that reportedly
received scant coverage from most Pakistani television networks.
The Taliban in Afghanistan. An ongoing Taliban insurgency in Afghanistan
and its connection to developments in Pakistan remain matters of grave concern.
Islamabad still defends its September 2006 truce with militants in North Waziristan,
but Pakistan’s efforts to make peace with pro-Taliban tribals are widely viewed as
having failed, with cross-border infiltrations continuing at an accelerated pace, and
suicide bombings, the targeted killings of pro-government tribal leaders, and
executions of accused “U.S. spies” costing scores of lives in 2007 (see “Infiltration
into Afghanistan” section below.) Legislation in the 110th Congress seeks to address
this issue (see “U.S. Aid and Congressional Action” section below).
The Lal (Red) Mosque. An open Islamist rebellion of sorts has been taking
place in Pakistan’s relatively serene capital, where radical leaders of the Lal (Red)
Mosque and their followers in the attached Jamia Hafsa seminary have since March
occupied illegally constructed religious buildings, kidnaped and detained local police
officers, battled security forces, and threatened to launch a violent anti-government
campaign unless Sharia (Islamic law) is instituted nationwide.
Battles in Waziristan. In March, heavy fighting between local militias
(supported by the Pakistani military) and Uzbek militants killed hundreds of people
in Waziristan and was touted by Islamabad as a sign that its new strategy was paying
dividends. Yet such battles may have been more about long-brewing local
resentments toward Uzbeks, and skeptics are further concerned that the battles served
to strengthen the “Pakistani Taliban” and helped to consolidate their control in the
tribal areas.
! On May 30, Pakistani and Afghan officials met in Potsdam,
Germany and vowed to deepen their bilateral cooperation on fighting
terrorism and on other issues.

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! Also on May 30, 13 civilians, including a senior official of a
government-run power utility, were killed in a home raid by
suspected Islamist militants in Tank, near South Waziristan
! On May 26, the U.S.-Pakistan-Afghanistan Tripartite
Commission held its 22nd session.
! On May 25, President Bush signed a new version of the U.S. Troop
Readiness, Veterans’ Care, Katrina Recovery, and Iraq
Accountability Appropriations Act, 2007 (H.R. 2206) into law (P.L.
110-28). The bill contains several Pakistan-specific provisions.
! On May 22, the Afghanistan Freedom and Security Support Act of
2007 (H.R. 2446) was introduced in the House. The bill contains
several Pakistan-specific provisions.
! Also on May 22, President Bush nominated Assistant Secretary of
State for Narcotics and Law Enforcement Anne Patterson to be the
new U.S. Ambassador to Pakistan
.
! On May 18, Pakistan and India held two-day talks on the Sir Creek
territorial dispute. On April 6, two days of talks had been held on
their militarized territorial dispute over the Siachen Glacier.
! On May 17, the House passed the National Defense Authorization
Act for FY2008 (H.R. 1585), which includes Pakistan-specific
provision.
! On May 15, suicide bomber killed up to 25 other people when he
attacked a Peshawar restaurant popular with Afghan refugees.
! On May 14, unidentified gunmen shot dead a senior Supreme
Court official and associate of Pakistan’s deposed Chief Justice.
! Also on May 14, a gunbattle broke out at a Pakistani-Afghan border
meeting in the Kurram tribal agency, leaving at least one U.S. and
one Pakistani soldier dead.
! On May 12, senior Taliban commander Mullah Dadullah was
killed by U.S.-led troops in Afghanistan.
! On May 9, the House Committee on Oversight and Government
Reform Subcommittee on National Security and Foreign Affairs
held a hearing on education reform in and U.S. aid to Pakistan.
! On April 30, the State Department’s Country Reports on
Terrorism 2006 said “Pakistan executed effective counterterrorism
cooperation and captured or killed many terrorists” while also
reiterating U.S. concerns that the FATA is “a safe haven for Al
Qaeda, the Taliban, and other militants.”

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! Also on April 30, the U.S. Trade Representative again named
Pakistan to its Special 301 watch list.
! Also on April 30, President Musharraf and Afghan President
Karzai met in Ankara, Turkey, where they pledged to share
intelligence and to cooperate more closely on counterterrorism.
! On April 28, a suicide bomber killed at least 28 other people and
narrowly missed Pakistan’s interior minister when he attacked a
political rally in Peshawar.
! On April 17, during Prime Minister Aziz’s visit to Beijing,
Pakistan and China signed 27 new agreements and memoranda of
understanding.
! On April 15, about 100,000 people rallied in Karachi to protest
against religious extremism and the actions of the radical Red
Mosque in Islamabad.
! On April 8, 40 people were reported killed and dozens more injured
in three days of sectarian violence pitting Sunnis against Shias in
Parachinar in the Kurram tribal agency.
! On April 5, the State Department released its annual report on
Supporting Democracy and Human Rights in 2006, which
expressed numerous concerns about “serious problems” with
Pakistan’s human rights record.
! On April 4, the 14th SAARC Summit was held in New Delhi.
! On March 26, tribal leaders in Bajaur signed an accord with
government officials. The next day, a senior Pakistani
intelligence officer and three other ISI officials were killed
in a
grenade and gunfire attack by unknown attackers in Bajaur.
! On March 21, the House Foreign Affairs Subcommittee on the
Middle East and South Asia held a hearing on U.S. policy toward
Pakistan
.
See also CRS Report RL33954, Pakistan: Significant Recent Events.
Setting and Regional Relations
Historical Setting
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

CRS-5
expansionism and Pakistan’s desire
for security assistance against a
PAKISTAN IN BRIEF
perceived threat from India
Population: 165 million; growth rate: 1.8%
(2007 est.)
prompted the two countries to
Area: 803,940 sq. km. (slightly less than twice
negotiate a mutual defense
the size of California)
assistance agreement in 1954. By
Capital: Islamabad
1955, Pakistan had further aligned
Head of Government: President and Chief of
itself with the West by joining two
Army Staff General Pervez Musharraf
Ethnic Groups: Punjabi, Sindhi, Pashtun,
regional defense pacts, the South
Baloch, Muhajir (immigrants from India at
East Asia Treaty Organization and
the time of partition and their descendants)
the Central Treaty Organization (or
Languages: Punjabi 58%, Sindhi 12%, Pashtu
“Baghdad Pact”). As a result of
8%, Urdu 8%; English widely used
these alliances, Islamabad received
Religions: Muslim 96% (Sunni 81%, Shia
15%), Christian, Hindu, and other 4%
nearly $2 billion in U.S. assistance
Life Expectancy at Birth: female 65 years;
from 1953 to 1961, one-quarter of
male 63 years (2007 est.)
this in military aid, making Pakistan
Literacy: female 35%; male 62% (2004 est.)
one of America’s most important
Gross Domestic Product (at PPP): $412
security assistance partners of the
billion; per capita: $2,580; growth rate
6.2% (2006 est.)
period. Differing expectations of
Currency: Rupee (100 = $1.65)
the security relationship have long
Inflation: 7.9% (2006)
bedeviled bilateral ties, however.
Military Expenditures: $4.0 billion (3.6% of
During and immediately after the
GDP; 2005)
Indo-Pakistani wars of 1965 and
U.S. Trade: exports to U.S. $3.67 billion;
imports from U.S. $2 billion (2006)
1971, the United States suspended
Sources: CIA, The World Factbook; Departments of
military assistance to both sides,
Commerce and State; Government of Pakistan; Economist
Intelligence Unit; Global Insight; Military Balance
resulting in a cooling of the
Pakistan-U.S. relationship and a
perception among many in Pakistan
that the United States was not a reliable ally.
In the mid-1970s, new strains arose over Pakistan’s efforts to respond to India’s
1974 underground nuclear test by seeking its own nuclear weapons capability. U.S.
aid was suspended by President Carter in 1979 in response to Pakistan’s covert
construction of a uranium enrichment facility. However, following the Soviet
invasion of Afghanistan later that year, Pakistan again was viewed as a frontline ally
in the effort to block Soviet expansionism. In 1981, the Reagan Administration
offered Islamabad a five-year, $3.2 billion aid package. Pakistan became a key
transit country for arms supplies to the Afghan resistance, as well as home for some
three million Afghan refugees, most of whom have yet to return.
Despite this renewal of U.S. aid and close security ties, many in Congress
remained troubled by Pakistan’s nuclear weapons program. 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. With the Soviet
withdrawal from Afghanistan, Pakistan’s nuclear activities again came under
intensive U.S. scrutiny and, in 1990, President George H.W. Bush again suspended
aid to Pakistan. Under the provisions of the Pressler amendment, most bilateral
economic and all military aid ended, and deliveries of major military equipment
ceased. In 1992, Congress partially relaxed the scope of sanctions to allow for food

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assistance and continuing support for nongovernmental organizations. Among the
notable results of the aid cutoff was the nondelivery of F-16 fighter aircraft purchased
by Pakistan in 1989. Nine years later, the United States agreed to compensate
Pakistan with a $325 million cash payment and $140 million in goods, including
surplus wheat, but the episode engendered lingering Pakistani resentments.
During the 1990s, with U.S. attention shifted away from the region, Islamabad
further consolidated its nuclear weapons capability, fanned the flames of a growing
separatist insurgency in neighboring Indian-controlled Kashmir, and nurtured the
Taliban movement in Afghanistan, where the radical Islamist group took control of
Kabul in 1996. After more than a decade of alienation, U.S. relations with Pakistan
were once again transformed in dramatic fashion, this time by the September 2001
terrorist attacks on the United States and the ensuing enlistment of Pakistan as a
pivotal ally in U.S.-led counterterrorism efforts. A small trickle of foreign assistance
to Pakistan again became a prodigious flow and, in a sign of renewed U.S.
recognition of the country’s importance, President George W. Bush designated
Pakistan as a major non-NATO ally of the United States in June 2004. One month
later, a Congressional Pakistan Caucus was formed and has since been joined by 71
Members of the U.S. House of Representatives.
Current U.S.-Pakistan Engagement
U.S. engagement with Pakistan continues to be deep and multifaceted.
President Bush traveled to Pakistan in March 2006 for the first such presidential visit
in six years, and numerous high-level governmental meetings have ensued. During
the visit, President Bush and President Pervez Musharraf issued a Joint Statement on
the U.S.-Pakistan “strategic partnership” that calls for a “strategic dialogue” and
“significant expansion” of bilateral economic ties, including mutual trade and
investment, as well as initiatives in the areas of energy, peace and security, social
sector development, science and technology, democracy, and nonproliferation.1 In
the wake of that meeting, diplomatic engagements have continued apace. Over the
past year, visits to Islamabad have been made by Vice President Cheney, Secretary
of State Rice, Secretary of Defense Gates, Speaker of the House Pelosi, and several
top U.S. military commanders. Pakistani visitors to Washington in the past year have
included President Musharraf, Foreign Minister Kasuri, and the Chairman of
Pakistan’s Joint Chiefs of Staff Committee, Gen. Ehsan ul-Haq. Among formal
sessions were the following:
! a June 2006 meeting of the U.S.-Pakistan Energy Dialogue held in
Washington;
! the July inaugural meeting of the U.S.-Pakistan Joint Committee on
Science and Technology, also in Washington;
! a November meeting of the U.S.-Pakistan Education Dialogue
hosted by Education Secretary Margaret Spellings in Washington;
and
! a February 2007 follow-on meeting of the U.S.-Pakistan Joint
Committee on Science and Technology in Washington.
1 See [http://usembassy.state.gov/pakistan/h06030404.html].

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Political Setting
The history of democracy in Pakistan is a troubled one, marked by tripartite
power struggles among presidents, prime ministers, and army chiefs. Military
regimes have ruled Pakistan for more than half of its nearly 60 years of existence,
interspersed with periods of generally weak civilian governance. From 1988 to 1999,
Islamabad had democratically elected governments, and the army appeared to have
moved from its traditional role of “kingmaker” to one of power broker. Benazir
Bhutto (leader of the Pakistan People’s Party) and Nawaz Sharif (leader of the
Pakistan Muslim League) each served twice as prime minister during this period.
The Bhutto government was dismissed on charges of corruption and nepotism in
1996 and Nawaz Sharif won a landslide victory in ensuing elections, which were
judged generally free and fair by international observers. Sharif moved quickly to
bolster his powers by curtailing those of the president and judiciary, and he emerged
as one of Pakistan’s strongest-ever elected leaders. Critics accused him of
intimidating the opposition and the press.
In October 1999, in proximate response to Prime Minister Sharif’s attempt to
remove him, Chief of Army Staff Gen. Pervez Musharraf overthrew the government,
dismissed the National Assembly, and appointed himself “chief executive.” In the
wake of this military overthrow of the elected government, Islamabad faced
considerable international opprobrium and was subjected to automatic coup-related
U.S. sanctions under section 508 of the annual foreign assistance appropriations act
(Pakistan was already under nuclear-related U.S. sanctions). Musharraf later
assumed the title of president following a controversial April 2002 referendum.
National elections were held in October of that year, as ordered by the Supreme
Court. A new civilian government was seated — Prime Minister M.Z. Jamali was
replaced with Musharraf ally Shaukat Aziz in August 2005 — but it has remained
weak. In apparent contravention of democratic norms, Musharraf continues to hold
the dual offices of president and army chief. Many figures across the spectrum of
Pakistani society welcomed Musharraf, or at least were willing to give him the
benefit of the doubt, as a potential reformer who would curtail both corruption and
the influence of religious extremists. Yet his domestic popularity has suffered
following indications that, as with Pakistan’s previous president-generals, expanding
his own power and that of the military would be his central goal.
Pakistan’s next parliamentary elections are slated for late 2007. President Bush
has said that electoral process will be “an important test of Pakistan’s commitment
to democratic reform” and, during his March 2006 visit to Islamabad, said President
Musharraf understands the elections “need to be open and honest.” Secretary of State
Rice and other U.S. diplomats have repeated the admonition. In June 2006, the
House Appropriations Committee (H.Rept. 109-486) expressed concern about the
Pakistani government’s “lack of progress on improving democratic governance and
rule of law.” Under the Pakistani system, the president is elected by an electoral
college comprised of the membership of all national and provincial legislatures.
Major controversy has arisen over Musharraf’s apparent intention to seek re-election
by the current assemblies, which are considered likely to be more favorable to his
continued rule than assemblies elected in 2007 might be. (See “Democracy and
Governance” section below. See also CRS Report RL32615, Pakistan’s Domestic
Political Developments
.)

CRS-8
Regional Relations
Pakistan-India Rivalry. Three full-scale wars — in 1947-1948, 1965, and
1971 — and a constant state of military preparedness on both sides of their mutual
border have marked six decades of bitter rivalry between Pakistan and India. The
acrimonious partition of British India into two successor states in 1947 and the
unresolved issue of Kashmiri sovereignty have been major sources of tension. Both
countries have built large defense establishments at significant cost to 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 (LOC) 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 from 41,000 to as many as 66,000
lives since 1989. Pakistan admits only to lending moral and political support to the
rebels, and it criticizes India for human rights abuses in “Indian-held Kashmir.”
India held Pakistan responsible for late 2001 terrorist attacks in Kashmir and on
the Indian Parliament complex in New Delhi. The Indian response, a massive
military mobilization, was mirrored by Pakistan and within months some one million
heavily-armed soldiers were facing-off at the international frontier. During an
extremely tense 2002 another full-scale war seemed a real and even likely possibility,
and may have been averted only through international diplomatic efforts, including
multiple visits to the region by top U.S. officials. An April 2003 peace initiative
brought major improvement in the bilateral relationship, allowing for an October
cease-fire agreement initiated by Pakistan. The process led to a January 2004 summit
meeting in Islamabad and a joint agreement to re-engage a “Composite Dialogue” to
bring about “peaceful settlement of all bilateral issues, including Jammu and
Kashmir, to the satisfaction of both sides.”2
During 2004, numerous mid-level meetings, normalized diplomatic relations,
and increased people-to-people contacts brought modest, but still meaningful
progress toward normalized relations. Regular dialogue continued in 2005 and a
third round of Composite Dialogue talks was held in 2006. Numerous confidence-
building measures have been put in place, most notably travel and commerce across
the Kashmiri LOC for the first time in decades, and bilateral trade has increased. Yet
militarized territorial disputes over Kashmir, the Siachen Glacier, and the Sir Creek
remain unresolved, and Pakistani officials regularly express unhappiness that more
substantive progress, especially on the “core issue” of Kashmir, is not occurring.
Following July 2006 terrorist bombings in Bombay, India, New Delhi postponed
planned foreign secretary-level talks, bringing into question the continued viability
of the already slow-moving process. However, after meeting on the sidelines of a
Nonaligned Movement summit in Cuba in September, President Musharraf and
Indian Prime Minister Singh announced a resumption of formal peace negotiations
and also decided to implement a joint anti-terrorism mechanism. The Composite
Dialogue resumed in November after a four-month hiatus when Foreign Secretary
Riaz Khan paid a visit to New Delhi for talks with his Indian counterpart. No
2 [http://www.indianembassy.org/press_release/2004/jan/07.htm].

CRS-9
progress was made on outstanding territorial disputes, and India is not known to have
presented evidence of Pakistani involvement in the 7/11 Bombay terrorist bombings,
but the two officials did give shape to a joint anti-terrorism mechanism proposed in
September and they agreed to continue the dialogue process in early 2007. A notable
step came in December 2006, when bilateral talks on the militarized Sir Creek
dispute ended with agreement to conduct a joint survey.
In January 2007, Pakistani Foreign Minister Khurshid Kasuri hosted his Indian
counterpart, Pranab Mukherjee, in Islamabad for the first such visit in more than a
year. The two men reviewed past progress and planned for a fourth Composite
Dialogue round in March. On February 18, two bombs exploded on an Indian
segment of the Samjhauta [Friendship] Express train linking Delhi, India, with
Lahore. Resulting fires killed 68 people, most of them Pakistanis. Days later, Kasuri
traveled to New Delhi, where he and Mukherjee reaffirmed a bilateral commitment
to the peace process despite the apparent effort to subvert it. While India refused a
Pakistani request to undertake a joint investigation into that attack, the two countries
did sign an agreement to reduce the risk of accidental nuclear war.
The new joint Pakistan-India anti-terrorism mechanism met for the first time in
Islamabad in March and produced a joint statement in which both governments
agreed to use the mechanism for exchanging information about investigations of
and/or efforts to prevent terrorist acts on either side of the shared border, and to meet
quarterly while immediately conveying urgent information. Hopes that the February
train bombing would provide a fitting “test case” apparently were dashed, however,
when India declined to share relevant investigative information with Pakistan.
Moreover, Indian officials were unhappy with Islamabad’s insistence that the
“freedom struggle” underway in Kashmir should not be treated as terrorism under
this framework. Still, the continuing engagement even after a major terrorist attack
was widely viewed as evidence that the bilateral peace process had gained a sturdy
momentum. A new rounds of dialogue was then launched in mid-March, when the
two foreign ministers met again in Islamabad. No new agreements were reached, but
both officials lauded improved bilateral relations and held “the most sustained and
intensive dialogue” ever on the Kashmir problem.3
The “IPI” Pipeline Project. Islamabad insists it is going ahead with a
proposed joint pipeline project to deliver Iranian natural gas to Pakistan and on to
India. In January 2007, officials from the three countries resolved a long-running
price-mechanism dispute, opening the way for further progress. In February, the
fourth meeting of the Pakistan-India Joint Working Group on the IPI [Iran-Pakistan-
India] Pipeline was held in Islamabad, where the two countries agreed to split equally
expected gas supplies. Prime Minister Aziz has described the pipeline as being
critical to Pakistan’s economic growth and political stability. Some independent
analysts and Members of Congress assert that completion of an IPI pipeline would
represent a major confidence-building measure in the region and could bolster
regional energy security while facilitating friendlier Pakistan-India ties (see, for
example H.Res. 353 in the 109th Congress). As part of its efforts to isolate Iran
3 See Pakistan Foreign Ministry Press Release No. 81/2007 at [http://www.mofa.gov.pk/-
Press_Releases/2007/March/PR_81_07.htm].

CRS-10
economically, the Bush Administration actively seeks to dissuade the Islamabad
government from participation in this project, and a State Department official has
suggested that current U.S. law dictates American opposition: The Iran-Libya
Sanctions Act (P.L. 107-24) required the President to impose sanctions on foreign
companies that make an “investment” of more than $20 million in one year in Iran’s
energy sector. The 109th Congress extended this provision in the Iran Freedom
Support Act (P.L. 109-293). No firms have been sanctioned under this act to date.
(See also CRS Report RS20871, The Iran Sanctions Act (ISA).)
Afghanistan. Pakistani leaders have long sought access to Central Asia and
“strategic depth” with regard to India though friendly relations with neighboring
Afghanistan. Such policy contributed to President General Zia ul-Haq’s support for
Afghan mujahideen “freedom fighters” who were battling Soviet invaders during the
1980s and to Islamabad’s later support for the Afghan Taliban regime from 1996 to
2001. British colonialists had purposely divided the ethnic Pashtun tribes inhabiting
the mountainous northwestern reaches of their South Asian empire with the 1893
“Durand Line.” This porous, 1,600-mile border is not accepted by Afghan leaders,
who have at times fanned Pashtun nationalism to the dismay of Pakistanis.
Following Islamabad’s major September 2001 policy shift, President Musharraf
consistently has vowed full Pakistani support for the government of Afghan President
Hamid Karzai and he insists that Pakistan is playing a “totally neutral role” in
Afghanistan. Islamabad claims to have arrested more than 500 Taliban militants in
2006, remanding 400 of them to Afghan custody, and reportedly has provided $300
million in economic assistance to Kabul since 2001. Nevertheless, the two leaders
continuously exchange public accusations and recriminations about the ongoing
movement of Islamic militants in the border region, and U.S. officials have issued
increasingly strong claims about the problems posed by Taliban insurgents and other
militants who are widely believed to enjoy safehaven on the Pakistani side of the
Durand Line. Moreover, Pakistan is wary of signs that India is pursuing a policy of
“strategic encirclement,” taking note of New Delhi’s past support for Tajik and
Uzbek militias which comprised the Afghan Northern Alliance, and the post-2001
opening of numerous Indian consulates in Afghanistan. Both Pakistan and
Afghanistan play central roles as U.S. allies in global efforts to combat Islamic
militancy. Continuing acrimony between Islamabad and Kabul is thus deleterious to
U.S. interests (see also “Infiltration into Afghanistan” section below).
The China Factor. Pakistan and China have enjoyed a generally close and
mutually beneficial relationship over several 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: Policy Issues). Indian leaders have
called the Islamabad-Beijing nuclear and missile “proliferation nexus” a cause of
serious concern in New Delhi, and U.S. officials remain seized of this potentially
destabilizing dynamic.

CRS-11
Analysts taking a realist, power political perspective view China as an external
balancer in the South Asian subsystem, with Beijing’s material support for Islamabad
allowing Pakistan to challenge the aspiring regional hegemony of a more powerful
India. Many observers, especially in India, see Chinese support for Pakistan as a key
aspect of Beijing’s perceived policy of “encirclement” or constraint of India as a
means of preventing or delaying New Delhi’s ability to challenge Beijing’s region-
wide influence.
In April 2005, the Chinese prime minister visited Islamabad, where Pakistan and
China signed 22 accords meant to boost bilateral cooperation. President Musharraf’s
five-day visit to Beijing in February 2006 saw bilateral discussions on
counterterrorism, trade, and technical assistance. Chinese President Hu’s November
2006 travel to Islamabad was the first such visit by a Chinese president in ten years;
another 18 new bilateral pacts were inked, including a bilateral Free Trade
Agreement and plans for joint development of airborne early warning radars.
Islamabad may seek future civil nuclear assistance from Beijing, including potential
provision of complete power reactors, especially in light of Washington’s categorical
refusal of Pakistan’s request for a civil nuclear cooperation similar to that being
planned between the United States and India. In May 2007, Prime Minister Aziz
visited Beijing, where Pakistan and China signed 27 new agreements and memoranda
of understanding to “re-energize” bilateral cooperation in numerous areas, including
defense, space technology, and trade. No public mention was made regarding civil
nuclear cooperation. The Chinese government has assisted Pakistan in constructing
a major new port at Gwadar, near the border with Iran; Islamabad and Beijing aspire
to make this port, officially opened in March 2007, a major commercial outlet for
Central Asian states. Some analysts are concerned that the port may be used for
military purposes and could bolster China’s naval presence in the Indian Ocean
region. Pakistan continues to view China as an “all-weather friend” and perhaps its
most important strategic ally.
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 and Afghan
stability, democratization and human rights, trade and economic reform, and efforts
to counter narcotics trafficking. Relations have been affected by several key
developments, including proliferation- and democracy-related sanctions; a continuing
Pakistan-India nuclear standoff and conflict over Kashmir; and the September 2001
terrorist attacks against the United States. In the wake of those attacks, President
Musharraf — under intense 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. U.S. sanctions relating to
Pakistan’s 1998 nuclear tests and 1999 military coup quickly were waived and, in
October 2001, large tranches of U.S. aid began flowing into Pakistan. Direct
assistance programs include training and equipment for Pakistani security forces,
along with aid for health, education, food, democracy promotion, human rights
improvement, counternarcotics, border security and law enforcement, as well as trade
preference benefits. The United States also supports grant, loan, and debt

CRS-12
rescheduling programs for Pakistan by the various major international financial
institutions. In June 2004, President Bush designated Pakistan as a major non-NATO
ally of the United States under Section 517 of the Foreign Assistance Act of 1961.
Revelations that Pakistan has been a source of nuclear proliferation to North Korea,
Iran, and Libya may complicate future Pakistan-U.S. relations.
Terrorism
After the September 2001 terrorist attacks on the United States, Pakistan
pledged and has provided major support for the U.S.-led anti-terrorism 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 a landmark January 2002 speech, 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 both
designated as terrorist organizations under U.S. law. In the wake of the speech,
thousands of Muslim extremists were detained, though most of these were later
released. In the spring of 2002, U.S. military and law enforcement personnel 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 approximately 500 such
fugitives to date.
Important Al Qaeda-related arrests in Pakistan have included Abu Zubaydah
(March 2002), Ramzi bin al-Shibh (September 2002), Khalid Sheik Mohammed
(March 2003), several key captures in the summer of 2004, and Abu Faraj al-Libbi
(May 2005). Other allegedly senior Al Qaeda figures were killed in gunbattles and
missile attacks, including in several apparent U.S.-directed attacks on Pakistani
territory from aerial drones. Yet Al Qaeda fugitives and their Taliban allies remain
active in Pakistan, especially in the mountainous tribal regions along the Afghan
border. Meanwhile, numerous banned indigenous groups continue to operate under
new names: Lashkar-e-Taiba became Jamaat al-Dawat; Jaish-e-Mohammed was re-
dubbed Khudam-ul Islam (the former was banned under U.S. law in April 2006).
President Musharraf repeatedly has vowed to end the activities of religious
extremists in Pakistan and to permanently prevent banned groups from resurfacing
there. His policies likely spurred two lethal but failed attempts to assassinate him in
December 2003. At present, Islamabad is pursuing a four-pronged strategy to
counter terrorism and religious extremism. The strategy contains military, political,
administrative, and development aspects. Nonetheless, some analysts call
Musharraf’s efforts cosmetic, ineffective, and the result of international pressure
rather than a genuine recognition of the threat posed. In recent years, some Pakistani
nationals and religious seminaries have been linked to Islamist terrorism plots in
numerous countries. In a January 2007 review of global threats, U.S. Director of
Intelligence John Negroponte issued what may be the strongest relevant statements
from a Bush Administration official to date, telling a Senate panel that, “Pakistan is
a frontline partner in the war on terror. Nevertheless, it remains a major source of

CRS-13
Islamic extremism and the home for some top terrorist leaders.” He identified Al
Qaeda as posing the single greatest terrorist threat to the United States and its
interests, and warned that the organization’s “core elements ... maintain active
connections and relationships that radiate outward from their leaders’ secure hideout
in Pakistan” to affiliates on four continents.4
Later in the same month, Vice President Dick Cheney and the Deputy Director
of the CIA, Steve Kappes, made an unannounced four-hour visit to Islamabad, where
they reportedly warned President Musharraf that a Democratic-controlled Congress
could cut U.S. aid to Pakistan unless that country takes more aggressive action to
hunt down Al Qaeda and Taliban operatives on its soil. The unusually strong
admonition came after U.S. intelligence officials concluded that a “terrorist
infrastructure” had been rebuilt in western Pakistan, that Islamabad’s
counterterrorism efforts had been feckless to date, and that the Bush Administration
was recognizing that current U.S. and Pakistani policies were not working. When
asked in a February Senate hearing about the possible source of a hypothetical future
Al Qaeda attack on the United States, the new Director of National Intelligence, Mike
McConnell, stated a belief that such an attack “most likely would be planned and
come out of the [Al Qaeda] leadership in Pakistan.”5 The State Department’s
Country Reports on Terrorism 2006, released in April 2007, said “Pakistan executed
effective counterterrorism cooperation and captured or killed many terrorists” while
also reiterating U.S. concerns that the FATA is “a safe haven for Al Qaeda, the
Taliban, and other militants.”6 Pakistani officials are resentful of criticisms and
doubts about their commitment to the counterterrorist fight, and they aver that U.S.
pressure on Pakistan to “do more” could undermine President Musharraf and
destabilize his government.7 (See also CRS Report RL32259, Terrorism in South
Asia
.)
The Continuing Hunt for Top Al Qaeda Leaders. Pakistani authorities
reportedly have remanded to U.S. custody approximately 500 wanted Al Qaeda
fugitives to date, including some senior alleged operatives. Still, Al Qaeda founder
Osama Bin Laden and his lieutenant, Egyptian Islamic radical leader Ayman al-
Zawahri, are believed by many to be hiding somewhere in Pakistan’s western border
region. Pakistani officials generally insist there is no evidence to support these
suspicions, but numerous U.S. officials have suggested otherwise. While some mid-
2006 reports placed the Al Qaeda founder in the remote Dir Valley of northwestern
Pakistan, the country’s prime minister said those hunting Bin Laden had no clues as
to his whereabouts, a claim bolstered by a September 2006 Washington Post report
that clandestine U.S. commandos tasked with finding Bin Laden had not received a
credible lead in years. In the same month, President Bush said he would order U.S.
4 Statement before the Senate Select Committee on Intelligence, January 11, 2007, at
[http://intelligence.senate.gov/hearings.cfm?hearingId=2467].
5 Statement before the Senate Armed Services Committee, February 27, 2007.
6 See [http://www.state.gov/s/ct/rls/crt/2006/82734.htm].
7 David Sanger and Mark Mazzetti, “Cheney Warns Pakistan to Act on Terrorism,” New
York Times
, February 25, 2007; Shahzeb Jillani, “US May Be ‘Undermining’ Pakistan,”
BBC News, March 1, 2007.

CRS-14
forces to enter Paksitan if he received good intelligence on Osama Bin Laden’s
location.
Infiltration Into Afghanistan. Tensions between the Kabul and Islamabad
governments — which stretch back many decades — have at times reached alarming
levels in recent years, with top Afghan officials accusing Pakistan of manipulating
Islamic militancy in the region to destabilize Afghanistan. Likewise, U.S. military
commanders overseeing Operation Enduring Freedom have since 2003 complained
that renegade Al Qaeda and Taliban fighters remain 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 urge
Islamabad to do more to secure its rugged western border area. U.S. government
officials have voiced similar worries, even expressing concern that elements of
Pakistan’s intelligence agency might be assisting members of the Taliban. In June
2006, the State Department’s top counterterrorism official told a Senate panel that
elements of Pakistan’s “local, tribal governments” are believed to be in collusion
with the Taliban and Al Qaeda, but that the United States had no “compelling
evidence” that Pakistan’s intelligence agency is assisting militants. In September, the
Commander of the U.S. European Command, Gen. James Jones, told the same
Senate panel it was “generally accepted” that the Taliban headquarters is somewhere
in the vicinity of Quetta, in Pakistan’s southwestern Baluchistan province.8
Pakistan Launches Internal Military Operations. During the autumn of
2003, in an unprecedented show of force, President Musharraf moved 25,000
Pakistani troops into the traditionally autonomous Federally Administered Tribal
Areas (FATA) on the Afghan frontier. The first half of 2004 saw an escalation of
Pakistani Army operations, many in coordination with U.S. and Afghan forces just
across the international frontier (U.S. forces have no official authorization to cross
the border into Pakistan). Combat between Pakistani troops and militants in the two
Waziristan agencies and other border areas reportedly has killed more than 800
Islamist extremists (many of them foreigners), along with some 700 Pakistani
soldiers, and many hundreds of civilians.9 The battles, which continued sporadically
throughout 2005 and again became fierce in the spring of 2006, exacerbated volatile
anti-Musharraf and anti-American sentiments held by many Pakistani Pashtuns.
Kabul’s October 2004 elections were held without major disturbances,
apparently in part due to Musharraf’s commitment to reducing infiltrations. Yet
concerns sharpened in 2005 and, by the summer of that year, Afghan leaders were
openly accusing Islamabad of actively supporting insurgents and providing their
leadership with safe haven. Islamabad adamantly denied the charges and sought to
reassure Kabul by dispatching additional troops to border areas, bringing the total to
80,000. Still, 2006 was the deadliest year to date for U.S. troops in Afghanistan and,
at year’s end, there were growing indications that Islamabad’s efforts to control the
tribal areas were meeting with little success.
8 See also Elizabeth Rubin, “In the Land of the Taliban,” New York Times, October 22,
2006.
9 Nicholas Fiorenza, “Pakistan Moves on Insurgent Flow,” Jane’s Defense Weekly, February
21, 2007.

CRS-15
President Musharraf’s “carrot and stick” approach of offering amnesty to those
militant tribals who “surrender,” and using force against those who resist, clearly did
not rid the region of indigenous Islamic militants or Al Qaeda operatives. Late 2005
and early 2006 missile attacks on suspected Al Qaeda targets — apparently launched
by U.S. aerial drones flying over Pakistani territory — hinted at more aggressive U.S.
tactics that could entail use of U.S. military assets in areas where the Pakistanis are
either unable or unwilling to strike. Yet the attacks, in particular a January 13, 2006,
strike on Damadola in the Bajaur tribal agency that apparently killed women and
children along with several alleged Al Qaeda suspects, spurred widespread Pakistani
resentment and a perception that the country’s sovereignty was under threat.
A series of deadly encounters between government forces and militants in the
FATA left scores dead in the spring of 2006, among them many civilians. Pakistani
troops reportedly are hampered by limited communications and other
counterinsurgency capabilities, meaning their response to provocations can be overly
reliant on imprecise, mass firepower. Simultaneously, tribal leaders who cooperated
with the federal government faced dire threats from the extremists — as many as 200
were the victims of targeted killings in 2005 and 2006 — and the militants have
sought to deter such cooperation by periodically beheading accused “U.S. spies.”
Islamabad Shifts Strategy. As military operations failed to subdue the
militants while causing much “collateral damage” and alienating local residents,
Islamabad in 2004 began shifting strategy and sought to arrange truces with Waziri
commanders, first at Shakai in South Waziristan in April 2004, then again in
February 2005. Officials in Islamabad recognized that the social fabric of the FATA
had changed following its role as a staging and recruiting area for the war against the
Soviet Army in Afghanistan during the 1980s: the traditional power base was eroded
as the influence of religious elements had greatly increased. President Musharraf
lambasts the creeping “Talibanization” of the tribal areas and has sought to
implement a new scheme, shifting over time from an almost wholly militarized
approach to one emphasizing negotiation and economic development in the FATA,
as well as (re-)elevating the role of tribal maliks who would work in closer
conjunction with federal political agents. The aim, then, became restoration of a kind
of enhanced status quo ante with a limited state writ (maliks would enjoy more pay
and larger levies), and the reduction and ultimately full withdrawal of army troops.10
Some reports had the U.S. government initially offering cautious support for this new
political strategy.11
Cease-Fire and North Waziristan Truce. In late June 2006, militants in
North Waziristan announced a unilateral 30-day cease-fire to allow for creation of a
tribal council seeking resolution with government forces. The Islamabad government
began releasing detained Waziri tribesmen and withdrawing troops from selected
checkposts in a show of goodwill. Hundreds of Pashtun tribesmen and clerics later
10 Author interview with Pakistan government official, Islamabad, September 2006;
“President General Pervez Musharraf’s Address to the Nation,” July 20, 2006, at
[http://www.presidentofpakistan.gov.pk/SpeechAddressList.aspx].
11 Jonathan Landay, “White House Backing New Plan to Defuse Insurrection in Pakistan,”
McClatchy Newspapers, August 16, 2006.

CRS-16
held a tribal council with government officials, and the cease-fire was extended for
another month. Throughout July and August, Pakistan reported arresting scores of
Taliban fighters and remanding many of these to Afghanistan. Then, on September
5, the Islamabad government and pro-Taliban militants in Miramshah, North
Waziristan, signed a truce to ensure “permanent peace” in the region. The key
government participant was a political agent representing the NWFP governor, who
agreed on behalf of the government to end army operations against local tribesmen;
release all detainees; lift all public sanctions, pay compensation for property damage,
return confiscated vehicles and other goods; and remove all new army checkposts.
In turn, two representatives of the North Waziristan “local mujahideen students”
(trans. “Taliban”) agreed to end their attacks on government troops and officials; halt
the cross-border movement of insurgents to Afghanistan; and evict all foreigners who
did not agree to live in peace and honor the pact.12 There was subsequent talk of
extending the scheme to other FATA agencies and perhaps even to Afghanistan.
News of the truce received lukewarm reception in Washington, where officials
took a “wait-and-see” approach to the development. By the final weeks of October
2006, there was a growing concern among both U.S. government officials and
independent analysts that the September arrangement in North Waziristan
represented a Pakistani “surrender” and had in effect created a sanctuary for
extremists, with the rate of Taliban activities in neighboring Afghanistan much
increased and some reports having the militants failing to uphold their commitments.
Still, Islamabad pressed ahead with a plan to extend a similar truce to the Bajaur
tribal agency. Then, only hours before such a deal was to be struck on October 30,
82 people were killed in a dawn air attack on a madrassa in Chingai, Bajaur. The
Pakistani military claimed to have undertaken the attack after the school’s pro-
Taliban leader continued to train terrorists and shelter “unwanted foreigners,” yet
many observers speculated that the attack had in fact been carried out by U.S.
Predator drones, perhaps after intelligence reports placing fugitive Al Qaeda
lieutenant Ayman al-Zawahri at the site. Nine days later, after a local pro-Taliban
militant leader vowed to retaliate against Pakistani security forces, a suicide bomber
killed himself and 42 army recruits at a military training camp at Dargai in the North
West Frontier Province, not far from the sight of the Chingai attack. The bombing
was the most deadly attack on the Pakistani military in recent memory.
Current Status. The situation in the FATA in 2007 remains highly unstable,
with a large trust deficit between government forces and tribal leaders, and renewed
suspicions among Pakistanis that the United States is able to violate Pakistani
sovereignty with impunity. In January 2007, the director of the U.S. Defense
Intelligence Agency, Lt. Gen. Michael Maples, told a Senate panel that, “Pakistan’s
border with Afghanistan remains a haven for Al Qaeda’s leadership and other
extremists,” and that tribals leaders in Waziristan had not abided by most terms of
the 9/06 truce agreement.13 In March, Undersecretary of Defense for Policy Eric
Edelman reported to the same panel that there was “an almost immediate and steady
12 A translated version of the pact is at [http://www.pbs.org/wgbh/pages/frontline/taliban/
etc/nwdeal.html].
13 Statement before the Senate Select Committee on Intelligence, January 11, 2007, at
[http://intelligence.senate.gov/hearings.cfm?hearingId=2467].

CRS-17
increase of cross-border infiltration and attacks” immediately after the September
2006 truce was reached. Some reports even describe anecdotes of the Pakistani
military providing fire support for Taliban units operating in Afghanistan.14
In late March, battles erupted between tribal forces and Uzbek militants in South
Waziristan. Heavy arms — including mortars, large-caliber machineguns, and
rockets — were used by both sides, and some 300 people, most of them Uzbeks,
were reported killed. President Musharraf later acknowledged that the Pakistani
army had provided support for the tribals. The fighting was touted by Islamabad as
a sign that its new strategy was paying dividends. Yet such conflict may well have
been more about long-brewing local resentments toward Uzbeks, and there is further
concern among skeptics that the battles served to strengthen the “Pakistani Taliban”
and helped to consolidate their control in the tribal areas.15 Also in March, the
Musharraf government made a third pact with tribal leaders, this time in Bajaur.
Days later, NATO’s top military commander, U.S. Army Gen. John Craddock, told
an interviewer that the 2006 truce with pro-Taliban forces in North Waziristan
“hasn’t worked since it went into effect” and that he believes it should be ended.16
Despite apparent setbacks, the Bush Administration claims to strongly support
President Musharraf’s efforts to adopt a more comprehensive approach to include
economic and social development and governance reform to the region, flowing in
part from an acknowledgment that “purely military solutions are unlikely to
succeed.”17 Yet international donors and lending agencies appear hesitant to finance
projects in the region while the security situation remains tense. Meanwhile, it
appears the “Pakistani Taliban” in North Waziristan has sought to establish a local
administrative infrastructure much as was done in South Waziristan following a
similar truce there in April 2004.18 Reports continue to indicate that the FATA
increasingly serves as a base for a new generation of potential terrorists and is the site
of numerous terrorist training camps, some associated with Al Qaeda.19 Many
analysts insist that only by bringing the tribal areas under the full writ of the Pakistani
14 David Sanger and David Rhode, “U.S. Pays Pakistan to Fight Terror, But Patrols Ebb,”
New York Times, May 20, 2007.
15 Kim Barker, “Pakistan’s Unlikely Alliances Worry West,” Chicago Tribune, April 22,
2007; Ismail Khan, “The Game is Up for Uzbeks,” Dawn (Karachi), April 5, 2007.
16 Jim Michaels, “General: Pakistani Border Deal Fails,” USA Today, April 2, 2007.
17 Statement of Assistant Secretary of State for South and Central Asian Affairs Richard
Boucher before the House Committee on Foreign Affairs, Subcommittee on Middle East and
South Asia, Regional Overview of South Asia,” March 7, 2007, at
[http://www.internationalrelations.house.gov/110/bou030707.htm]. Pakistani strategy as
conveyed by the country’s Ambassador to the U.N. in Munir Akram, “A United Front
Against the Taliban,” New York Times, April 4, 2007.
18 See, for example, “Miramshah Taliban Open Office,” Dawn (Karachi), September 28,
2006; M. Ilyas Khan, “Taliban Spread Wings in Pakistan,” BBC News, March 5, 2007.
19 Aryn Baker, “The Truth About Talibanization,” Time, April 2, 2007, and Bruce Riedel,
“Al Qaeda Strikes Back,” Foreign Affairs, May 2007, are representative.

CRS-18
state and facilitating major economic development there can Islamabad’s FATA
problem be resolved.20
Infiltration into Kashmir and India. Islamabad has been under continuous
U.S. and international pressure to terminate the infiltration of separatist militants
across the Kashmiri Line of Control (LOC). Such pressure reportedly elicited a
January 2002 promise from President Musharraf to then-U.S. Deputy Secretary of
State Richard Armitage that all such movements would cease. During a June 2002
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. Musharraf has pledged to India that he will
not permit any territory under Pakistan’s control to be used to support terrorism, and
he 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 continues to actively support separatist insurgents as a
means both to 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 statements
from Indian officials indicating that rates of militant infiltration were down
significantly. However, Indian leaders periodically reiterate their complaints that
Islamabad has taken insufficient action to eradicate the remaining “infrastructure of
terrorism” on Pakistani-controlled territory. With indications that terrorism on Indian
soil beyond the Jammu and Kashmir state may have been linked to Pakistan-based
terrorist groups, Indian leaders repeat demands that Pakistan uphold its promises to
curtail the operations of Islamic militants and violent Kashmiri separatists originating
on Pakistani-controlled territory.
Following conflicting reports from Indian government officials about the
criminal investigation into July 2006 Bombay terrorist bombings that left nearly 200
people dead, India’s prime minister claimed in October that India had “credible
evidence” of Pakistani government complicity in the plot. Islamabad rejected such
allegations as “propaganda” designed “to externalize an internal [Indian] malaise.”21
Several other terrorist attacks against Indian targets outside of Kashmir have been
linked to Pakistan-based groups, including lethal assaults on civilians in Delhi and
20 See, for example, Barnett Rubin and Abubakar Siddique, “Resolving the Pakistan-
Afghanistan Stalemate,” U.S. Institute of Peace Special Report, 176, October 2006;
“Pakistan’s Tribal Areas: Appeasing the Militants,” International Crisis Group Asia Report
No. 125, December 11, 2006; Christine Fair, Nicholas Howenstein, and Alexander Thier,
“Troubles on the Pakistan-Afghanistan Border,” U.S. Institute for Peace Briefing, December
2006.
21 “We Have Credible Evidence: Manmohan,” Hindu (Madras), October 25, 2006; Anand
Giridharadas, “India’s Police Say Pakistan Helped Plot July Train Bombings,” New York
Times
, October 1, 2006; Pakistan Ministry of Foreign Affairs Media Briefing, October 2,
2006.

CRS-19
Bangalore in 2005, and in Varanasi in 2006. Indian security officials routinely blame
Pakistan’s intelligence service for assisting the infiltration of Islamist militants into
India from Nepal, Bangladesh, and Bhutan, as well as across the Kashmiri LOC.
Domestic Terrorism. Pakistan is known to be a base for numerous
indigenous terrorist organizations, and the country continues to suffer from terrorism
at home, especially that targeting the country’s Shia minority. Until a March 2006
car bombing at the U.S. consulate in Karachi that left one American diplomat dead,
recent attacks on Western targets had been rare, but 2002 saw several acts of lethal
anti-Western terrorism, including the kidnaping and murder of reporter Daniel Pearl,
a grenade attack on a Protestant church in Islamabad that killed a U.S. Embassy
employee, and two car bomb attacks, including one on the same U.S. consulate,
which killed a total of 29 people. These attacks, widely viewed as expressions of
militants’ anger with the Musharraf regime for its cooperation with the United States,
were linked to Al Qaeda, as well as to indigenous militant groups.
From 2003 to the present, Pakistan’s worst domestic terrorism has been directed
against the country’s Shia minority and included suicide bomb attacks that killed
scores of people in May 2005 and February 2006 (in addition, some 57 Sunnis were
killed in an April 2006 suicide bombing in Karachi). Indications are that the
indigenous Lashkar-e-Jhangvi (LJ) Sunni terrorist group is responsible for the most
deadly anti-Shia violence. Two attempts to kill Musharraf in December 2003 and
failed efforts to assassinate other top Pakistani officials in mid-2004 were linked to
the LJ and other Al Qaeda-allied groups, and illuminated the grave and continuing
danger presented by religious extremists.
Following a July 2006 suicide bombing in Karachi that killed a prominent Shiite
cleric, Musharraf renewed his pledge to crack down on religious extremists; hundreds
of Sunni clerics and activists were subsequently arrested for inciting violence against
Shiites through sermons and printed materials. However, serious sectarian violence
flared anew in late 2006 and early 2007. Bomb attacks, many of them by suicidal
extremists motivated by sectarian hatreds killed many people; some reports link the
upsurge in such attacks to growing sectarian conflict in Iraq. Among the spate of at
least 14 significant domestic terrorist attacks suffered by Pakistan in 2007 were
! a late January bomb blast in Peshawar that killed 15 people, most of
them policemen, including the city’s police chief, in a likely anti-
Shia attack;
! the early February murder of six opposition People’s Party activists
west of Islamabad;
! a mid-February suicide bombing that killed 16 people, including a
judge, and critically injured 6 others in a Quetta courtroom;
! the targeted killing of a female provincial minister in Punjab by an
Islamist zealot;
! a late April suicide bombing that killed at least 28 other people and
narrowly missed Pakistan’s interior minister at a political rally in
Peshawar; and
! a mid-May suicide bombing that killed up to 25 other people at a
Peshawar restaurant said to be popular with Afghan refugees.

CRS-20
A leading pro-Taliban militant in Pakistan’s tribal areas, Baitullah Mehsud, issued
vows to avenge government attacks in the region in early 2007, and subsequently has
been linked to at least four suicide bombings in Pakistan.22 Some analysts believe
that, by redirecting Pakistan’s internal security resources, an increase in such violence
can ease pressure on Al Qaeda and affiliated groups and so allow them to operate
more freely there.
Other Security Issues
Pakistan-U.S. Security Cooperation. U.S.-Pakistan security cooperation
accelerated quickly after 2001, and President Bush designated Pakistan as a major
non-NATO U.S. ally in June 2004. The close U.S.- Pakistan security ties of the cold
war era — which came to a near halt after the 1990 aid cutoff — have been restored
as a result of Pakistan’s role in the U.S.-led anti-terrorism campaign. In 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. In March 2005, the
United States announced that it would resume sales of F-16 fighters to Pakistan after
a 16-year hiatus. A revived high-level U.S.-Pakistan Defense Consultative Group
(DCG) — moribund since 1997 — now sits for high-level discussions on military
cooperation, security assistance, and anti-terrorism; its most recent session came in
May 2006. In 2003, a U.S.-Pakistan-Afghanistan Tripartite Commission was
established to bring together military commanders for discussions on Afghan stability
and border security; a session held in Pakistan in January 2007 included
establishment of the first joint intelligence sharing center in Kabul to boost
cooperation against Taliban and other extremists. Officers from NATO’s
International Security Assistance Force in Afghanistan have joined the body, which
met for the 22nd time in May 2007.
Major government-to-government arms sales and grants since 2001 include 6
C-130 military transport aircraft; 6 AN/TPS-77 surveillance radars; air traffic control
systems; nearly 6,000 military radios; 100 Harpoon anti-ship missiles (with the
possibility of sales of another 90); 6 Phalanx guns (with upgrades on another 6); and
2,014 TOW anti-armor missiles. In 2004, the U.S. Navy agreed to grant 8 excess P-
3C Orion maritime patrol aircraft to Pakistan; plans for their major refurbishment and
service by U.S. firms could be worth $1 billion in coming years. Other pending sales
include up to 500 Sidewinder air-to-air missiles and 115 self-propelled howitzers.
Major Excess Defense Article grants have included 20 refurbished AH-1F Cobra
attack helicopters (with 20 more for parts) and 4 F-16A fighters (24 more such
fighters will be transferred to Pakistan as they become excess to the U.S. Air Force).
Further potential arms sales include costly plans to refurbish and modify three excess
P-3 aircraft with the E-2C Hawkeye airborne early warning suite. The Department
of Defense has characterized F-16 fighters, P-3C patrol aircraft, and anti-armor
missiles as having significant anti-terrorism applications, claims that elicit skepticism
from some analysts. The Pentagon reports total Foreign Military Sales agreements
with Pakistan worth $863 million in FY2002-FY2005. In-process sales of F-16s
have raised the value to $3.5 billion in FY2006 alone.
22 “Doubts Over Peace Deal,” BBC News, January 17, 2007; “Baitullah Linked to Suicide
Attacks, Says FIA Official,” Dawn (Karachi), March 21, 2007.

CRS-21
Security-related U.S. assistance programs for Pakistan are said aimed especially
at bolstering Islamabad’s counterterrorism and border security efforts, and have
included U.S.-funded road-building projects in the NWFP and FATA; and the
provision of night-vision equipment, communications gear, protective vests, and
transport helicopters and aircraft. The United States also has undertaken to train and
equip new Pakistan Army Air Assault units that can move quickly to find and target
terrorist elements. Modest U.S.-funded military education and training programs
seek to enhance the professionalism of Pakistan’s military leaders, and develop
respect for rule of law, human rights, and democratic values. U.S. security assistance
to Pakistan’s civilian sector is aimed at strengthening the country’s law enforcement
capabilities through basic police training, provision of advanced identification
systems, and establishment of a new Counterterrorism Special Investigation Group.
U.S. efforts reportedly are hindered by Pakistani shortcomings that include poorly
trained and poorly equipped personnel who generally are underpaid by ineffectively
coordinated and overburdened government agencies.23 (See also CRS Report
RL32259, Terrorism in South Asia.)
Renewed F-16 Sales and Congressional Concerns. In June 2006, the
Pentagon notified Congress of a possible Foreign Military Sale to Pakistan worth up
to $5.1 billion. The deal involves 18 newly-built advanced F-16 combat aircraft (and
an option for 18 more), along with related munitions and equipment, and would
represent the largest-ever weapons sale to Pakistan. Associated munitions for new
F-16s and for mid-life upgrades on others will include 500 AMRAAM air-to-air
missiles and 700 BLU-109 bombs. Congressional concerns about the sale and
displeasure at the Bush Administration’s apparently improper notification procedures
spurred a July hearing of the House International Relations Committee. During that
session, many Members worried that F-16s were better suited to fighting India than
to combating terrorists; some warned that U.S. military technology could be passed
from Pakistan to China. The State Department’s lead official on political-military
relations sought to assure the committee that the sale would serve U.S. interests by
strengthening the defense capabilities of a key ally without disturbing the regional
balance of power and that all possible measures would be taken to prevent the
onward transfer of U.S. technologies. H.J.Res. 93, disapproving the proposed sale,
was introduced in the House, but died in committee.
Secretary of State Rice subsequently sent a letter to Congress indicating that no
F-16 combat aircraft or related equipment would be delivered to Pakistan until
Islamabad provided written security assurances that no U.S. technology will be
accessible by third parties. Islamabad has, however, denied that any “extraordinary”
security requirements were requested. After further negotiations on specifics,
including a payment process that will require a major outlay from the Pakistani
treasury, the United States and Pakistan in September signed a letter of acceptance
for the multi-billion dollar F-16 deal. Since then, several major U.S. defense
corporations have won contracts worth hundreds of millions of dollars to supply F-16
23 See, for example, Seth Jones, et al., “Securing Tyrants or Fostering Reform?,” RAND
Corporation Monograph, January 7, ch. 6, 2007, at [http://www.rand.org/pubs/monographs/
2006/RAND_MG550.pdf].

CRS-22
parts and munitions to Pakistan. (See also CRS Report RL33515, Combat Aircraft
Sales to South Asia: Potential Implications
)
Nuclear Weapons and Missile Proliferation. Many policy analysts
consider an apparent arms race between India and Pakistan to be among the most
likely potential causes of the future use of nuclear weapons by states. In May 1998,
India conducted unannounced nuclear tests, breaking a 24-year, self-imposed
moratorium on such testing. Despite U.S. and world efforts to dissuade it, Pakistan
quickly followed. 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.
Pakistan currently is believed to have enough fissile material, mainly enriched
uranium, for 55-90 nuclear weapons; India, with a program focused on plutonium,
may be capable of building a similar number. Both countries have aircraft capable
of delivering nuclear bombs (U.S.-supplied F-16 combat aircraft in Pakistan’s air
force reportedly have been refitted to carry nuclear bombs). Pakistan’s military has
inducted short- and medium-range ballistic missiles (allegedly acquired from China
and North Korea), while India possesses short- and intermediate-range missiles. 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. According to the director of the U.S. Defense
Intelligence Agency, Pakistan is building its stockpile of fission weapons and is
likely to continue work on advanced warhead and delivery systems.24 (See also CRS
Report RL32115, Missile Proliferation and the Strategic Balance in South Asia; and
CRS Report RS21237, Indian and Pakistani Nuclear Weapons.)
The A.Q. Khan Nuclear Proliferation Network. 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 were 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 early 2003, the Administration determined that the relevant facts “do not
warrant imposition of sanctions under applicable U.S. laws.” Press reports during
2003 suggested that both Iran and Libya benefitted from Pakistani nuclear assistance.
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.
The investigation led to the February 2004 “public humiliation” of metallurgist
Abdul Qadeer Khan, known as the founder of Pakistan’s nuclear weapons program
and a national hero, when he confessed to involvement in an illicit nuclear smuggling
network. Khan and at least seven associates were said to have sold crucial nuclear
weapons technology and uranium-enrichment materials to North Korea, Iran, and
Libya. President Musharraf, citing Khan’s contributions to his nation, issued a
24 Statement of Lt. Gen. Michael Maples before the Senate Select Committee on
Intelligence, January 11, 2007, at [http://intelligence.senate.gov/070111/maples.pdf].

CRS-23
pardon that was later called conditional.25 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.
While Musharraf has promised President Bush that he will share all information
learned about Khan’s proliferation network, Pakistan refuses to allow any direct
access to Khan by U.S. or international investigators. In May 2006, days after
releasing from detention nuclear scientist and suspected Khan collaborator
Mohammed Farooq, the Islamabad government declared the investigation “is
closed.” Some in Congress remained skeptical, however, and a House panel
subsequently held a hearing at which three nongovernmental experts insisted that
U.S. and international investigators be given direct access to Khan, in particular to
learn more about assistance given to Iran’s nuclear program. No alleged Pakistani
participants, including Khan himself, have faced criminal charges in the case. In
May 2007, a London-based think tank released a report on the Khan network, finding
that “at least some of Khan’s associates appears to have escaped law enforcement
attention and could, after a period of lying low, resume their black-market
business.”26 (See also CRS Report RL32745, Pakistan’s Nuclear Proliferation
Activities and the Recommendations of the 9/11 Commission
.)
A Major New Nuclear Reactor? Revelations in July 2006 that Pakistan is
in the midst of constructing a major heavy water nuclear reactor at the Khushab
complex brought a flurry of concern from analysts who foresee a regional
competition in fissile material production, perhaps including China. Upon
completion, which could be several years away, a reactor with 1,000-megawatt
capacity might boost Pakistan’s weapons-grade plutonium production capabilities to
more than 200 kilograms per year, or enough for up to 50 nuclear weapons. While
Islamabad has not commented directly on the construction, government officials
there insist that Pakistan will continue to update and consolidate its nuclear program
for the purpose of minimum credible deterrence. The Bush Administration
responded to the public revelations by claiming it had been aware of Pakistani plans
and that it discourages the use of the facility for military purposes. Some in
Congress, who were not briefed about the new Pakistani reactor, have sought to link
the development to U.S. plans for major new arms sales to Pakistan, along with an
initiative to begin U.S. civil nuclear cooperation with India. Moreover, a January
2007 report warned that Pakistan may soon be reprocessing weapons-grade
plutonium at its Chashma facility, a capability that would allow Islamabad to build
more and more powerful nuclear weapons.27
25 In May 2007, Pakistan’s Ambassador to the United States reportedly said that if Khan had
not been a national hero, “we would have strung him from the highest tree” (“A
‘Worrisome’ Time in Pakistan” [interview], USA Today, May 23, 2007).
26 See [http://www.iiss.org/publications/strategic-dossiers/nbm].
27 “U.S. Critical of Pakistan’s New Nuclear Reactor,” Associated Press, July 24, 2006;
David Albright and Paul Brannan, “Chashma Nuclear Site in Pakistan With Possible
Reprocessing Plant,” January 18, 2007, at [http://www.isis-online.org/publications/-
southasia/chashma.pdf].

CRS-24
Pakistan’s New Nuclear Transparency. During October 2006, Islamabad
appeared to launch a public relations effort aimed at overcoming the stigma caused
by Khan’s proliferation activities. The effort included dispatching to Washington the
chief of the country’s Strategic Plans Division, Lt. Gen. Khalid Kidwai, who
attempted to make more transparent Pakistan’s nuclear command and control
structure, and who acknowledged that Pakistan’s past proliferation record had been
“poor and indefensible.”28 Many analysts now assert that meaningful efforts have
been made to improve the physical security of Pakistan’s strategic arsenal.
U.S. Nonproliferation Efforts. The United States has long sought to halt or
limit the proliferation of nuclear weapons in South Asia. In May 1998, following the
Indian and Pakistani nuclear tests, President Clinton imposed full restrictions on all
non-humanitarian aid to both countries as mandated under Section 102 of the Arms
Export Control Act. However, Congress and the President acted almost immediately
to lift certain aid restrictions and, in October 2001, all remaining nuclear-related
sanctions on Pakistan (and India) were removed. Officially, the United States
continues to urge Pakistan and India to join the Nuclear Nonproliferation Treaty
(NPT) as non-nuclear weapon states and it offers no official recognition of their
nuclear weapons capabilities, which exist outside of the international
nonproliferation regime.
During the latter years of the Clinton Administration, the United States set forth
nonproliferation “benchmarks” for Pakistan and India, 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 Pakistan nor India are
signatories to the CTBT or the NPT. The Bush Administration quickly set aside the
benchmark framework. Concerns about onward proliferation, fears that Pakistan
could become destabilized by the U.S.-led counterterrorism efforts in Afghanistan,
and confusion over the issue of political succession in Islamabad have heightened
U.S. attention to weapons proliferation in the region. Section 1601 of P.L. 107-228
outlined U.S. nonproliferation objectives for South Asia. Some Members of
Congress identify “contradictions” in U.S. nonproliferation policy toward South
Asia, particularly as related to the Senate’s rejection of the CTBT and indications that
the United States seeks to build new nuclear weapons.
Pakistan-India Tensions and the Kashmir Issue. In the interests of
regional stability, the United States strongly encourages an ongoing Pakistan-India
peace initiative and remains concerned about the potential for long-standing
disagreements to cause open hostilities between these two nuclear-armed countries.
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 were extremely high in the wake of the Kargil conflict of 1999, when an
incursion by Pakistani soldiers led to a bloody six-week-long battle. Throughout
28 Speech at the Carnegie Endowment for International Peace, Washington, DC, October 24,
2006.

CRS-25
2000 and 2001, cross-border firing and shelling caused scores of both military and
civilian deaths. A July 2001 Pakistan-India summit meeting failed to produce even
a joint statement, reportedly due to 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.”
The 2002 Crisis. Secretary of State Powell visited South Asia in an effort to
ease escalating tensions over Kashmir, but an October 2001 bombing at the Jammu
and Kashmir state assembly building was followed by a December assault on the
Indian Parliament in New Delhi (both incidents were blamed on Pakistan-based
terrorist groups). India mobilized some 700,000 troops along the Pakistan-India
frontier and threatened war unless Islamabad ended all “cross-border infiltration” of
Islamic militants. This action triggered a corresponding Pakistani military
mobilization. Under significant international diplomatic pressure and the threat of
India’s use of force, President Musharraf in January 2002 vowed to end the presence
of terrorist entities on Pakistani soil, and he outlawed five militant groups, including
those most often named in attacks in India: 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 patrol
operations along the Pakistan-Afghanistan border. Intensive international diplomatic
missions to South Asia reduced tensions during the summer of 2002 and appear to
have prevented the outbreak of war. Numerous top U.S. officials were involved in
this effort and continued to strenuously urge the two countries to renew bilateral
dialogue.29
The Most Recent Peace Process. Pakistan and India began full military
draw-downs in October 2002 and, after a cooling-off period, a “hand of friendship”
offer to Pakistan by the Indian prime minister in April 2003 led to the restoration of
full diplomatic relations. Yet surging separatist violence that summer contributed to
an exchange of sharp rhetoric between Pakistani and Indian leaders at the United
Nations, casting doubt on the nascent peace effort. A new confidence-building
initiative got Pakistan and India back on a positive track, and a November 2003
cease-fire was initiated after a proposal by then-Pakistani Prime Minister Zafarullah
Khan Jamali. President Musharraf subsequently 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, New Delhi acknowledged that it was
significantly decreased and, combined with other confidence-building measures,
relations were sufficiently improved that the Indian prime minister attended a January
2004 summit meeting of the South Asian Association for Regional Cooperation in
29 See Polly Nayak and Michael Krepon, “US Crisis Management in South Asia’s Twin
Peaks Crisis” at [http://www.stimson.org/southasia/pdf/USCrisisManagement.pdf].

CRS-26
Islamabad. There Pakistan and India issued a joint “Islamabad Declaration” calling
for a renewed “Composite Dialogue” to bring about “peaceful settlement of all
bilateral issues, including Jammu and Kashmir, to the satisfaction of both sides.”30
A major confidence-building development came in April 2005, when a new bus
service was launched linking Muzaffarabad in Pakistani Kashmir and Srinagar in
Indian Kashmir, and a summit meeting produced an agreement to address the
Kashmir issue “in a forward looking manner for a final settlement.” Still, many
Kashmiris reject any settlement process that excludes them.
Even as the normalization of India-Pakistan relations moves forward — and
likely in reaction to their apparent marginalization in the face of this development —
separatist militants continue their attacks, and many observers in both India and the
United States believe support for Kashmiri militants remains Pakistani state policy.
Yet many indicators show positive long-term trends. Steadily reduced rates of
infiltration may be attributed to the endurance of the Pakistan-India dialogue.
Moreover, President Musharraf has made considerable efforts to exhibit flexibility,
including December 2006 statements that Pakistan is “against independence” for
Kashmir, and his offering of a four-point proposal that would lead to “self-
governance ... falling between autonomy and independence.”31 This was seen by
many analysts as being roughly in line with New Delhi’s Kashmir position. Indeed,
the Indian prime minister welcomed Musharraf’s proposals, saying they “contribute
to the ongoing thought process.” Prospects for a government-to-government
accommodation may thus be brighter than ever before.
Baluchistan Unrest. Pakistan’s vast southwestern Baluchistan province is
about the size of California and accounts for 44% of the country’s land area, but only
5% of its population. The U.S. military made use of bases in the region to support
its operations in neighboring Afghanistan. The province is the proposed setting for
a pipeline that would deliver Iranian natural gas to both Pakistan and India, a project
which, if brought to fruition, could bring hundreds of millions of dollars in annual
transit fees to Islamabad’s national treasury. The United States opposes this “IPI”
pipeline project as part of its effort to isolate Iran internationally. Security problems
in Baluchistan reduce the appeal to investors of building a pipeline across the
province. The presence in Baluchistan of Jundallah, a trans-border militant group
that claims to fight on behalf of Baloch rights, has caused friction between Islamabad
and Tehran. More broadly, such problems raise serious questions about Pakistan’s
internal stability and national cohesion.
Over the decades of Pakistani independence, many of the ethnic Baloch and
some of the Pashtun tribes who inhabit this relatively poor and underdeveloped
province have engaged in armed conflict with federal government forces, variously
seeking more equitable returns on the region’s rich natural resources, greater
autonomy under the country’s federal system, or even outright independence and
formation of a Baloch state that might include ethnic brethren and some territories
in both Afghanistan and Iran. Non-Baloch (mostly Punjabis) have been seen to
30 [http://www.indianembassy.org/press_release/2004/jan/07.htm].
31 Somini Sengupta, “Pakistani Says Concessions Could Produce Kashmir Pact,” New York
Times
, December 6, 2006.

CRS-27
benefit disproportionately from mineral and energy extraction projects, and
indigenous Baloch have been given only a small role in the construction of a major
new port in Gwadar. Many Baloch complain of being a marginalized group in their
own homeland. Long-standing resentments led to armed conflicts in 1948, 1958, and
1973. The latter insurrection, which lasted four years, involved tens of thousands of
armed guerillas and brought much destruction to the province; it was put down only
after a major effort by the Pakistan Army, which made use of combat helicopters
provided by Iran. Some 8,000 rebels and Pakistani soldiers were killed.
The Current Conflict. Mid-2004 saw an increase in hit-and-run attacks on
army outposts and in the sabotage of oil and gas pipelines. The alleged rape of a
Baloch doctor by Pakistani soldiers in January 2005 sparked provincial anger and a
major spike in such incidents over the course of the year. In December 2005, rockets
were fired at a Baluchistan army camp during a visit to the site by President
Musharraf. A Baloch separatist group claimed responsibility and the Pakistani
military began major offensive operations to destroy the militants’ camps. In the
midst of increasingly heavy fighting in January 2006, Musharraf openly accused India
of arming and financing militants fighting in Baluchistan. New Delhi categorically
rejected the allegations. U.N. and other international aid groups soon suspended their
operations in Baluchistan due to security concerns. Shortly after, Baloch militants
shot and killed three Chinese engineers and their Pakistani driver, causing disruption
in Islamabad-Beijing relations.
President Musharraf calls Baloch rebels “miscreants” and “terrorists”; the
Islamabad government officially banned the separatist Baluchistan Liberation Army
as a terrorist organization in April 2006 and at times suggests that Baloch militants
are religious extremists. Yet most rebel attacks are taken against military and
infrastructure targets, and — despite a government campaign to link the two
movements — Islam appears to play little or no role as a motive for Baloch
militancy.32 Islamabad has employed helicopter gunships and fixed-wing aircraft in
its effort to defeat the rebel forces.
The Death of Nawab Bugti. Fighting waned in the middle of 2006, with
hundreds of rebels surrendering in return for amnesty. The main rebel tribal leader
and onetime Baluchistan chief minister, 79-year-old Nawab Akbar Bugti, had gone
into hiding and was believed cut off from his own forces. In June, President
Musharraf declared that all “terrorists” had been eliminated from Baluchistan, yet
combat flared again in July, reportedly leaving dozens dead, and periodic bombings
in the capital city of Quetta continued. Then, in late August, Bugti was located in a
cave hideout and was killed by Pakistan army troops in a battle that left dozens of
soldiers and rebels dead.
Recognizing Bugti’s popularity among wide segments of the Baloch populace
and of the potential for his killing to provide martyr status, government officials
denied the tribal leader had been targeted, calling his death an inadvertent result of
a cave collapse. Nevertheless, news of his death spurred major unrest across the
32 Frederic Grare, “Pakistan: The Resurgence of Baluch Nationalism,” Carnegie Paper No.
65, January 2006, at [http://www.carnegieendowment.org/files/CP65.Grare.FINAL.pdf].

CRS-28
province and beyond, with hundreds of people being arrested in the midst of large-
scale street demonstrations. Bugti’s killing was criticized across the spectrum of
Pakistani politicians and analysts, with some commentators calling it a Pakistani
Army miscue of historic proportions.33 Days of rioting included numerous deaths
and injuries, but the more dire predictions of spreading unrest and perhaps even the
disintegration of Pakistan’s federal system have not come to pass. By October,
Pakistan’s interior minister was claiming a “normalization” and decrease in violence
in Baluchistan, although a low-intensity insurgency continues and the overarching
problem remains unresolved.
Narcotics. Pakistan is a major transit country for opiates that are grown and
processed in Afghanistan then distributed worldwide by Pakistan-based traffickers.
The State Department indicates that Pakistan’s cooperation on drug control “remains
strong,” and the Islamabad government has made impressive strides in eradicating
indigenous opium poppy cultivation. However, opium production spiked in post-
Taliban Afghanistan, which is now said to supply up to 90% of the world’s heroin.
Elements of Pakistan’s intelligence agency are suspected of past involvement in drug
trafficking; in March 2003, a former U.S. Ambassador to Pakistan told a House panel
that their role in the heroin trade from 1997-2003 was “substantial.” At present, the
Taliban are reported to benefit significantly by taxing Afghan farmers and extorting
traffickers.34 Other reports indicate that profits from drug sales are financing the
activities of Islamic extremists in Pakistan and Kashmir.
U.S. counternarcotics programs aim to reduce the flow of opiates though
Pakistan, eliminate Pakistan as a source of such opiates, and reduce the demand for
illegal drugs within Pakistan. Islamabad’s own counternarcotics efforts are hampered
by lack of full government commitment, scarcity of funds, poor infrastructure, and
likely corruption. Since 2002, the State Department’s Bureau of International
Narcotics and Law Enforcement Affairs has supported Pakistan’s Border Security
Project by training border forces, providing vehicles and surveillance and
communications equipment, transferring helicopters and fixed-wing aircraft to the
Interior Ministry’s Air Wing, and road-building in western tribal areas. Congress
funded such programs with more than $54 million for FY2006. (See also CRS
Report RL32686, Afghanistan: Narcotics and U.S. Policy.)
Islamization, Anti-American Sentiment, and Madrassas
With some 160 million citizens, Pakistan is the world’s second-most populous
Muslim country. An unexpected outcome of the country’s 2002 elections saw the
Muttahida Majlis-e-Amal (MMA or United Action Front), a coalition of six Islamic
parties, win 11% of the popular vote and 68 seats in the National Assembly — about
one-fifth of the total. It also controls the provincial assembly in the North West
Frontier Province (NWFP) and leads a coalition in the Baluchistan assembly. These
Pashtun-majority western provinces border Afghanistan, where U.S.-led
counterterrorism operations are ongoing. In 2003, the NWFP provincial assembly
33 “Bugti’s Killing is the Biggest Blunder Since Bhutto’s Execution,” Daily Times (Lahore),
August 28, 2006.
34 “Taliban Reaping Opium Profits,” Associated Press, April 11, 2007.

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passed a Shariat (Islamic law) bill. In 2005, and again in November 2006, the same
assembly passed a Hasba (accountability) bill that many fear could create a parallel
Islamic legal body. Pakistan’s Supreme Court, responding to petitions by President
Musharraf’s government, has rejected most of this legislation as unconstitutional, but
in February 2007 it upheld most of a modified Hasba bill re-submitted by the NWFP
assembly. Such developments alarm Pakistan’s moderates and Musharraf has
decried any attempts to “Talibanize” regions of Pakistan.
Pakistan’s Islamists are notable for expressions of anti-American sentiment, at
times calling for “jihad” against the existential threat to Pakistani sovereignty they
believe alliance with Washington entails. Most analysts contend that two December
2003 attempts to assassinate President Musharraf were carried out by Islamist
militants angered by Pakistan’s post-September 2001 policy shift. Some observers
identify a causal link between the poor state of Pakistan’s public education system
and the persistence of xenophobia and religious extremism in that country.
Anti-American sentiment is not limited to Islamist groups, however. Many
across the spectrum of Pakistani society express anger at U.S. global foreign policy,
in particular when such policy is perceived to be unfriendly or hostile to the Muslim
world (as in, for example, Palestine and Iraq).35 In 2004 testimony before a Senate
panel, senior U.S. expert Stephen Cohen opined: “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.” A 2005 Pew Center
opinion poll found 51% of Pakistanis expressing confidence in Al Qaeda founder
Osama Bin Laden to “do the right thing in world affairs” and, in subsequent
American magazine interview, President Musharraf conceded that “the man on the
street [in Pakistan] does not have a good opinion of the United States.” He added,
by way of partial explanation, that Pakistan had been “left high and dry” after serving
as a strategic U.S. ally during the 1980s Afghan war.36
A Pew poll taken shortly before the catastrophic October 2005 earthquake found
only 23% of Pakistanis expressing a favorable view of the United States, the lowest
percentage for any country surveyed. That percentage doubled to 46% in an
ACNielson poll taken after large-scale U.S. disaster relief efforts in earthquake-
affected areas, with the great majority of Pakistanis indicating that their perceptions
had been positively influenced by witnessing such efforts. However, a January 2006
missile attack on Pakistani homes near the Afghan border killed numerous civilians
and was blamed on U.S. forces, renewing animosity toward the United States among
segments of the Pakistani populace. An October 2006 missile attack in the same
border area ostensibly was launched by Pakistani forces, but widespread suspicions
of U.S. involvement further engendered anti-Americanism and concerns about
Pakistani sovereignty. Another noteworthy episode in 2006 saw Pakistani cities
hosting major public demonstrations against the publication in European newspapers
of cartoons deemed offensive to Muslims. These protests, which were violent at
times, included strong anti-U.S. and anti-Musharraf components, suggesting that
Islamist organizers used the issue to forward their own political ends. Subsequently,
35 Author interviews in Islamabad, September 2006.
36 “10 Questions for Pervez Musharraf,” Time, October 3, 2005.

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a June 2006 Pew Center poll found only 27% of Pakistanis holding a favorable
opinion of the United States, suggesting that public diplomacy gains following the
2005 earthquake had receded.
In April 2007, the University of Maryland-based Program on International
Policy Attitudes released a survey of public opinion in four Muslim countries. The
findings indicate that significant resentment toward and distrust of the United States
persists among notable segments of the Pakistani public:
! 67% of Pakistanis have an unfavorable view of the U.S. government;
! 73% think weakening and dividing the Islamic world is a U.S. goal;
! more than one-third approve of attacks on U.S. troops in Iraq and
Afghanistan (another third disapprove of such attacks);
! more than one-third also think the U.S. government and/or Israel
were behind the 9/11 attacks (only 2% hold Al Qaeda responsible);
! 27% report having positive feelings toward Osama Bin Laden; and
! 54% agree strongly with the goal of requiring strict application of
Sharia law in every Islamic country.37
Meanwhile, an open Islamist rebellion of sorts has been taking place in Pakistan’s
relatively serene capital, where radical leaders of the Lal (Red) Mosque and their
followers in the attached Jamia Hafsa seminary have since March occupied illegally
constructed religious buildings, kidnaped and detained local police officers, battled
security forces, and threatened to launch a violent anti-government campaign unless
Sharia (Islamic law) is instituted nationwide.
Pakistan’s Religious Schools (Madrassas).38 Afghanistan’s Taliban
movement itself began among students attending Pakistani religious schools
(madrassas). Among the more than 10,000 madrassas training some 1.5 million
children in Pakistan are a small percentage that have been implicated in teaching
militant anti-Western, anti-American, anti-Hindu, and even anti-Shia values. Former
Secretary of State Colin Powell once identified these as “programs that do nothing
but prepare youngsters to be fundamentalists and to be terrorists.”39 Contrary to
popularly held conceptions, however, research indicates that the great majority of
Pakistan’s violent Islamist extremists does not emerge from the country’s madrassas,
but rather from the dysfunctional public school system or even from private, English-
medium schools. One study found that only 17% of international terrorists sampled
had Islamic education backgrounds.40
37 [http://www.worldpublicopinion.org/pipa/pdf/apr07/START_Apr07_rpt.pdf].
38 See also CRS Report RS22009, Education Reform in Pakistan, and CRS Report RS21654,
Islamic Religious Schools, Madrasas: Background.
39 Statement before the House Appropriations Committee, March 10, 2004.
40 Marc Sageman, Understanding Terror Networks (University of Pennsylvania Press, 2004).
See also Mariam Abou Zahab and Olivier Roy, Islamist Networks (Columbia University
Press, 2004); Peter Bergen and Swati Pandney, “The Madrassa Myth,” New York Times,
June 14, 2005.

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Many of Pakistan’s madrassas are financed and operated by Pakistani Islamist
political parties such as the JUI-F (closely linked to the Taliban), as well as by
multiple unknown foreign entities, many in Saudi Arabia. As many as two-thirds of
the seminaries are run by the Deobandi sect, known in part for traditionally anti-Shia
sentiments and at times linked to the Sipah-e-Sahaba terrorist group. In its most
recent report on international religious freedom, the U.S. State Department said,
“Some unregistered and Deobandi-controlled madrassas in the FATA and northern
Baluchistan continued to teach extremism” and that schools run by the Jamaat al-
Dawat — considered to be a front organization of the proscribed Lashkar-e-Taiba
terrorist group — serve as recruitment centers for extremists. President Musharraf
himself has acknowledged that a small number of seminaries were “harboring
terrorists” and he has asked religious leaders to help isolate these by openly
condemning them.41
International attention to Pakistan’s religious schools intensified during the
summer of 2005 after Pakistani officials acknowledged that suspects in the July
London bombings visited Pakistan during the previous year and may have spent time
at a madrassa near Lahore. While President Musharraf has in the past pledged to
crack down on the more extremist madrassas in his country, there continues to be
little concrete evidence that he has done so, and even the president himself has
admitted that movement on this issue has been slow.42 Some observers speculate that
Musharraf’s reluctance to enforce reform efforts is rooted in his desire to remain on
good terms with Pakistan’s Islamist political parties, which are seen to be an
important part of his political base.43 The U.S. Congress has appropriated many
millions of dollars to assist Pakistan in efforts to reform its education system,
including changes that would make madrassa curriculum closer in substance to that
provided in non-religious schools. More than $200 million has been allocated for
such assistance since 2002. In November 2006, the U.S.-Pakistan Education
dialogue was launched in Washington to bolster further engagement.
Democratization and Human Rights
Democracy and Governance. The status and development of Pakistan’s
democratic institutions is a key U.S. policy concern, especially among those analysts
who view representative government in Islamabad as being a prerequisite for
reducing religious extremism and establishing a moderate Pakistani state. There had
been hopes that the October 2002 national elections would reverse Pakistan’s historic
trend toward unstable governance and military interference in democratic institutions.
Such hopes were eroded by ensuing developments, including President Musharraf’s
41 [http://www.state.gov/g/drl/rls/irf/2006/71443.htm]; “Some Madrassas Bad: Musharraf,”
Daily Times (Lahore), September 8, 2004.
42 See “Pakistan: Reforming the Education Sector,” International Crisis Group Report 84,
October 7, 2004; Charles Sennott, “Radical Teachings in Pakistan Schools,” Boston Globe,
September 29, 2006. Author interviews with Pakistani government officials and scholars
have tended to confirm that movement on madrassa reform is slow, at best.
43 John Lancaster and Kamran Khan, “At an Islamic School, Hints of Extremist Ties,”
Washington Post, June 13, 2004; Vali Nasr, “Military Rule, Islamism, and Democracy in
Pakistan,” Middle East Journal 58, 2, Spring 2004.

CRS-32
imposition of major constitutional changes and his retention of the position of army
chief. International and Pakistani human rights groups continue to issue reports
critical of Islamabad’s military-dominated government. In 2007, and for the eighth
straight year, the often-cited Freedom House rated Pakistan as “not free” in the areas
of political rights and civil liberties. While praising Pakistan’s electoral exercises as
moves in the right direction, the United States expresses concern that seemingly
nondemocratic developments may make the realization of true democracy in Pakistan
more elusive, and U.S. officials continue to press Pakistani leaders on this issue.
Pakistan’s Military-Dominated Government. General Musharraf’s
assumption of the presidency ostensibly was legitimized by a controversial April
2002 referendum marked by evidence of fraud. In August 2002, Musharraf
announced sweeping constitutional changes to bolster the president’s powers,
including provisions for presidential dissolution of the National Assembly. The
United States expressed concerns that the changes could make it more difficult to
build democratic institutions in Pakistan. The 2002 elections nominally fulfilled
Musharraf’s promise to restore the National Assembly that was dissolved in the wake
of his extra-constitutional seizure of power. The pro-military Pakistan Muslim
League-Quaid-e-Azam (PML-Q) won a plurality of seats, while a coalition of
Islamist parties made a surprisingly strong showing. The civilian government was
hamstrung for more than a year by fractious debate over the legitimacy of
constitutional changes and by Musharraf’s continued status as army chief and
president. A surprise December 2003 agreement between Musharraf and the Islamist
opposition ended the deadlock by bringing the constitutional changes before
Parliament and by eliciting a promise from Musharraf to resign his military
commission before 2005. Non-Islamist opposition parties unified under the Alliance
for the Restoration of Democracy (ARD) accused the MMA of betrayal and insisted
that the new arrangement merely institutionalized military rule in Pakistan.
Other apparent reversals for Pakistani democratization came in 2004, including
the sentencing of ARD leader Javed Hashmi to 23 years in prison for sedition,
mutiny, and forgery, and the “forced” resignation of Prime Minister Jamali for what
numerous analysts called his insufficient deference to President Musharraf.
Musharraf “shuffled” prime ministers to seat his close ally, Finance Minister Shaukat
Aziz. Aziz is seen to be an able financial manager and technocrat favored by the
military, but he has no political base in Pakistan. Moreover, in the final month of
2004 Musharraf chose to continue his role as army chief beyond the stated deadline.
The leadership of the country’s most popular, moderate, secular party — the Pakistan
People’s Party — seek greater U.S. support for Pakistani democratization and warn
that the space in which they are allowed to operate is so narrow as to bring into
question their continued viability as political forces.44
A public opinion survey by the International Republican Institute, completed
before the March 2007 judicial crisis began, found President Musharraf to be the
most popular political leader in Pakistan, comfortably ahead of former prime
ministers Bhutto and Sharif, who placed second and third, respectively. The poll also
44 Author interviews with PPP leader Benazir Bhutto, Washington, DC, February 2006, and
PPP officials, Islamabad, January 2004 and September 2006.

CRS-33
found a majority of respondents opposed to Musharraf’s continued dual role as
president and army chief, and a plurality saying the military, while seen as the
country’s most respected institution, should not play a role in governance.45 The
findings of such surveys may be significantly inaccurate, given widespread illiteracy
and the ability of surveyors to lead respondents. In May 2007, a National Democratic
Institute delegation issued a report on its visit to Pakistan, calling expected national
elections there “critical to the nation’s future,” warning that tainted elections could
strengthen the position of extremist elements or further consolidate the role of the
military in governance, urging Musharraf to retire his military commission in the
interest of public confidence, and calling for a significantly strengthened election
Commission to ensure credible polls.46
Current Judicial/Political Crisis. On March 9, President Musharraf
summarily dismissed the Chief Justice of Pakistan’s Supreme Court, Iftikhar
Chaudhry, on unspecified charges of misconduct and nepotism. Analysts widely
believe the dismissal was an attempt by Musharraf to remove a potential impediment
to his continued roles as president and army chief, given Chaudhry’s recent rulings
that exhibited independence and went contrary to government expectations. The
move triggered immediate outrage among numerous Pakistani lawyers and others
who claimed Musharraf had acted unconstitutionally. Several judges and a deputy
attorney general resigned in protest, ensuing street protests by lawyers grew in scale
and were joined by both secular and Islamist opposition activists. By providing an
issue upon which anti-Musharraf sentiments could coalesce, the imbroglio soon
morphed from a judicial crisis to a full-fledged political crisis and the greatest threat
to Musharraf’s government since it was established in 1999. Numerous analyses
conclude that the developments have severely weakened Musharraf politically and
could threaten the viability of his continued rule.47
The U.S. State Department at first declared the issue to be a purely internal
matter and withheld further comment but, as a sense of crisis increased in Pakistan,
a Department spokesman called Chaudhry’s dismissal “a matter of deep concern”
that the U.S. government was “monitoring very closely,” and he called for the issue
to be handled in a transparent manner in accordance with Pakistani law. However,
in a statement which triggered concern among many Pakistanis and skeptical analysts
alike, the spokesman also claimed President Musharraf was “acting in the best
interest of Pakistan and the Pakistani people.”48 Musharraf has vowed not to interfere
in the case and claims the judge’s fate is out of his hands. He also has called the
dismissal constitutional and, without offering evidence, claimed the uproar was a
political conspiracy aimed at him and his government.
45 See [http://www.iri.org/mena/pakistan/2007-04-26-Pakistan.asp].
46 [http://www.accessdemocracy.org/library/2157_pk_pre_election_statement_051707.pdf].
47 Representative is Teresita Schaffer, “Pakistan: Shrinking Control,” CSIS Commentary,
May 18, 2007, at [http://www.csis.org/media/csis/pubs/070518_schaffer_commentary.pdf].
48 See [http://www.state.gov/r/pa/prs/dpb/2007/mar/81762.htm]; [http://www.state.gov/r/pa/-
prs/dpb/2007/mar/81838.htm].

CRS-34
In refusing to be cowed by the Musharraf government and voluntarily resign his
post, the suspended Chief Justice became a popular figure in Pakistan. On May 5,
tens of thousands of supporters lined the streets as Chaudhry drove from Islamabad
to Lahore to address the High Court there (a normally 4-hour drive took more than
24 hours). One week later, Chaudhry flew to Karachi but was blocked from leaving
the city’s airport, reportedly by activists of the government-allied MQM party.
Ensuing street battles between MQM cadres and opposition activists left at least 40
people dead, most of them members of Benazir Bhutto’s People’s Party. Reports had
local police and security forces standing by without intervening while the MQM
attacked anti-Musharraf protesters, leading many observers to charge the government
with complicity in the bloody rioting. The May 12 incidents did significant further
damage to President Musharraf’s standing. At present, Musharraf shows no signs of
compromising on the judicial issue, and his government has cracked down on media
outlets, warning them against “defaming” the country’s military. On June 1, the
army’s corp commanders issued a statement reaffirming their full support for
Musharraf’s continued rule and decrying a “malicious campaign against the
institutions of the state” being undertaken by a “small minority.” Three days later,
Musharraf issued an ordinance expanding government authority to restrict press
freedom.

U.S. Policy. The United States indicates that it expects Pakistan’s scheduled
2007 general elections to be free and fair throughout the entire process. However,
numerous critics of Bush Administration policy assert that the Islamabad government
has for more than five years been given a “free pass” on the issue of representative
government in Pakistan, in part as a means of enlisting that country’s assistance in
U.S.-led counterterrorism efforts. In July 2005, the Senate Appropriations
Committee expressed concern with “the slow pace of the democratic development
of Pakistan” (S.Rept. 109-96). Pakistan’s nominally non-party August-October 2005
municipal elections saw major gains for candidates favored by the PML-Q and
notable reversals for Islamists, but were also marked by widespread accusations of
rigging. The Bush Administration made no public comment on reported
irregularities. Subsequently, the House Appropriations Committee in June 2006
(H.Rept. 109-486) expressed concern about “the lack of progress on improving
democratic governance and rule of law.” In February 2007, the Director of National
Intelligence, Mike McConnell, repeated for a Senate panel the U.S. intelligence
community’s analysis that
[D]emocracy has not been fully restored since the Army took power in 1999. ...
Musharraf continues to be criticized for remaining both the President and Chief
of Army Staff, but there are no political leaders inside the country able to
challenge his continued leadership. Musharraf’s secular opponents are in
disarray, and the main Islamic parties continue to suffer from internal divisions
and an inability to expand their support base.49
The U.S. State Department’s Country Report on Human Rights Practices 2006,
issued by the Bureau of Democracy, Human Rights, and Labor in March 2007, does
not use the word “democracy” or any of its derivatives in discussing Pakistan, but
49 See [http://armed-services.senate.gov/statemnt/2007/February/McConnell%2002-27-
07.pdf].

CRS-35
does note that “restrictions on citizens’ right to change their government” represent
a “major problem.”50 In a June letter to Secretary of State Condoleezza Rice, several
senior Members of Congress decried the “spiral of civil unrest and harshly
suppressed protest in Pakistan” and asserted that U.S. and Pakistani national interests
“are both served by a speedy restoration of full democracy to Pakistan and the end
to state-sponsored intimidation — often violent — of Pakistani citizens protesting
government actions in a legal and peaceful manner.”51 (See also CRS Report
RL32615, Pakistan’s Domestic Political Developments.)
Human Rights Problems. The State Department’s Country Report on
Human Rights Practices 2006 (issued in March 2007) again determined that the
Pakistan government’s record on human rights “remained poor.” Along with
concerns about anti-democratic practices, the report lists extrajudicial killings,
torture, and abuse by security forces; “widespread” government and police
corruption; lack of judicial independence; political violence; terrorism; and
“extremely poor” prison conditions among the major problems. It further notes an
increase in restrictions on press freedoms and in reports of “disappearances” of
political activists. Improvement was noted, however, with government efforts to
crack down on human trafficking.52 (The most recent State Department report on
trafficking in persons again said, “Pakistan does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making significant efforts
to do so.”53)
According to State, the Islamabad government is known to limit freedoms of
association, religion, and movement, and to imprison political leaders. The Human
Rights Commission of Pakistan and international human rights groups have issued
reports critical of Pakistan’s lack of political freedoms, lawlessness in many areas
(especially the western tribal agencies), and of the country’s perceived abuses of the
rights of minorities. Controversial statutory restrictions include harsh penalties for
blasphemy. In H.Rept. 109-486 (June 2006), the House Appropriations Committee
expressed concern about “what appears to be the Government of Pakistan’s
increasing lack of respect for human rights ....” In S.Rept. 109-277 (July 2006), the
Senate Appropriations Committee expressed being “gravely concerned with
violations of human rights” in Pakistan.
Gender Discrimination. Discrimination against women is widespread and
traditional constraints — cultural, legal, and spousal — keep women in a subordinate
position in society. In 2005, Pakistani gang rape victim Mukhtaran Mai — and
Islamabad’s (mis)handling of her case — became emblematic of gender
discrimination problems in Pakistan. The Hudood Ordinance was promulgated
during the rule of President Gen. Zia ul-Haq and is widely criticized for imposing
50 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78874.htm].
51 Letter to Secretary of State Rice from Sen. Joe Biden, Rep. Tom Lantos, and Rep. Ileana
Ros-Lehtinen, June 1, 2007.
52 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78874.htm]. A Pakistan Foreign Ministry
spokeswoman claimed the report “lacks objectivity and contains inaccuracies.”
53 [http://www.state.gov/g/tip/rls/tiprpt/2006/65989.htm].

CRS-36
stringent punishments and restrictions under the guise of Islamic law. Among its
provisions, the ordinance criminalizes all extramarital sex and makes it extremely
difficult for women to prove allegations of rape (those women who make such
charges without the required evidence often are jailed as adulterers). In November
2006, the Hudood laws were amended in the Women’s Protection Bill. President
Musharraf supported the changes and the ruling PML party joined with the
opposition PPP to overcome fierce resistance by Islamist parties. Musharraf called
the bill’s passage “just the beginning” and “a victory for moderates,” and said his
government would soon introduce further legislation to improve the status of women.
The step is viewed as a landmark in efforts to create more a moderate Pakistani state.
However, the February 2007 murder of a female provincial minister in Punjab by a
radical Islamist, and threats being issued against girls’ schools and female health
workers in the NWFP indicate that well-entrenched societal discrimination continues.
Religious Freedom. The State Department’s International Religious
Freedom Report 2006 again found that in practice the Islamabad government
imposes limits on the freedom of religion in Pakistan. The report noted “some steps
to improve the treatment of religious minorities,” but indicated that “serious
problems remained,” including discriminatory laws and violence against religious
minorities.54 The State Department has rejected repeated U.S. Commission on
International Religious Freedom recommendations that Pakistan be designated a
“country of particular concern.” The 2007 annual report from that Commission
claims that, “Sectarian and religiously motivated violence persists in Pakistan ... and
the government’s somewhat improved response to this problem continues to be
insufficient and not fully effective.”55
Press Freedom. Press freedom and the safety of journalists recently has
become a major concern in Pakistan, spurred especially by the June 2006 discovery
of the handcuffed body of Pakistani journalist Hayatullah Khan in a rural area of
North Waziristan. Khan, who had been missing for more than six months, was
abducted by unknown gunmen after he reported on an apparent U.S.-launched missile
attack in Pakistan’s tribal region. Khan’s family is among those who suspect the
involvement of Pakistani security forces; an official inquiry into the death was
launched. Other journalists have been detained and possibly tortured, including a
pair reportedly held incommunicado without charges for three months after they shot
footage of the Jacobabad airbase that was used by U.S. forces. Pakistani journalists
have taken to the streets to protest perceived abuses and they complain that the
government seeks to intimidate those who would report the facts of Pakistani
counterterrorism operations. In May 2007, the New York-based Committee to
Protect Journalists placed Pakistan sixth in a list of the ten countries where press
freedom had most deteriorated since 2002.56 In early June, in apparent reaction to
media coverage of rallies in support of Pakistan’s suspended Chief Justice, the
Musharraf government issued an ordinance expanding its authority to restrict press
freedom.
54 [http://www.state.gov/g/drl/rls/irf/2006/71443.htm].
55 [http://www.uscirf.gov/countries/publications/currentreport/index.html].
56 [http://cpj.org/backsliders/index.html].

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“Disappeared” Persons. According to the U.S. State Department, there was
an increase of politically motivated disappearances in Pakistan in 2006, with police
and security forces holding prisoners incommunicado and refusing to provide
information on their whereabouts, particularly in terrorism and national security
cases. In November 2006, Pakistan’s Supreme Court ordered the government to
disclose the whereabouts of 41 suspected security detainees who have “disappeared.”
Human rights groups claim to have recorded more than 400 cases of such secret
detentions since 2002. London-based Amnesty International has criticized Islamabad
for human rights abuses related to its cooperation with the U.S.-led “war on terror,”
including the arbitrary detention, enforced disappearance, and torture of hundreds of
people. In 2005, New York-based Human Rights Watch released a list of 26 “ghost
detainees” thought to be in U.S. custody, at least 16 of whom were arrested in
Pakistan. The families of missing persons have increased their efforts to pressure the
government on this issue.
Economic Issues
Overview. Pakistan is a poor country, but the national economy has gathered
significant positive momentum in recent years, helped in large part by the
government’s pro-growth policies and by post-2001 infusions of foreign aid.
However, presently high rates of domestic inflation have many analysts concerned
about the country’s macroeconomic stability. According to the World Bank, nominal
GDP per capita in 2006 was only $771, but poverty rates have dropped from 34% to
24% over the past five years. Severe human losses and property damage from an
October 2005 earthquake in northern Pakistan have had limited follow-on economic
impact, given a large influx of foreign aid and the stimulus provided by
reconstruction efforts. The long-term economic outlook for Pakistan is much
improved since 2001, even as it remains clouded in a country still dependent on
foreign lending and the importation of basic commodities. Substantial fiscal deficits
and dependency on external aid counterbalance a major overhaul of the tax collection
system and what have been major gains in the Karachi Stock Exchange, which nearly
doubled in value as the world’s best performer in 2002 and was up 56% in 2005.
Along with absolute development gains in recent years, Pakistan’s relative standing
has also improved: The U.N. Development Program ranked Pakistan 134th out of 177
countries (between Laos and Bhutan) on its 2006 human development index, up from
144th in 2003.57
Output from both the industrial and service sectors has grown substantially since
2002, but the agricultural sector has lagged (in part due to droughts), slowing overall
growth. Agricultural labor accounts for nearly half of the country’s work force, but
only about one-fifth of national income and 2% of tax revenue. Pakistan’s real GDP
grew by 6.6% in the fiscal year ending June 2006, driven by a booming
manufacturing sector and greater than expected agricultural expansion. However,
overall growth was down from 8.4% the previous year and fell well short of
Islamabad’s target of 7%. Expanding textile production and the government’s pro-
growth measures have most analysts foreseeing solid expansion ahead, with
predictions at or above 6% for the next two years.
57 [http://hdr.undp.org/hdr2006/pdfs/report/HDR06-complete.pdf].

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Pakistan stabilized its external debt at about $33 billion by mid-2003, but this
rose to nearly $39 billion in 2005. Still, such debt is less than one-third of GDP
today, down from more than one-half in 2000. The country’s total liquid reserves
reached $13.7 billion by May 2007, an all-time high and a nearly five-fold increase
since 1999. Foreign remittances have exceeded $4 billion annually since 2003, up
from slightly more than $1 billion in 2001. High oil prices have driven inflationary
pressures, resulting in a year-on-year consumer rate of 6.9% in April 2007. While
inflation is expected to ease later in 2007, many analysts call it the single most
important obstacle to future growth. Defense spending and interest on public debt
together consume two-thirds 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
two-thirds of all exports (and up to 90% of exports to the United States). 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. Rewards for 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 2005, the World Bank’s
country director for Pakistan said there are plenty of risks for pessimists to worry
about with regard to Pakistani growth and poverty reduction, but claimed “today the
optimists have the upper-hand.” According to the Asian Development Bank’s
Outlook 2006:
Over the medium term, the outlook is favorable for growth in the range of 6-8%,
though this requires the [Pakistani] Government to maintain its robust
performance in economic management, greater investment to ease infrastructure
bottlenecks, and continued security and political stability.58
In December 2006, the World Bank’s country director said Pakistan’s economy “has
built up a strong momentum for growth,” and he lauded Islamabad for putting in
place “a sound framework for fiscal management” and restoring investor confidence.
Trade and Investment. Pakistan’s primary exports are cotton, textiles and
apparel, rice, and leather products. The United States is by far Pakistan’s leading
export market, accounting for nearly one-quarter of the total. During 2006, total U.S.
imports from Pakistan were worth nearly $3.7 billion (up 13% over 2005). Almost
90% of this value came from purchases of textiles and apparel. U.S. exports to
Pakistan during 2006 were worth about $2 billion (up 60% over 2005). Civilian
aircraft and associated equipment accounted for about 42% of this value; electricity
generating machinery and textile fibers were other notable U.S. exports (2005 figures
58 [http://www.adb.org/Documents/Books/ADO/2006/default.asp].

CRS-39
had been depressed as a result of completed delivery of aircraft in 2004).59
According to the 2006 National Trade Estimate of the U.S. Trade Representative
(USTR), Pakistan has made substantial progress in reducing import tariff schedules,
though a number of trade barriers remain. Progress also has come in the area of
intellectual property rights protection: estimated trade losses due to copyright piracy
in Pakistan were notably lower in 2005 and 2006. Book piracy accounted for about
half of the 2006 losses, however, and remains a serious concern.60 Pakistan also has
been a world leader in the pirating of music CDs and has appeared on the USTR’s
“Special 301” Watch List for 17 consecutive years (in 2004, continuing violations
caused the USTR to move Pakistan to the Priority Watch List; improved intellectual
property rights protection saw it lowered back to the Watch List in 2006).61 From the
USTR annual report:
The government of Pakistan continued to take noticeable steps during 2006 to
improve copyright enforcement, especially with respect to optical disc piracy.
Nevertheless, Pakistan does not provide adequate protection of all intellectual
property. Book piracy, weak trademark enforcement, lack of data protection for
proprietary pharmaceutical and agricultural chemical test data, and problems
with Pakistan’s pharmaceutical patent protection remain serious barriers to trade
and investment.62
In April 2007, the USTR again named Pakistan to its Special 301 watch list, lauding
Islamabad for progress on intellectual property rights enforcement, but also
expressing ongoing concerns about Pakistan’s lack of effective protections in the
pharmaceutical sector.
According to Pakistan’s Ministry of Finance, total foreign direct investment in
Pakistan exceeded $3 billion for the year ending June 2006 — an unprecedented
amount that more than doubled over the previous year — but investors remain wary
of the country’s uncertain security circumstances. About one-third of the value came
from U.S.-based investors. Islamabad is eager to finalize a pending Bilateral
Investment Treaty and reach a Free Trade Agreement with the United States,
believing that its vital textile sector will be bolstered by duty-free access to the U.S.
market. The establishment of Reconstruction Opportunity Zones that could facilitate
development in Pakistan’s poor tribal regions, an initiative of President Bush during
his March 2006 visit to Pakistan, may require congressional action in 2007. The
Heritage Foundation’s 2007 Index of Economic Freedom — which may
overemphasize the value of absolute growth and downplay broader quality-of-life
59 [http://www.census.gov/foreign-trade/statistics/country/index.html].
60 The International Intellectual Property Alliance, a coalition of U.S. copyright-based
industries, estimated U.S. losses of $100 million due to copyright piracy in Pakistan in 2006
([http://www.iipa.com/rbc/2007/2007SPEC301PAKISTAN.pdf]).
61 [http://www.ustr.gov/assets/Document_Library/Reports_Publications/2006/2006_NTE
_ R e p o r t / a s s e t _ u p l o a d _ f i l e 7 9 7 _ 9 1 9 8 . p d f ] a n d [ h t t p : / / w w w . u s t r . g o v / -
assets/Document_Library/Reports_Publications/2006/2006_Special_301_Review/-
asset_upload_file190_9339.pdf].
62 See [http://www.ustr.gov/Document_Library/Reports_Publications/2007/2007_Trade_
Policy_Agenda/Section_Index.html]

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measurements — again rated Pakistan’s economy as being “mostly unfree” and
ranked it 89th out of 157 countries. The index identified restrictive trade policies, a
heavy fiscal burden, weak property ownership protections, and limited financial
freedoms.63 Corruption is another serious problem: in 2007, Berlin-based
Transparency International placed Pakistan 142nd out of 163 countries in its annual
ranking of world corruption levels.64
U.S. Aid and Congressional Action
U.S. Assistance. A total of about $15 billion in direct U.S. aid went to
Pakistan from 1947 through 2006, including more than $4 billion in military
assistance. In June 2003, President Bush hosted President Musharraf at Camp David,
Maryland, where he vowed to work with Congress on establishing a five-year, $3
billion aid package for Pakistan. Annual installments of $600 million each, split
evenly between military and economic aid, began in FY2005.65 When additional
funds for development assistance, law enforcement, earthquake relief, and other
programs are included, the non-food aid allocation for FY2006 was $759 million (see
Table 1). The Bush Administration’s FY2007 request called for another $739
million in aid to Pakistan, however, the House Appropriations Committee (H.Rept.
109-486) recommended reducing that amount by $150 million, ostensibly for
domestic budgetary reasons unrelated to Pakistan-U.S. relations. The Senate
Appropriations Committee (S.Rept. 109-277) called for no such decreases, but did
recommend shifting about $94 million in requested economic support to
development, health, education, and governance programs. Thus, while the total
FY2007 allocation for Pakistan is yet to be determined, it may fall somewhere
between $585 million and $740 million (see Table 1, note a).
Congress also has appropriated billions of dollars to reimburse Pakistan for its
support of U.S.-led counterterrorism operations. At the close of 2006, a total of
about $6.9 billion had been appropriated for FY2002-FY2007 Defense Department
spending for coalition support payments to “Pakistan, Jordan, and other key
cooperating nations.” Pentagon documents indicate that disbursements to Islamabad
— at $4.75 billion or an average of more than $80 million per month — account for
the great majority of these funds. The amount is equal to more than one-quarter of
Pakistan’s total military expenditures. The Defense Department Appropriations Act,
2007 (P.L. 109-289) allows that up to $900 million in Pentagon funds be used for
FY2007 reimbursements. The Bush Administration requested another $1 billion in
emergency supplemental coalition support funds for FY2007, however, in marking
up the U.S. Troop Readiness, Veterans’ Health, and Iraq Accountability Act, 2007
(H.R. 1591), the House Appropriations Committee called for only $300 million in
such funds, and the version subsequently passed by the full Senate further decreased
that amount to $200 million. Congressional conferees then reconciled the bill,
preserving the relevant Senate language (H.Rept. 110-107). This bill was vetoed by
63 See [http://www.heritage.org/research/features/index/country.cfm?id=Pakistan].
64 See [http://www.transparency.org].
65 The Foreign Operations FY2005 Appropriations bill (P.L. 108-447) established a new
base program of $300 million for military assistance for Pakistan.

CRS-41
the President, but a new supplemental appropriations bill, which became P.L. 110-28
in May 2007, preserved the $200 million additional CSF appropriations. The
Administration also has requested another $1.7 billion in coalition support for
FY2008.
Proliferation-Related Legislation. Through a series of legislative
measures, Congress incrementally lifted sanctions on Pakistan resulting from its
nuclear weapons proliferation activities.66 After the September 2001 terrorist attacks
on the United States, policymakers searched for new means of providing assistance
to Pakistan. President Bush’s issuance of a final determination that month removed
remaining sanctions on Pakistan (and India) resulting from the 1998 nuclear tests,
finding that restrictions were not in U.S. national security interests. Some Members
of the 108th Congress urged reinstatement of proliferation-related sanctions in
response to evidence of Pakistani assistance to third-party nuclear weapons programs.
However, the Nuclear Black-Market Elimination Act (H.R. 4965) died in committee.
Legislation in the 109th Congress included the Pakistan Proliferation Accountability
Act of 2005 (H.R. 1553), which sought to prohibit the provision of military
equipment to Pakistan unless the President can certify that Pakistan has verifiably
halted all proliferation activities and is fully sharing with the United States all
information relevant to the A.Q. Khan proliferation network. This bill also did not
emerge from committee.
In the 110th Congress, the Implementing the 9/11 Commission
Recommendations Act of 2007 (H.R. 1), passed by the House in January 2007,
contains provisions that would suspend all arms sales licenses and deliveries to any
“nuclear proliferation host country” unless the President certifies that such a country
is, inter alia, fully investigating and taking actions to permanently halt illicit nuclear
proliferation activities.
Coup-Related Legislation. Pakistan’s October 1999 military coup triggered
U.S. aid restrictions under Section 508 of the annual Foreign Assistance
appropriations act. Post-September 2001 circumstances saw Congress take action
on such restrictions. P.L. 107-57 (October 2001) waived coup-related sanctions on
Pakistan through FY2002 and granted presidential authority to waive them through
FY2003. A November 2003 emergency supplemental appropriations act (P.L. 108-
106) extended the President’s waiver authority through FY2004. The foreign
operations FY2006 appropriations bill (P.L. 109-102) extended it through FY2006.
The House-passed Implementing the 9/11 Commission Recommendations Act of
2007 (H.R. 1) would provide a two-year extension through FY2008. President Bush
has exercised this waiver authority annually.
66 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 to waive nuclear-test-related sanctions applied against Pakistan and
India after October 1999, when President Clinton waived economic sanctions on India
(Pakistan remained under sanctions as a result of the October 1999 coup). (See CRS Report
RS20995, India and Pakistan: U.S. Economic Sanctions.)

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Other Legislation. In the 108th Congress, conference managers making
foreign operations appropriations directed the Secretary of State to report to Congress
on Pakistan’s education reform strategy and the U.S. strategy to provide relevant
assistance (H.Rept. 108-792; see CRS Report RS22009, Education Reform in
Pakistan
). Also in the 108th Congress, the House-passed Foreign Relations
Authorization Act, FY2004-2005 (H.R. 1950) would have required the President to
report to Congress on Pakistani actions related to terrorism and WMD proliferation.
The Senate did not take action on this bill. The House-passed version of the
Intelligence Authorization Act, FY2005 contained similar reporting requirements;
this section was removed in the Senate. In the 109th Congress, the Targeting
Terrorists More Effectively Act of 2005 (S. 12) and the Real Security Act of 2006 (S.
3875) contained Pakistan-specific language; both died in committee.
In the 110th Congress, the National Defense Authorization Act for FY2008
(H.R. 1585), passed by the full House in May 2007, includes a provision to expand
programs to build the capacity of Pakistan’s counterterrorism security forces. A
Senate version (S. 1548), introduced in early June, contains no such provision, but
would halt coalition support reimbursements to Pakistan unless the President certifies
that Islamabad “is making substantial and sustained efforts to eliminate safe havens
for the Taliban, Al Qaeda, and other violent extremists in areas under its sovereign
control ....” The Senate bill also would require the President to report to Congress
a description of a long-term U.S. strategy for engaging with Islamabad on the
problems of cross-border infiltration of militants into Afghanistan and safe havens
enjoyed by such militants in Pakistan.
S.Res. 99, expressing the sense of the Senate that U.S. military assistance to
Pakistan should be guided by demonstrable progress by the government of Pakistan
in achieving certain objectives related to counterterrorism and democratic reforms,
was introduced in the Senate in March 2007, but has not moved out of committee.
In early June, the Afghanistan Freedom and Security Support Act of 2007 (H.R.
2446
) was passed by the full House. The bill contains provisions that would require
the President to report to Congress on implementation of policies to encourage
greater Pakistan-Arab country reconstruction assistance to Afghanistan and on
Pakistan-Afghanistan cooperation; authorize the President to appoint a new special
envoy to promote closer Pakistan-Afghanistan cooperation; and require the President
to report to Congress on actions taken by Pakistan to permit or impede transit of
Indian reconstruction materials to Afghanistan across Pakistani territory.
9/11 Commission Recommendations. The 9/11 Commission Report,
released in July 2004, identified the government of President Musharraf as the best
hope for stability in Pakistan and Afghanistan, and it recommended that the United
States make a long-term commitment to provide comprehensive support for
Islamabad so long as Pakistan itself is committed to combating extremism and to a
policy of “enlightened moderation.” In the Intelligence Reform and Terrorism
Prevention Act of 2004 (P.L. 108-458), Congress broadly endorsed this
recommendation by calling for U.S. aid to Pakistan to be sustained at a minimum of
FY2005 levels and requiring the President to report to Congress a description of
long-term U.S. strategy to engage with and support Pakistan. A November 2005
follow-on report by Commissioners gave a “C” grade to U.S. efforts to support
Pakistan’s anti-extremism policies and warned that the country “remains a sanctuary

CRS-43
and training ground for terrorists.” In the 109th Congress, H.R. 5017 and S. 3456
were introduced to insure the implementation of the recommendations of the 9/11
Commission. The bills contained Pakistan-specific language, but neither emerged
from committee.
A new Democratic majority took up the issue again in 2007. The premiere
House resolution of the 110th Congress (H.R. 1, the Implementing the 9/11
Commission Recommendations Act of 2007) was passed in January containing
discussion of U.S. policy toward Pakistan, including a requirement that the President
report to Congress a long-term U.S. strategy for engaging Pakistan and a statement
of policy linking increases in U.S. foreign assistance to Pakistan to the Islamabad
government’s demonstrated commitment to democratization . The bill also includes
a provision that would end U.S. military assistance and arms sales licensing to
Pakistan in FY2008 unless the President certifies that the Islamabad government is
“making all possible efforts” to end Taliban activities on Pakistani soil. The Bush
Administration opposes this provision on the grounds that it would be
counterproductive to the goal of closer U.S.-Pakistan relations, and it instead urges
that the certification be replaced with a reporting requirement. A Senate version of
the House bill (S. 4) was passed in March, but contains no Pakistan-specific
language.

CRS-44
Table 1. Overt U.S. Assistance to Pakistan, FY2001-FY2008
(in millions of dollars)
FY
FY
FY
FY
FY
FY
FY
Total
FY
2008
2001
2002
2003
2004
2005
2006
FY2002-FY2006
2007a
(req.)
a
Economic Support Funds

624.5
188.0b
200.0b
297.6
296.6
1,606.7
382.9
a
Other Development Aidc

40.0
50.1
75.0
50.0
119.8
334.9
57.8
Total Economic Aid

664.5
238.1
275.0
347.6
416.4
1,941.6
a
440.7
a
Foreign Military Financing

75.0
224.5
74.6
298.8
297.0
969.9
300.0
a
Other Security-Related Aidd
3.5
321.5e
32.0
37.8
42.0
45.6
478.9
44.0
Total Security-Related Aid
3.5
396.5
256.5
112.4
340.8
342.6
1,448.8
a
344.0
Coalition Support Funds

1,169.1
1,246.6
705.3
963.8
844.9f
4,929.7
g
g
Total Non-Food Aid Plus
3.5
2,230.1
1,741.2
1,092.7
1,652.2
1,603.9
8,320.1
a
785.0
Coalition Support Funds
Food Aidh
87.5
90.8
18.7
24.0
18.0
17.7
256.7


Grand Total
91.0
2,320.9
1,759.9
1,116.7
1,670.2
1,621.6
8,576.8
a
785.0
Sources: U.S. Departments of State, Defense, and Agriculture; U.S. Agency for International Development.
Notes:
a. FY2007 appropriations come under the Continuing Appropriations Resolution (P.L. 109-289 as amended). Estimated country allocations are expected later in 2007. In passing
the Foreign Operations Appropriations Act, 2007, the House Appropriations Committee (H.Rept. 109-486) recommended reducing ESF by $50 million and FMF by $100 million
from the previous year’s levels, ostensibly for domestic budgetary reasons unrelated to Pakistan-U.S. relations. The Senate Appropriations Committee (S.Rept. 109-277) called
for no decreases, but recommended shifting about $94 million in ESF to CSF, DA, and democracy and governance programs.
b. Congress authorized Pakistan to use the FY2003 ESF allocation to cancel $988 million and the FY2004 allocation to cancel $495 million in concessional debt to the U.S. government.
c. Includes Child Survival and Health; Development Assistance; Emergency Refugee and Migration Assistance; and International Disaster and Famine Assistance.
d. Includes International Military Education and Training; International Narcotics Control and Law Enforcement; Nonproliferation, Anti-Terrorism, Demining and Related; and
Peacekeeping Operations.

CRS-45
e. Includes $73 million for border security projects that continued in FY2003.
f. Reflects reimbursements for Pakistani military operations through September 2006.
g. The Bush Administration requested $1 billion in further CSF funds for “Pakistan, Jordan, and other key cooperating nations” in FY2007; Congress appropriated only $200 million
for such purposes (P.L. 110-28). The Administration has requested $1.7 billion in further CSF funds in FY2008.
h. P.L.480 Title I (loans), P.L.480 Title II (grants), and Section 416(b) of the Agricultural Act of 1949, as amended (surplus agricultural commodity donations). Food aid totals do
not include freight costs.


CRS-46
Figure 1. Map of Pakistan