Daily Times

[Recap: The US has held Pakistan and ISI responsible for its humiliating exit from Afghanistan. Through a resolution, tabled in the Senate in September, it intends to punish the Taliban for liberating their motherland; Pakistan for supporting them; and ISI for outsmarting the Five Eyes, assisted by Mossad, NDS, and RAW in the Afghanistan imbroglio. Nonsensical indeed, but not unexpected! The history of Pak-US relations is replete with such overbearing instances.]

As discussed earlier, nuclear tests caused a serious setback to Pak-US relations, which had seen a renewed US interest during the second Clinton Administration. Within days, President Clinton slapped the Glenn Amendment, which subjected Pakistan to a broader range of economic and military sanctions. But, since most assistance had already been terminated, the Glenn sanctions had limited additional consequences for bilateral assistance to Pakistan.

According to an official US report, “the seemingly draconian sanctions of the Glenn Amendment, triggered by the Indian and Pakistani nuclear tests of May 1998, were, in practice, implemented with considerable flexibility, greatly mitigating their potential harshness.”

Moreover, as discussed in Part III, Brownback Amendments I and II, enacted almost immediately after the imposition of the Glenn Amendment sanctions on India and Pakistan, permitted the president to waive most of the Glenn sanctions. In November 1998 and then in October 1999, President Clinton used this authority to waive a number of the most onerous sanctions, imposed against India, as well as certain sanctions that had been imposed on Pakistan.

The October 1999 overthrow of the civilian government in Islamabad invited an additional layer of sanctions, under Section 508 of the Foreign Appropriations Act.

According to the initial US estimates, the 1998 sanctions were expected to cost Pakistan approximately $3 billion per annum. Pakistan’s Finance Minister, too, quoted the same figure. However, putting up a brave face, he maintained that the country could sustain the loss. He admitted that the sanctions would affect the development prospects and future foreign investment in Pakistan. But, he claimed, the common man on the street would not notice the effects as much. Playing to the domestic gallery, he said: “We have enough wheat to feed (the common man). We have enough clothing for him to wear.”

But the economy is not about wheat and clothing only. Pakistan’s foreign exchange reserves at that stage were just over one billion dollars, which were hardly enough to cater for two weeks’ imports. Besides, Pakistan had major international debt repayments coming up shortly. Analysts had predicted that Pakistan would have to resort to drastic measures to survive sanctions. To meet the challenge, the government, inter alia, enacted a new law that suspended legal rights, dealing with foreign exchange, and froze all Foreign Currency accounts in Pakistani banks. This, in turn, led to a massive devaluation of the Pakistani Rupee, adding proportionately to Pakistan’s debt burden.

Unlike India, Pakistan was borrowing from the IMF. In May 1998, nearly one billion dollars remained in a line of credit, approved several months ago. The sanctions raised a big question mark on the disbursement of this amount. Under US law, the Administration was obligated to oppose new lending to Pakistan from international organisations. (While the US does not have a veto on IMF lending programmes, it is the biggest shareholder in the organisation, controlling 18 per cent of the votes.) As with the World Bank, the IMF lending to Pakistan was also unlikely to go forward without US support.

Pakistan, like India, was a major borrower from the World Bank, which indefinitely postponed $800 million of new lending to India. Pakistan’s request for about a $750 million loan could not, obviously, be treated differently. Japan, the largest source of bilateral aid to Pakistan, with annual lending worth nearly half a billion US dollars, suspended its aid programme. The situation was further aggravated by the subsequent economic sanctions imposed by G-7.

International default was narrowly averted by the partial waiver of sanctions and the subsequent reinstatement of Pakistan’s IMF Enhanced Structural Adjustment Facility / Electronic Frontier Foundation (ESAF/EFF) in early 1999, followed by Paris Club and London Club re-scheduling. The government had difficulty meeting the conditionality of the IMF program, which was suspended in July 1999. Pakistan announced a program of reforms and entered into discussion with the IMF regarding a Poverty Reduction and Growth Facility, to begin in July 2000.

Once again, Pakistan was hit harder by the sanctions than India, largely because its dependence on the US was greater than that of India’s and also because it imported many elements of its nuclear weapon and missile infrastructures, thereby triggering sanctions aimed at curbing such transfers. India, whose missile and nuclear programs were treated as essentially indigenous (although they had also benefited from foreign assistance), did not run afoul of these provisions of the US law.

Brownback-II (June 1999) did provide Pakistan with some relief from the Symington and Pressler amendment sanctions that had prohibited all military and economic assistance to Pakistan since 1990. But, as ill-luck would have it, that relief proved to be short-lived. The October 1999 overthrow of the civilian government in Islamabad invited an additional layer of sanctions, under Section 508 of the Foreign Appropriations Act, which included restrictions on foreign military financing and economic assistance. This restricted the US assistance to Pakistan mainly to refugee and counter-narcotics assistance.

In November 2000, following a determination by the US that China had transferred M-11 missiles to Pakistan in the latter half of the 1990s, the Clinton Administration imposed sanctions on the Pakistani Ministry of Defence, the Pakistani Space and Upper Atmosphere Research Commission, and their sub-units, under the Arms Export Control Act and Export Administration Act, banning exports to (and imports from) entities receiving Missile Technology Control Regime Category-I missiles (i.e. missiles able to carry a 500-Kg payload to 300 kilometres or more).

Pakistan had to wait for the turn of the century before the US could relent. In April 2001, Reps. Ed Royce (R-CA) and Jim McDermott (D-WA) introduced a bill in the House of Representatives to remove all sanctions on India and Pakistan. But 9/11 and its fallout overtook the legislative process.

(To be Continued)

The writer is a former diplomat, based in Canberra, and can be reached at khizar_niazi@hotmail.com.