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Pakistan-U.S. relations.

SUMMARY

Key areas of U.S. concern regarding Pakistan include regional terrorism; weapons proliferation; the ongoing Kashmir dispute 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 pivotal ally in U.S.-led counterterrorism efforts in Southwest Asia. Top U.S. officials regularly praise Islamabad for its ongoing cooperation, although doubts exist about Islamabad's commitment to some core U.S. interests in the region. Pakistan is identified as a base for terrorist groups and their supporters operating in Kashmir, India, and Afghanistan. Pakistan continues to face serious problems, including religious sectarianism and domestic terrorism.

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; the tests triggered restrictions on U.S. aid to both countries (remaining nuclear-related sanctions on Pakistan were waived in October 2001). Pakistan and India have fought three wars since 1947. Recently, the United States has been troubled by evidence of "onward" proliferation of Pakistani nuclear technology to third parties, including North Korea, Iran, and Libya. Such evidence became stark in early 2004.

Separatist violence in the Kashmir region has continued unabated since 1989. India blames Pakistan for the ongoing infiltration of Islamic militants into Indian Kashmir, a charge Islamabad denies. The United States has received pledges from Islamabad that all "cross-border terrorism" would cease and that any terrorist facilities in Pakistani-controlled areas would be closed. The United States strongly encourages maintenance of a ceasefire along the Kashmiri Line of Control and dialogue between Islamabad and New Delhi.

A stable, democratic, economically thriving Pakistan is vital to U.S. interests in Asia. The country's macroeconomic indicators have turned positive since 2001, but widespread poverty persists, and democracy has fared poorly in Pakistan; the country has endured military rule for half of its existence. In 1999, the elected government of Prime Minister Nawaz Sharif was ousted in an extra-constitutional coup led by Army Chief Gen. Pervez Musharraf, who has since assumed the title of President. National elections in October 2002 resulted in no majority party emerging but were marked by significant gains for a coalition of Islamic parties. A National Assembly and Prime Minister Jamali were seated in November 2002, but the civilian government remained stalled on issues related to the legality of constitutional changes made by Musharraf (and ratified in December 2003) and to his continued status as Army Chief. The United States strongly urges the Musharraf government to restore the country to civilian democratic rule. Congress has granted the President authority to waive coup-related sanctions on Pakistan through FY2004.

Pakistan received nearly $2 billion in U.S. assistance for FY2002-FY2004. In June 2003, President Bush pledged to work with Congress on establishing a five-year, $3 billion aid package for Pakistan to begin in FY2005. See also CRS Report RS21584, Pakistan: Chronology of Recent Events, CRS Report RS21299, Pakistan's Domestic Political Developments, and CRS Report RL32259, Terrorism in South Asia.

MOST RECENT DEVELOPMENTS

During March, the United States, Pakistan, and Afghanistan intensified their coordinated military operations in the mountainous Afghan-Pakistani border region, and Pakistani troops fought a pitched 12-day battle with Islamic militants in a traditionally autonomous tribal area. In April, however, Islamabad took a new tack of seeking "reconciliation" with Pashtun militants and the foreign radicals they are accused of harboring. It is unclear whether such a strategy can succeed, but the top U.S. military commander in Afghanistan has expressed doubt. Reports indicate that the United States is providing significant surveillance and intelligence assistance to the Pakistani military, along with more than $70 million per month in logistics reimbursement payments.

During a March visit to Islamabad, Secretary of State Powell said that the United States will designate Pakistan as a "major non-NATO ally" under Section 517 of the Foreign Assistance Act of 1961, spurring some Pakistanis to anticipate new sales of major U.S. weapons platforms. Six days later, H.R. 4021 was introduced in the House. The bill seeks to amend the Foreign Assistance Act to require that only countries that have a democratic form of government and that support U.S. nonproliferation objectives may be designated as major non-NATO allies.

In April, Pakistan's Parliament established a National Security Council that has been harshly criticized by opposition leaders as institutionalizing a permanent governance role for the Pakistani military, and President Musharraf said that he may not resign his military commission by the end of 2004 as previously indicated. Also, opposition political figure and Alliance for the Restoration of Democracy leader Javed Hashmi was sentenced to 23 years in prison for sedition, mutiny, and forgery. In May, Shabaz Sharif, a former Punjab Chief Minister and brother of deposed PM Nawaz Sharif, attempted to return to Pakistan from exile, but was "dragged away by commandos" and deported to Saudi Arabia after less than two hours in Lahore. Police arrested as many as 2,200 supporters from Sharif's PML-N party who had gathered to welcome him.

On May 7, a suspected suicide bombing at a Karachi mosque killed 14 Shia worshipers and injured at least 200 others. Sunni militants were suspected of being behind the attack. On May 3, a car bomb exploded in the port city of Gwadar, killing three Chinese engineers.

More information is in CRS Report RS21584, Pakistan: Chronology of Recent Events.

BACKGROUND AND ANALYSIS

Historical Background

The long and checkered Pakistan-U.S. relationship has its roots in the Cold War and South Asia regional politics of the 1950s. U.S. concerns about Soviet expansionism and Pakistan's desire for security assistance against a perceived threat from India prompted the two countries to negotiate a mutual defense assistance agreement in 1954. By the end of 1955, Pakistan had further aligned itself with the West by joining two regional defense pacts, the South East Asia Treaty Organization and the Central Treaty Organization. As a result of these alliances, and a 1959 U.S.-Pakistan cooperation agreement, Islamabad received about $508 million in U.S. military assistance from 1953 to 1961.

Differing expectations of the security relationship have long bedeviled bilateral ties. During and immediately after the Indo-Pakistani wars of 1965 and 1971, the United States suspended military assistance to both sides, resulting in a cooling of the Pakistan-U.S. relationship and a perception among some 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 test of a nuclear device by seeking its own nuclear weapons capability. Limited U.S. military aid was resumed in 1975, but was suspended again in 1979 by the Carter Administration in response to Pakistan's covert construction of a uranium enrichment facility. Following the Soviet invasion of Afghanistan in December 1979, Pakistan was again viewed as a frontline state in the effort to block Soviet expansionism. In September 1981, the Reagan Administration negotiated a five-year, $3.2 billion economic and military aid package with Islamabad. Pakistan became a key transit country for arms supplies to the Afghan resistance, as well as a camp for some three million Afghan refugees, many of whom have yet to return home.

Despite the renewal of U.S. aid and close security ties, many in Congress remained concerned about Pakistan's nuclear weapons program. Concern was based in part on evidence of U.S. export control violations that suggested a crash Pakistani program to acquire a nuclear capability. In 1985, Section 620E(e) (the Pressler amendment) was added to the Foreign Assistance Act, requiring the President to certify to Congress that Pakistan does not possess a nuclear explosive device during the fiscal year for which aid is to be provided. This amendment represented a compromise between those in Congress who thought that aid to Pakistan should be cut off because of evidence that it was continuing to develop its nuclear option and those who favored continued support for Pakistan's role in opposing Soviet occupation of Afghanistan.

With the Soviet withdrawal from Afghanistan beginning in May 1988, Pakistan's nuclear activities again came under closer U.S. scrutiny and, in October 1990, President Bush suspended aid to Pakistan. Under the provisions of the Pressler amendment, most economic and all military aid to Pakistan was stopped and deliveries of major military equipment suspended. Narcotics assistance of $3-5 million annually was exempted. In 1992, Congress partially relaxed the scope of the aid cutoff to allow for P.L. 480 food assistance and continuing support for nongovernmental organizations. One of the most serious results of the aid cutoff for Pakistan was the nondelivery of some 71 F-16 fighter aircraft ordered by Pakistan in 1989. In December 1998, the United States agreed to pay Pakistan $324.6 million from the U.S. Treasury's Judgment Fund, a fund used to settle legal disputes that involve the U.S. government, as well as provide Pakistan with $140 million in goods.

Pakistan-India Rivalry

Three full-scale wars--in 1947-48, 1965, and 1971--and a constant state of military preparedness on both sides of their mutual border have marked the half-century of bitter rivalry between India and Pakistan. The acrimonious nature of the partition of British India into two successor states in 1947 and the continuing dispute over Kashmir have been major sources of tension. Both Pakistan and India have built large defense establishments at the cost of economic and social development. The Kashmir problem is rooted in claims by both countries to the former princely state, divided since 1948 by a military line of control into the Indian state of Jammu and Kashmir and Pakistan-held Azad (Free) Kashmir. India blames Pakistan for supporting a violent separatist rebellion in the Muslim-dominated Kashmir Valley that has taken between 40,000 and 90,000 lives since 1989. Pakistan admits only to lending moral and political support to the rebellion.

The China Factor

India and China fought a brief border war in 1962, and an occasionally tense border dispute remains unresolved. A strategic rivalry also exists between these two large nations. Pakistan and China, on the other hand, have enjoyed a generally close and mutually beneficial relationship over recent decades. Pakistan served as a link between Beijing and Washington in 1971, as well as a bridge to the Muslim world for China during the 1980s. China's continuing role as a major arms supplier for Pakistan began in the 1960s, and included helping to build a number of arms factories in Pakistan, as well as supplying complete weapons systems. After the 1990 imposition of U.S. sanctions on Pakistan, the Islamabad-Beijing arms relationship was further strengthened (see CRS Report RL31555, China and Proliferation of Weapons of Mass Destruction and Missiles). Although relations between India and China warmed significantly in 2003, India's External Affairs Minister stated in November that the Islamabad-Beijing nuclear and missile proliferation "nexus" continued to cause serious concerns in New Delhi.

Pakistan's Political Setting

Military regimes have ruled Pakistan for more than half of its 57 years of existence, interspersed with periods of generally weak civilian governance. After 1988, Pakistan had democratically elected governments, and the army appeared to have moved from its traditional role of "kingmaker" to one of power broker or referee. Benazir Bhutto (leader of the Pakistan People's Party) and Nawaz Sharif (leader of the Pakistan Muslim League) each served twice as prime minister between 1988 and 1999. President Farooq Leghari dismissed the Bhutto government for corruption and nepotism in 1996, and Nawaz Sharif won a landslide victory in February 1997 parliamentary elections, which were judged generally free and fair by international observers. Sharif moved quickly to consolidate his power by curtailing the powers of the President and the judiciary. In April 1997, the Parliament passed the 13th Amendment to the constitution, removing the President's 8th Amendment powers to dismiss the government and to appoint armed forces chiefs and provincial governors. After replacing the Chief Justice of the Supreme Court and seeing the resignation of President Leghari, Sharif emerged as one of Pakistan's strongest elected leaders since independence. Critics accused him of further consolidating his power by intimidating the opposition and the press. In April 1999, a two-judge Bench of the Lahore High Court convicted former PM Bhutto and her husband of corruption and sentenced them each to five years in prison, fined them $8.6 million, and disqualified them from holding public office. Bhutto was out of the country at the time. Six months later, in response to Sharif's attempt to remove him, Army Chief Gen. Pervez Musharraf overthrew the government, dismissed the National Assembly, installed a National Security Council, and appointed himself "Chief Executive." He declared a state of emergency, suspended the constitution, and, by special decree, ensured that his actions could not be challenged by any court, thus essentially imposing martial law. In April 2002, Musharraf assumed the title of President. National elections were held in October of that year, as ordered by the Supreme Court (see section on "Democratization" below).

Pakistan-U.S. Relations and Key Country Issues

U.S. policy interests in Pakistan encompass a wide range of issues, including counterterrorism, nuclear weapons and missile proliferation, South Asian regional stability, democratization and human rights, economic reform and market opening, and efforts to counter narcotics trafficking. These concerns have been affected by several key developments in recent years, including proliferation- and democracy-related sanctions; a Pakistan-India conflict over Kashmir and a continuing bilateral nuclear standoff; and, most recently, the September 2001 terrorist attacks against the United States. In the wake of those attacks, President Musharraf--under strong U.S. diplomatic pressure--offered President Bush Pakistan's "unstinted cooperation in the fight against terrorism." Pakistan became a "vital ally" in the U.S.-led anti-terrorism coalition. In a U.S. effort to shore up the Musharraf government, sanctions relating to Pakistan's 1998 nuclear tests and 1999 military coup were soon waived. In October 2001, large amounts of U.S. aid began flowing into Pakistan. Direct assistance programs include aid for health, education, food, democracy promotion, child labor elimination, counter-narcotics, border security and law enforcement, as well as trade preference benefits. The United States also supports grant, loan, and debt rescheduling programs for Pakistan by the various major international financial institutions. While visiting Islamabad in March 2004, Secretary of State Powell said that the United States will designate Pakistan as a "major non-NATO ally" under Section 517 of the Foreign Assistance Act of 1961. Revelations that Pakistan has been a source of onward nuclear proliferation to North Korea, Iran, and Libya may complicate future Pakistan-U.S. relations.

Security

International Terrorism. After the September 2001 terrorist attacks on the United States, Pakistan pledged and has provided support for the U.S.-led anti-terror coalition. According to the U.S. Departments of State and Defense, Pakistan has afforded the United States unprecedented levels of cooperation by allowing the U.S. military to use bases within the country, helping to identify and detain extremists, and tightening the border between Pakistan and Afghanistan. Top U.S. officials regularly praise Pakistani anti-terrorism efforts. In the spring of 2002, U.S. military and law enforcement personnel reportedly began engaging in direct, low-profile efforts to assist Pakistani security forces in tracking and apprehending fugitive Al Qaeda and Taliban fighters on Pakistani territory. Pakistani authorities have remanded to U.S. custody nearly 500 such fugitives to date. In a landmark speech in January 2002, President Musharraf vowed to end Pakistan's use as a base for terrorism of any kind, and he banned numerous militant groups, including Lashkar-e-Taiba and Jaish-e-Muhammad, both blamed for terrorist violence in Kashmir and India and designated as Foreign Terrorist Organizations under U.S. law. In the wake of the speech, thousands of Muslim extremists were arrested and detained, though many of these have since been released. (See also CRS Report RL31624, Pakistan-U.S. Anti-Terrorism Cooperation, and CRS Report RL32259, Terrorism in South Asia.)

Pivotal Al Qaeda-related arrests in Pakistan have included Abu Zubaydah (March 2002), Ramzi bin al-Shibh (September 2002), and Khalid Mohammed (March 2003). Yet Al Qaeda and Taliban fugitives still are numerous in Pakistan and appear to have reestablished their organizations in Pakistani cities such as Karachi, Peshawar, and Quetta. Al Qaeda founder Osama bin Laden may himself be in Pakistan. Meanwhile, numerous banned groups have continued to operate under new names: Lashkar-e-Taiba became Jamaat al-Dawat; Jaish-e-Mohammed was re-dubbed Khudam-ul Islam. The United States in October 2003 designated the Pakistan-based Al Akhtar Trust as a terrorist support organization. Al Akhtar is said to be carrying on support for Al Qaeda and Taliban terrorist activities funded by the previously-designated Al Rashid Trust. The United States also identified Indian crime figure Dawood Ibrahim as a "global terrorist" with links to both Al Qaeda and Lashkar-e-Taiba. Ibrahim, wanted by the Indian government for 1993 Bombay bombings that killed and injured thousands, is believed to be in Pakistan.

Infiltration Into Kashmir. Islamabad has been under continuous pressure from the United States and numerous other governments to terminate the infiltration of insurgents across the Kashmiri Line of Control. Such pressure reportedly elicited an explicit promise from President Musharraf to U.S. Deputy Secretary of State Armitage that all such movements would cease. After confirmations from both U.S. and Indian government officials that infiltration was down significantly in the summer of 2002, the rate reportedly rose again and, in July 2003, the U.S. envoy to New Delhi declared that infiltrations continued. During a May 2003 visit to Islamabad, Deputy Secretary Armitage reportedly received another pledge from the Pakistani President, this time an assurance that any existing terrorist camps in Pakistani Kashmir would be closed. President Musharraf insists that his government is doing everything possible to stop infiltration and shut down militant base camps in Pakistani-controlled territory. Critics contend, however, that Islamabad has provided active support for the insurgents in Kashmir as a means to both maintain strategically the domestic backing of Islamists who view the Kashmir issue as fundamental to the Pakistani national idea, and to disrupt tactically the state government in Indian Kashmir in seeking to erode New Delhi's legitimacy there. Positive indications growing from the latest Pakistan-India peace initiative include a cease-fire at the LOC that has held since November 2003, and January 2004 statements from top Indian officials indicating that rates of militant infiltration are down significantly.

Infiltration Into Afghanistan. A more recent development is the increased infiltration of terrorists and their supporters across the Afghanistan-Pakistan border. Beginning in early 2003, top U.S. military commanders overseeing Operation Enduring Freedom complained that renegade Al Qaeda and Taliban fighters were able to attack coalition troops in Afghanistan, then escape across the Pakistani frontier. They expressed dismay at the slow pace of progress in capturing wanted fugitives in Pakistan and have urged Islamabad to do more to secure its rugged western border area. Numerous top U.S. government officials voiced similar worries, even expressing concern that members of Pakistan's powerful Inter-Services Intelligence agency might be assisting members of the Taliban and Al Qaeda. During the summer of 2003, tensions between the Kabul and Islamabad governments reached alarming levels, with some top Afghan officials accusing Pakistan of tolerating or even supporting Taliban forces and manipulating Islamic militancy in the region to destabilize Afghanistan. In December 2003, U.S. forces in Afghanistan announced launching another major operation against Taliban and Al Qaeda forces near the Pakistan border. The opening months of 2004 saw an escalation of Pakistani Army operations near the Afghan border and, in March, the United States, Pakistan, and Afghanistan re-invigorated military efforts to neutralize Islamic militant forces that remain in the mountainous, Pashtun-majority regions near the Afghan border. A major battle in Pakistan's traditionally autonomous South Waziristan resulted in many deaths, but the capture of no "high-value targets." The battle also served to exacerbate already volatile anti-Musharraf sentiments held by many Pakistani Pashtuns.

Domestic Terrorism. Pakistan continues to suffer from anti-Shia, anti-Christian, and anti-Western terrorism at home. In January 2002, Wall Street Journal reporter Daniel Pearl was kidnaped in Karachi and later found murdered. Spring 2002 car bomb attacks on Western targets, including the U.S. consulate in Karachi, killed 29 people, among them 11 French military technicians. A March 2002 grenade attack on a Protestant church in Islamabad killed five, including a U.S. Embassy employee and her daughter. These attacks were viewed as expressions of militants' anger with the Musharraf regime for its cooperation with the United States. The incidents were linked to Al Qaeda, as well as to indigenous militant groups. During 2003 and 2004, the worst domestic terrorism has been directed against Pakistan's Shia minority, including what likely was the most lethal case of terrorism in Pakistani history when suicide bombers attacked a Shiite mosque in July, killing at least 53. A March 2004 machine gun and grenade attack on a Shia procession in Quetta killed at least 47 and injured another 160. Indications are that the indigenous Lashkar-i-Jhangvi Sunni militant group was responsible for the most deadly incidents. The United States helped to fund a new 650-officer Diplomatic Security Unit in early 2003 and assists with numerous programs designed to improve the quality of Pakistan's internal police forces through the provision of equipment and training. Two deadly attempts to kill Musharraf in December 2003 may have been linked to Al Qaeda and illuminated the danger presented by the determined extremists. The United States has played a direct role in training the security detail of the Pakistani President.

Pakistan-U.S. Security Cooperation. The close U.S.-Pakistan security ties of the cold war era--which had come to near halt after the 1990 aid cutoff--appear to be in the process of restoration as a result of Pakistan's role in U.S.-led anti-terrorism campaign. In July 2002, the United States began allowing commercial sales that enabled Pakistan to refurbish at least part of its fleet of American-made F-16 fighter aircraft. One year later, U.S. Ambassador to Pakistan Nancy Powell announced that Islamabad will purchase six C-130 military transport aircraft from Lockheed Martin for approximately $75 million under a Foreign Military Financing grant. Congress also was notified of another pending Foreign Military Sale arrangement with Pakistan reportedly worth $155 million. Under this deal, Pakistan is to receive six Aerostat surveillance radars. These mark the first major arms sales to Pakistan in more than a decade and are intended to bolster Islamabad's counterterrorism capabilities. Islamabad continues to seek U.S. weapons and technology, especially in an effort to bolster its air forces. Pakistani officials are eager to purchase of major U.S. weapons platforms, including F-16s fighters, P-3 maritime surveillance aircraft, and Harpoon anti-ship missiles. The Bush Administration and several Members of Congress are reported to be supportive of these efforts. A revived high-level U.S.-Pakistan Defense Consultative Group (DCG)--moribund since 1997--met in September 2002 for high-level discussions on military cooperation, security assistance, and anti-terrorism. Another meeting in September 2003 set a schedule for joint military exercises and training, discussed how the U.S. military can assist Pakistan in improving its counterterrorism capabilities, and included a U.S. vow to expedite future security assistance. During the same month, the Pentagon notified Congress of three pending major arms sales to Pakistan potentially worth more than $300 million. The 12 radars, and 40 Bell 407 helicopters are meant to enhance Pakistan's ability to support Operation Enduring Freedom and to secure its borders.

Nuclear Weapons and Missile Proliferation. U.S. policy analysts consider the apparent arms race between India and Pakistan as posing perhaps the most likely prospect for the future use of nuclear weapons. In May 1998, India conducted five underground nuclear tests, breaking a 24-year, self-imposed moratorium on such testing. Despite U.S. and world efforts to dissuade it, Pakistan quickly followed, claiming five tests of its own before month's end. The tests created a global storm of criticism, and represented a serious setback to two decades of U.S. nuclear nonproliferation efforts in South Asia. Both countries have aircraft capable of delivering nuclear bombs, which may number 35-100 on each side. India's military has inducted short- and intermediate-range ballistic missiles, while Pakistan itself possesses short- and medium-range missiles (allegedly acquired from China and North Korea). All are assumed to be capable of delivering nuclear warheads over significant distances. In 2000, Pakistan placed its nuclear forces under the control of a National Command Authority led by the president.

Press reports in late 2002 suggested that Pakistan assisted Pyongyang's covert nuclear weapons program by providing North Korea with uranium enrichment materials and technologies beginning in the mid-1990s and as recently as July 2002. Islamabad rejected such reports as "baseless," and Secretary of State Powell was assured that no such transfers are occurring. If such assistance is confirmed by President Bush, all non-humanitarian U.S. aid to Pakistan may be suspended, although the President has the authority to waive any sanctions that he determines would jeopardize U.S. national security. In March 2003, the Administration determined that the relevant facts "do not warrant imposition of sanctions under applicable U.S. laws." Press reports during 2003 and into 2004 suggested that both Iran and Libya have benefitted from Pakistani nuclear assistance; the International Atomic Energy Agency has implicated Pakistani companies in providing "critical technology and parts" to Iran's uranium enrichment program. Islamabad denied any nuclear cooperation with Tehran or Tripoli, although it conceded in December 2003 that certain senior scientists were under investigation for possible independent proliferation activities.

That investigation led to the February 2004 "public humiliation" of Abdul Qadeer Khan, known as the founder of Pakistan's nuclear weapons program and national hero, when he openly confessed to having sold nuclear materials and technology abroad. Khan and at least seven associates are said to have sold significant nuclear weapons technology and uranium-enrichment materials to North Korea, Iran, and Libya. President Musharraf, citing Khan's contributions to his nation, issued a pardon that has since been called conditional. The United States has been assured that the Islamabad government had no knowledge of such activities and indicated that the decision to pardon is an internal Pakistani matter. Musharraf has promised President Bush that he will share all information learned about the Khan's proliferation network. Director of Central Intelligence Tenet indicated that the network had been active on four continents and was penetrated by U.S. and British intelligence agents years ago. Some press reports have suggested that several Pakistani Army Chiefs, perhaps including General Musharraf, were aware of the proliferation activities. (See CRS Report RL32115, Missile Proliferation and the Strategic Balance in South Asia, and CRS Report RL31900, Weapons of Mass Destruction: Trade Between North Korea and Pakistan.)

U.S. Nonproliferation Efforts. In May 1998, following the South Asian nuclear tests, President Clinton imposed full restrictions on all non-humanitarian aid to both India and Pakistan as mandated under Section 102 of the Arms Export Control Act. In some respects, Pakistan was less affected by the sanctions than was India, as most U.S. assistance to Pakistan had been cut off in 1990. At the same time, Pakistan's smaller and more fragile economy was more vulnerable to the negative effects of aid restrictions. However, Congress and the President acted almost immediately to lift certain aid restrictions, and after October 2001 all remaining nuclear-related sanctions on Pakistan (and India) were removed. In April 2004, the U.S. Assistant Secretary of State for Proliferation urged Pakistan and India to join the Nuclear Nonproliferation Treaty (NPT) as non-nuclear weapon states, saying that the United States does not accept either country as a nuclear weapon state under the NPT.

During the latter years of the Clinton administration, the United States set forth nonproliferation "benchmarks" for India and Pakistan, including halting further nuclear testing and signing and ratifying the Comprehensive Test Ban Treaty (CTBT); halting fissile material production and pursuing Fissile Material Control Treaty negotiations; refraining from deploying nuclear weapons and testing ballistic missiles; and restricting any and all exportation of nuclear materials or technologies. The results of U.S. efforts were mixed, at best, and neither India nor Pakistan are signatories to the CTBT or NPT. The Bush Administration makes no reference to the benchmark framework. Senator Richard Lugar, Chairman of the Senate Foreign Relations Committee, has called upon the United States to promote nuclear confidence-building measures in South Asia, including "assistance on export controls, border security, and the protection, control, and accounting of nuclear stockpiles and arsenals." U.S. and Pakistani officials have held talks on improving security and installing new safeguards on Pakistan's nuclear weapons and nuclear power plants. Concerns about onward proliferation and fears that Pakistan could become destabilized by the U.S. anti-terrorism war efforts in Afghanistan have heightened U.S. attention to weapons proliferation in South Asia. (See CRS Report RL31559, Proliferation Control Regimes; CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions; and CRS Report RL31589, Nuclear Threat Reduction Measures for India and Pakistan.)

The Kashmir Issue. Bilateral relations between Pakistan and India remain deadlocked on the issue of Kashmiri sovereignty, and a separatist rebellion has been underway in the region since 1989. Tensions between India and Pakistan remained extremely high in the wake of the Kargil conflict. Throughout 2000 and 2001, cross-border firing and shelling caused scores of both military and civilian deaths. A six-month-long unilateral cease-fire and halt to offensive military operations in Kashmir was undertaken by India in late 2000 and the Pakistani government vowed that its military would observe "maximum restraint." Kashmir's main militant groups, however, rejected the cease-fire as a fraud and continued to carry out attacks on military personnel and government installations. In May 2001, the Indian government announced that it was ending its unilateral cease-fire in Kashmir but that PM Vajpayee would invite President Musharraf to India for talks. A July summit meeting in Agra failed to produce a joint communique, reportedly as a result of pressure from hardliners on both sides. Major stumbling blocks were India's refusal to acknowledge the "centrality of Kashmir" to future talks and Pakistan's objection to references to "cross-border terrorism." Secretary of State Powell visited the region in an effort to ease escalating tensions over Kashmir, but an October terrorist attack on the Jammu and Kashmir state assembly was followed by a December terrorist attack on the Indian Parliament in New Delhi. Both incidents were blamed on Pakistan-based terrorist groups. The Indian government responded by mobilizing some 700,000 troops along the Pakistan-India frontier and threatening war unless Islamabad ended all cross-border infiltration of Islamic militants. Under significant international diplomatic pressure and the threat of India's use of possibly massive force, President Musharraf in January 2002 vowed to end the presence of terrorist entities on Pakistani soil and he outlawed five militant groups, including Lashkar-e-Taiba and Jaish-e-Mohammed.

Despite the Pakistani pledge, infiltrations into Indian-held Kashmir continued, and a May 2002 terrorist attack on an Indian army base at Kaluchak killed 34, most of them women and children. This event again brought Pakistan and India to the brink of full-scale war, and caused Islamabad to recall army troops from both patrol operations along the Pakistan-Afghanistan border as well as from international peacekeeping operations. Intensive diplomatic missions to South Asia appears to have reduced tensions during the summer of 2002 and prevented the outbreak of war. Numerous top U.S. diplomats were involved in this effort and continued strenuously to urge the two countries to renew bilateral dialogue. A "hand of friendship" offer by the Indian Prime Minister in April 2003 led to the restoration of full diplomatic relations in July, but surging separatist violence in September contributed to an exchange of sharp rhetoric between Pakistani and Indian leaders at the United Nations, casting doubt on the latest peace effort. However, an October confidence-building initiative got Pakistan and India back on track toward improved relations, and a November cease-fire was initiated after a proposal by Pakistani PM Jamali. In December, President Musharraf suggested that Pakistan might be willing to "set aside" its long-standing demand for a plebiscite in Kashmir, a proposal welcomed by the United States, but called a "disastrous shift" in policy by Pakistani opposition parties.

Although militant infiltration did not end, the Indian government acknowledged that it was significantly decreased and, combined with other confidence-building measures, relations were sufficiently improved that the Indian PM attended a three-day summit meeting of the South Asian Association for Regional Cooperation (SAARC) in Islamabad in January 2004. On January 6, Pakistan and India issued a joint "Islamabad Declaration" calling for a "composite dialogue" to begin in February 2004 to bring about "peaceful settlement of all bilateral issues, including Jammu and Kashmir, to the satisfaction of both sides." Musharraf declared that "history has been made" with the dialogue agreement, a characterization echoed by the United States. Pakistan-based militant groups expressed their determination to continue fighting against Indian forces in Kashmir despite the agreement.

Islamization and Anti-American Sentiment

An unexpected outcome of the 2002 elections saw the Muttahida Majlis-e-Amal (MMA or United Action Forum), a coalition of six Islamic parties, win 68 seats--about 20% of the total--in the national assembly. It also controls the provincial assembly in the North West Frontier Province (NWFP) and leads a coalition in the Baluchistan assembly. These western provinces are Pashtun-majority regions that border Afghanistan where important U.S.-led counterterrorism operations are ongoing. This result has led to concerns that a shift in Pakistan's foreign policy might be in the offing, most especially with growing anti-American sentiments and renewed indications of the "Talibanization" of western border regions. Thus far, however, Islamabad's foreign and economic policies have remained fairly consistent.

In June 2003, the Islamist coalition in the NWFP passed a Shariat bill in the provincial assembly. These laws seek to replicate in Pakistan the harsh enforcement of Islamic law seen in Afghanistan under the Taliban. As such, the development has alarmed Pakistan's more secular moderates, and President Musharraf has decried any attempts to "Talibanize" regions of Pakistan. Islamists are notable for their virulent expressions of anti-American sentiment; they have at times called for "jihad" against what they view as the existential threat to Pakistani sovereignty that alliance with Washington entails. Anti-American sentiment is not limited to Islamic groups, however. A June 2003 public opinion survey found that 45% of Pakistanis had at least "some confidence" in Osama bin Laden's ability to "do the right thing regarding world affairs," and a March 2004 survey found that only 6% of Pakistan's believe that the United States is sincere in its efforts to combat terrorism; 55% of the remainder believe that the United States is seeking to "dominate the world." Most analysts contend that two December 2003 attempts to assassinate President Musharraf were carried out by Islamic militants angered by Pakistan's post-September 2001 policy shift. In January 2004 testimony before the Senate Foreign Relations Committee, one senior expert opined that "Pakistan is probably the most anti-American country in the world right now, ranging from the radical Islamists on one side to the liberals and Westernized elites on the other side."

Democratization and Human Rights

Democracy and Governance. There had been hopes that national elections in October 2002 would reverse Pakistan's historic trend toward unstable governance and military interference in democratic institutions. Such hopes were eroded by the passage of some highly restrictive election laws, including those that prevented the country's two leading civilian politicians from participating, as well as President Musharraf's unilateral imposition of major constitutional amendments in August 2002. In 2003, and for the eleventh straight year, the nonpartisan Freedom House rated Pakistan as "not free" in the areas of political rights and civil liberties. An October 2003 report from Human Rights Watch claimed that four years of military rule has "led to serious human rights abuses." While praising Pakistan's electoral exercises as moves in the right direction, the United States has expressed concern that seemingly nondemocratic developments may make the realization of true democracy in Pakistan more elusive.

Gen. Musharraf's April 2002 assumption of the title of President ostensibly was legitimized by a controversial referendum that many observers claimed was marked by "excessive fraud and coercion." In August 2002, the Musharraf government announced sweeping changes in the Pakistani constitution under a "Legal Framework Order" (LFO). These changes provide the office of President and the armed forces powers not previously available in the country's constitutional history, including provisions for Presidential dissolution of the National Assembly and appointment of the Army Chief and provincial governors, among others. The United States expressed concerns that the changes "could make it more difficult to build strong, democratic institutions in Pakistan." In October 2002, the country held its first national elections since 1997, fulfilling in a limited fashion Musharraf's promise to restore the National Assembly that was dissolved in the wake of his extra-constitutional seizure of power in October 1999. Numerous observers complained that the exercise was flawed. No party won a majority of parliamentary seats, though the pro-Musharraf Pakistan Muslim League-Quaid-e-Azam (PML-Q) won a plurality. In November 2002, the new National Assembly chose Musharraf supporter and former Baluchistan Chief Minister Mir Zafarullah Jamali to serve as Pakistan's Prime Minister.

For more than one year the civilian government remained hamstrung by a fractious dispute between Musharraf's allies and opposition parties in the National Assembly over Musharraf's continued role as Army Chief and the legality of the LFO amendments to the constitution. Some analysts even expressed concern that President Musharraf would launch a "second coup" by dissolving the fledgling Assembly. Yet the dispute came to an end with a surprise December 2003 deal between Musharraf and the Islamist MMA. Under the arrangement, Musharraf pledged to resign his military commission by the end of 2004. He also agreed to put a slightly altered version of the LFO before Parliament. It was passed and, on the final day of 2003, became the 17th Amendment to the Constitution. Finally, Musharraf submitted to and won a vote of confidence by Pakistan's Electoral College (comprised of the membership of all national and provincial legislatures). The victory legitimized Musharraf's presidency through 2007. Officials in Islamabad contend that the developments augur well for Pakistani democracy and stability, but secular opposition parties unified under the Alliance for the Restoration of Democracy (ARD) have accused the MMA of betrayal and insist that the new arrangement merely institutionalizes military rule in Pakistan, especially after the April 2004 establishment of a new national Security Council. (See CRS Report RS21299, Pakistan's Domestic Political Developments.)

Human Rights Problems. The U.S. State Department, in its Pakistan Country Report on Human Rights Practices, 2003, determined that the Islamabad government's record on human rights "remained poor; although there were some improvements in a few areas, serious problems remained." Along with concerns about ongoing anti-democratic practices, the report lists "acute" corruption, extrajudicial killings, lack of judicial independence, political violence, terrorism, and "extremely poor" prison conditions among the serious problems. Police have abused and raped citizens with apparent impunity. Improvement in a few areas was noted, however, particularly with press freedoms and the punishment of some security officials who were found guilty of abuses. The Human Rights Commission of Pakistan, Amnesty International, and Human Rights Watch have issued reports critical of Pakistan's lack of political freedoms and of the country's perceived abuses of the rights of women and minorities. Discrimination against women is widespread, and traditional constraints--cultural, legal, and spousal--have kept women in a subordinate position in society. "Honor killings" continue to occur throughout the country. The adult literacy rate for men in Pakistan is 60%, while only half as many women can read and write. The State Department's International Religious Freedom Report for 2003 indicated that the Pakistani government continues to impose limits on freedom of religion, to fail in many respects to protect the rights of religious minorities, and to fail at times to intervene in cases of sectarian violence. Religious minorities are subjected to discriminatory laws and social intolerance. Blasphemy laws, instituted under the Zia regime and strengthened in 1991, are commonly brought as a result of personal or religious vendettas and carry a mandatory death penalty. Anti-Christian and anti-Western violence, which peaked in the summer of 2002, has cost scores of lives, as have attacks on Pakistan Shiites in 2003 and 2004.

Narcotics

Pakistan is a major transit country for opiates that are grown and processed in Afghanistan and western Pakistan, then distributed throughout the world by Pakistan-based traffickers. The region has in the past supplied up to 40% of heroin consumed in the United States and has been second only to Southeast Asia's Golden Triangle as a top source of the world's heroin. The U.S. Department of State indicates that Pakistan's cooperation on drug control with the United States "remains excellent." The Islamabad government has made impressive strides in eradicating opium poppy cultivation; estimated production in 2001 was only 5 metric tons, less than one-thirtieth of the estimated 155 tons produced in 1995. However, opium production has spiked in post-Taliban Afghanistan and, in September 2003, President Bush again identified Pakistan as being among the world's "major illicit drug producing or drug-transit countries." Pakistan's powerful Inter-Services Intelligence agency (ISI) is suspected of involvement in drug trafficking; in March 2003, a former U.S. Ambassador to Pakistan told a House International Relations Committee panel that the role of the ISI in the heroin trade over the past six years had been "substantial." Some reports indicate that profits from drug sales are financing the activities of Islamic militant groups in both Pakistan and Kashmir. Pakistan's counter-narcotics efforts continue to be hampered by factors such as lack of full government commitment; scarcity of funds; poor infrastructure in drug-producing regions; government wariness of provoking unrest in tribal areas; and "acute" corruption. Direct U.S. counter-narcotics aid to Pakistan totaled $2.4 million in 2002. The State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) oversaw Pakistani projects with more than $90 million in FY2002, including $73 million in emergency supplemental appropriations for border security efforts that continued in FY2003. INL was budgeted $6 million for FY2003, rising to $36.5 million estimated for FY2004 and $40 million requested for FY2005.

Economic Issues

Overview. Pakistan is a poor country with great extremes in the distribution of wealth. Per capita GDP is about $2,060 when accounting for purchasing power parity. The long-term economic outlook for Pakistan was much improved in 2003, but has remained clouded in a country highly dependent on foreign lending and the importation of basic commodities (public debt is equal to more than 70% of GDP). In the middle term, greater political stability following 2002 elections brightened the outlook by providing President Musharraf with a political base for the further pursuit of economic reform, but a hamstrung National Assembly and tensions with India hampered progress (although developments in late 2003 and early 2004 may resolve these latter issues). In the short-run, substantial fiscal deficits and the still urgent dependency on external aid donations counterbalance a major overhaul of the tax collection system and what have been notable gains in the Karachi Stock Exchange, the world's best performer in 2002 and up more than 60% in 2003. Output from both the industrial and service sectors grew in 2002, but the agricultural sector's performance slowed growth overall (in part due to severe drought). Agricultural labor accounts for nearly half of the country's work force. Pakistan's real GDP for the fiscal year ending June 2003 grew by 5.1%, up from 3.6% growth during the previous year. An industrial sector recovery and the end of a 3-year drought have some foreseeing continued growth ahead, with most predictions putting the FY2003/04 rate above 5%.

The Pakistani government stabilized the country's external debt at about $33 billion by June 2003. The country's total liquid reserves topped $11 billion by August 2003, an all-time high and an increase of nearly 400% since October 1999. Foreign remittances for FY2003 exceeded $4.2 billion, nearly quadrupling the amount in 2001. Inflation, hovering around 4%, is low due largely to weak consumer demand, but is expected to rise in 2004. Defense spending and interest on public debt together consume 70% of total revenues, thus squeezing out development expenditure. Pakistan's resources and comparatively well-developed entrepreneurial skills may hold promise for more rapid economic growth and development in coming years. This is particularly true for Pakistan's textile industry, which accounts for 60% of Pakistan's exports. Analysts point to the pressing need to further broaden the country's tax base in order to provide increased revenue for investment in improved infrastructure, health, and education, all prerequisites for economic development.

Attempts at economic reform historically have floundered due to political instability. The Musharraf government has had notable successes in effecting macroeconomic reform, although efforts to reduce poverty have made little headway. The January 2004 sale of Habib Bank, the country's second-largest, was Pakistan's largest-ever privatization move. Rewards for its participation in the post-September 2001 anti-terror coalition eased somewhat Pakistan's severe national debt situation, with many countries, including the United States, boosting bilateral assistance efforts and large amounts of external aid flowing into the country. In October 2003, the IMF noted "strong improvement in Pakistan's external and fiscal prospects" while encouraging further economic reforms (the national budget for 2003/04 largely reflected the need to meet IMF poverty reduction and growth facility conditions that end in 2004). A March 2004 report from the Asian Development Bank confirmed a strong economic recovery for Pakistan during the latter half of 2003, led by "substantial improvement" in the country's two main commodity producing sectors, agriculture and large-scale manufacturing.

Trade and Investment. Pakistan's primary exports are cotton, textiles and apparel, rice, and leather products. During 2003, total U.S. imports from Pakistan were worth about $2.53 billion. Three-quarters of this value came from the purchase cotton apparel, cotton cloth, and related articles. U.S. exports to Pakistan during 2003 were worth $840 million, an increase of 21% over 2002. The leading U.S. export to Pakistan was raw cotton. The U.S. trade deficit with Pakistan has been approximately $1.7 billion for each of the past four years. The State Bank of Pakistan reports a steady increase in foreign investment in the country since 2001, with a total of $820 million for the year ending June 2003. More than one-quarter of this amount came from the United States. During a February 2003 visit to the United States, the Pakistani foreign minister requested greater access to U.S. markets as a means of reducing poverty and thus also the forces of extremism in Pakistan. He made a direct link between poverty and the continued existence of Islamic schools (madrassas) that are implicated in teaching militant anti-American values.

According to the most recent report of the U.S. Trade Representative, Pakistan has made progress in reducing import tariff schedules, though a number of trade barriers remain. Some items are either restricted or banned from importation for reasons related to religion, national security, luxury consumption, or protection of local industries. The U.S. pharmaceutical industry believes that Pakistan maintains discriminatory practices that impede U.S. manufacturer profitability, and some U.S. companies have complained about Pakistani violations of intellectual property rights. The International Intellectual Property Alliance estimated trade losses of $126 million in 2003 due to copyright piracy and criticized Islamabad for "ignoring" a problem--Pakistan is a world leader in the pirating of CDs--that has kept Pakistan on the U.S. Trade Representative's "Special 301" watch list for 14 consecutive years. The Heritage Foundation's 2004 Index of Economic Freedom rated Pakistan as being "mostly unfree," highlighting an especially restrictive set of trade policies, weak property ownership protections, and a high level of black market activity. Heritage also noted an increase in Islamabad's domination of the banking system and influence over credit allocation, but credited the government with improved monetary policies.

U.S. Aid and Congressional Action

U.S. Assistance. Total U.S. economic and military assistance to Pakistan from 1947-2003 was just under $14 billion. Actual U.S. assistance to Pakistan in FY2002 was just above $1 billion, up substantially over the $3.5 million for FY2001 (excluding food aid). The Bush Administration requested $305 million in assistance to Pakistan for FY2003. Congress allocated about $295 million of this in the Consolidated Appropriations Resolution, 2003 (P.L. 108-7). In April 2003, the Emergency Wartime Supplemental Appropriations Act, 2003 (P.L. 108-11) allocated $200 million in additional FY2003 security-related assistance to Pakistan. The current estimate for total FY2004 aid stands at $385 million. In June 2003, President Bush vowed to work with Congress on establishing a five-year, $3 billion aid package for Pakistan. Five annual installments of $600 million each are meant to begin in FY2005 and be evenly split between military and economic aid. The aid request for FY2005 is $701 million (see Table 1, below).

In November 2003, Congress approved a presidential request for emergency supplemental funding for FY2004 (P.L. 108-106). The law provides that $1.15 billion in additional defense spending may be used for payments to reimburse Pakistan and other cooperating nations for their support of U.S. military operations. The Asian Development Bank reported that Pakistan received $581 million in U.S. logistics support for the latter half of 2003, an amount equal to 38% of Pakistan's total defense expenditures during that period. P.L. 108-106 also provides that up to $200 million in FY2004 Economic Support Funds may be used for the further modification of direct loans and guarantees for Pakistan. This could reduce Pakistan's concessional debt to the United States by some $460 million, leaving a balance of around $1.3 billion.

Proliferation-Related Legislation. Through a series of legislative measures, Congress incrementally lifted sanctions on Pakistan and India resulting from their nuclear weapons proliferation activities. (*) After the September 2001 terrorist attacks on the United States, policymakers searched for new means of providing assistance to Pakistan. President Bush's issuance of a final determination (September 22, 2001) removed remaining sanctions on Pakistan (and India) resulting from the 1998 nuclear tests, finding that denying export licences and assistance was not in the national security interests of the United States. Some Members of the 108th Congress have urged reinstatement of proliferation-related sanctions in response to press reports of Pakistani assistance to the North Korean, Iranian, and Libyan nuclear weapons programs, though no country-specific legislation is pending. The National Defense Authorization Act, 2004 (P.L. 108-136) authorizes the President to use Cooperative Threat Reduction funds for projects and activities to address proliferation threats outside the states of the former Soviet Union, potentially including Pakistan and India. The Missile Threat Reduction Act of 2003 (H.R. 1875) would strengthen U.S. missile proliferation laws in ways that could affect Pakistan, among other countries.

Coup-Related Legislation. The October 1999 coup in Pakistan triggered U.S. aid restrictions under Section 508 of the annual Foreign Assistance Appropriations Act. New geopolitical circumstances after September 2001 spurred Congress to take action on democracy-related aid restrictions on Pakistan. P.L. 107-57 (October 2001) granted presidential authority to waive coup-related sanctions on Pakistan through FY2003. President Bush exercised this authority in March 2003. In the 108th Congress, P.L. 108-106 (November 2003) extended the President's waiver authority through FY2004; this was exercised by President Bush in March 2004. Pending legislation includes H.R. 1403, which seeks to remove the President's waiver authority, and S. 2144, which would extend that authority through FY2005. (See also CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions.)

Trade-Related Legislation. In the 108th Congress, H.R. 2267, H.R. 2467, and S. 1121 seek to extend certain trade benefits that are meant to increase trade and investment with eligible countries of the greater Middle East, including Pakistan. H.R. 3496 would extend trade benefits to certain tents imported into the United States from eligible countries, including Pakistan. Section 1705 of the Miscellaneous and Technical Corrections Act of 2004 (H.R. 1047) would authorize the President to designate certain hand-made or hand-woven carpets as eligible articles for duty-free treatment under the Generalized System of Preferences, a move that the Senate Committee on Finance believes would be of particular benefit to Pakistan.

Other Legislation. In July 2003, House passed the Foreign Relations Authorization Act, FY2004-2005 (H.R. 1950). Section 709 of the Act would require the President to report to Congress on actions taken by Islamabad to close terrorist camps in Pakistan-controlled areas, prohibit the infiltration of militants at the Kashmiri Line of Control, and cease the transfer of WMD or related technologies to any third parties. When considered alongside a senior White House official's June 2003 assertion that long-term U.S. aid requires that the United States be "satisfied" with Pakistan's progress on nonproliferation, anti-terrorism, and democratization--and a July letter to President Bush signed by 16 Members of Congress outlining their concerns on these same issues--the legislation is seen to reflect ongoing congressional attention to developments in Pakistan. It also renewed Pakistani worries about the reliability of U.S. assistance pledges.

Following Secretary of State Powell's March 2004 announcement that the United States would designate Pakistan as a "major non-NATO ally," H.R. 4021 was introduced in the House. The bill seeks to amend the Foreign Assistance Act of 1961 to require that only countries that have a democratic form of government and that support U.S. nonproliferation objectives may be designated as major non-NATO allies.
Table 1. U.S. Assistance to Pakistan, FY2001-FY2005
(in millions of dollars)

Program or            FY 2001    FY2002      FY2003
Account               Actual     Actual      Actual

CSH                   -.-        5.0         15.6
DA                    -.-        10.0        34.5
ERMA                  -.-        25.0        -.-
ESF                   -.-        624.5       188.0 (a)
FMF                   -.-        75.0        224.5
IMET                  -.-        0.9         1.0
INCLE                 3.5        90.5b       31.0
NADR                  -.-        10.1        -.-
PKO                   -.-        220.0       -.-
Subtotal              $3.5       $1,061      $494.6
P.L.480 Title I (c)   0.5        10.0        9.0
P.L.480 Title II (c   1.9        5.1         9.7
Section 416(b) (c)    85.1       75.7        -.-
Total                 $91.0      $1,151.8    $513.3

Program or            FY2004     FY2005
Account               Estimate   Request

CSH                   25.6       21.1
DA                    42.4       29.0
ERMA                  -.-        -.-
ESF                   200.0 (a)  300.0
FMF                   74.6       300.0
IMET                  1.3        2.0
INCLE                 36.5       40.0
NADR                  5.0        8.0
PKO                   -.-        -.-
Subtotal              $385.4     $700.1
P.L.480 Title I (c)   5.8        -.-
P.L.480 Title II (c)  (d)        (d)
Section 416(b) (c)    -.-        -.-
Total                 $391.2     $700.1

Sources: U.S. Departments of State and Agriculture; U.S.
Agency for International Development

Abbreviations:

CSH:                  Child Survival and Health
DA:                   Development Assistance
ERMA:                 Emergency Refugee and Migration Assistance
ESF:                  Economic Support Fund
FMF:                  Foreign Military Financing
IMET:                 International Military Education and Training
INCLE:                International Narcotics Control and Law
                      Enforcement (includes border security)
NADR:                 Nonproliferation, Anti-Terrorism, Demining,
                      and Related
PKO:                  Peacekeeping Operations
P.L. 480 Title I:     Trade and Development Assistance food
                      aid (loans)
P.L. 480 Title II:    Emergency and Private Assistance food
                      aid (grants)
Section 416(b):       The Agricultural Act of 1949, as amended
                      (surplus agricultural commodity donations)

Notes:

(a). Congress authorized Pakistan to use the FY2003 ESF allocation
to cancel $988 million and the FY2004 ESF allocation to cancel up
$460 million in concessional debt to the U.S. government.

(b). Included $73 million for border security projects that continued
in FY2003.

(c). Food aid amounts do not include what can be significant
transportation costs.

(d). Title II food aid accounts generally are held in reserve.


PAKISTAN IN BRIEF

Population: 151 million; growth rate: 2.01% (2003 est.)

Area: 803,940 sq. km. (slightly less than twice the size of California)

Capital: Islamabad Ethnic Groups: Punjabi, Sindhi, Pashtun (Pathan), Baloch, Muhajir (immigrants from India at the time of partition and their descendants)

Languages: Punjabi 58%, Sindhi 12%, Pashtu 8%, Urdu (official) 8%, other 14%; English widely used

Religions: Muslim 97% (Sunni 77%, Shia 20%), Christian, Hindu, and other 3%

Life Expectancy at Birth: female 63.1 years; male 61.3 years (2003 est.) Literacy: female 31%; male 60% (2003 est.)

Gross Domestic Product (at PPP): $333 billion; per capita: $2,080; growth rate 5.8% (2003)

Inflation: 3.9% (2002)

U.S. Trade: exports to U.S. $2.53 billion; imports from U.S. $840 million (2003)

Sources: CIA World Factbook; U.S. Commerce Dept.

(*) The Agricultural Export Relief Act of 1998 (P.L. 105-194) allowed U.S. wheat sales to Pakistan after July 1998. The India-Pakistan Relief Act of 1998 (in P.L. 105-277) authorized a one-year sanctions waiver exercised by President Clinton in November 1998. The Department of Defense Appropriations Act, 2000 (P.L. 106-79) gave the President permanent authority after October 1999 to waive nuclear-test related sanctions applied against Pakistan and India. On October 27, 1999, President Clinton waived economic sanctions on India (Pakistan remained under sanctions as a result of the October 1999 coup). The Foreign Operations Export Financing and Related Appropriations Agencies Act, 2001 (P.L. 106-429; Section 597) provided an exception under which Pakistan could be provided U.S. foreign assistance funding for basic education programs. (See also CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions.)

K. Alan Kronstadt

Foreign Affairs, Defense, and Trade Division
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