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US to lift nuclear sanctions on India, Pakistan

Washington, showing the economic benefits for Pakistan's support in its confrontation with Afghanistan, will soon lift sanctions against India and Pakistan imposed after their 1998 nuclear tests, a senior Western diplomat said on Friday.

In addition, it will reschedule $600 million in Pakistani debt on September 24, a diplomat said.

The lifting of the sanctions imposed after India and then Pakistan carried out tit-for-tat nuclear tests, and thus joined the elite community of nuclear powers, would allow the United States to vote in favour of aid in multilateral bodies and resume direct assistance in a number of areas.

It will not affect additional US sanctions imposed on Pakistan because of military ruler General Pervez Musharraf's seizure of power in 1999.

"You will see discernible progress soon," said the diplomat, who asked not to be identified. Preparation for the lifting of the sanctions was under way in Washington, the official said.

Washington had also accelerated negotiations to reschedule the $600 million in Pakistani debt owed to the United States, the diplomat said.

The signing of the agreement under the Paris Club, which handles negotiations on bilateral debt, would take place on September 24, and is part of $1.6 billion in Pakistan's Paris Club debt being rescheduled this year.

Another diplomat said the moves were part of a number of financial benefits, many already in the pipeline, that have been accelerated to help Pakistan as it lines up behind Washington in what may be an attack on neighbouring Afghanistan.

Reward for Pakistan

Musharraf, despite criticism at home, has promised to back the United States as it pursues those responsible for the September 11 attacks on Washington and New York that are feared to have killed more than 6,000 people.

Washington says the chief suspect is Osama bin Laden, who is sheltered by Afghanistan's Taliban.

A series of meetings have taken place between senior members of the US embassy and Musharraf and ministers with economic portfolios as part of an effort to provide quick benefits to Pakistan.

"Everything they asked the United States to do on the economic front fits into the context of their economic reform programme," said the second diplomat.

The diplomats said Pakistan has made clear that any additional aid will be directed toward the badly underfunded social sectors such as health and education, not toward the military.

Even before the current crisis, which has forced the closure of Pakistan's stock exchanges all this week, the economy was in precarious condition.

It is struggling under about $40 billion in foreign debt and has meagre reserves to defend its currency, which has been declining for more than a year.

Pakistan is just completing a $596 million standby agreement with the International Monetary Fund, with the IMF expected to authorise the final tranche next week. It is then to begin talks on a three-year agreement.

Once the sanctions imposed for the nuclear tests are lifted, the United States would be able to vote in favour of fresh aid to Pakistan. At present it must abstain on aid packages that it supports.

In addition to the assistance for Pakistan, the United States is also stepping up humanitarian assistance available for Afghanistan, although delivering it in the current crisis would be almost impossible.

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