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World - Asia/Pacific

Ground Zero Graphic

U.S. outlines sanctions against India, Pakistan

Celebrants in India, top, and Pakistan rejoice after their respective countries' nuclear tests  

In this story:

June 18, 1998
Web posted at: 8:40 p.m. EDT (0040 GMT)

WASHINGTON (CNN) -- The United States further outlined its economic sanctions Thursday against the governments of India and Pakistan, indicating that military sales, private lending and some credits and guarantees to the two governments will stop.

The United States announced broad sanctions last month in response to nuclear tests in both countries that have raised concerns about an arms race in South Asia.

"The path down which India and Pakistan have started to move with these tests is a dead end, and no one else should follow down that path," U.S. Deputy Secretary of State Strobe Talbott said at a news conference.

The Clinton administration said moves will be made in Congress to allow agricultural credits for India and Pakistan while the sanctions are in place.

And while American banks will be prohibited from lending money to the two governments, lending to the private sector will not be affected.

American businesses cry foul

U.S. business groups have pressured the White House, saying the sanctions put American companies at a competitive disadvantage against European and Asian firms.

Hoping to minimize the affect on U.S. businesses, the Clinton administration said it would "favorably consider," on a case-by-case basis, transactions that do not support nuclear, missile or inappropriate military activities.

Talbott called on allies not to exploit the limitations on U.S. companies trying to do business in India and Pakistan.

"We would hope that our allies and partners will resist the temptation," Talbott said. "We would hope that they would try to strike a balance."

International lending could stop

The United States has already terminated certain military sales and revoked licenses on some commercial sales of munitions to India and Pakistan. It will also end or suspend aid covered by the Foreign Assistance Act, except for humanitarian assistance.

And no new credits will be allowed under the U.S. Import-Export Bank. Commitments that predate the nuclear tests will go forward.

Internationally, the United States will move to block loans from lending groups such as the World Bank and the International Monetary Fund. But the United States would vote for loans for education, water and sewer projects, and agricultural assistance.

Administration officials say the sanctions are designed to get India and Pakistan to halt further nuclear tests, sign the Comprehensive Test Ban Treaty and agree not to deploy missiles with nuclear warheads.

Reuters contributed to this report.

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