For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Islamic Republic of Pakistan

Geography
Area: 803,943 sq. km. (310,527 sq. mi.); about twice the size of California.
Cities: Capital--Islamabad and adjacent Rawalpindi comprise a national capital area with a combined population of 3.7 million. Other cities--Karachi (10 million), Lahore (5.7 million), Faisalabad (6.5 million).

People
Nationality: Noun and adjective--Pakistan(i).
Population (1998 estimate): 135 million.
Annual growth rate (1998): 2.6%.
Ethnic groups: Punjabi, Sindhi, Pathan (Pushtun), Baloch, Muhajir (i.e., Urdu-speaking immigrants from India and their descendants), Saraiki, Hazara.
Religions: Muslim 97%; small minorities of Christians, Hindus, and others.
Languages: Urdu (national and official), English, Punjabi, Sindhi, Pushtu, Baloch.
Education: Literacy (1999) 45%. Unofficial estimates are as low as 35%.
Health: Infant mortality rate (1997)--85/1,000. Life expectancy (1999)--men 63 yrs., women 63 yrs.
Work force (1999): Agriculture--44%. Services--30%. Industry--26%.

Government
Type: Military. Parliamentary democracy suspended on October 12, 1999.
Independence: August 14, 1947.
Branches: Executive--The Chief of Army Staff serves as Chief Executive and is advised by a mixed civilian/military National Security Council and civilian Cabinet. Provinces are headed by a Governor and provincial cabinet, who are civilians appointed by the Chief Executive. Judicial--Supreme Court, provincial high courts, and Federal Islamic Court. On January 26, 2000, justices were required to take an oath of loyalty to the Chief Executive and the Provisional Constitutional Order that placed the constitution in abeyance.
Political parties: The Pakistan Muslim League (PML) and the Pakistan People's Party (PPP) are national political parties. Other parties with a strong regional, ethnic or religious base include the Awami National Party (ANP), the Muttahida Qaumi Movement (MQM), and the Jamaat-i-Islami (JI).
Suffrage: Universal at 21. Following the October 12, 1999, ouster of the government of Prime Minister Nawaz Sharif, the military-led government stated its intention to restructure the political and electoral systems. Elections for local government are anticipated in late 2000. No time frame has yet been provided for provincial and national elections.
Political subdivisions: Each of the four provinces--Punjab, Sindh, Northwest Frontier, and Balochistan--comes under the authority of the Governor and provincial cabinet, appointed by the Chief Executive. The Northern Areas and Federally Administered Tribal Areas (FATA) are administered by the federal government, but enjoy considerable autonomy.

Economy
GDP (1998-99): $59 billion.
Real annual growth rate 1998-99: 3.1%.
Per capita GDP (1998-99): $441.
Natural resources: Arable land, natural gas, limited petroleum, substantial hydropower potential, coal, iron ore.
Agriculture: Products--wheat, cotton, rice, sugarcane, tobacco.
Industry: Types--textiles, fertilizer, steel products, chemicals, food processing, oil and gas products, cement.
Trade (FY 1998-99): Exports--$7.8 billion: raw cotton, rice, cotton yarn, textiles, fruits, vegetables. Major partners--U.S., Japan, U.K., Saudi Arabia, Germany. Imports--$9.4 billion: wheat, crude oil, cooking oil, fertilizers, machinery. Major partners--U.S., Japan, Saudi Arabia, Malaysia, U.K., Sri Lanka.

PEOPLE
The majority of Pakistan's population lives along the Indus River valley and along an arc formed by the cities of Faisalabad, Lahore, Rawalpindi/Islamabad, and Peshawar.

Although the official language of Pakistan is Urdu, it is spoken as a first language by only 9% of the population; 65% speak Punjabi, 11% Sindhi, and 24% speak other languages (Pushtu, Saraiki, Baloch, Brahui). Urdu, Punjabi, Pushtu, and Baloch are Indo-European languages; Brahui is believed to have Dravidian (pre-Indo-European) origins. English is widely used within the government, the officer ranks of the military, and in many institutions of higher learning.

HISTORY
Archeological explorations have revealed impressive ruins of a 4,500-year old urban civilization in Pakistan's Indus River valley. The reason for the collapse of this highly developed culture is unknown. A major theory is that it was crushed by successive invasions (circa 2000 B.C. and 1400 B.C.) of Aryans, Indo-European warrior tribes from the Caucasus region in what is now Russia. The Aryans were followed in 500 B.C. by Persians and, in 326 B.C., by Alexander the Great. The "Gandhara culture" flourished in much of present-day Pakistan.

The Indo-Greek descendants of Alexander the Great saw the most creative period of the Gandhara (Buddhist) culture. For 200 years after the Kushan Dynasty was established in A.D. 50, Taxila (near Islamabad) became a renowned center of learning, philosophy, and art.

Pakistan's Islamic history began with the arrival of Muslim traders in the 8th century. During the 16th and 17th centuries, the Mogul Empire dominated most of South Asia, including much of present-day Pakistan.

British traders arrived in South Asia in 1601, but the British Empire did not consolidate control of the region until the latter half of the 18th century. After 1850, the British or those influenced by them governed virtually the entire subcontinent.

In the early 20th century, South Asian leaders began to agitate for a greater degree of autonomy. Growing concern about Hindu domination of the Indian National Congress Party, the movement's foremost organization, led Muslim leaders to form the all-India Muslim League in 1906. In 1913, the League formally adopted the same objective as the Congress -- self-government for India within the British Empire -- but Congress and the League were unable to agree on a formula that would ensure the protection of Muslim religious, economic, and political rights.

Pakistan and Partition
The idea of a separate Muslim state emerged in the 1930s. On March 23, 1940, Muhammad Ali Jinnah, leader of the Muslim League, formally endorsed the "Lahore Resolution," calling for the creation of an independent state in regions where Muslims constituted a majority. At the end of World War II, the United Kingdom moved with increasing urgency to grant India independence. However, the Congress Party and the Muslim League could not agree on the terms for a constitution or establishing an interim government. In June 1947, the British Government declared that it would bestow full dominion status upon two successor states -- India and Pakistan. Under this arrangement, the various princely states could freely join either India or Pakistan. Consequently, a bifurcated Muslim nation separated by more than 1,600 kilometers (1,000 mi.) of Indian territory emerged when Pakistan became a self-governing dominion within the Commonwealth on August 14, 1947. West Pakistan comprised the contiguous Muslim-majority districts of present-day Pakistan; East Pakistan consisted of a single province, which is now Bangladesh.

The Maharaja of Kashmir was reluctant to make a decision on accession to either Pakistan or India. However, armed incursions into the state by tribesman from the NWFP led him to seek military assistance from India. The Maharaja signed accession papers in October 1947 and allowed Indian troops into much of the state. The Government of Pakistan, however, refused to recognize the accession and campaigned to reverse the decision. The status of Kashmir has remained in dispute.

After Independence
With the death in 1948 of its first head of state, Muhammad Ali Jinnah, and the assassination in 1951 of its first Prime Minister, Liaqat Ali Khan, political instability and economic difficulty became prominent features of post-independence Pakistan. On October 7, 1958, President Iskander Mirza, with the support of the army, suspended the 1956 constitution, imposed martial law, and canceled the elections scheduled for January 1959. Twenty days later the military sent Mirza into exile in Britain and Gen. Mohammad Ayub Khan assumed control of a military dictatorship. After Pakistan's loss in the 1965 war against India, Ayub Khan's power declined. Subsequent political and economic grievances inspired agitation movements that compelled his resignation in March 1969. He handed over responsibility for governing to the Commander-in-Chief of the Army, General Agha Mohammed Yahya Khan, who became President and Chief Martial Law Administrator.

General elections held in December 1970 polarized relations between the eastern and western sections of Pakistan. The Awami League, which advocated autonomy for the more populous East Pakistan, swept the East Pakistan seats to gain a majority in Pakistan as a whole. The Pakistan Peoples Party (PPP), founded and led by Ayub Khan's former Foreign Minister, Zulfikar Ali Bhutto, won a majority of the seats in West Pakistan, but the country was completely split with neither major party having any support in the other area. Negotiations to form a coalition government broke down and a civil war ensued. India attacked East Pakistan and captured Dhaka in December 1971, when the eastern section declared itself the independent nation of Bangladesh. Yahya Khan then resigned the presidency and handed over leadership of the western part of Pakistan to Bhutto, who became President and the first civilian Chief Martial Law Administrator.

Bhutto moved decisively to restore national confidence and pursued an active foreign policy, taking a leading role in Islamic and Third World forums. Although Pakistan did not formally join the non-aligned movement until 1979, the position of the Bhutto government coincided largely with that of the non-aligned nations. Domestically, Bhutto pursued a populist agenda and nationalized major industries and the banking system. In 1973, he promulgated a new constitution accepted by most political elements and relinquished the presidency to become Prime Minister. Although Bhutto continued his populist and socialist rhetoric, he increasingly relied on Pakistan's urban industrialists and rural landlords. Over time the economy stagnated, largely as a result of the dislocation and uncertainty produced by Bhutto's frequently changing economic policies. When Bhutto proclaimed his own victory in the March 1977 national elections, the opposition Pakistan National Alliance (PNA) denounced the results as fraudulent and demanded new elections. Bhutto resisted and later arrested the PNA leadership.

1977-1985 Martial Law
With increasing anti-government unrest, the army grew restive. On July 5, 1977, the military removed Bhutto from power and arrested him, declared martial law, and suspended portions of the 1973 constitution. Chief of Army Staff Gen. Muhammad Zia ul-Haq became Chief Martial Law Administrator and promised to hold new elections within three months.

Zia released Bhutto and asserted that he could contest new elections scheduled for October 1977. However, after it became clear that Bhutto's popularity had survived his government, Zia postponed the elections and began criminal investigations of the senior PPP leadership. Subsequently, Bhutto was convicted and sentenced to death for alleged conspiracy to murder a political opponent. Despite international appeals on his behalf, Bhutto was hanged on April 6, 1979.

Zia assumed the Presidency and called for elections in November. However, fearful of a PPP victory, Zia banned political activity in October 1979 and postponed national elections.

In 1980, most center and left parties, led by the PPP, formed the Movement for the Restoration of Democracy (MRD). The MRD demanded Zia's resignation, an end to martial law, new elections, and restoration of the constitution as it existed before Zia's takeover. In early December 1984, President Zia proclaimed a national referendum for December 19 on his "Islamization" program. He implicitly linked approval of "Islamization" with a mandate for his continued presidency. Zia's opponents, led by the MRD, boycotted the elections. When the government claimed a 63% turnout, with more than 90% approving the referendum, many observers questioned these figures.

On March 3, 1985, President Zia proclaimed constitutional changes designed to increase the power of the President vis-a-vis the Prime Minister (under the 1973 constitution the President had been mainly a figurehead). Subsequently, Zia nominated Muhammad Khan Junejo, a Muslim League member, as Prime Minister. The new National Assembly unanimously endorsed Junejo as Prime Minister and, in October 1985, passed Zia's proposed eighth amendment to the constitution, legitimizing the actions of the martial law government, exempting them from judicial review (including decisions of the military courts), and enhancing the powers of the President.

The Democratic Interregnum
On December 30, 1985, President Zia removed martial law and restored the fundamental rights safeguarded under the constitution. He also lifted the Bhutto government's declaration of emergency powers. The first months of 1986 witnessed a rebirth of political activity throughout Pakistan. All parties -- including those continuing to deny the legitimacy of the Zia/Junejo government -- were permitted to organize and hold rallies. In April 1986, PPP leader Benazir Bhutto, daughter of Zulfiqar Ali Bhutto, returned to Pakistan from exile in Europe.

Following the lifting of martial law, the increasing political independence of Prime Minister Junejo and his differences with Zia over Afghan policy resulted in tensions between them. On May 29, 1988, President Zia dismissed the Junejo government and called for November elections. In June, Zia proclaimed the supremacy in Pakistan of Shari'a (Islamic law), by which all civil law had to conform to traditional Muslim edicts.

On August 17, a plane carrying President Zia, American Ambassador Arnold Raphel, U.S. Brig. General Herbert Wassom, and 28 Pakistani military officers crashed on a return flight from a military equipment trial near Bahawalpur, killing all of its occupants. In accordance with the constitution, Chairman of the Senate Ghulam Ishaq Khan became Acting President and announced that elections scheduled for November 1988 would take place.

After winning 93 of the 205 National Assembly seats contested, the PPP, under the leadership of Benazir Bhutto, formed a coalition government with several smaller parties, including the Muhajir Qaumi Movement (MQM). The Islamic Democratic Alliance (IJI), a multi-party coalition led by the PML and including religious right parties such as the Jamaat-i-Islami (JI), won 55 National Assembly seats.

Differing interpretations of constitutional authority, debates over the powers of the central government relative to those of the provinces, and the antagonistic relationship between the Bhutto Administration and opposition governments in Punjab and Balochistan seriously impeded social and economic reform programs. Ethnic conflict, primarily in Sindh province, exacerbated these problems. A fragmentation in the governing coalition and the military's reluctance to support an apparently ineffectual and corrupt government were accompanied by a significant deterioration in law and order.

In August 1990, President Khan, citing his powers under the eighth amendment to the constitution, dismissed the Bhutto government and dissolved the national and provincial assemblies. New elections, held in October of 1990, confirmed the political ascendancy of the IJI. In addition to a two-thirds majority in the National Assembly, the alliance acquired control of all four provincial parliaments and enjoyed the support of the military and of President Khan. Muhammad Nawaz Sharif, as leader of the PML, the most prominent Party in the IJI, was elected Prime Minister by the National Assembly.

Sharif emerged as the most secure and powerful Pakistani Prime Minister since the mid-1970s. Under his rule, the IJI achieved several important political victories. The implementation of Sharif's economic reform program, involving privatization, deregulation, and encouragement of private sector economic growth, greatly improved Pakistan's economic performance and business climate. The passage into law in May 1991 of a Shari'a bill, providing for widespread Islamization, legitimized the IJI government among much of Pakistani society.

After PML President Junejo's death in March 1993, Sharif loyalists unilaterally nominated him as the next party leader. Consequently, the PML divided into the PML Nawaz (PML/N) group, loyal to the Prime Minister, and the PML Junejo group (PML/J), supportive of Hamid Nasir Chatta, the President of the PML/J group.

However, Nawaz Sharif was not able to reconcile the different objectives of the IJI's constituent parties. The largest religious party, Jamaat-i-Islami (JI), abandoned the alliance because of its perception of PML hegemony. The regime was weakened further by the military's suppression of the MQM, which had entered into a coalition with the IJI to contain PPP influence, and allegations of corruption directed at Nawaz Sharif. In April 1993, President Khan, citing "maladministration, corruption, and nepotism" and espousal of political violence, dismissed the Sharif government, but the following month the Pakistan Supreme Court reinstated the National Assembly and the Nawaz Sharif government. Continued tensions between Sharif and Khan resulted in governmental gridlock and the Chief of Army Staff brokered an arrangement under which both the President and the Prime Minister resigned their offices in July 1993.

An interim government, headed by Moeen Qureshi, a former World Bank Vice President, took office with a mandate to hold national and provincial parliamentary elections in October. Despite its brief term, the Qureshi government adopted political, economic, and social reforms that generated considerable domestic support and foreign admiration.

In the October 1993 elections, the PPP won a plurality of seats in the National Assembly and Benazir Bhutto was asked to form a government. However, because it did not acquire a majority in the National Assembly, the PPP's control of the government depended upon the continued support of numerous independent parties, particularly the PML/J. The unfavorable circumstances surrounding PPP rule -- the imperative of preserving a coalition government, the formidable opposition of Nawaz Sharif's PML/N movement, and the insecure provincial administrations -- presented significant difficulties for the government of Prime Minister Bhutto. However, the election of Prime Minister Bhutto's close associate, Farooq Leghari, as President in November 1993 gave her a stronger power base.

In November 1996, President Leghari dismissed the Bhutto government, charging it with corruption, mismanagement of the economy, and implication in extra-judicial killings in Karachi. Elections in February 1997 resulted in an overwhelming victory for the PML/Nawaz, and President Leghari called upon Nawaz Sharif to form a government. In March 1997, with the unanimous support of the National Assembly, Sharif amended the constitution, stripping the President of the power to dismiss the government and making his power to appoint military service chiefs and provincial governors contingent on the "advice" of the Prime Minister. Another amendment prohibited elected members from "floor crossing" or voting against party lines. The Sharif government engaged in a protracted dispute with the judiciary, culminating in the storming of the Supreme Court by ruling party loyalists and the engineered dismissal of the Chief Justice and the resignation of President Leghari in December 1997. The new President elected by Parliament, Rafiq Tarar, was a close associate of the Prime Minister. A one-sided accountability campaign was used to target opposition politicians and critics of the regime. Similarly, the government moved to restrict press criticism and ordered the arrest and beating of prominent journalists. As domestic criticism of Sharif's administration intensified, Sharif attempted to replace Chief of Army Staff General Pervez Musharraf on October 12, 1999, with a family loyalist, Director General ISI Lt. Gen. Ziauddin. Although General Musharraf was out of the country at the time, the Army moved quickly to depose Sharif.

On October 14, 1999, General Musharraf declared a state of emergency and issued the Provisional Constitutional Order (PCO), which suspended the federal and provincial parliaments, held the constitution in abeyance, and designated Musharraf as Chief Executive. While delivering an ambitious seven-point reform agenda, Musharraf has not yet provided a timeline for a return to civilian, democratic rule, although local elections are anticipated at the end of calendar year 2000. Musharraf has appointed a National Security Council, with mixed military/civilian appointees, a civilian Cabinet, and a National Reconstruction Bureau (think tank) to formulate structural reforms. A National Accountability Bureau (NAB), headed by an active duty military officer, is prosecuting those accused of willful default on bank loans and corrupt practices, whose conviction can result in disqualification from political office for twenty-one years. The NAB Ordinance has attracted criticism for holding the accused without charge and, in some instances, access to legal counsel. While military trial courts were not established, on January 26, 2000, the government stipulated that Supreme, High, and Shari'a Court justices should swear allegiance to the Provisional Constitutional Order and the Chief Executive. Approximately 85 percent of justices acquiesced, but a handful of justices were not invited to take the oath and were forcibly retired. Political parties have not been banned, but a couple of dozen ruling party members remain detained, with Sharif and five colleagues facing charges of attempted hijacking.

GOVERNMENT
The Pakistan Constitution of 1973, amended substantially in 1985 under Zia, was suspended by the military government on October 12, 1999. Musharraf has committed to return Pakistan to democratic, civilian rule but the implications of his promised structural reforms on the country's previous parliamentary system are unknown.

Under the Provisional Constitutional Order and its amendments, all power flows from and to the Chief Executive, who also holds the posts of Chief of Army Staff and Chairman, Joint Chiefs of Staff. The Judiciary is proscribed from issuing any order contrary to the decisions of the Chief Executive, and the President, Cabinet, National Security Council, and Governors serve at his discretion. In practice, Musharraf consults extensively with his civilian appointees and Corps Commanders and in certain policy areas (e.g., economic reform) civilian appointees have exhibited wide policy latitude.

Although the Judiciary was compelled to take an oath to the PCO and the Chief Executive, courts continue to function and exercise that authority which does not conflict with the PCO. The Supreme Court is Pakistan's highest court. The President, in consultation with the Chief Executive, appoints the Chief Justice and they together determine the other judicial appointments. Each province has a high court, the justices of which are appointed by the President after conferring with the Chief Justice of the Supreme Court and the provincial chief justice.

NATIONAL SECURITY
Pakistan's 610,000-member armed forces, the world's eighth largest, are well trained and disciplined. However, budget constraints and nation-building duties have reduced Pakistan's normal robust training tempo, which if not reversed, will eventually impact on the operational readiness of the Armed Forces. Likewise, Pakistan has had an increasingly difficult time maintaining their aging fleet of United States, Chinese, United Kingdom and French equipment. While the industrial base capabilities have expanded significantly, limited fiscal resources and various sanctions have significantly constrained the government's efforts to modernize the armed forces.

Until 1990, the United States provided military aid to Pakistan to modernize its conventional defensive capability. The United States allocated about 40% of its assistance package to non-reimbursable credits for military purchases, the third largest program behind Israel and Egypt. The remainder of the aid program was devoted to economic assistance. While sanctions have been in effect since 1990, various amendments have authorized return of spare parts and end items already paid for by Pakistan. In addition, the U.S. and Pakistan have come to a financial agreement on the non-delivery of F-16s. However, Pakistan's nuclear tests in response to India's May 1998 tests and the recent military coup have placed additional sanctions on Pakistan.

Principal Government Officials
President--Rafiq Tarar
Chief Executive--General Pervez Musharraf
Minister of Foreign Affairs--Abdul Sattar
Ambassador to the U.S.--Maleeha Lodhi
Ambassador to the UN--Shamshad Ahmed

Pakistan maintains an embassy in the United States at 2315 Massachusetts Avenue, N.W., Washington, DC 20008 (Tel. 202-939-6200).

ECONOMY
Extreme poverty and underdevelopment in Pakistan, as well as fiscal mismanagement that has produced a large foreign debt, obscure the potential of a country which has the resources and entrepreneurial skill to support rapid economic growth. In fact, the economy averaged an impressive growth rate of 6 percent per year during the 1980s and early 1990s. However, the economy is extremely vulnerable to Pakistan's external and internal shocks, such as in 1992-93, when devastating floods and political uncertainty combined to depress economic growth sharply and the financial crisis in Asia which hit major markets for Pakistani textile exports. Average real GDP growth from 1992 to 1998 dipped to 4.1 percent annually.

Since the early 1980s, the government has pursued market-based economic reform policies. Market-based reforms began to take hold in 1988, when the government launched an ambitious IMF-assisted structural adjustment program in response to chronic and unsustainable fiscal and external account deficits. Since that time the government has removed barriers to foreign trade and investment, begun to reform the financial system, eased foreign exchange controls, and privatized dozens of state-owned enterprises. Pakistan continues to struggle with these reforms, having mixed success, especially in reducing its budget and current account deficits. The budget deficit in FY 1996-97 was 6.4% of GDP. Initial data implied a reduction in 1997-98 to 5.4% and in 1998-99 to 4.3%, but revised data indicates that the deficit is probably still over 5.0%. In that same 2-year period, the rupee was devalued against the dollar 12% and 10.5% respectively.

Economic reform was further set back by Pakistan's nuclear tests in May 1998 and the subsequent economic sanctions imposed by the G-7. International default was narrowly averted by the partial waiver of sanctions and the subsequent reinstatement of Pakistan's IMF ESAF/EFF in early 1999, followed by Paris Club and London Club reschedulings. The Sharif government had difficulty meeting the conditionality of the IMF program, which was suspended in July 1999. The current government has announced a program of reforms and is in discussion with the IMF regarding a Poverty Reduction and Growth Facility to begin in July 2000.

With a per capita GDP of about USD 441, the World Bank considers Pakistan a low-income country. No more than 39 percent of adults are literate, and life expectancy is about 62 years or less. The population, currently about 130 million, is growing at about 2.6%, very close to the GDP growth rate. Relatively few resources have been devoted to socio-economic development on infrastructure projects. Inadequate provision of social services and high population growth have contributed to a persistence of poverty and unequal income distribution.

Agriculture and Natural Resources
Pakistan's principal natural resources are arable land and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Agriculture accounts for about 24% of GDP and employs about 50% of the labor force. The most important crops are wheat, sugarcane, cotton, and rice, which together account for more than 75% of the value of total crop output. Despite intensive farming practices, Pakistan remains a net food importer. Pakistan exports rice, cotton, fish, fruits, and vegetables and imports vegetable oil, wheat, cotton, pulses and consumer foods.

The economic importance of agriculture has declined since independence, when its share of GDP was around 53%. Following the poor harvest of 1993, the government introduced agriculture assistance policies, including increased support prices for many agricultural commodities and expanded availability of agricultural credit. From 1993 to 1997, real growth in the agricultural sector averaged 5.7% but has since declined to less than 4%. Agricultural reforms, including increased wheat and oilseed production, play a central role in the new government's economic reform package.

Pakistan has extensive energy resources, including fairly sizable natural gas reserves, some proven oil reserves, coal, and large hydropower potential. However, the exploitation of energy resources has been slow due to a shortage of capital and domestic political constraints. For instance, domestic petroleum production totals only about half the country's oil needs. The need to import oil also contributes to Pakistan's persistent trade deficits and the shortage of foreign exchange. The current government has announced that privatization in the oil and gas sector is a priority, as is the substitution of indigenous gas for imported oil, especially in the production of power.

Industry
Pakistan's manufacturing sector accounts for about 26% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 64% of total exports. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing. Despite ongoing government efforts to privatize large-scale parastatal units, the public sector continues to account for a significant proportion of industry. In FY 1998-99, gross fixed capital formation in the public sector accounted for about 38% of the total. In the face of an increasing trade deficit, the government hopes to diversify the country's industrial base and bolster export industries.

Foreign Trade and Aid
Weak world demand for its exports and domestic political uncertainty have contributed to Pakistan's high trade deficit. In FY 1998-99, Pakistan recorded a current account deficit of $1.7 billion, only a slight improvement over the FY 1997-98 current account deficit of $1.9 billion. Pakistan's exports continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Major imports include petroleum and petroleum products, edible oil, wheat, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products. External imbalance has left Pakistan with a growing foreign debt burden. Principal and interest payments in FY 1998-99 totaled $2.6 billion, more than double the amount paid in FY 1989-90. Annual debt service now exceeds 34% of export earnings.

Pakistan receives about $2.5 billion per year in loan/grant assistance from international financial institutions (e.g., the IMF, the World Bank, and the Asian Development Bank) and bilateral donors. Increasingly, the composition of assistance to Pakistan has shifted away from grants toward loans repayable in foreign exchange. All new U.S. economic assistance to Pakistan was suspended after October 1990, when then-President Bush could no longer certify under the Pressler Amendment to the Foreign Assistance Act (Section 620e[e]) "that Pakistan does not possess a nuclear explosive device and that the proposed assistance package reduces significantly the risk that Pakistan will acquire a nuclear explosive device."

FOREIGN RELATIONS
Pakistan is a prominent member of the Organization of the Islamic Conference (OIC) and an active member of the United Nations. Its foreign policy encompasses historically difficult relations with India, a desire for a stable Afghanistan, long-standing close relations with China, extensive security and economic interests in the Persian Gulf, and wide-ranging bilateral relations with the United States and other Western countries.

India
Since partition, relations between Pakistan and India have been characterized by rivalry and suspicion. Although many issues divide the two countries, the most sensitive one since independence has been the status of Kashmir.

At the time of partition, the princely state of Kashmir, though ruled by a Hindu Maharajah, had an overwhelmingly Muslim population. When the Maharajah hesitated in acceding to either Pakistan or India in 1947, some of his Muslim subjects, aided by tribesmen from Pakistan, revolted in favor of joining Pakistan. In exchange for military assistance in containing the revolt, the Kashmiri ruler offered his allegiance to India. Indian troops occupied the eastern portion of Kashmir, including its capital, Srinagar, while the western part came under Pakistani control.

India addressed this dispute in the United Nations on January 1, 1948. One year later, the UN arranged a cease-fire along a line dividing Kashmir, but leaving the northern end of the line undemarcated and the vale of Kashmir (with the majority of the population) under Indian control. India and Pakistan agreed with Indian resolutions which called for a UN-supervised plebiscite to determine the state's future.

Full-scale hostilities erupted in September 1965, when India alleged that insurgents trained and supplied by Pakistan were operating in India-controlled Kashmir. Hostilities ceased three weeks later, following mediation efforts by the UN and interested countries. In January 1966, Indian and Pakistani representatives met in Tashkent, U.S.S.R., and agreed to attempt a peaceful settlement of Kashmir and their other differences.

Following the 1971 Indo-Pakistan conflict, President Zulfiqar Ali Bhutto and Indian Prime Minister Indira Gandhi met in the mountain town of Shimla, India, in July 1972. They agreed to a line of control in Kashmir resulting from the December 17, 1971 cease-fire, and endorsed the principle of settlement of bilateral disputes through peaceful means. In 1974, Pakistan and India agreed to resume postal and telecommunications linkages, and to enact measures to facilitate travel. Trade and diplomatic relations were restored in 1976 after a hiatus of five years.

India's nuclear test in 1974 generated great uncertainty in Pakistan and is generally acknowledged to have been the impetus for Pakistan's nuclear weapons development program. In 1983, the Pakistani and Indian governments accused each other of aiding separatists in their respective countries, i.e., Sikhs in India's Punjab state and Sindhis in Pakistan's Sindh province. In April 1984, tensions erupted after troops were deployed to the Siachen Glacier, a high-altitude desolate area close to the China border left undemarcated by the cease-fire agreement (Karachi Agreement) signed by Pakistan and India in 1949.

Tensions diminished after Rajiv Gandhi became Prime Minister in November 1984 and after a group of Sikh hijackers was brought to trial by Pakistan in March 1985. In December 1985, President Zia and Prime Minister Gandhi pledged not to attack each other's nuclear facilities. (A formal "no attack" agreement was signed in January 1991.) In early 1986, the Indian and Pakistani governments began high-level talks to resolve the Siachen Glacier border dispute and to improve trade.

Bilateral tensions increased in early 1990, when Kashmiri militants began a campaign of violence against Indian Government authority in Jammu and Kashmir. Subsequent high-level bilateral meetings relieved the tensions between India and Pakistan, but relations worsened again after the destruction of the Ayodhya Mosque by Hindu extremists in December 1992 and terrorist bombings in Bombay in March 1993. Talks between the Foreign Secretaries of both countries in January 1994 resulted in deadlock.

In the last several years, the Indo-Pakistani relationship has veered sharply between rapprochement and conflict. After taking office in February 1997, Prime Minister Nawaz Sharif moved to resume official dialog with India. A number of meetings at the foreign secretary and prime ministerial level took place, with positive atmospherics but little concrete progress. The relationship improved markedly when Indian Prime Minister Vajpayee traveled to Lahore for a summit with Sharif in February 1999. There was considerable hope that the meeting could lead to a breakthrough. Unfortunately, in spring 1999 infiltrators from Pakistan occupied positions on the Indian side of the Line of Control in the remote, mountainous area of Kashmir near Kargil, threatening the ability of India to supply its forces on Siachen Glacier. By early summer, serious fighting flared in the Kargil sector. The infiltrators withdrew following a meeting between Prime Minister Sharif and President Clinton in July. Relations between India and Pakistan have since been particularly strained, especially since the October 12, 1999 coup in Islamabad.

Afghanistan
Following the 1979 Soviet invasion of Afghanistan, the Pakistani Government played a vital role in supporting the Afghan resistance movement and assisting Afghan refugees. After the Soviet withdrawal in February 1989, Pakistan, with cooperation from the world community, continued to provide extensive support for displaced Afghans. In 1999, the United States provided approximately $70 million in humanitarian assistance to Afghanistan and Afghan refugees in Pakistan, mainly through multilateral organizations and NGOs. As such, the United States in 1999 was the largest single donor. In 1999, more than 1.2 million registered Afghan refugees remained in Pakistan, as fighting between rival factions continued. Pakistan has recognized the Taliban as the government in Afghanistan and provides the Taliban assistance. Pakistan has periodically offered to try to help bring Afghanistan's warring factions to the negotiating table, thus far with negligible results.

Russian Federation
Under military leader Ayub Khan, Pakistan sought to improve relations with the Soviet Union; trade and cultural exchanges between the two countries increased between 1966 and 1971. However, Soviet criticism of Pakistan's position in the 1971 war with India weakened bilateral relations, and many Pakistanis believed that the August 1971 Indo-Soviet Treaty of Friendship, Peace and Cooperation encouraged Indian belligerency. Subsequent Soviet arms sales to India, amounting to billions of dollars on concessional terms, reinforced this argument.

During the 1980s, tensions increased between the Soviet Union and Pakistan because of the latter's key role in helping to organize political and material support for the Afghan rebel forces. The withdrawal of Soviet forces from Afghanistan and the collapse of the former Soviet Union resulted in significantly improved bilateral relations, but Pakistan's support for and recognition of the Taliban regime in neighboring Afghanistan is an ongoing source of tension.

People's Republic of China
In 1950, Pakistan was among the first countries to recognize the People's Republic of China (P.R.C.). Following the Sino-Indian hostilities of 1962, Pakistan's relations with China became stronger; since then, the two countries have regularly exchanged high-level visits resulting in a variety of agreements. China has provided economic, military, and technical assistance to Pakistan.

Favorable relations with China have been a pillar of Pakistan's foreign policy. The P.R.C. strongly supported Pakistan's opposition to Soviet involvement in Afghanistan and is perceived by Pakistan as a regional counterweight to India and Russia.

Iran and the Persian Gulf
Historically, Pakistan has had close geopolitical and cultural-religious linkages with Iran. However, strains in the relationship appeared in the last decade. Pakistan and Iran support opposing factions in the Afghan conflict. Also, some Pakistanis suspect Iranian support for the sectarian violence which has plagued Pakistan. Nevertheless, Pakistan pursues an active diplomatic relationship with Iran, including recent overtures to seek a negotiated settlement between Afghanistan's warring factions.

Despite popular support for Iraq in 1991, the Pakistani government supported the coalition against Iraq's invasion of Kuwait and sent 11,600 troops to defend Saudi Arabia. Pakistan provides military personnel to strengthen Gulf-state defenses and to reinforce its own security interests in the area.

U.S.-PAKISTAN RELATIONS
The United States and Pakistan established diplomatic relations in 1947. The U.S. agreement to provide economic and military assistance to Pakistan and the latter's partnership in the Baghdad Pact/CENTO and SEATO strengthened relations between the two nations. However, the U.S. suspension of military assistance during the 1965 Indo-Pakistan war generated a widespread feeling in Pakistan that the United States was not a reliable ally. Even though the United States suspended military assistance to both countries involved in the conflict, the suspension of aid affected Pakistan much more severely. Gradually, relations improved and arms sales were renewed in 1975. Then, in April 1979, the United States cut off economic assistance to Pakistan, except food assistance, as required under the Symington Amendment to the Foreign Assistance Act of 1961, due to concerns about Pakistan's nuclear program.

The Soviet invasion of Afghanistan in December 1979 highlighted the common interest of Pakistan and the United States in peace and stability in South Asia. In 1981, the United States and Pakistan agreed on a $3.2-billion military and economic assistance program aimed at helping Pakistan deal with the heightened threat to security in the region and its economic development needs.

Recognizing national security concerns and accepting Pakistan's assurances that it did not intend to construct a nuclear weapon, Congress waived restrictions (Symington Amendment) on military assistance to Pakistan. In March 1986, the two countries agreed on a second multi-year (FY 1988-93) $4-billion economic development and security assistance program. On October 1, 1990, however, the United States suspended all military assistance and new economic aid to Pakistan under the Pressler Amendment, which required that the President certify annually that Pakistan "does not possess a nuclear explosive device."

There have been several incidents of violence against American officials and U.S. mission employees in Pakistan. In November 1979, false rumors that the United States had participated in the seizure of the Grand Mosque in Mecca provoked a mob attack on the U.S. embassy in Islamabad. The government's delayed response enabled the mob to burn the embassy. Four people died, two of them U.S. nationals. The American Cultural Center in Lahore also was destroyed by fire. In 1989, there was an attack on the American Center in Islamabad, where six Pakistanis were killed in the crossfire with the police. In March of 1995, two American employees of the consulate in Karachi were killed and one wounded in an attack on the home-to-office shuttle. In November of 1997, four U.S. businessmen were brutally murdered while being driven to work in Karachi. In November 1999, the Embassy and the American Center were the targets of rocket attacks that wounded one local national security guard.

The decision by India to conduct nuclear tests in May 1998 and Pakistan's matching response set back U.S. relations in the region, which had seen renewed U.S. Government interest during the second Clinton Administration. A presidential visit scheduled for the first quarter of 1998 was postponed and, under the Glenn Amendment, sanctions restricted the provision of credits, military sales, economic assistance, and loans to the government. An intensive dialogue on nuclear nonproliferation and security issues between Deputy Secretary Talbott and Foreign Secretary Shamshad Ahmad was initiated, with discussions focusing on CTBT signature and ratification, FMCT negotiations, export controls, and a nuclear restraint regime. The October 1999 overthrow of the democratically elected Sharif government triggered an additional layer of sanctions under Section 508 of the Foreign Appropriations Act which include restrictions on foreign military financing and economic assistance. Presently, U.S. Government assistance to Pakistan is limited mainly to refugee and counter-narcotics assistance.

Principal U.S. Embassy Officials
Ambassador--William B. Milam
Deputy Chief of Mission--Michele J. Sison
Defense Attache--Col. Herb Stoddard
Defense Representative--Col. Tod Wilson
Counselor for Political Affairs--John R. Schmidt
Counselor for Economic Affairs--James S. Elliott
Public Affairs Officer--Lee James Irwin
Consul General--David Donahue
Consul General, Karachi--John Bennett
Principal Officer, Lahore--Sheldon Rapoport
Principal Officer, Peshawar--David Katz

The U.S. Embassy is located at the Diplomatic Enclave, Ramna 5, Islamabad [Tel. (92)-(51)-2080-2000; telex 82-5-864].

[This is a mobile copy of Pakistan (03/00)]