Nuclear Sanctions: Section 102(b) of the Arms Export Control Act and Its Application to India and Pakistan

Order Code 98-486 A

CRS Report for Congress

Received through the CRS Web

Nuclear Sanctions: Section 102(b)

of the Arms Export Control Act and Its

Application to India and Pakistan

Updated October 5, 2001

Jeanne J. Grimmett

Legislative Attorney

American Law Division

Congressional Research Service ˜ The Library of Congress

Nuclear Sanctions: Section 102(b) of the Arms Export

Control Act and Its Application to India and Pakistan

Summary

Section 102(b) of the Arms Export Control Act (AECA) requires the President

to impose sanctions on any country that he has determined is a "non-nuclear-weapon

state" and has received or detonated a "nuclear explosive device." Sanctions include

prohibitions on foreign assistance; munitions sales and licenses; foreign military

financing; government credits, guarantees, and financial assistance; U.S. support for

multilateral financial assistance; private bank lending to the affected government; and

exports of certain specific controlled goods and technology. Specific exceptions exist

for humanitarian aid; food and agricultural exports; food assistance; private bank

loans and credits for purchases of food and agricultural commodities; and certain

transactions involving intelligence activities. The statute does not provide for

terminating or suspending sanctions once imposed. The President placed § 102(b)

sanctions on India and Pakistan in May 1998 following nuclear tests by those

countries earlier that month. The statute had never before been invoked and its full

implementation give rise to various legal and policy issues. After an inter-agency

review, the Administration announced its overall implementation plan for both

countries June 18, 1998. Concerns over the lack of an exemption for agricultural

goods in § 102(b)(2)’s prohibition on government credits and guarantees led to

enactment of the Agriculture Export Relief Act (P.L. 105-194), which exempted

Department of Agriculture programs through FY99; it also permanently exempted

government financing for medicine and medical goods and allowed private loans for

fertilizer exports. In October 1998, Congress authorized the President to waive for

one year certain § 102(b)(2) prohibitions applicable to the two countries, as well as

other related statutory restrictions (India-Pakistan Relief Act, P.L. 105-277). The

President exercised this authority December 1, 1998.

Congress has since authorized the President to waive indefinitely, as they apply

to India and Pakistan, all sanctions imposed under §§ 101 or 102 of the AECA; a

nuclear-related restriction in the Export-Import Bank Act; and § 620E(e) of the

Foreign Assistance Act (FAA)(Pressler Amendment), which restricts military aid and

exports to Pakistan (DOD Appropriations Act, 2000, P.L. 106-79, § 9001). The

President may waive military and export control sanctions only if he certifies to

Congress that applying a restriction would not be in U.S. national security interests;

any licenses for defense exports must be notified to Congress and are subject to

congressional review. In October 1999, President Clinton waived sanctions with

regard to certain programs and commercial transactions specific to each country. In

August and early September 2001, both the Bush Administration and Members of

Congress began to call for removal of the sanctions, mainly as applicable to India;

legislation to lift the measures has also been introduced. Following the September 11

attacks on the World Trade Center and the Pentagon, the President waived for both

India and Pakistan prohibitions on exports of defense items and sensitive technology

and military financing, citing U.S. national security interests; also waived were any

remaining sanctions in §§ 101 or 102 of the AECA, the Export-Import Bank Act, and

the Pressler Amendment. Foreign assistance to Pakistan continues to be restricted

because of an anti-coup provision in appropriations legislation and other debt-related

restrictions; also, three Pakistani entities are subject to two-year AECA missile

proliferation sanctions. Legislation allowing removal of restrictions on Pakistan (S.

1465) was reported by the Senate Foreign Relations Committee October 4. This

report will be updated.

Contents

Requirements of § 102(b) of the Arms Export Control Act (AECA) . . . . . . . . . 2

Application of § 102(b) of the AECA to India and Pakistan . . . . . . . . . . . . . . . . 5

Details of § 102(b) Sanctions Imposed on India and Pakistan . . . . . . . . . . . . . . . 7

1998 Sanctions Relief Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1999 Sanctions Relief Legislation and Presidential Action . . . . . . . . . . . . . . . . 14

Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Nuclear Sanctions: Section 102(b) of the

Arms Export Control Act and Its Application

to India and Pakistan

This report describes the requirements of § 102(b) of the Arms Export Control

Act, 22 U.S.C. § 2799aa-1(b)(AECA or Act), which requires the imposition of

economic and military sanctions against countries that have engaged in certain types

of nuclear proliferation, and discusses its application to India and Pakistan, which

conducted nuclear weapons tests in May 1998. It also discusses subsequently enacted

legislation authorizing the removal or some or all of these sanctions and presidential

action taken pursuant to these new authorities.

Section 102(b), also known as the Glenn Amendment, was enacted in the

Nuclear Proliferation Prevention Act of 1994 and is an amended version of the now

repealed § 670(b) of the Foreign Assistance Act of 1961, originally enacted in 1977.1

In pertinent part, § 102(b)(1) requires the President to impose sanctions on any

country that he has determined is a "non-nuclear-weapon state" and has received or

detonated a "nuclear explosive device" and on any country that has transferred such

a device to a non-nuclear-weapons state.

The required sanctions include prohibitions on foreign assistance; sales and

licenses under the AECA; U.S. government credits, credit guarantees, and financial

assistance; U.S. support for multilateral financial assistance; private bank lending to

the affected government; and exports of certain specific controlled goods and

technology. Humanitarian aid, food and agricultural exports, food assistance, and

bank loans and credits for purchases of food and agricultural commodities are

exempted, as are certain transactions involving intelligence activities.

Congress amended portions of these sanctions provisions in July 1998 and

subsequently granted the President authority temporarily to waive particular sanctions

with regard to India and Pakistan as of October 21, 1998. The President formally

exercised this waiver authority December 1, 1998, the waiver expiring October 21,

1999. In an October 25, 1999 enactment, Congress granted the President authority

to waive AECA sanctions without time limit; the President used this authority

October 27, 1999 to waive statutory restrictions with regard to specified U.S.

government programs and commercial transactions involving the two countries.

1

Foreign Assistance Act of 1961, § 670, added by P.L. 95-92, § 12, amended and restated

by P.L. 97-113, § 737(c). The provision adding § 102 to the AECA, which is contained in

Part B of the Nuclear Proliferation Prevention Act of 1994, was enacted in § 826(a) of the

Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, P.L. 103-236. The

Nuclear Proliferation Prevention Act of 1994 was enacted as Title VIII of P.L. 103-236.

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Requirements of § 102(b) of the Arms Export

Control Act (AECA)

The text of § 102(b)(1) of the Arms Export Control Act under discussion here

provides as follows:

Except as provided in paragraphs (4), (5), and (6), in the event that the President

determines that any country, after the effective date of part B of the Nuclear

Proliferation Prevention Act of 1994 —

(B) is a non-nuclear-weapon-state and either —

(i) receives a nuclear explosive device, or

(ii) detonates a nuclear explosive device,

then the President shall forthwith report in writing his determination to the

Congress and shall forthwith impose the sanctions described in paragraph (2)

against that country.

The statute defines a "non-nuclear-weapon state" as "any country which is not

a nuclear-weapon state, as defined in Article IX(3) of the Treaty on the NonProliferation of Nuclear Weapons" (AECA, § 102(c)). Under Article IX(3) of the

Treaty, a nuclear weapon state is "one which has manufactured and exploded a

nuclear weapon or other nuclear device prior to January 1, 1967" (21 U.S.T. 492-93).

The term "nuclear explosive device" is to be defined pursuant to § 830(4) of the

Nuclear Proliferation Prevention Act, 22 U.S.C. § 3201 note, and thus includes "any

device, whether assembled or disassembled, that is designed to produce an

instantaneous release of an amount of nuclear energy from special nuclear material

that is greater than the amount of energy that would be released from the detonation

of one pound of trinitrotoluene (TNT)."2

Section 102(b)(2) of the AECA sets forth the sanctions to be imposed after a

presidential determination. As they existed in May 1998, these sanctions were as

follows:

(A) The United States Government shall terminate assistance to that country

under the Foreign Assistance Act of 1961, except for humanitarian

assistance or food or other agricultural commodities.

(B) The United States Government shall terminate —

(i) sales to that country under this Act [i.e. the AECA] of any defense

articles, defense services, or design and construction services, and

2

Legislative history of § 102(b) indicates that sanctions imposed under § 102(b)(2) are

intended to be prospective. House Conference Report language on the provision, which was

adopted as a Senate floor amendment and not contained in the House bill, states that the

"conference substitute is similar to the Senate amendment, but ... refines the language on

sanctions with respect to transfers or detonations of nuclear explosive devices (or transfers

or designs or components thereof) to ensure that such sanctions are prospective." H.Rept.

103-482, 103d Cong., 2d Sess. 264 (1994).

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(ii) licenses for the export to that country of any item on the United States

Munitions List.

(C) The United States Government shall terminate all foreign military financing

for that country under this Act [i.e. the AECA].

(D) The United States Government shall deny to that country any credit, credit

guarantees, or other financial assistance by any department, agency, or

instrumentality of the United States Government, except that the sanction of

this subparagraph shall not apply —

(i) to any transaction subject to the reporting requirements of title V of the

National Security Act of 1947 (relating to congressional oversight of

intelligence activities), or

(ii) to humanitarian assistance.3

(E) The United States Government shall oppose, in accordance with section 701

of the International Financial Institutions Act (22 U.S.C. 262d), the

extension of any loan or financial or technical assistance by any international

financial institution.4

(F) The United States Government shall prohibit any United States bank from

making any loan or providing any credit to the government of that country,

except for loans or credits for the purpose of purchasing food or other

agricultural commodities.

3

In addition, § 2(b)(4) of the Export-Import Bank Act, 12 U.S.C. § 635(b)(4)(as amended by

§ 1303(a) of P.L. 104-201) prohibits the Bank from giving approval to guarantees, insurance,

credit extensions or participations in the extension of credit in support of U.S. exports to any

country that the Secretary of State has determined is not a nuclear-weapon state and has

detonated, after October 26, 1977, a nuclear explosive device. The statute gives the President

authority to waive the prohibition if he finds Bank approvals to be in the "national interest."

The Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1998,

prohibited the Export-Import Bank from using funds available to it in FY1998 “to make

expenditures, contracts, or commitments for the export of nuclear equipment, fuel, or

technology to any country other than a nuclear-weapon state as defined in Article IX of the

Nuclear Non-Proliferation Treaty eligible to receive economic or military assistance under this

Act that has detonated a nuclear explosive after the date of enactment,” i.e., November 26,

1997. P.L. 105-118, Title I, 111 Stat. 2386. This is a standard foreign operations

appropriations restriction; it currently appears in the Foreign Operations Appropriations Act,

2001, P.L. 106-429, Appendix A– H.R. 5526, Title I, 114 Stat. 1900, 1900A-3.

4

Section 701 of the International Financial Institutions Act, 22 U.S.C. § 262d, sets forth

human rights and U.S. assistance policies with international financial institutions. Among

other covered institutions are the International Bank for Reconstruction and Development

(World Bank), the International Development Association, the International Finance

Corporation, the Asian Development Bank, and the International Monetary Fund (IMF). In

carrying out his or her duties, the United States Executive Director of each of the named

institutions is to consider, among other things, whether the recipient country has detonated

a nuclear device. 22 U.S.C. § 262d(b)(3)(C). In addition, the U.S. Government is to "seek

to channel assistance to projects which address basic human needs of the people of the

recipient country." 22 U.S.C. § 262d(d).

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(G) The authorities of section 6 of the Export Administration Act of 19795 shall

be used to prohibit exports to that country of specific goods and technology

(excluding food and other agricultural commodities), except that such

prohibition shall not apply to any transaction subject to the reporting

requirements of title V of the National Security Act of 1947 (relating to

congressional oversight of intelligence activities).

While the statute requires that the President impose the sanctions "forthwith,"

it does not specify a date by which they must be imposed. The President may delay

their imposition for a maximum of 30 days of continuous session of Congress,

however, if he first transmits to the Speaker of the House of Representatives and the

Chairman of the Senate Foreign Relations Committee "a certification that he has

determined that an immediate imposition of sanctions on that country would be

detrimental to the national security of the United States" (§ 102(b)(4)(B)). This

section permits only one certification to be transmitted to the Congress for a country

regarding the same detonation, transfer, or receipt of a nuclear explosive device.

Section 102(b) does not allow the President unilaterally to waive one or more

of the sanctions when they are originally imposed, but does provide for the enactment

of legislation on an expedited basis that would permit such a waiver.6 The statute

does not provide for the possible removal or suspension of one or more of the

sanctions once certain conditions are met,7 nor does it provide for their termination.

Thus, in the absence of other provisions of law that may be invoked, legislation must

seemingly be enacted to achieve these ends.8

5

The authorities of the Export Administration Act (EAA), now expired, have been carried

forward in Executive Order No. 13222 of August 17, 2001, issued under the International

Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq. 66 Fed. Reg. had been

extended under Executive Order No. 12924 of August 19, 1994. 59 Fed. Reg. 43437 (1994).

Section 6 of the EAA, 50 U.S.C. App. § 2405, authorized the President to impose export

controls for foreign policy reasons, subject to certain conditions and restrictions.

6

If the President transmits a certification to the Congress for the delay of sanctions, a joint

resolution to authorize the exercise of waiver authority will be considered under expedited

procedures in the Senate if the legislation is introduced in either House within 30 days of

continuous session after Congress receives the President's certification. Arms Export Control

Act (AECA), § 102(b)(4)(B),(C). The waiver authority allows the President to waive "any

sanction" that must otherwise be imposed under § 102(b)(2) if he determines and certifies in

writing to the Speaker of the House and the Chairman of the Senate Foreign Relations

Committee that "the imposition of the sanction would be seriously prejudicial to the

achievement of United States nonproliferation objectives or otherwise jeopardize the common

defense and security." AECA, § 102(b)(5). The certification must include a statement setting

forth the specific reasons for the waiver. The authority would be limited to the country that

has engaged in the proscribed conduct.

7

For example, § 102(b) applies to a country that has detonated a nuclear explosive device

when it had the status of a "non-nuclear-weapon state," an act whose character cannot be

modified were that status subsequently to change.

8

Legislative history of P.L. 103-236 does not appear to address the termination of § 102(b)

sanctions. See 140 Cong. Rec. S411-S413 (daily ed. January 31, 1994) and H.Rept. 103-482,

103d Cong., 2d Sess. 261-266 (1994). Section 102(b) may be compared, however, to § 824

(continued...)

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Application of § 102(b) of the AECA to India and

Pakistan

On May 11, 1998, India stated publicly that it had conducted three underground

nuclear tests that day; on May 13, it announced that it had conducted two additional

tests. Pakistan announced May 28 that it had conducted five underground nuclear

tests; it reported a sixth test May 30. Because neither India nor Pakistan had

detonated a nuclear device before January 1, 1967, each is considered to be a "nonnuclear-weapon state" for purposes of § 102(b)(2).

On May 13, 1998, President Clinton signed Presidential Determination No. 9822, a memorandum for the Secretary of State, in which he determined "in accordance

with section 102(b)(1) of the Arms Export Control Act ... that India, a non-nuclearweapon state, detonated a nuclear explosive device on May 11, 1998," and directed

"the relevant agencies and instrumentalities of the United States Government ... to

take the necessary actions to impose the sanctions described in section 102(b)(2) of

the Act."9 On May 30, the President made an identical determination (No. 98-25)

with respect to Pakistan's May 28 tests.10 In each case, the President decided not to

8

(...continued)

of the Nuclear Proliferation Prevention Act, which, like § 826(a), the section enacting §

102(b), is also contained in Part B of the Act. Section 824, which provides for the imposition

of sanctions on persons found to have assisted nuclear proliferation through the provision of

financing, requires that sanctions continue in effect for 12 months and provides that they will

cease to apply after that period only if the President makes certain determinations.

It should also be noted that while the President has independent powers in the area of

foreign relations, the power of the President (or other entities of the Executive Branch) to

engage in the activities covered by the sanctions (e.g., providing foreign assistance, licensing

arms exports) and to prohibit the particular transactions listed in the Act is based on statutory

grants of delegated authority. In areas where Congress has exercised its express constitutional

powers, the President may not use his independent authority to contravene an expression of

congressional will. See, e.g., Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 634

(1952)(Justice Jackson concurring); Consumers Union of U.S. v. Kissinger, 506 F.2d 136

(D.C.Cir. 1974), cert. denied, 421 U.S. 1004 (1975); United States v. Guy W. Capps, Inc.,

204 F.2d 655 (4th Cir. 1953), aff’d on other grounds, 348 U.S. 296 (1955). See generally

L. Henkin, Foreign Affairs and the U.S. Constitution 86-96 (1996).

9

Presidential Determination No. 98-22 of May 13, 1998, 63 Fed. Reg. 27665 (1998).

10

Presidential Determination No. 98-25 of May 30, 1998, 63 Fed. Reg. 31881 (1998). The

United States suspended economic and military aid to Pakistan in April 1979 after receiving

what it considered to be incontrovertible evidence of covert efforts by that country to construct

a uranium enrichment facility. This action was taken under § 669 of the Foreign Assistance

Act of 1961 (FAA), known as the Symington Amendment, which prohibited all U.S. economic

and military assistance to any nonnuclear weapons country that had received nuclear

enrichment equipment, materials or technology which had not been placed under International

Atomic Energy Agency (IAEA) safeguards, unless the President made certain certifications.

Pursuant to subsequent legislation, sanctions were waived and later reapplied. Section 669 is

currently replaced by § 101 of the AECA. The FAA provides that the President may waive

the § 101 prohibition as it applies to Pakistan, with respect to any grounds for the prohibition

(continued...)

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invoke that part of § 102(b) allowing a 30-day delay of sanctions. By doing so, the

President appeared to forego the possible expedited enactment of a joint resolution

authorizing him to waive any sanction with respect to India or Pakistan, as provided

in § 102(b)(4)(B). Congress could choose to enact separate legislation, however,

authorizing such a waiver or a version thereof.

The President's determination regarding India was the first invocation of §

102(b). At the time, no regulations had been issued governing its implementation.

While the Executive Branch has implemented many forms of sanctions legislation in

the past and could draw on this experience in implementing § 102(b), it had no prior

regulatory precedents for administering this specific statute. The absence of certain

definitions in § 102(b) could present problems for agencies, but could also afford

them flexibility in implementing these measures.11 Agencies involved in administering

the sanctions include the Department of State, the Department of Defense, the

Agency for International Development (AID), the Overseas Private Investment

Corporation (OPIC), the Department of Commerce, the Office of Foreign Assets

Control of the Department of the Treasury (OFAC), the U.S. Export-Import Bank,

and the Commodity Credit Corporation (CCC). As noted earlier, absent other

provisions of law that may apply, authority for the modification, suspension, or

10

(...continued)

of assistance arising before the effective date of the Nuclear Proliferation Prevention Act of

1994, if he determines that to provide assistance is in the national interest of the United States.

FAA, § 620E(d), 22 U.S.C. § 2375(d).

Under § 620E(e) of the Foreign Assistance Act, added in 1985 and amended in 1996

(P. L. 104-107)(Pressler Amendment), Pakistan is prohibited from receiving certain military

assistance and military equipment or technology unless the President can certify during the

fiscal year in which such assistance or sales or transfers are to take place,“that Pakistan does

not possess a nuclear explosive device and that the proposed military assistance program will

reduce significantly the risk that Pakistan will possess a nuclear explosive device." Pakistan

has not been certified with respect to non-possession of a nuclear explosive device since

Presidential Determination No. 90-1 of October 5, 1989, 54 Fed. Reg. 43797 (1989). The

President was able to waive § 101 of the AECA and § 620E(e) of the FAA for one year as

these provisions applied to India or Pakistan under the India-Pakistan Relief Act of 1998 (see

pages 11-13, infra) and may now do so without time restriction under authority granted in §

9001 of the Department of Defense Appropriations Act, 2000, P.L. 106-79 (see pages 13-15,

infra). Regarding sanctions imposed on Pakistan, see generally CRS Report 92-631,

Economic Sanctions Imposed by the United States Against Specified Countries: 1979

Through 1992, at 193-96.

11

Section 102(b) sanctions are to be imposed against the "country" involved, except for

prohibitions on private bank loans, which apply to the "government of that country." Neither

of these terms is defined in the statute, however, and thus it is not clear whether they are

intended to include sub-national or government-owned entities. (Compare, for example, §

2(b)(4) of the Export-Import Bank Act (see supra note 3), which provides that the term

"country" is to have the meaning given to the term "foreign state" in 28 U.S.C. § 1603(b), a

provision of the Foreign Sovereign Immunities Act. Under this provision, the term "foreign

state" is to include "a political subdivision of a foreign state or an agency or instrumentality

of a foreign state"). Other terms – for example, "humanitarian aid" – also remain undefined.

The legislation does not contain a contract sanctity provision, which would bar the President

from prohibiting transactions in performance of contracts entered into before the date of the

sanctions.

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termination of these sanctions would appear to depend on a future congressional

enactment.12

Details of § 102(b) Sanctions Imposed on India and

Pakistan

After conducting an inter-agency review to develop a comprehensive sanctions

policy with respect to India and Pakistan, the Administration announced its original

implementation scheme for the two countries June 18, 1998.13 Highlights of the

sanctions, as modified by the Agriculture Export Relief Act of 1998 and the IndiaPakistan Relief Act of 1998, are described immediately below. The 1998 enactments

are discussed in greater detail in the following section of this report. Provisions of

P.L. 106-79, enacted October 25, 1999, granting the President broad waiver authority

and repealing the India-Pakistan Relief Act of 1998, along with the President’s actions

under the new statute, are discussed in the last section of this report.

Foreign assistance: The United States terminated or suspended foreign

assistance under the Foreign Assistance Act, with those exceptions provided by law.14

On December 1, 1998, the President exercised his authority under the India-Pakistan

Relief Act of 1998 (enacted October 21, 1998) to waive until October 21, 1999, the

§ 102(b) prohibition as it applied to Trade and Development Agency (TDA) activities

involving both India and Pakistan. The President also exercised his waiver authority

to allow assistance to both countries under the International Military Education and

Training (IMET) program.15 Prior to the waiver, TDA would not consider new

12

In testimony before the Senate Foreign Relations Committee, the State Department expressed

the view that new legislation was needed to enable the Executive Branch to terminate § 102(b)

sanctions. Crisis in South Asia: India’s Nuclear Tests; Pakistan’s Nuclear Tests; India and

Pakistan: What Next? Hearings Before the Subcomm. on Near Eastern and South Asian

Affairs of the Senate Comm. on Foreign Relations, 105th Cong., 2d Sess. 18-19

(1998)(testimony of Robert Einhorn, Assistant Secretary of State). See also Economic

Sanctions and U.S. Policy Interests: Hearing Before the House Comm. on International

Relations, 105th Cong., 2d Sess. 25 (testimony of Stuart Eizenstat, Under Secretary of State

for Economic, Business, and Agricultural Affairs).

13

Dep't of State, "Fact Sheet on India and Pakistan Sanctions," June 18, 1998 [hereinafter

cited as DOS Fact Sheet]; Dep't of State, "India-Pakistan Sanctions," On-the-Record Briefing,

Washington, D.C., June 18, 1998 [http://www.state.gov][hereinafter cited as DOS Briefing].

See also India-Pakistan Nuclear Proliferation in South Asia: Hearing Before the Subcomm.

on Asia and the Pacific of the House Comm on International Relations, 105th Cong., 2d

Sess. (1998) [hereinafter cited as HIRC Hearing]. For additional information on the

implementation of these sanctions, see CRS Report 98-570, India-Pakistan Nuclear Tests and

U.S. Response.

14

DOS Fact Sheet, supra note 13, at 1. The Fact Sheet cites the § 102(b) exceptions for

humanitarian assistance and food and agricultural commodities as examples. The Department

also noted that most assistance to Pakistan had already been prohibited. Id.

15

The IMET program is authorized in Part II, Chapter 5 of the FAA (§§ 541-546), 22 U.S.C.

§§ 2347-2347e. Along with the ban on foreign assistance under § 102(b)(2)(A) of the AECA,

(continued...)

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projects in the sanctioned countries,16 but commitments made by the TDA before May

13, 1998, for India and before May 30, 1998, for Pakistan were honored “in

accordance with applicable law."17 Policy regarding Overseas Private Development

Corporation (OPIC) programs, which are authorized in §§ 231 et seq. of the Foreign

Assistance Act, is discussed under “Government credits, credit guarantees, and other

financial assistance,” below.

Military sales, exports, and financing: The United States has terminated

foreign military sales under the AECA, revoked licenses for the commercial sale of

any item on the United States Munitions List, and suspended delivery of previously

approved defense articles and services to India.18 Pakistan is prohibited from

receiving certain U.S. military assistance, as well as U.S. military equipment and

technology, pursuant to § 620E(e) of the Foreign Assistance Act of 1961 (Pressler

Amendment), a restriction which may now be waived under § 9001 of P.L. 106-79.19

Government credits, credit guarantees, and other financial assistance: The

Export-Import Bank (Eximbank) had issued notices terminating new business in India

and Pakistan prior to the Administration’s June 18 announcement.20 This policy was

later adopted by the Overseas Private Investment Corporation (OPIC) and the

Commodity Credit Corporation (CCC).21 Transactions approved by Eximbank as

well as legally binding commitments made by OPIC and the CCC did, however, go

15

(...continued)

§ 101(a) of the Act bars FAA military assistance and grant military education and training

as a sanction for engaging in certain nuclear enrichment transfers, unless the President makes

specified certifications. The Pressler Amendment ban on military assistance to Pakistan,

however, excludes IMET assistance and certain other FAA programs. FAA, § 620E(e)(2),

22 U.S.C. § 2375(e)(2).

16

DOS Fact Sheet, supra note 13, at 1.

17

HIRC Hearing, supra note 13, at 9 (testimony of David Aaron, Under Secretary of

Commerce for International Trade).

18

DOS Fact Sheet, supra note 13, at 1. In a May 20 Federal Register notice, the Bureau of

Political-Military Affairs of the State Department announced that "all licenses and other

approvals to export or otherwise transfer defense articles and defense services from the United

States to India, or transfer U.S. origin defense articles and defense services from a foreign

destination to India, or temporarily import defense articles from India pursuant to Section 38

of the Arms Export Control Act are immediately revoked." 63 Fed. Reg. 27781 (1998). The

Department also stated that it would subsequently "deny all applications and other requests

for approval to export or otherwise transfer or retransfer defense articles and services to

India." Id. The State Department’s notice revoking munitions export licenses and other

approvals for Pakistan is set forth at 63 Fed. Reg. 33122 (June 17, 1998).

19

See supra note 10.

20

The Export-Import Bank announced a prohibition on financing of new transactions in the

public and private sectors in India May 13, 1998. It did the same for Pakistan June 1. The

sanctions were imposed under both § 102(b) of the AECA and § 2(b)(4) of the Export-Import

Bank Act. Ex-Im Bank Press Releases, May 13, 1998, and June 1, 1998

[http://www.exim.gov/].

21

DOS Fact Sheet, supra note 13, at 1.

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forward.22

The Agriculture Export Relief Act, enacted July 14, 1998, amended

the AECA to provide an exemption through FY1999 for U.S. Department of

Agriculture financing covered by § 102(b)(2)(D). This enactment permitted U.S.

wheat farmers to participate in a 365,000 metric ton wheat tender by Pakistan that

closed the following day.23 The new statute also permanently exempted from the

AECA prohibition federal government financing for medicine and medical supplies.

On December 1, 1998, the President used his authority under the India-Pakistan Relief

Act of 1998 to waive until October 21, 1999, the AECA prohibition on Eximbank and

OPIC activities with regard to both India and Pakistan, as well as nuclear-related

restrictions on Eximbank activities contained in § 2(b)(4) of the Export-Import Bank

Act.24

Support for international financial assistance: This sanction affects U.S.

support for the programs of such international financial institutions (IFIs) as

International Bank for Reconstruction and Development (World Bank), the

International Development Association, the International Finance Corporation, the

Asian Development Bank, and the International Monetary Fund (IMF).25 In the

Administration's June 19 press briefing, the Treasury Department spokesman stated

that "[t]here is now a G-8 consensus ... on two key points: first, that loans to India

and Pakistan in the category of basic human needs will go forward; and second, that

loans that are outside of that category — non-basic human needs — will be

postponed. With the voting share that the G-8 have at the IFIs, we expect that

consensus to be sustained."26 In a written summary, the State Department noted that

the United States has "gained G-8 support to postpone consideration of non-basic

human needs (BHN) loans for India and Pakistan by the International Financial

Institutions (IFI) to bolster the effect of the Glenn Amendment requirement that the

U.S. oppose non-BHN loans."27 In July 1998, U.S. officials announced that the

United States would not oppose the negotiation of IMF loans to Pakistan, although

22

DOS Briefing, supra note 13 (response of Under Secretary of the Treasury David Lipton);

HIRC Hearing, supra note 13, at 9 (testimony of David Aaron, Under Secretary of Commerce

for International Trade).

23

“White House Amends Sanctions Law in Time for Pakistan Wheat Tender,” Inside U.S.

Trade, July 17, 1998. For background on agricultural issues, see CRS Report 98-770, U.S.

Agricultural Exports and the Nuclear Nonproliferation Sanctions on India and Pakistan.

24

Section 2(b)(4) of the Export-Import Bank Act is described at note 3, supra.

25

See supra note 4.

26

DOS Briefing, supra note 13 (statement of Under Secretary of the Treasury David Lipton).

The G-8 countries referred to are the United States, the United Kingdom, France, Germany,

Japan, Canada, Italy, and Russia.

27

DOS Fact Sheet, supra note 13, at 2; see supra note 4. The Department added that these

restrictions included a postponement of $1.17 billion in IFI lending for India and "although

no IFI loans for Pakistan have been presented for board consideration, $25 million in IMF

assistance has been postponed for failure to meet economic benchmarks." Id. The Treasury

Department spokesman at the Administration's June 19 press briefing described BHN loans

as including loans in "categories such as education, maternal and child health, water and

sewage, low-income housing, rural development." DOS Briefing, supra note 13 (statement

of Under Secretary of the Treasury David Lipton).

CRS-10

it would abstain from an IMF board vote to approve any resulting loan agreement, an

action the Administration viewed to be in compliance with its statutory obligation

under § 102(b).28 On December 1, 1998, the President invoked the India-Pakistan

Relief Act to waive this provision until October 21, 1999, as it applies to “the

extension of any loan or financial or technical assistance to Pakistan by any

international financial institution in support of the assistance program that Pakistan

is negotiating with the International Monetary Fund.”

Private bank loans: The Administration stated that it planned to implement the

§ 102(b)(2)(F) prohibition on certain private lending in a future Executive Order.29

This prohibition appeared to have posed considerable difficulty for regulators, in part

because of the level and nature of governmental involvement in the Indian banking

system.30 As noted earlier, the prohibition’s exemption for agricultural commodities

was legislatively expanded in July 1998 to include fertilizer. On December 1, the

President used his authority under the India-Pakistan Relief Act of 1998 to waive §

102(b) until October 21, 1999, as it applies to “the extension of any loan or the

providing of any credit to the Government of India or the Government of Pakistan by

any U.S. bank.”

Exports: The Commerce Department's Bureau of Export Administration (BXA)

issued interim guidance for exporters May 28 and June 3, 1998, but a number of

questions as to which dual-use items were to be covered and which recipients were

to be embargoed remained unresolved.31 Following the Administration's June 18

statement, the Bureau issued its updated export policy June 22, stating that it would

apply this policy to new and pending license applications. As announced, the

controls were grouped into three categories addressing items to be exported and endusers, the first category representing the most severe level of controls. These

categories are: (1) nuclear and missile-related items and entities of concern; (2)

exports of national security-related items (including certain computers) and military

entities; and (3) other dual-use items.32 Controls range, for example, from an

28

State Department Background Briefing, July 21, 1998, as reported by Federal News

Service, available in LEXIS, News Library, Curnws File; “Despite A-Test, U.S. Won’t Bar

Pakistan Bailout,” N.Y. Times, July 22, 1998, at A3. See generally CRS Report 98-570,

India-Pakistan Nuclear Tests and U.S. Response, at 26-27.

29

DOS Fact Sheet, supra note 13, at 2.

30

See, e.g., "Banks Lobby Washington for Slack in India Sanctions," Wall St. J., May 22,

1998, at A15. For a discussion of banking issues, see CRS Report 98-537, Bank Loan

Denial for Nuclear Proliferation under Section 102(b) of the Arms Export Control Act as

Applicable to India and Pakistan.

31

"U.S. Is Wrestling Over Limits on High-Tech Exports to India," Wall St. J., June 10, 1998,

at A14; "Albright Makes Push for Flexibility on India, Pakistan Nuclear Sanctions," Inside

U.S. Trade, June 12, 1998.

32

Bureau of Export Administration, "U.S. Sanctions on the Export of Dual-Use Goods to India

and Pakistan" (June 22, 1998) [http://www.bxa.doc.gov]. By prohibiting the export of

missile-related goods and possibly some dual-use items, DOC appears to have disagreed with

some industry arguments that the NNPA permitted the Department to restrict only nuclear(continued...)

CRS-11

absolute prohibition on exports of any dual-use item controlled for nuclear or missile

proliferation reasons to all end users (category 1) to end-user based controls on

computers of over 2000 MTOPS (category 2) to favorable case-by-case consideration

of license applications for dual-use items to Indian and Pakistani entities where neither

the item nor the entity is covered by either of the first two categories.

In codifying its regulations November 19, 1998, BXA, among other things,

added to its general Entity List at 15 C.F.R. Part 744, Supp. 4, the names of Indian

and Pakistani government, parastatal, and private entities determined to be involved

in nuclear or missile activities, as well as the names of Indian and Pakistani military

entities.33 The agency stated that, with limited exceptions, it would require a license

for the export of any item over which BXA exercises regulatory jurisdiction to the

entities cited for nuclear and missile activities, and presume denial with regard to

items specifically listed on the Commerce Control List for export to the named

military entities.34 In March 2000, BXA removed 51 Indian entities from the Entity

List, changed its licensing policy for exports of items not listed on the Commodity

Control List (i.e., those classified as EAR99) to Indian and Pakistani government,

private and parastatal entities from a presumption of denial to a presumption of

approval, and made other changes regarding the treatment of specific entities in both

countries.35

32

(...continued)

related goods and technology. See "Business Groups Face Uphill Battle in Effort to Limit

India Sanctions" and letters of Industry Coalition on Technology Transfer and Electronic

Industries Association to Samuel B. Berger, Assistant to the President to the President for

National Security Affairs, Inside U.S. Trade, May 22, 1998.

33

Dep’t of Commerce, Bureau of Export Administration, “India and Pakistan Sanctions and

Other Measures; Interim Rule,” 63 Fed. Reg. 64322-42 (November 19, 1998). In its June 22

export policy statement (supra note 31), BXA announced that, pursuant to the Enhanced

Proliferation Control Initiative (EPCI), it would publish a list of Indian and Pakistani

government and private entities involved in nuclear and missile activities and would prohibit

the exports and reexports of all items subject to the EAR to the listed entities. Under the

EPCI, originally imposed by Executive Order 12735 of November 16, 1990 (55 Fed. Reg.

48587) and a December 1990 presidential directive (26 Weekly Comp. Pres. Docs. 2033

(1990)), foreign policy export controls have been imposed on specific items intended for

proliferation-related uses and on goods that a U.S. exporter knows will be used for

proliferation purposes. Bureau of Export Administration, "Imposition of Foreign Policy

Export Controls under the Enhanced Proliferation Control Initiative; Report to the Congress"

(February 1991).

34

63 Fed. Reg. at 64322-23. Current regulations are set forth in 15 C.F.R. §§ 742.16;

744.11; 744.12; Part 744, Supp. No. 4 (Entity List), and related provisions; see also

Department of Commerce, Bureau of Export Administration, “Dual-Use Export Control

Sanctions: India and Pakistan,” posted at [http://www.bxa.doc.gov/Entities/Ind-Pak2.html].

35

65 Fed. Reg. 14444 (2000). BXA stated that it was taking its action to remove the 51 Indian

entities from the List “[b]ased on a consensus decision by the Administration to more tightly

focus on those Indian entities which make direct and material contributions to weapons of

mass destruction and missile programs and items that can contribute to such programs” and

cited as support for the regulatory revisions “sense of Congress” language in § 9001(d) of the

(continued...)

CRS-12

1998 Sanctions Relief Legislation

Concern over the lack of an exemption for food and agricultural products in the

§ 102(b)(2)(D) prohibition on government credits, guarantees, and financing led to

the July 14, 1998, enactment of the Agriculture Export Relief Act (AERA), P.L. 105194, which amended this AECA section to exempt credits, credit guarantees, and

financial assistance programs provided by the U.S. Department of Agriculture

(USDA) to support the purchase of food or other agricultural commodities, and

makes this amendment applicable to USDA credits, guarantees, and assistance made

before, on, or after the date of enactment, through September 30, 1999.36 The Act

also lifted, through September 30, 1999, any sanctions that had already been imposed

under § 102(b) involving these USDA programs.37 Additionally, the AERA made the

general prohibition on U.S. credits, credit guarantees, and financial assistance

inapplicable to medicine and medical supplies and permanently lifted any sanctions

imposed on such items before the date of enactment.38 Finally, the Act amended the

private loan exemption for agricultural commodities to specifically include fertilizer

and permanently lifted any sanctions imposed on such items before the date of

enactment.39

35

(...continued)

FY2000 DOD Appropriations Act calling for refinement and focusing of the list (see infra

page 14 for statutory language).

36

Agriculture Export Relief Act (AERA), Pub. L. No. 105-194, § 2(a)(3), § 2(d). Of primary

concern at the time were the CCC General Sales Manager (GSM) programs, which provide

export credit guarantees for U.S. agricultural commodities (7 C.F.R. Part 1493). The Justice

Department had reportedly concluded that § 102(b)(2)(D) did not allow the Administration

to provide agricultural credits for exports to sanctioned countries. "No Flexibility for Food,"

Dow Jones News Service, June 11, 1998, available in WESTLAW, ALLNEWSPLUS File;

"U.S. moves to exempt Pakistani wheat credits from sanctions," AP, June 12, 1998;

"Congress May Lift Ban on Wheat Sales to India and Pakistan," N.Y. Times, June 15, 1998,

at A17. Unlike certain other sanctions that must be imposed under § 102(b) — namely, the

prohibition on Foreign Assistance Act assistance, the prohibition on private bank lending, and

the use of Export Administration Act authority to prohibit exports — the prohibition on

government credits, credit guarantees and financial assistance does not include an express

exemption for food and agricultural commodities. Compare AECA, § 102(b)(2)(D), as in

effect in May 1998, with AECA, §§ 102(b)(2)(A), (F), (G).

Amendments exempting USDA programs were originally attached to the reported

version of H.R. 4101 (105th Cong.), the Agriculture, Rural Development, Food and Drug

Administration and Related Agencies Appropriations Bill, 1999, at § 737 (H.Rept. 105-588,

105th Cong., 2d Sess.) and to the reported version of S. 2159, the Senate agriculture

appropriations bill for FY1999, at § 738 (S.Rept. 105-212, 105th Cong., 2d Sess.). The

Agriculture Export Relief Act of 1998 was later enacted as freestanding legislation.

For further discussion of economic sanctions as they relate to the agricultural sector, see

CRS Report RL30108, Economic Sanctions and U.S. Agricultural Exports.

37

AERA, §§ 2(d), 2(e).

38

AERA, §§ 2(c), 2(e).

39

AERA, §§ 2(b), 2(e).

CRS-13

The India-Pakistan Relief Act of 1998 (IPRA), enacted October 21, 1998,

authorized the President to waive “for a period not to exceed one year upon

enactment” all or part of the § 102(b) sanctions imposed on India or Pakistan related

to FAA and governmental financial assistance, international financial assistance, and

private bank loans, as well as all or part of the following: § 620E(e) of the Foreign

Assistance Act, prohibiting military assistance to Pakistan based on its nuclear

activities (Pressler Amendment); § 2(b)(4) of the Export-Import Bank Act, generally

restricting financing based on the detonation of a nuclear device; and § 101 of the

AECA, which prohibits certain FAA and AECA assistance to countries engaged in

nuclear enrichment transfers.40 The Act maintained § 102(b) prohibitions on sales of

defense articles and services, export licenses for U.S. Munitions List items, foreign

military financing under the AECA, and export controls under § 6 of the Export

Administration Act (EAA).41 Before exercising his waiver authority, the President

was required to consult with the Senate Foreign Relations Committee, the House

International Relations Committee, and the Senate and House Appropriations

Committees. In addition, the Secretary of State was required to submit a report to

these committees, at least 30 days before a one-year waiver period expired, on

economic and national security developments in India and Pakistan.

On November 7, 1998, the President announced that he would waive some of

the existing nuclear sanctions because of Indian and Pakistani commitments regarding

further nuclear testing.42 As noted earlier, the President formally exercised his IPRA

authority December 1, 1998, waiving until October 21, 1999, the statutory provisions

covered by the new law, with regard to specific programs and activities.43

40

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies

Appropriations Act, 1999, P.L. 105-277, § 101(a), Title IX, § 902(a), 112 Stat. 2681-40.

41

P.L. 105-277, § 101(a), Title IX, § 902(b).

42

“President Clinton Eases Some Sanctions Against India, Pakistan After Nuke-Test Ban,”

15 Int’l Trade Rep. 1931-32 (BNA 1998).

43

Presidential Determination No. 99-7, December 1, 1998, 34 Weekly Comp. Pres. Doc. 2401

(1998). At the request of the House Ways and Means Committee, the International Trade

Commission (ITC) in April 1999 began a factfinding investigation regarding the economic

effect of the AECA sanctions imposed on India and Pakistan, publishing its report in

September 1999. As the ITC stated in the report’s abstract, AECA sanctions “appeared to

have had a relatively minimal overall impact on India, while they appeared to have had a more

pronounced adverse impact on Pakistan. However, for both countries it is difficult to isolate

the effects of the U.S. sanctions from other concurrent economic events, such as each

country’s domestic economic policies and sanctions imposed by other countries.” The ITC

also stated that “[r]ecent trade data indicated that reimposition of the Glenn Amendment

sanctions prohibiting USDA export credits and guarantees most likely would adversely affect

U.S. wheat exports to Pakistan, which is an important customer for white wheat grown in the

U.S. Pacific Northwest states.” U.S. Int’l Trade Comm’n, Overview and Analysis of the

Economic Impact of U.S. Sanctions with Respect to India and Pakistan iii (September

1999)(USITC Publication 3236).

CRS-14

1999 Sanctions Relief Legislation and Presidential

Action

A number of bills were introduced in 1999 to narrow the application of § 102(b)

of the AECA and other provisions of law as they pertain to India and Pakistan.44

Three bills containing sanctions relief legislation for India and Pakistan were acted

upon: H.R. 973 passed the House June 15, 1999; H.R. 2415 passed the House July

21, but passed the Senate August 3 in a form that did not contain sanctions relief

provisions; S. 1122 passed the Senate June 8, and was later inserted into H.R. 2561,

the Department of Defense Appropriations Act, 2000. H.R. 2561 passed the Senate

as amended July 28, and was enacted into law October 25 with sanctions relief

language.

The new law, P.L. 106-79, § 9001, authorizes the President to waive, without

time limitation, all of the sanctions contained in §§ 101 or 102 of the AECA, the

nuclear-related restriction in § 2(b)(4) of the Export-Import Bank Act, and § 620E(e)

of the Foreign Assistance Act (Pressler Amendment), as these apply to India or

Pakistan. The President may waive military and export control sanctions in §

102(b)(2), however, only if he certifies to Congress that a particular restriction would

not be in U.S. national security interests. Further, the issuance of a license for defense

exports is subject to the same requirements as those contained in § 36(c) of the

AECA, 22 U.S.C. § 2776(c), which requires the President to certify to Congress

specified information on a proposed defense export before an export license is

issued.45

The statute also contains “sense of Congress” language that (1) the “broad

application of export controls to nearly 300 Indian and Pakistani entities is

inconsistent with the specific national security interests of the United States and that

this control list requires refinement” and (2) “export controls should be applied only

to those Indian and Pakistani entities that make direct and material contributions to

weapons of mass destruction and missile programs and only to those items that can

contribute to such programs.”

Waivers issued under the law will cease to apply to India or Pakistan if the

respective country detonates a nuclear explosive device or takes one of the nuclear44

Undersecretary of State Stuart Eizenstat reportedly stated in testimony before the House

Agriculture Committee in June 1999 that the Administration favored having “waiver

authority, full and permanent waiver authority, for all of the Glenn sanctions with respect to

India and Pakistan.” Economic Sanctions and the Effect on U.S. Agriculture; Hearing

Before the House Comm. on Agriculture, June 9, 1999, transcript reported by Federal News

Service, available in LEXIS, News Library, Curnws File (response of Mr. Eizenstat to

question by Mr. Pomeroy).

45

Section 36(c), as written, applies to exports of major defense equipment and other defense

articles and services valued over threshold dollar amounts. It also provides that unless the

President states in his certification that an emergency exists which requires the proposed

export in the U.S. national security interests, such a license may not issue until 30 calendar

days after the certification is received by Congress, unless a joint resolution of disapproval

is enacted in the interim.

CRS-15

related actions that would require the President to report to Congress under §

102(b)(1) of the AECA. The statute also repeals the India-Pakistan Relief Act of

1998.

On October 27, the President waived the statutory restrictions covered by the

new law as applicable to specific U.S. government programs and commercial

transactions.46 The waiver for India covers the following:

! Export-Import Bank programs;

! OPIC programs;

! Trade and Development Agency programs;

! assistance under the International Military Education and Training (IMET)

program;

! private U.S. bank loans and credits to the Government of India;

! assistance to the Asian Elephant Conservation Fund, the Rhinoceros and Tiger

Conservation Fund, and the Indo-American Environmental Leadership

program; and

! USDA credits, credit guarantees, and other financial assistance to support the

purchase of food or other agricultural commodities.

The waiver for Pakistan is more limited, covering private U.S. bank loans and

credits to the Government of Pakistan, and USDA credits, credit guarantees, and

other financial assistance to support the purchase of food or other agricultural

commodities. The United States had earlier terminated aid to Pakistan under an

annual foreign operations appropriations act provision cutting off all assistance

financed by funds appropriated under the statute to any country whose duly elected

head of government is deposed by military coup or decree, a provision that was

triggered by the October 12, 1999 military coup in Pakistan.47 The 2001 Foreign

Operations Appropriations Act, however, allows appropriated funds for certain

Foreign Assistance Act programs to be made available for basic education programs

for Pakistan, “notwithstanding any provision of law that restricts assistance to foreign

countries.”48

As noted earlier, the Commerce Department in March 2001 removed 51 Indian

entities from the Entity List, made other revisions regarding the treatment of specific

entities of both countries, and instituted a presumption of approval for applications

to export goods to certain government, parastatal, and private entities in India or

Pakistan where the goods are subject to DOC jurisdiction but not listed on the

46

Presidential Determination No. 2000-04 of October 27, 1999, 64 Fed. Reg 60649 (1999).

47

Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1999, §

508, P.L. 105-277, § 101(d), 112 Stat. 2681-171. Aid may be resumed if the President

determines and reports to the House and Senate Appropriations Committees that a

democratically elected government has taken office subsequent to the termination of aid. This

is a standard appropriations restriction and currently appears in § 508 of the Foreign

Operations Appropriations Act, 2001, P.L. 106-429, Appendix A–H.R. 5526, 114 Stat. 1900,

Stat. 1900A-24.

48

P.L. 106-429, Appendix A–H.R. 5526, § 597, 114 Stat. 1900, Stat. 1900A-61.

CRS-16

Commodity Control List. The Department referred to the “sense of Congress”

language in the 1999 statute as supporting its regulatory revisions.49

Recent Developments

On August 9, 2001, the President waived the application of restrictions in §§ 101

and 102 of the AECA with regard to Pakistan relating to exports of defense articles

and services to the extent that the restrictions applied to “the sale of certain specified

U.S.-origin helicopter and armored personnel carrier spare parts and ammunition to

Pakistan for use in its deployment in Sierra Leone in support of UN peacekeeping

operations.”50

Later in the month, the Bush Administration indicated that it was reviewing its

sanctions policy with the primary aim of easing sanctions currently imposed on

India.51 Sen. Joseph Biden, Chairman of the Senate Foreign Relations Committee,

wrote to the President August 24 urging him to use his waiver authority to lift

economic sanctions (mainly export controls) imposed on India, and stating that “a

case can be made for the use of waiver authority to lift sanctions on Pakistan as well,”

but that concerns over missile technology from China to Pakistan should first be

resolved.52 Ranking Member of the House International Relations Committee Tom

Lantos sent a letter to the President August 28 also stating his support for lifting the

nuclear sanctions imposed on India. On September 5, Rep. Jim McDermott and Rep.

Ed Royce (co-chairmen of the Congressional Caucus on India), along with 48 other

House Members, wrote to the President in support of Administration statements

regarding removal of sanctions and asking that he “strongly consider re-evaluation

and substantially changing” the Entity List.

Following the September 11 terrorist attacks on the World Trade Center and the

Pentagon, the President, on September 22, waived § 101(b)(2) sanctions and

prohibitions on exports of defense items and sensitive technology and military

financing with respect to both India and Pakistan, having determined that continuation

of the measures would not be in U.S. national security interests.53 He also waived any

49

See text at supra note 35.

50

Presidential Determination No. 2001-23 of August 9, 2001, 66 Fed. Reg. 44521 (2001).

The waived restrictions had been imposed under the International Traffic in Arms Regulations

(ITARS).

51

“U.S. Seeks to Lift Sanctions on India; Aim Is to Bolster Military Relations,” Wash. Post,

August 12, 2001, at A1; “U.S. Ready to End Sanctions on India to Build Alliance,” N.Y.

Times, Aug. 27, 2001; “Administration to Work with Congress to Lift Economic Sanctions

Against India,” 18 Int’l Trade Rep. 1387 (2001).

52

“Biden Calls for Easing India Sanctions, Urges Talks with Administration,” Inside U.S.

Trade, August 31, 2001.

53

Presidential Determination No. 2001-28, September 22, 2001, posted at

[http://www.whitehouse.gov/news/releases/2001/09/20010922-4.html]. See also Dep’t of

Commerce, Bureau of Export Administration, “India and Pakistan: Lifting of Sanctions,

(continued...)

CRS-17

remaining sanctions in §§ 101 or 102 of the AECA, the Export-Import Bank Act, and

the Pressler Amendment. As noted above, however, foreign assistance to Pakistan

is currently restricted because of the anti-coup provision in the FY2001 foreign

operations appropriations act.54 In addition, the Pakistani Ministry of Defense and its

sub-units and successors, as well as two other Pakistani entities (the Space and Upper

Atmosphere Research Commission (SUPARCO) and the National Development

Complex) are currently subject to two-year AECA missile proliferation sanctions.

These consist of prohibitions on granting export licenses under the EAA and the

AECA and on entering into U.S. government contracts involving the sanctioned

entities.55

Legislation

H.R. 1358 (McDermott), introduced April 3, 2001, would remove all nuclear

sanctions imposed on India and Pakistan. The bill has been referred to the House

International Relations Committee and the House Financial Services Committee.

H.R. 2889 (Lantos), introduced September 14, 2001, would permanently

remove nuclear sanctions as they apply to India. The bill has been referred to the

House International Relations Committee.

H.R. 2506, the foreign operations appropriations bill for FY2002, as passed the

House, provides that assistance may be resumed to countries subject to the anti-coup

amendment not only if the President certifies that a democratically elected government

has taken office, but also if he certifies that “substantial progress has been made

towards the holding of democratic elections” (§ 508). The bill, as reported by the

Senate Appropriations Committee, does not contain this additional language. Both

bills, however, would provide for basic education assistance for Pakistan (H.R. 2506,

§ 577, as passed by the House; § 572, as reported in the Senate).

53

(...continued)

Removal of Indian and Pakistani Entities, and Revision in License Review Policy,” 66 Fed.

Reg. 50090 (October 1, 2001).

54

The State Department has also cited as currently applicable to Pakistan § 620(q) of the

Foreign Assistance Act and § 512 of the Foreign Operations Appropriations Act (the Brooke

Amendment), which bar certain assistance for countries in default on U.S. Government loans.

“Sanctions on India and Pakistan,” Fact Sheet, September 28, 2001, posted at

<http://www.state.gov> (under “Press Releases (Other).

55

The Ministry of Defense is also subject to a two-year import prohibition covering products

produced by the Ministry. The missile proliferation sanctions are imposed under § 73 of the

AECA 22 U.S.C. § 2797b(a)(1), and § 11B(b)(1) of the EAA, 50 U.S.C. App. §

2401b)(b)(1). For further details, see Dep’t of State, “Bureau of Nonproliferation; Imposition

of Missile Proliferation Sanctions Against Entities in Iran and Pakistan,” 65 Fed. Reg. 71348

(November 30, 2000)(Ministry of Defense; Space and Upper Atmosphere Research

Commission), and Dep’t of State, “Bureau of Nonproliferation; Imposition of Missile

Proliferation Sanctions Against a Chinese Entity and a Pakistani Entity,” 65 Fed. Reg. 47256

(September 11, 2001)(National Development Complex). For further discussion of existing

sanctions and other statutory restrictions applicable to India and Pakistan, see CRS Report

RS20995, India and Pakistan: Current U.S. Economic Sanctions.

CRS-18

S. 1465 (Brownback), as reported by the Senate Foreign Relations Committee

October 4, 2001, would make a number of statutory aid-related restrictions

inapplicable to Pakistan and allow flexibility in the use of other related authorities until

October 1, 2003, unless otherwise provided in the bill. Regarding the anti-coup

restriction, it would make inapplicable to Pakistan any such provision in the foreign

operations appropriations act for FY2002 (or for any earlier fiscal year) (§ 1(a)). It

would also authorize the President to waive, with respect to Pakistan, any anti-coup

provision in the foreign operations act for FY2003 if the President determines and

certifies to Congress that the waiver would facilitate the transition to democratic rule

in Pakistan and is important to United States efforts to respond to, deter, or prevent

acts of international terrorism (§ 1(b)). Congressional consultation requirements

would be required before either or these authorities were invoked. Regarding EAA

and AECA missile proliferation sanctions, it would allow the President, with respect

to a sanction imposed on a foreign person in Pakistan prior to January 1, 2001, to

exercise the waiver contained in the underlying authorities after consultation with

appropriate congressional committees and without regard to the notification period

set forth in the waiver provisions (§ 2). Regarding other foreign assistance

restrictions, it would make § 620(q) of the Foreign Assistance Act, prohibiting

assistance to countries in default on certain debt owed the United States, and any

similar provision in the foreign operations appropriations act for FY2002, inapplicable

to Pakistan (§ 3). The reported bill also contains provisions modifying FAA

notification deadlines for drawdowns and transfers of excess defense articles carried

out to respond to, deter, or prevent acts of international terrorism (§ 4).

As introduced September 25, 2001, the bill would have authorized the President

through September 30, 2003, and notwithstanding any other provision of law, to

provide assistance, authorize the export of defense articles or defense services,

authorize the export of dual-use items, or extend other financial assistance to India

or Pakistan, under the Foreign Assistance Act, the Arms Export Control Act, the

Export-Import Bank Act, or any other provision of law, if the President determined

that to do so was in the national interest of the United States and important to U.S.

efforts to respond to, deter, or prevent acts of international terrorism. The President

would have been required to notify Congress before using this authority; the statute

could not have been construed to authorize the President to provide for nuclear

cooperation with either country.