Congressional Hearings/Resolutions

Regional Security in South Asia

Panel I of a hearing of the Asia and Pacific Subcommittee of the House International Relations Committee

October 20, 1999

Representative Doug Bereuter (R-NE), Chair

Witnesses:

• Karl F. Inderfurth, Assistant Secretary for South Asian Affairs, U.S. Department of State
• Arona Butcher, Chief of Country and Regional Analysis Division, Office of Economics, United States International Trade Commission

REP. BEREUTER: (Strikes gavel.) The subcommittee will come to order. The House has completed its immediate vote.

The Asian Pacific Subcommittee meets today in open session to receive testimony on regional security concerns in India and Pakistan. South Asia, of course, defies easy generalizations. It's a region with enormous potential, yet much of that potential remains unrealized.

India, which is the world's largest democracy, has just experienced a remarkably successful election, but elected officials remain extremely reluctant to take the reforms necessary to restructure and modernize the country. At least that's the perception.

In Pakistan, the governments of Prime Ministers Nawaz Sharif and Benazir Bhutto have been plagued by mismanagement and corruption. However, concerns about the ineptitude of civilian government in Pakistan has been overtaken by events.

The military coup in Pakistan has, of course, fundamentally changed the security equation in South Asia. We now face pressing questions regarding the stability of Pakistan's nuclear arsenal. We ask whether a military regime will be more belligerent or adventurous than a civilian government, whether civilian rule will soon return, and whether the coup provides an entree for Islamic fundamentalists to increase their influence.

The recent events in Pakistan also have an impact upon U.S. sanction policy. Legislative authority was granted to permit the president to waive for one year the mandatory sanctions imposed on India and Pakistan following their nuclear tests. That one-year waiver is due to expire in two days. I for one am very suspicious or skeptical that unilateral sanctions or the threat of sanctions will alter Indian and Pakistani behavior.

Despite my reservations, I'm interested to hear the views of our witnesses on the role that the U.S. might play in promoting peace and stability across the entirety of the region during this difficult period.

Certainly peace and stability are at risk in South Asia. Both India and Pakistan appear committed to developing a meaningful nuclear capability, together with the means to deliver that weaponry. In addition to last year's nuclear tests, both nations are moving forward on intermediate-range ballistic missiles that would be able to carry a nuclear payload.

The Indian National Security Council has released with a -- a strategic white paper that calls for a nuclear triad of 500 air- launched, sea-launched and ground-launched nuclear missiles. Such a force would be greater than the nuclear arsenals of Britain, France and China. If India would actually pursue such a nuclear force, it would surely trigger an arms race with both Pakistan and China and certainly would leave the entire subcontinent at far greater risk of a nuclear war.

The threat is not exclusively on the nuclear level. This summer's fighting between the Indian army and the Pakistani-supported infiltrators in Kashmir highlighted the potential for events to deteriorate rapidly at the conventional level of warfare. The Indian army suffered severe losses and was under great pressure, in some corners in Delhi, to strike at insurgent bases deep in Pakistan. If that had occurred, further escalation might have been unavoidable. Fortunately, cooler heads prevailed and the situation has, at least temporarily, quieted.

Nonetheless, tempers remain high and when the Indian air force recently shot down a Pakistani military aircraft that was flying near the border, the situation threatened once again to spin out of control. It is, needless to say, a situation fraught with danger.

Amidst such setbacks, nevertheless, there is reason to hope. The Lahore peace process which Prime Ministers Sharif and Vajpayee began last year continues to hold promise as a means to resolve differences. We should not minimize the differences, but there clearly is broad support in India and Pakistan for resolving the disputes that have divided these countries since independence.

If the Lahore process has taught us anything, it is that the people are tired of war and are tired of politicians who are forever seeking to gain some minor tactical advantage vis-à-vis their neighbors. If Pakistan and India could ever resurrect the Lahore peace process and surmount their deep divisions, the way is then, it would appear, open to resolve many of the other regional problems.

The Subcommittee is privileged today to have witnesses with wide-ranging and exceptional expertise on South Asia. Testifying for the administration is assistant secretary of State for South Asian affairs, the Honorable Karl F. Inderfurth. Mr. Secretary, we welcome you back to the Subcommittee, where on a number of occasions in the past several years you cogently have provided us with the administration's perspective and policies on key South Asian issues.

Secretary Inderfurth assumed his current position in August of '97 after serving as the U.S. representative for special political affairs to the United Nations where his portfolio included U.N. peacekeeping, disarmament and security affairs.

Mr. Secretary, your testimony today comes at an interesting time, following so closely the Indian elections. We certainly are interested in your views regarding the importance of extending the waiver authority on existing U.S. sanctions. How will the administration exercise any renewed waiver authority? We are also interested in your views regarding whether the Lahore peace process can now be jump-started and what it means to U.S. interests if the peace process flounders.

In addition, we would like you to address, if you are able and willing -- you're able; you're willing -- the U.S.-Pakistani military-to-military relationship, particularly in the wake of the coup.

We are also pleased to have Dr. Arona Butcher, chief of the country and regional analysis division at the U.S. International Trade Commission, the ITC. Dr. Butcher is also an adjunct professor at Howard University. She comes before the Subcommittee, I think, for the first time.

The ITC has just concluded a study of the impact of the Glenn Amendment sanctions and the possible repercussions of possible reimposition of sanctions. Dr. Butcher, I'm interested to learn the ITC's assessment of how effective the sanctions were and whether the inconvenience caused by the sanctions justified their imposition. In particular, have U.S. agriculture and commercial exporters had difficulty in regaining market share after the sanctions were waived?

We are also honored to have a highly qualified second panel to share their views -- the Honorable Teresita Schaffer completed a long and distinguished career in the Foreign Service, including service as deputy assistant secretary of State for South Asian affairs, at the time the most senior post available.

She has served in India, Pakistan, Bangladesh, and was U.S. ambassador to Sri Lanka. Ambassador Schaefer is currently the director of South Asia's program at the Center for Strategic and International Studies.

Mr. Selig Harrison is a senior scholar at the Woodrow Wilson Institute and a fellow at the Century Foundation. He was for many years the Washington Post bureau chief for South Asia and is presently an adjunct professor at the Elliott School of International Affairs at George Washington University.

He's the author of five books on India and Pakistan and security, and his writings frequently appear in the Washington Post, the New York Times and scholarly journals.

Gentlemen, ladies, as is consistent with the practice of the subcommittee, your entire written statements will be made a part of the record. I request that you limit your introductory remarks, if you can, to no more than 10 minutes so we can allow adequate time for members' questions.

Let me turn, however, first to the distinguished gentleman from California, the senior Democrat of the subcommittee, for his introductory comments, and then we'll start the testimony.

Mr. Lantos.

REP. LANTOS: Thank you very much, Mr. Chairman. I'll just take a minute. First, I want to commend you for holding this hearing.

I want to welcome Secretary Inderfurth and Dr. Butcher to our hearing. And I would very much hope that the secretary will deal very candidly with the rather dramatic developments in his region.

I happened to tune in on General Musharraf's televised speech. And I was watching the speech with one of my grandchildren. And he, the general, spoke slowly and eloquently and with great deliberation. And he said, "We shall not have a military government" -- and I interrupted him and said -- (inaudible) -- (stay ?) "until it's absolutely necessary." And those were exactly his words, "until it's absolutely necessary."

It reminded me of General Zia's tenure, which I believe was equally temporary at the outset. He advised us that he will restore civilian government as soon as possible, the military will stay in only as long as it's absolutely necessary; and it was 11 years, as I recall, that the Zia government stayed in office.

So one of the things that I am very anxious to have you expand on, Mr. Secretary, is what, in our judgment, is the time line that the Pakistani troops will be back in the barracks? Because, however bad civilian governments may be in developing countries -- we could certainly be here ad nauseam and ad infinitum criticizing the various civilian governments that Pakistan has had in recent years -- it is still obvious to -- at least to me -- that on balance the military coup and the deposition of a duly-elected civilian government is not a desirable phenomenon in Southeast Asia or any other place.

So I would be grateful if you could give us your insight both with respect to the personal circumstances that may have led to this; to what extent General Musharraf's background as a Pakistani who lived in India in earlier periods, and his rather blunt statements in recent days, indicate that this in fact is only a temporary phenomenon, that a civilian regime will be restored and that the troops be returned to their barracks?

I also would be grateful if you could give us your appraisal of the Indian elections.

If my memory serves me right, it's been over a quarter-century that an incumbent prime minister's party was returned to office, even though this is a very complex coalition of, I believe, 17 parties; because on the surface, it appears, and I don't wish to interfere in Indian domestic politics, that it's a sign of stability and continuity, which at a very generic level, we must welcome.

It is not desirable in Eastern Europe or in East Asia to have a government turned out of office at every election, which is the phenomenon we had in a number of other newly independent societies, such as the Baltics, where with every election cycle, we had the incumbents turned out of office.

I realize that Indonesia is outside of your purview, but you are knowledgeable about Indonesia. And if you are able and willing to say a word about the new president and what we can expect in terms of his attitude towards developing stronger and better relations with the United States and what his attitude is likely to be with respect to the very tragic developments in East Timor.

Thank you, Mr. Chairman.

REP. BEREUTER: Thank you, Congressman Lantos.

Congressman Rohrabacher has asked to make a brief opening statement. I'll extend that opportunity to him and to other members who desire that.

Mr. Rohrabacher?

REP. DANA ROHRABACHER (R-CA): Thank you very much.

Mr. Chairman, for the last three years, I have repeatedly warned this committee, and the State Department, that the Clinton's administration policy on the Taliban, which has been decidedly pro- Taliban, would create great instability in Central Asia and would undermine democracy in Pakistan. Today, Mr. Chairman, the chickens are coming home to roost.

The recent instability in Uzbekistan and Tajikistan, and the conflict in Chechnya, to some degree can be traced to drug money and fanatical Islam coming out of Afghanistan.

And talking about drug money, the Taliban's opium production in Afghanistan doubled last year. And now, democracy has fallen in Pakistan.

This is not a result of personalities; it's a result of policy; bad policy, bad policy on the part of this administration.

Eight years ago, after the fall of the Soviet Union, there was a tremendous opportunity for South and Central Asia. The lack of courage and the incomprehensible policies of the Clinton administration has (sic) created a crisis in Central Asia where there was none. This administration's policies have been more than a failure; it's been a disaster for millions of people whose lives have been affected, including a recent influx of 300,000 destitute refugees from the Taliban into the Panjshir Valley, hoping for some sort of refuge from their fury from -- given to them by Massoud and some of the last resisters to the Taliban, whom we have never helped, I might add.

Mr. Chairman, this subcommittee, as well as the full committee, needs to go on record condemning this administration, including Mr. Inderfurth, for clear attempts to thwart congressional oversight into their policies. It took more than a year of the time when the request was made for documents concerning this administration's Afghan policy to be delivered to this committee. The first batch of documents was made available more than six months after Secretary Madeleine Albright assured this committee, on the record, at a committee hearing, that the documents would be forthcoming. In no way have we seen all the documents, although some documents have been presented.

And I want to thank some other members of my committee, who supported my request all along, including the -- Chairman Gilman of the committee. Mr. Ackerman, for example, let it be known that it was important, when requests like this are made, that they be followed through on. Yet it took over a year to get even some of the documents. And the first documents that were delivered, Mr. Chairman, had newspaper clippings, insulting this committee.

Even in the selected documents that have been disclosed thus far, I might add, and to let my members -- fellow members know, there is evidence of past support by this administration of the Taliban -- a policy that was altered only after pressure in this committee and by women's groups -- over the defiance of the Taliban over Mr. bin Laden, the terrorist in Afghanistan. Still, however, there is no recognizable effort by this administration to contribute to the defeat or removal of the Taliban.

Furthermore, there has been little effort by this administration to assist the refugees, as I say, in the Panjshir Valley and other areas of Afghanistan that are just facing a horrible fate due to the Taliban's continued campaign. The chaos and suffering in South and Central Asia and now Pakistan has escalated -- has been escalated -- this suffering and the chaos by the policies of this administration. And as far as I'm concerned, it's a shameful record, and the cover-up of the information for us to determine what that policy was is even more shameful.

I'm looking forward to receiving, Mr. Inderfurth, the rest of the State Department documents that you have kept from us. And I -- again, Mr. Chairman, let me note the scant documents that have been delivered to me. We've already found evidence of a dual-track policy showing we have supported the Taliban

REP. LANTOS: Will the gentleman yield?

REP. ROHRABACHER: I don't think I have the time anymore.

REP. LANTOS: Well, I think, in all fairness, we will need to respond to this broadside against --

REP. BEREUTER: Are there other --

REP. ROHRABACHER: I think that it would be Mr. Inderfurth who would need to respond --

REP. BEREUTER: Are there other Democrats who wish to speak?

REP. : (Off mike.)

REP. BEREUTER: Perhaps he will yield you time, Mr. Lantos.

The gentleman from American Samoa is recognized for opening statement. And he yields, apparently, to Mr. Lantos.

DEL. ENI F. H. FALEOMAVAEGA (D-AS): Mr. Chairman, I yield my time to the --

REP. LANTOS: I thank my friend and colleague for yielding.

Apparently, it's become customary to open every hearing of the House International Relations Committee with an intemperate attack on the Clinton administration. And I deeply regret that this particular hearing is no exception.

I would be grateful if my colleague from California would supply this committee, in open or closed session, his evidence of the support of the Clinton administration for the Taliban because I consider his statement to be absurd and delusional. And I am using my adjectives carefully: I consider my colleague's statement absurd and delusional.

The Clinton administration has been steadfast in its opposition to the Taliban. As a matter of act, the Clinton administration has led the international attempt to weaken and minimize the Taliban.

And since my colleague made reference to the unspeakable attitude of the Taliban vis-à-vis women, let me remind all of us that this administration has been in the forefront for women's rights, both in the United States and internationally.

So while this interjection has provided us with a moment of levity and amusement, I have to state categorically that I don't consider the gentleman's statement to be a serious statement but a statement which unless backed up by evidence, evidence to which members of this committee are fully entitled that Mr. Rohrabacher has such evidence, evidence that in fact the Clinton administration is a secret supporter of the Taliban and their policies vis-à-vis women. I look forward to receiving that evidence from Mr. Rohrabacher.

And I want to thank you for yielding me that time.

REP. BEREUTER: Would the gentleman yield back?

REP. LANTOS: I yield back my time to my colleague from Samoa.

REP. BEREUTER: The chair would like to proceed as soon as possible with our witnesses.

I would say the gentleman from California Mr. Rohrabacher is within his rights to present these concerns, and the gentleman from California Mr. Lantos has been critical of that but not of the gentleman's intent or integrity. And so this is in accordance with the subcommittee's rules at this point. But I think I see -- did I see another person who wishes to be recognized?

Did the gentleman from American Samoa --

DEL. FALEOMAVAEGA: Mr. Chairman, I reserve my time. But in the interest of time, I'm going to pass on my opening statement. And I would gladly yield my time --

REP. BEREUTER: I think the gentleman's time has expired, but I would hear from the gentleman on this side. Then I'll come to Mr. Ackerman. Is that all right? I think that's the way we should proceed.

Doctor, you may proceed -- the gentleman from Louisiana.

REP. JOHN COOKSEY (R-LA): Thank you, Mr. Chairman.

REP. BEREUTER: Then I'll come to Mr. Ackerman.

REP. COOKSEY: I too share some concerns about some of the events that have occurred recently and in the not-so-distant future. And I'm also -- I share some of my colleague Mr. Rohrabacher's concerns also about maybe the way some of this has been handled.

But we came here to hear the witnesses. And I have another committee that I'm on. This morning we had some important witnesses, and we dispensed with all of these opening statements that it seems always sound the same, from both sides, and we went right to the heart of the business. And we got a lot done. It was a lot more efficient. It was a better utilization of my time and everyone else's time.

I'm a surgeon, and as a surgeon, we go in, we make a diagnosis, and then we either operate or not operate. Well, I'm ready to operate and get rid of a lot of the rhetoric and proceed. And I think that the committee chairman should consider doing what one of our -- my other committee chairmen is doing and dispense with all these witness -- these statements, opening statements, and hear from the witnesses, and instead have closing statements. And then maybe everyone would stay till the end of the hearing.

REP. BEREUTER: I thank the gentleman.

I would very much like to proceed. It is a different arena that you're operating in now, I would say to the gentleman. (Soft laughter.)

The gentleman from New York, Mr. Ackerman.

REP. GARY ACKERMAN (D-NY): I thank the chairman. And I greatly respect the good doctor for his goodwill being inserted into the process.

Thank you, Mr. Chairman. Let me join you in welcoming the witnesses before the subcommittee today. In particular, I want to commend Secretary Inderfurth and his team at the South Asia Bureau for the way they've led our policy initiatives in a very tough region.

The contrasting events in India and Pakistan over a single 24-hour period speak eloquently about the new challenges and opportunities that we face in South Asia. In India we have seen hundreds of millions of voters enthusiastically exercise their votes in a free and fair election. Although there has been some concern about election fatigue, it appears that a sort of political stability has returned to India with the strong majority given to Prime Minister Vajpayee's coalition.

On the other hand, we saw an awful turn of events in neighboring Pakistan where a democratic government, however flawed, was overthrown by the military. Notwithstanding General Parvaiz Musharraf's moderate words, we should not be lulled into thinking this will be a moderate government, after all, he has suspended the constitution and the elected national and provincial assemblies, dismissed the government, and declared a state of emergency. He is also the author of Pakistan's ill-fated invasion of India last summer.

I am concerned, and I believe the administration is as well, over what we did not hear from General Musharraf. We did not hear a clear timetable for new elections and the reestablishment of democratic government. I believe that we must remain engaged with Pakistan, but that we should do so on the side of the Pakistani people. We must identify and support democratic elements within Pakistan so that the people of Pakistan can again enjoy their democratic rights. The people of Pakistan are not celebrating the demise of democracy, they are at best celebrating the demise of an allegedly corrupt government.

The waiver authority contained in the Defense Appropriations Act should not be used to reestablish an arms pipeline with Pakistan, and I am pleased that the administration is not considering that. When democracy is restored, however, the waiver authority should be used to strengthen democratic institutions and promote economic growth. That same authority should also be used to move U.S.-India bilateral relations to a higher plane which would allow India and the United States to forge a strategic partnership in South Asia. In the past we have neglected our relationship with India, and the legacy of that neglect has been mistrust.

I believe it is time to reexamine our basic premise regarding U.S. policy in South Asia. We should look beyond the simplistic prism of India-Pakistan rivalry and see that India, a democracy, is our natural ally within the region. The best way to demonstrate our commitment to the people of India is by ensuring that the president travels to India, which I encourage him to do as soon as possible.

I thank you, Mr. Chairman, and look forward to hearing the witnesses.

REP. BEREUTER: Thank you, Mr. Ackerman.

The gentleman from Ohio, Mr. Gillmor.

REP. PAUL GILLMOR (R-OH): Thank you very much, Mr. Chairman. I seek recognition for two reasons. One, to associate myself with the spirit of the comments by Dr. Cooksey; and two, to yield to my colleague from California, Mr. Rohrabacher, on the condition that he doesn't use all the time.

SEN. ROHRABACHER: Fine. Thank you very much. I'll just say a few words concerning Mr. Lantos's attempt at rebuttal of my opening statement.

Let me just say that for a year I requested documents. This is not a laughing matter. It is not a laughing matter when the secretary of State comes before a hearing, a public hearing, makes a promise for documents, and then -- not like drags her feet, but stonewalls that promise and stonewalls the request. This is not a matter of levity, Mr. Lantos. This is a matter -- this is a very serious issue.

Sixty percent of the world's opium is now produced in Afghanistan. These billions of dollars are spilling over, as I warned they would for so long, into Pakistan and into Central Asia. The fact that the administration repeatedly has been unwilling to provide the documentation, for exactly what you asked us to do, to determine what the policy is. And I will say there is indication that I've already read in the very small number of documents that Mr. Inderfurth managed to give to us of a past support for the Taliban. And I see no reason why the other documents -- this is a legitimate request. And again, I applaud Mr. Ackerman. At least Mr. Ackerman didn't call it delusional and laughable that we were trying to get to the heart of this policy matter by requesting documentation from the administration. That's our job here! This is not a matter of levity in terms of laughing it off! This is a matter of very -- of seriousness. And I've taken this job very seriously.

That statement that I issued in the beginning, right at the start of this, was something that has been three years worth of work on my part. I've been to the region time and again. I've talked to the leaders there. There is indication, every indication that this administration has done nothing to thwart the Taliban. And then we have foot-dragging on requests for evidence. What else are we to conclude except there's something they're trying to hide?

And I'm trying to do my job, and I'm serious about it. And those who accept this sort of brush-off that I'm being delusional or that someone who is asking for this information is delusional, I think is undermining the credibility of this committee. And I --

REP. BEREUTER: Would the gentleman from Ohio yield?

REP. ROHRABACHER: -- yield back the balance of my time.

REP. BEREUTER: Will the gentleman from Ohio yield? I thank the gentleman for yielding. I hope the gentleman from California understands that I believe that we have oversight responsibilities, and I have supported his requests for information from the administration.

I would like now to move forward.

REP. BROWN: Mr. Chairman. Mr. Chairman, I have a very brief opening statement.

REP. BEREUTER: Mr. Brown, the gentleman from Ohio.

REP. SHERROD BROWN (D-OH): I'm not going to express, as Dr. Cooksey and Mr. Gilmore did, my opposition to opening statements, because I'm making one.

Mr. Chairman, thank you for just a real short moment.

I want to enter into the record, ask unanimous consent to enter into the record A.M. Rosenthal's October 15th Op Ed piece in the New York Times called "The Himalayan Error," and the subtitle is, "The Tilt Toward Pakistan," and say only that --

REP. BEREUTER: Without objection.

REP. BROWN: Thank you, Mr. Chairman. That the events of last week, I think, underscore the errors of our ways in South Asia under presidents of both parties going back for more than a generation. We've seen 40 years of a pro-American military government or at least influenced by the military in Pakistan; we've seen 40 years of U.S. military support in Pakistan. Next door, we see a country for the last 50 years that's practiced democracy of 50 years that recently has been warned.

We've built a closer and closer relationship with India over the last few years, but I just think that the coup in Pakistan, the pro- Pakistani tilt of our government through most of the post-World War II years underscore to me the importance of our building our relationship with India much better than we have in the past. It's a country of a billion people; Pakistan is a country of one-seventh the size of that. Not that Pakistan is not important to us, but I think that we as a nation have leaned the wrong way, have gone in the wrong direction. I think the events of the last couple of weeks underscore that better than anything any of us could say, and I would just like to again thank Secretary Inderfurth for his work in strengthening ties with India and encourage him and the State Department to do better.

Thank you, Mr. Chairman.

REP. BEREUTER: Mr. Secretary -- thank you, Mr. Brown -- we look forward to your statement. Thank you for appearing today and for being willing to respond to our questions after your opening statement. We'll hear from Dr. Butcher next, but your entire statement will be made part of the record. You may proceed as you wish.

MR. INDERFURTH: Mr. Chairman, Congressman Lantos, members of the committee, there is the biblical injunction of the last shall be the first. If you look at my testimony, I had Afghanistan at the last in my testimony. I think that given what we have heard, I would like to make just a very brief remark on what Congressman Rohrabacher has had to say.

First, I take issue with virtually every point made by Congressman Rohrabacher except for his evident concern for the Afghan people, which I think he knows we both share. Now, in terms of the oversight responsibilities --

REP. BEREUTER: Mr. Secretary, would you pull that mike a little closer, please?

MR. INDERFURTH: Certainly. In terms of your reference to the oversight responsibilities of the committee, I would like to say something about that because I'm sure it would be of concern to every member of the committee whether or not you are receiving the information that you have requested.

We are complying with the request made by Chairman Gilman, which was made formally on May 21st.

Now this was following procedures established between the committee and the State Department for making a request of this nature.

We immediately contacted our embassies. We notified relevant bureaus in the department and began what is indeed a time-consuming and labor-intensive process of collecting these documents and preparing them for transmittal to the department.

On July 20th, the first set of documents was sent to Congressman Rohrabacher. This set included, as he pointed out, a number of pages of unclassified material, true, but also included 17 classified documents, which were made available by staff of the State Department in his office.

Now the second set of documents was delivered September 2nd, and this set contained more than 40 classified documents.

A third tranche is being prepared and will be delivered to the congressman shortly, and at least one more tranche will follow that.

Now we trust that this effort, which we are making very much in compliance with our responsibilities -- we hope that this effort we are making will fulfill Congressman Rohrabacher's request and that it will prove worthwhile.

But I do want to say that having reviewed these documents myself, that they offer absolutely no support for his contention that the U.S. government has now or in the past had a covert policy of support for the Taliban. And I think as you hear my statement in a moment, the sanctions that we have recently placed on the Taliban for its continued support for Osama bin Laden, as well as for the U.N. resolution which was passed last Friday by the entire U.N. Security Council, which places sanctions on the Taliban, would suggest that there's not a policy of support but indeed opposition to the Taliban for its support for international terrorism.

Mr. Chairman, a brief glimmer of hope, if I could just start, before I get to my prepared statement, because you mentioned the Lahore process -- unfortunately, I'm much more informed about Lahore than I am about Indonesia. I apologize, Congressman, about that. But we too -- I think the last time I testified here, we had hoped that the Lahore process of Prime Minister Vajpayee and Prime Minister Sharif would set a new stage for relations on the subcontinent. That took place in February. Unfortunately, since then, we have seen a Kashmir crisis in Kargil, and last week we saw the military overthrow of the government in Pakistan. So there have been significant setbacks for the Lahore process.

But I do want to note the one glimmer of light, and that is that the Lahore-Delhi bus service, which was inaugurated by the two prime ministers in February, continues to run uninterrupted. So the people of the two countries, even though we have had these major disruptions to what we had hoped was a new stage in their effort at reconciliation -- at the least the bus service itself continues to operate.

We hope that maybe at some point, the Lahore process itself could get back on track.

Mr. Chairman, I do appreciate this opportunity to appear before the subcommittee today for a number of very obvious reasons already alluded to and referred to by members of the committee. I believe that this is an auspicious to meet with you.

We have a number of immediate challenges facing United States' policy in South Asia. And this afternoon I will address three in particular and try to do those as quickly as possible. My full statement I appreciate being placed in the record.

The three issues would be the political crisis in Pakistan, where the army has taken the reins of power, the recent elections in India and the formation of a new government, and the situation in Afghanistan and our steps to combat international terrorists who take shelter there.

At the top of our agenda today is the political crisis, which erupted a week ago in Pakistan. As I said, Mr. Chairman, my full statement will summarize more of my remarks, including developments since October 12th. I would, however, like to focus on our policy at present toward Pakistan.

We listened closely to General Musharraf's nationwide address of last Sunday night. We heard his pledge for a return to a true democracy in Pakistan and that the armed forces have no intention of remaining in power any longer than necessary.

But we are disappointed with what we did not hear. Specifically, we did not hear an announcement of a clear timetable for the early restoration of constitutional, civilian and democratic government. As Congressman Lantos pointed out, you will remember that an earlier army chief, General Zia, anticipated a brief period of military control when he took power. He ended up ruling for 11 years.

The press in Pakistan and here has focused in recent days on the rationale for the general's actions. Much of the coverage has seemed to support General Musharraf's statement that Pakistan had hit rock bottom. For our part, we are not justifying or condoning the general's actions.

As a matter of principle, one that we believe applies throughout the world, the remedy for flawed democracy is not a military coup or suspension of a democratically elected legislature, or the detention of the elected government. In our view, Pakistan's long-term stability lies in developing civilian political institutions, which are self-correcting through political processes, not through the expedient of military intervention.

President Clinton, Secretary Albright, and other U.S. officials have expressed our deep regret at this setback to democracy, and our hope that Pakistan's authorities will acknowledge and fulfill their duty to restore Pakistan to civilian, democratic, constitutional government as soon as possible.

Mr. Chairman, until we see a restoration of democracy in Pakistan, we have made it clear we would not be in a position to carry on business as usual with Pakistani authorities. As you know, Section 508 of the Foreign Operations Appropriations Act contains a prohibition against a broad range of assistance for a country whose democratically elected head of government is deposed by military coup or decree. We have applied those sanctions with regard to Pakistan. Now, as a practical matter, most forms of assistance are already prohibited for Pakistan under the Glenn Amendment and other statutory requirements.

Now, as General Musharraf told his nation, actions speak louder than words. The United States will watch closely as the general acts to fulfill his pledge to return his country to democracy and to address the other serious problems he identified, including the economy and corruption. We call on General Musharraf to respect civil liberties, freedom of the press, judicial independence and human rights while this process proceeds. Our own actions toward Pakistan in the days ahead will be guided in large part by the steps the new authorities take.

Mr. Chairman, one final word on Pakistan, if I may. Despite our deep disappointment with this latest setback to democracy in Pakistan, we have no choice but to stay engaged. We cannot walk away. Pakistan is important; it is important because stability, or the lack thereof, in Pakistan will have an impact on Pakistan's neighbors, the region and beyond. Pakistan is important because it can serve, and we hope one day will serve, as an example of a progressive Islamic democracy. Pakistan is important because it is a link, both economic and political, between the Indian Ocean and Central Asia; because it has significant human and economic resources; and because it has historically been a friend of the United States. It is important, therefore, for the United States and other long-term friends of Pakistan to express their concern, exert their influence, and take those steps necessary and appropriate so that Pakistan can see a prompt return to civilian rule and restoration of the democratic process, as called for by President Clinton.

Mr. Chairman, members of the committee, turning to India, we are also facing a challenge, but in this case a more positive one. India has just completed the largest exercise of democratic voting the world has ever witnessed; more than 360 million voters cast ballots. The final results of India's month-long election gave the 17-party coalition of Prime Minister Vajpayee 303 seats in the lower house of parliament, 31 more than needed to form a simple majority. Atal Behari Vajpayee was sworn in for the third time as India's prime minister on October 13. It was also, as Foreign Minister Jaswant Singh pointed out, and Congressman Lantos, the first time in 27 years in India that an incumbent prime minister has been returned to office. President Clinton called Prime Minister Vajpayee to offer his congratulations.

Mr. Chairman, there are substantial elements of continuity between the previous and the new governments, in particular in the key positions of prime minister, foreign minister, home minister, finance minister and defense minister. Prime Minister Vajpayee's ability to maintain continuity of leadership in the key ministries, and his successful effort to accommodate his coalition partners, should mean that his government will be quick off the mark in implementing policy priorities, including economic reform, rural development, and national security. This new government also appears to have a larger and, therefore, potentially stronger coalition, a fact that we hope will enable India's leaders to adopt a longer-term perspective rather than one overshadowed by the prospects of a brief tenure.

Mr. Chairman, the new government's initial messages to the world are positive. Both Foreign Minister Singh and Principal Secretary to the Prime Minister and National Security Adviser Brajesh Mishra, who will be in Washington tomorrow, have reiterated their intention to seek a national consensus for signing the Comprehensive Test Ban Treaty.

This administration remains committed to the CTBT and believes it is an important measure to restrain the prospect of a nuclear arms race in South Asia. Now, as everyone here knows, we have faced our own challenges recently with ratification, and despite the importance -- and, rather, understand the importance of forging a solid domestic consensus, which we will continue to try to do. The United States will also continue to urge both India and Pakistan to sign and ratify the CTBT because we believe it is in their national security interest to do so.

There are a number of other steps in the nonproliferation area that we are encouraging India and Pakistan to take to address our concerns and those of the international community. These steps, which we believe are consistent with Indian and Pakistani security interests, include: constructive engagement on fissile material; restraint in missile developments, including non-deployment and strengthened export controls. Deputy Secretary Talbott will soon resume his dialogue with Foreign Minister Jaswant Singh on these issues.

Mr. Chairman, we also see signs of promise on the economic front. There are reports that the new government will put in place a new economic package by mid-November.

The package would cover a wide range, a wide spectrum, including reforms of the financial, industrial and infrastructure sectors. In Finance Minister Sinha's own words, "We want to undertake the second generation of economic reform."

Prime Minister Vajpayee has also acknowledged the need for India's greater integration into the world economy. And several bills that would help open India to greater investment are awaiting the new parliament's approval. These include proposals to open up the insurance sector to private domestic and foreign companies, and a telecommunications plan that would accelerate investment in private telephone networks.

With the new government in place, we are hopeful that India will return to a firm course towards liberalization. Economic opportunities in the energy sector will be one of many subjects that Energy Secretary Bill Richardson will discuss with his Indian counterparts next week, when he becomes the first U.S. Cabinet officer to visit India since the formation of the new government.

Mr. Chairman, with the new government in place in Delhi, we will focus intensely on the future of the Indo-American relationship. President Clinton is acutely aware that, as the first American president elected since the end of the Cold War, he has an unprecedented opportunity to put our relations with India on a substantially different footing. No longer do New Delhi and Washington find themselves at cross-purposes because of Cold War constraints. In the words of Prime Minister Vajpayee, we are natural allies.

To define that new relationship and to invest it with the broadest and deepest possible meaning, we have to address the complex set of issues that surfaced with the Indian nuclear tests in May last year, addressing them from our perspective and from India's perspective. Our ability to move forward and the extent of our future cooperation will be influenced by the progress we make, particularly in the nonproliferation area.

In this connection, Mr. Chairman, the administration appreciates Congress's recent action granting the president comprehensive waiver authority for the Glenn, Symington and Pressler sanctions. I want to emphasize that we sought enhanced waiver authority because this would give us more flexibility as we pursue our agenda in South Asia.

The unfolding situation in Pakistan is a reminder of how quickly things can change in South Asia, and, therefore, of the importance of ensuring that we have a range of tools at our disposal. Once legislation is enacted, we will use the authority effectively and prudently and, I want to emphasize, in consultation with Congress.

As you know, over the past year we have repeatedly contacted the Taliban and encouraged them to expel bin Laden without delay and avoid further confrontation on this issue with the U.S. and others in the international community. Unfortunately, the Taliban has not been responsive.

In July, President Clinton issued an executive order blocking the Taliban's property and banning commercial transactions with the Taliban. In August, Ariana Airlines was placed under sanctions. To date we have frozen more than $34 million in Taliban assets.

Most recently, and through U.S. diplomatic efforts, the rest of the world has now joined us in expressing its resolve to end terrorist operations in Afghanistan. A U.S.-initiated resolution passed unanimously by the U.N. Security Council last week demands that the Taliban stop sheltering bin Laden and ensure that he is expelled and brought to justice. If the Taliban failed to do so by November 15, their assets will be frozen worldwide, and Taliban-owned, leased or operated aircraft will be denied permission to take off or land anywhere in the world.

This resolution is a result of intense U.S. effort and represents a significant step forward in our campaign to end bin Laden's terrorist activities.

Mr. Chairman, let me just add, we are prepared to work with the Taliban to rid Afghanistan of terrorist networks. As President Clinton said following passage of the U.N. sanctions resolution last week, the international community has sent a clear message. The choice between cooperation and isolation lies with the Taliban.

Mr. Chairman, may I conclude by noting that our ability to pursue our agenda in South Asia and, indeed, throughout the world depends in large part on adequate funding for our foreign affairs budget, a point that Secretary Albright makes repeatedly. As you know, earlier this week, President Clinton vetoed the foreign operations appropriations bill because it was funded at approximately $2.2 billion below his request.

The administration believes these cuts are dangerously shortsighted. The bill's low funding level, in the president's words, "puts at risk America's 50-year-old tradition of leadership for a safer, more prosperous and democratic world."

Obviously, the across-the-board cuts in foreign affairs spending will harm what we are trying to do in South Asia. Indeed, if the proposed cuts are enacted, the administration will be forced to reduce our efforts to counter terrorism; prevent and reduce conflict, and support regional democracy; stem the spread of deadly diseases, like HIV/AIDS; address trafficking in women and children; and fight drugs, all of which are clearly in the interests of the American people and key to our agenda in South Asia.

Mr. Chairman, members of the committee, we face a number of immediate and long-term challenges, as opportunities, in South Asia, where our national interests are engaged. We need your support and the necessary resources to do our job.

Thank you very much.

REP. BEREUTER: Thank you, Secretary Inderfurth.

Next we'll hear from Arona M. Butcher. Dr. Butcher is chief of Country and Regional Analysis Division, Office of Economics, United States International Trade Commission. You may proceed as you wish, Dr. Butcher.

MS. BUTCHER: Mr. Chairman, members of the committee, I wish -- I want to thank you for the opportunity to present the findings of a study conducted by the International Trade Commission on U.S. Economic Sanctions imposed on India and Pakistan after these countries detonated nuclear explosive devices in May 1998.

As you know, on March 16th, 1999, the Committee on Ways and Means asked the commission to examine the economic sanctions imposed on India on May 13th, '98, and Pakistan on May 30th, '98, pursuant to Section 102 of the Arms Export Control Act, also known as the Glenn amendment. The committee asked the commission to analyze the effects of the sanctions on the U.S. economy and to assess the likely economic impact on the United States, India, and Pakistan if the sanctions are reimposed, as well as summarize the instances when the sanctions have affected humanitarian activities and the activities of multinational institutions in India and Pakistan.

The major finding of the commission's report is that the quantifiable impact of the Glenn amendment's economic sanctions and the likely impact of the reimposition of these sanctions of the United States, India, and Pakistan are relatively small. However, according to U.S. industry, the main impact of these sanctions is increasing the perception that the U.S. companies could be unreliable suppliers.

The Glenn amendment sanctions that are analyzed in the commission's study are:

First, deny export credits and guarantees by the U.S. government department or agency, such as USDA, U.S. Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

This sanction was waived until October 21st, 1999.

Second, prohibit U.S. banks from making any loan to the government of a detonating country except for purposes of purchasing food or other agricultural commodities. This was also waived until October 21st, 1999.

Third, oppose the extension of any loan for financial or technical assistance by international financial institutions, such as the Asian Development Bank, the International Monetary Fund, the World Bank, except for humanitarian purposes. This was waived for Pakistan until October 21st, 1999, but is in force for India.

Fourth, terminate the U.S. foreign-aid programs except for humanitarian assistance and food or other agricultural commodities. This is in force.

The short duration of the sanctions precluded an empirical analysis of the effects of sanctions on the United States prior to the waiver. For example, restriction on the provision of USDA export credits and guarantees were listed on July 15th, 1998. And many of the remaining components of Glenn amendment sanctions were waived by the president on December 1st, 1998.

Therefore, in order to assess the impact of the Glenn amendment sanctions on the U.S. economy, the commission obtained information from U.S. industry by conducting a telephone survey of over 200 U.S. companies and associations, by holding a public hearing, and from written submissions. Other U.S. government agencies involved in monitoring and enforcing sanction actions were also contacted.

In the case of India and Pakistan, macroeconomic data and trade-flow data were examined for the '97-'99 period. In order to assess the likely impact on the United States, India and Pakistan, of the reimposition of sanctions, a global economic model was employed with '95 as the base year, the most recent year for which data on trade flows for India and Pakistan, and their major trading partners were available.

According to U.S. embassy sources, the industries most affected by the Glenn amendment sanctions were those related to the sale of certain agricultural products, industrial machinery; transportation, construction and mining equipment; electronics products and infrastructure development services.

Another result of the sanctions was, and continues to be, the increasing perception of U.S. companies as unreliable suppliers. In addition, according to U.S. industry, the sanctions continue to have a negative impact on U.S. business in India, as U.S. companies are reluctant to pursue business opportunities because of uncertainty over sanctions.

The likely impact of the reimposition of Glenn amendment sanctions on the United States, according to the model results, would be an estimated cost measured in terms of loss of purchasing power of about $161 million or less than one-tenth of a percent of the U.S. GDP in '95. The decline in overall employment would be less than two- tenths of a percent and would be primarily in the U.S. grain sector. U.S. wages and the return to capital would decline by less than one- tenth of a percent.

However, the reimposition of sanctions prohibiting USDA export credits and guarantees would likely result in an estimated net benefit for the United States, similar to the benefit from removing an export subsidy, of about $27 million; that is, denying export credits to the Indian and Pakistani importers results in savings for the U.S. economy.

The reimposition of these sanctions, however, is likely to adversely affect U.S. wheat exports to Pakistan, primarily because Pakistan is a significant user of USDA export credits. U.S. wheat producers in the Pacific Northwest -- Idaho, Oregon and Washington -- would be affected most if Pakistan were to shift to alternate suppliers, such as Australia and Canada. According to U.S. industry, the reimposition of restrictions on company or customer access to project financing or loan guarantees from Ex-Im Bank and OPIC most likely will hinder efforts of U.S. companies seeking to do business in India and Pakistan. This, in turn, might harm U.S. international competitiveness and diminish the perception of U.S. companies as reliable suppliers. Financial services firms, in particular, reported that their operations likely would be affected. Those sanctions would make it more difficult for U.S. companies to participate in major infrastructure projects.

In the case of India, the Glenn Amendment sanctions appear to have had minimal overall impact on its economy. This is most likely because of the fact that India's economy is not dependent on foreign bilateral and multilateral assistance, and thus appeared to have been adversely affected -- not to have been adversely affected by the postponement of several World Bank loans. According to the government of India, the overall force of Glenn Amendment sanctions on the Indian economy was about $1.5 billion in 1998, about four -- .4 percent of India's gross domestic product. India experienced an initial downturn in its financial sector after U.S. sanctions were imposed, but its economy recovered by late '98 to post a 5.6 percent growth rate for that year.

The likely impact of reimposition of sanctions would be an estimated total cost of $320 million, equivalent to less than one- tenth of a percent of India's current GDP. The estimated effects on wages and the return to capital in India and Pakistan also would be small, declining by less than one-tenth of a percent. The reimposition of sanctions prohibiting USDA export credits and guarantees was estimated to have no cost for India since India imports relatively little grain from the United States. Grain is the primary commodity affected by USDA export credits and guarantees that is exported to India.

The major alternative suppliers benefiting from reduced U.S. exports to India and Pakistan under the Glenn Amendment sanctions would be the other major trading partners of sanctioned countries. These include Japan, Europe, the rest of Asia, Australia, New Zealand, and the South Pacific trading partners.

In the case of Pakistan, the Glenn Amendment sanctions most likely have had a small impact on its economy. The United States was, relatively, a small provider of aid, trade and investment for Pakistan before the sanctions were activated. Moreover, most U.S. economic assistance to Pakistan was terminated in 1990 by other sanctions. Pakistan did experience an economic downturn immediately after the Glenn Amendment sanctions were triggered, but there may be other factors -- for example, IMF reform package -- that may have influenced this downturn. Despite its economic difficulties, the Pakistan's economy grew by 5.4 percent in '98.

The likely impact of the reimposition of sanctions on Pakistan would be an estimated total cost of about $57 million, less than one percent of Pakistan's current GDP. With net welfare loss to Pakistan from less than $500,000 for most of the sectors examined, to $6 million to the special industrial machinery and equipment sector.

The cost to Pakistan of reimposition of sanctions prohibiting USDA export credits and guarantees was estimated to be approximately $20 million, used primarily to purchase wheat from the United States. However, Pakistan would most likely shift to alternative suppliers in Australia and Canada if the Glenn Amendment sanctions prohibiting USDA export credits are reimposed.

In the case of humanitarian activities, the effects of the Glenn Amendment sanctions on India and Pakistan also appear to be minimal, as the U.S. sanctions did not apply to the provision of humanitarian aid or to the provisions of medicines and medical equipment. In the case of activities of multinational institutions, India does not appear to have been adversely affected by the postponement of several non-humanitarian World Bank loans. Pakistan could, however, be adversely affected if the United States and other major countries oppose future IMF loans for Pakistan.

Finally, some of the factors influencing the analysis in this report are that India and Pakistan are relatively small trading partners of the United States.

REP. BEREUTER: Dr. Butcher, excuse me. We have those factors right in front of us here in your statement. I wonder if you could summarize and tell us what you think the economic effects are in your own words in summary.

MS. BUTCHER: The economic effects are basically relatively small, as I've indicated, because of some of the factors; they're being small trading partners with the USA. Also the short duration of the sanctions did not influence the activity in India and Pakistan. And also, the other factors, for example in Pakistan, where Japan is the major donor of aid, and also the IMF reform package was already implemented in Pakistan. And also the East Asian financial crisis also effected the activities in these countries.

REP. BEREUTER: Thank you very much.

We'll now proceed under the five-minute rule under regular order. I'd begin the question by mentioning to you, Secretary Inderfurth, that there's been some discussion among commentators about what's happened in Pakistan of the fact that in the 51 years of its independence, Pakistan has now had military rule for 25 or 26 years. And as I understand it, there has not been a substantial outcry or demonstrations in the streets against the coup that's taken place.

Perhaps that's because of the popularity, or lack thereof, of the current -- of the recent government, and perhaps it's because of the desperate economic and -- declining, at least, economic conditions that were serious -- I won't use "desperate" -- that existed. But what are we to make of the fact that Pakistan has chosen a military course, or at least has found itself with military leadership for half of its existence and how we see at the moment no clear outcry against a coup which has taken the elected government from power?

MR. INDERFURTH: Mr. Chairman, I think your observations about the reaction to the military takeover are accurate. It is very clear, and we have been seeing this for many weeks as it unfolded, a great deal of concern in Pakistan itself about the direction the country was heading; the economic situation clearly at the top of that agenda or near the top; widespread corruption; a feeling that the relations between the civilian government and other segments of society, the Sharif government, were reaching a certain crisis proportion.

A backdrop to this is the history of civilian-military relations in that country; half the 52-year history of Pakistan there has been a military government. Prime Minister Sharif, his relations with the military were filled with a great deal of tension.

A year ago he had dismissed the chief of the army staff, General Karmat (sp), had replaced him with General Musharraf. There was tension there, which was exacerbated by the Kargil crisis in Kashmir. We believe that Prime Minister Sharif made the right decision after his meeting with President Clinton to see the Line of Control restored in Kashmir and to see that crisis ended, but the way in which that crisis took place and the ill feelings that resulted from that certainly made relations between Prime Minister Sharif and the military more difficult.

REP BEREUTER: Mr. Secretary, if I --

MR. INDERFURTH: That came to a head just two weeks ago, when Prime Minister Sharif attempted to dismiss -- I'm sorry, two weeks ago they expected to have this repaired, and then last week he tried to dismiss General Musharraf, and the army reacted.

REP. BEREUTER: If I could just interject, as a part here of your possible response, there are press reports indicating that the prime minister in effect warned the difficulty he would place himself and his regime -- his government in if, in fact, he made the decisions that we were supporting in the case of Kargil; and secondly, that General Musharraf was in fact the leader of the incursion, support for the incursion that took place. Would you care to factor that into your response?

MR. INDERFURTH: Well, I will, because that has gotten some attention. And there is no question that the Kargil crisis did factor into the unraveling of the situation in Pakistan. It's our very strong view that the mistake with Kargil was made when a decision was taken by the Pakistani government -- we believe approved by Prime Minister Sharif, but also led by General Musharraf as head of the army -- to try to back forces going across the Line of Control and seizing certain territory in Indian-held Kashmir. That precipitated what was indeed the most dangerous conflict between the two countries since 1971.

The decision by Prime Minister Sharif to see these forces returned, that decision, combined with very effective military action, brought that crisis to an end. It could have gotten worse. It could have escalated. It could have -- by either calculation or miscalculation.

Bringing that crisis to an end, when you're dealing with two nuclear-capable states, was very important.

Now the consequences of that for what was an ongoing crisis within Pakistan, including the government's increasing crackdown on legitimate forms of dissent, the freedom of the press, all of this led to what I think we have seen in the last several days.

REP. BEREUTER: Thank you. My time has expired.

I'd like to call on the gentleman from New York, Mr. Ackerman, in accordance with committee procedures. The gentleman is recognized for five minutes.

REP. ACKERMAN: Thank you, Mr. Chairman. Thank you.

Mr. Secretary, am I correct in my understanding that the administration does not intend to use the Pressler and Glenn amendment waivers to restart an arms supply relationship with Pakistan?

MR. INDERFURTH: That's correct. We have no plans nor intentions.

REP. ACKERMAN: Thank you very much. In your summary of your statement just a moment ago, you said that the administration believed that the Sharif government approved or approved of the Kargil incursion. Does that mean to imply that they approved of it afterwards or they knew about it beforehand? And were they complicitous in the formulation that policy or just went along for the ride afterwards?

MR. INDERFURTH: Well, the ride got very bumpy. And I think that they were in on the takeoff, if you want to use that metaphor. We believe that there was civilian approval for this. This was not a, to our knowledge, to our information -- and again, we're not inside the Pakistani government; we can't say with absolute certainty -- but the information that we have leads us to the conclusion that it was a military-proposed operation and civilian-approved operation.

Now the degree to which --

REP. ACKERMAN: I think the interest here is whether or not -- during the famous bus trip by the prime minister to Lahore, if indeed Mr. Sharif was duplicitous during that meeting and knew about the fact that Kargil was or was about to take place.

MR. INDERFURTH: We don't have an answer to that. We believe that that operation had been on the shelf for some time. Whether or not it had been pulled off the shelf and presented in February, when Prime Minister Sharif and Prime Minister Vajpayee were meeting -- we don't know the answer to that. We would hope that that was not the case.

REP. ACKERMAN: Thank you. And your statement notes that you will use the authority in the defense appropriation bill, quote, "effectively and prudently and in consultation with the Congress," unquote. And certainly that's exactly what we would expect. Do you have a sense at this point of what would be a prudent and effective use of the waiver authority?

MR. INDERFURTH: Well, let me say that assuming the DOD bill is signed, we would plan to renew the waivers that are currently in effect for India immediately. We would then assess what further steps should be taken with that authority in light of our renewed engagement with the new Indian government. No decisions have been taken here. We have a number of issues which we are working on where we want to see progress and we would hope that that authority would contribute to that.

I should mention, by the way, that we are currently reviewing the so-called "entities list" --

REP. ACKERMAN: That was going to be my next question, and basically, have you begun the process which calls for the paring down of the list and how far along are you, and should we expect a sorter list or no list, or --

MR. INDERFURTH: Well, we are in that process of looking carefully at the entities list. I think that we have been engaged in that now for a few weeks. The DOD appropriations bill language does ask for -- I think it's a 60-day period to report to Congress, so we will certainly have that within that time frame; perhaps sooner.

REP. ACKERMAN: Thank you. In the light of the fact that General Musharraf was the architect of the Kargil invasion, what are the chances to restart a meaningful dialogue between both India and Pakistan, and should the Indian government trust him and if so, why?

MR. INDERFURTH: Well, the chances, as I mentioned in my brief opening-opening remark, is Lahore does not look well these days -- the Lahore process -- even though the bus service continues. I think that as we are, I think the Indian government will wait to see what actions General Musharraf takes in the days ahead. We have said -- I said in my statement -- that we are going to move forward based on actions, not on words. I think the Indian government will take the same approach.

I think that there is a concern in New Delhi about the military takeover. They have had experience with military governments in the past.

They have approached this so far in a low-key cautious way.

But I think the actions taken -- the new government has not been formed. We have no timetable for a return to democracy. There is, I think, a great deal to be learned about how General Musharraf intends to proceed before we or the Indian government, or I think the international community, can make decisions on any of these issues, including a resumption of the Lahore process. We would hope, however, that that process could be resumed because it has appeared to be the only promising avenue for some reconciliation between the two countries in a very long time.

REP. ACKERMAN: Thank you, Mr. Secretary.

Thank you, Mr. Chairman, for the generous allocation of the time.

REP. BEREUTER: Thank you, Mr. Ackerman. I wish we had more.

The gentleman from California is recognized under the five-minute rule. Mr. Rohrabacher?

REP. ROHRABACHER: (Laughs.) All right. Thanks for reminding me, Mr. Chairman. Just a couple of bookkeeping matters.

Mr. Inderfurth, does the State Department have its cables and electronic communications computerized?

MR. INDERFURTH: Well, you may be talking to the wrong person, Congressman. I am not a computer whiz. We can certainly provide you the information on our data system. I am sure it's computerized, and I am sure that the search would include that, as well as files and e- mails and cables and everything that you have asked for.

REP. ROHRABACHER: Okay. And to your knowledge, does the State Department computer system have the capability to search out subject-matter areas?

MR. INDERFURTH: I don't know how it searches.

REP. ROHRABACHER: All right. We'll leave it at that. Thank you very much. You don't know.

You are personally aware that Chairman Gilman verbally requested, at a closed hearing with Secretary Albright in November of last year, for the documents that we were talking about?

MR. INDERFURTH: Congressman, the formal request was made on May 21st, and I am sorry we cannot --

REP. ROHRABACHER: Are you aware that -- Mr. Inderfurth, if you could answer my question please -- were you aware of Chairman Gilman's --

REP. ACKERMAN (?): I am sorry, Mr. Chairman. There is no reason that any of us have to shout at the witness --

REP. ROHRABACHER: No. When someone is trying to eat up my time, I have got five minutes, which the chairman is talking about. Could you please answer the question: Were you aware of Chairman Gilman's verbal request for the documents that I had requested earlier in November?

MR. INDERFURTH: In an open or a closed session -- did you say closed session?

REP. ROHRABACHER: It was a closed session.

MR. INDERFURTH: I am not aware of that.

REP. ROHRABACHER: And you weren't aware of it?

MR. INDERFURTH: I know that there was a request.

REP. ROHRABACHER: How many times did I tell you, Mr. Inderfurth, of Mr. Gilman's request?

MR. INDERFURTH: I think you said in open session.

REP. ROHRABACHER: No, how many times did I repeat --

MR. INDERFURTH: Because I've seen an open session request.

REP. ROHRABACHER: -- how many times did I remind you of Mr. Gilman's verbal request at that hearing?

MR. INDERFURTH: Well, again, Congressman, we need it in writing.

REP. ROHRABACHER: I can tell you, Mr. Inderfurth, it was over five times.

MR. INDERFURTH: We need it in writing. I'm sorry.

REP. ROHRABACHER: It was over five times.

How many times does this member have to remind you of the verbal commitment of Secretary Albright in that November hearing to provide the documents forthwith?

MR. INDERFURTH: That commitment was made and it's being pursued now, in light of the formal written request.

REP. ROHRABACHER: Thank you --

MR. INDERFURTH: The commitment was a good one.

REP. ROHRABACHER: Thank you, Mr. Inderfurth.

Mr. Inderfurth, let me just note that in your own statement today, you state: "Mr. Chairman, we are prepared to work with the Taliban to rid Afghanistan of terrorist networks." And it goes on talking about how the Clinton administration has made that choice of cooperation or isolation, and that choice lies with the Taliban.

Let me note, Mr. Inderfurth, that to me, that's reconfirming everything that I have been saying. Plus, Mr. Inderfurth, let me note that this is very similar of saying to Al Capone, "Whether or not you're going to help us rid Chicago of bootleggers is up to you."

The Taliban are up to here with terrorism, they're up to here in the opium trade. And for you to make these kind of statements about cooperating with the Taliban underscores exactly the point that I've been trying to make, does it not?

MR. INDERFURTH: It does not.

REP. ROHRABACHER: All right --

MR. INDERFURTH: The work with the Taliban in this instance -- we have an indictment of Osama bin Laden. If they would like to turn him over, we will work with them -- we will go to their border and take bin Laden and bring him back to New York and put him on trial. That is what we are referring to. If they need some way to get him out of the country, we are prepared to work with them for that. That's exactly and only what we're referring to.

REP. ROHRABACHER: Mr. Inderfurth, did your assistant talk to you about a document, S-175, it's a State Department cable dated 8/07/98?

MR. INDERFURTH: No, I really don't have a whole list of the documents.

REP. ROHRABACHER: Did your -- did your assistant who came to me and went over those documents, relate that document to you?

MR. INDERFURTH: If you're referring to Mr. Morrison, he did report on his discussions with you. But specific documents, dates -- if you want to provide that to me, and if it's unclassified, I'd be glad to talk about it in this session.

REP. ROHRABACHER: All right, thank you. And it is your position, and you are stating -- (aside) -- can I say "under oath" today? Can I say, Mr. Chairman, that he's stating under oath, or would this -- I guess we can't say that, can we?

(Returning) Well, you are reaffirming that there is nothing in the State Department cables that you have read or know about that indicates any past support or present support for the Taliban?

MR. INDERFURTH: I have seen nothing to that effect.

REP. ROHRABACHER: Oh, that's a great answer. That's an answer -- you know, you were a newsman, Mr. Inderfurth. You know what kind of answer that is. That's an answer that's so full of weasel words it means nothing. Nothing that you've seen? Perhaps -- you know, I used to be a newsman too, Mr. Inderfurth, and I recognize when people sometimes don't want to see things, they don't see it.

Is that possible -- that there are documents in the State Department that you haven't seen, that indicate this?

MR. INDERFURTH: We have provided you the full documentation that we have available. And as I said, of those documents that I have seen, nothing supports your allegations.

But again, I would be pleased, as I have said from the outset, to discuss these with you -- open, closed session; your office, my office; any fashion you would like to do it.

But again, this has been a charge that you have made for some time. And in the review that has been done in compliance with Chairman Gilman's formal request, I have seen nothing to support what you have -- the charges that you've made. But again, if you have something that perhaps I overlooked in reviewing these, please let me know.

REP. ROHRABACHER: Thank you very much.

REP. ACKERMAN: Will the gentleman yield?

REP. ROHRABACHER: Mr. Chairman, I just say -- would close by saying that I renew my statement that the documents that I've seen do indicate a past support for the Taliban. I can't go into detail. They're secret documents.

Number two, from the -- just from Mr. Inderfurth's testimony today and the other investigations that I've carried on, I certainly renew this charge. And there's nothing that can be done on the other side of this aisle to try to laugh off this charge. This is a very serious charge. It goes to the heart of our oversight powers. I appreciate Mr. Ackerman's support for our request for these documents --

REP. BEREUTER: Thank you, Mr. Rohrabacher.

REP. ACKERMAN: Mr. Chairman, I ask unanimous consent that the gentleman be given one extra minute.

REP. BEREUTER: Is there objection? Hearing none --

REP. ACKERMAN: Will the gentleman yield to me?

REP. ROHRABACHER: I certainly will.

REP. ACKERMAN: Thank you very much.

Mr. Secretary, have you either seen, heard of any document in existence, or even heard any rumors of such documents being in existence, other than from the allegations made by my distinguished colleague from California?

MR. INDERFURTH: No, I have not.

REP. BEREUTER: Would the --

REP. ACKERMAN: Did I get around all the obfuscation? (Chuckling.) If I -- is there something else I need -- I may ask --

REP. ROHRABACHER: Yes. I would thank the gentleman very much for his taking this issue very seriously. And although we are -- we come from things -- from different sides of the aisle, we know that this is a very serious responsibility that we have -- these document requests.

I am looking forward to the rest of the documents, and I will be very happy to talk to you in private or public about that.

REP. ACKERMAN: I -- I would --

REP. BEREUTER: Sir?

REP. ACKERMAN: I would -- thank you, Mr. Chairman. I appreciate the cooperation, the continued cooperation of your department with the gentleman from California in continuing to provide documents with the full understanding that sometimes you can't prove a negative and maybe such documentation does not exist, and if so, perhaps at least with that background, the gentleman at one point will be satisfied that he has seen everything that there is that might be seen.

REP. BEREUTER: Thank you, Mr. Ackerman, and just -- I would move on to the next person, but just saying that, I would say that if the gentleman would like the assistance of Chairman Gilman and myself, Mr. Lantos, Mr. Gejdenson, in trying to make sure that we have this discussion, dialogue, information passage, I think it would be salutary because it is getting in the way of a good relationship between the executive branch and this committee and this subcommittee, and we need to solve the problem if we can.

And I now turn to the gentleman from Florida, Mr. Hastings, under the five-minute rule.

REP. ALCEE HASTINGS (D-FL): Thank you. Thank you, Mr. Chairman. In deference to Mr. Ackerman, he asked that I yield to him briefly.

REP. ACKERMAN: Thank you, and I make that request just to ask unanimous consent request that the remarks and questions by the gentleman from Ohio, Mr. Brown, be made a part of the record.

REP. BEREUTER: Without objection, that will be the order. The gentleman reclaims his time then and may proceed.

REP. HASTINGS: Yes. Thank you very much, Mr. Chairman. Mr. Chairman, my colleague from California has persisted in his line of inquiry, which he is perfectly entitled to. I would urge, however, in all fairness, that his remarks not be taken at all to suggest that the administration in any way is condoning actions of the Taliban. As a matter of fact, Secretary Inderfurth's testimony reflects very accurately a number of circumstances. In July, President Clinton issued an executive order blocking the Taliban's property. The administration has castigated the Taliban on numerous occasions regarding its human rights policies and especially its treatment of women.

The expelling of bin Laden is something that, through diplomatic efforts, the United States has been able to achieve the kinds of results that the rest of the world have now joined us in expressing their resolve to end terrorism. So it is a bit unfair, although not at all without the purview of the members' prerogatives.

It's a bit unfair to characterize the efforts and/or the testimony of Secretary Inderfurth as not being productive.

I find, among other things, it to be most productive, particularly in light of the prolific statements that he makes suggesting, among other things, the strength of this administration's views with reference to the eradication of terrorism in Afghanistan.

That said, Mr. Chairman, I hadn't meant to use my time for that purpose, but I could not allow that kind of thing to go poisoning into the record without understanding with clarity this administration's position as stated by Secretary Inderfurth in the very fine comments that he has offered us here today.

In addition, I'd like to ask you, Secretary Inderfurth, two things. And then Dr. Butcher, not to leave you over there without a question, my question to you, Dr. Butcher, would be if the sanctions affected the economies of India and Pakistan and did their economies suffer or drop in productivity because of the sanctions? And I gather the question would be, to what extent have they found alternative sources, and how successful has the United States industry been in recapturing their previous market share?

And if I could go to Secretary Inderfurth first and ask him whether or not the military regime that's in force now in Pakistan might be more supportive, in your view, or sympathetic towards Islamic fundamentalism. And a second question, Mr. Secretary. I, for one, from the day that I arrived in Congress -- not the day, but the year that I arrived in Congress have advocated that President Clinton should visit South Asia. I know that such a visit has been planned and scheduled and rescheduled and then put off the schedule because of the nuclear testing of India and Pakistan.

I would urge that you urge that the president understand that I think, for one, as one member, that he ought to go to South Asia now more than ever, notwithstanding what has happened in the coup in Pakistan, notwithstanding the nuclear testing.

I leave it at that and ask you a question. Do you know of your own knowledge whether President Clinton intends to visit South Asia in the near future?

Those are my questions, Mr. Chairman.

MR. INDERFURTH: Mr. Chairman, the last question first. The president still intends to visit South Asia next year, and that is the case.

Now, the exact nature of that visit is still under consideration at the White House. But his intention to visit South Asia in the year 2000, hopefully early in the year 2000, is still there.

On the question of Islamic fundamentalism, I made reference in my testimony to General Musharraf's speech to the nation and, through CNN, to the international community on October 17th. He said in that speech -- and I think it's apropos of your question -- he said in his speech that, "Islam teaches tolerance, not hatred; universal brotherhood, and not enmity; peace, and not violence." And he also said, and I quote, "I would like to reassure our minorities that they will enjoy full rights and protections," end quote.

Now, it's our view that these are not the words of an extremist. But again, as I said in earlier remarks, we will be very much watching General Musharraf in terms of his actions, as well as his words. So we hope that that direction that he outlined is one that he will pursue in Pakistan.

REP. HASTINGS: Mr. Chairman, I ask unanimous consent for 30 seconds for Dr. Butcher to respond.

REP. BEREUTER: Now that -- she'll have that under regular order. Thank you.

MS. BUTCHER: Regarding regaining market share will depend on the funding from Export-Import Bank and OPIC. For example, Boeing lost contracts with India and Pakistan on aircraft. But once the waiver was in effect, they regained -- they were able to get the funding to sell aircraft and parts.

And similarly with the export credits from USDA, wheat exports rely on that, as well. And if those are reimposed, the alternative suppliers for Pakistan are Canada and Australia, offering competitive terms. So again, Pakistan's imports from -- its total imports or wheat imports are from the U.S., or 78 percent of the imports come from the U.S., and the rest comes from Australia. If they are unable to get export credits, they will most likely go to Australia or Canada for the wheat exports.

It is basically a function of funding available to our U.S. exporters to sell to Pakistan and India.

REP. HASTINGS: Thank you both. And I thank you, Mr. Chairman.

REP. BEREUTER: Congressman Hastings, I appreciate you pursuing that matter.

Dr. Cooksey, you're recognized.

REP. COOKSEY: Thank you, Mr. Chairman.

And we do appreciate the witnesses being here today and giving your testimony, and it's good to hear it.

I want to ask a question, and I would hope that you can -- and I know the answer, but I feel like it needs to be stated in the record. The appropriations bill for the Department of Defense is in the process of being considered by Clinton. And you're familiar with the Glenn Amendment that you referred to, Dr. Butcher. And there is new waiver authority in that Department of Defense bill that would waive these sanctions against Pakistan and India.

Now, am I not correct in that if Clinton chooses to veto this Department of Defense Conference bill, that then the waiver expires tomorrow, according to the Glenn Amendment, as outlined in your testimony. And tomorrow is October the 21st, 1999. So then the sanctions will be reimposed on India and Pakistan. And would this Democrat president move us back to an isolationist position that we -- with some of these sanctions? Is he aware of that? Is he willing to move back to sanctions?

MR. INDERFURTH: Congressman, I --

REP. COOKSEY: Well let me ask, are you aware, is the State Department aware of that?

MR. INDERFURTH: Oh, of course we are, and I actually have a response for you on this.

REP. COOKSEY: Okay.

MR. INDERFURTH: But I don't think that the issues at stake with respect to the DOD appropriations bill are riding on this issue of the waiver authority for India and Pakistan. I think that there are larger issues involved there that the president --

REP. COOKSEY: You mean in terms of vetoing the Department of Defense bill?

MR. INDERFURTH: Yeah, in terms of vetoing.

I think that he and the administration is well aware that embedded within this DOD appropriations bill is the waiver authority for India and Pakistan, which we greatly appreciate because it's comprehensive and permanent, and we've worked very hard with members of Congress and we greatly support -- or appreciate the support that we have had there. But I don't think that a veto of the DOD appropriations bill would relate to moving us back to an isolationist point of view or anything, quite frankly, related to his view on India and Pakistan. It would simply be a part of a legislative process.

Now --

REP. COOKSEY: But there would be a reimposition of the sanctions.

MR. INDERFURTH: There would be, but let me go through that just very briefly because it is timely because today is October 20th, and tomorrow this may or may not take place. We are well aware that we have until the 21st. Clearly, we would like to see this authority approved and signed into law. We are looking, however, if that does not take place by tomorrow, for ways to find a bridge between tomorrow's expiration and the issuance of a new waiver under the authorities contained in the DOD bill. Our lawyers are working to see if it's feasible to interpret the one-year Brownback authority that is currently law as allowing the president to extend the waiver for an interim period.

Now, if we -- and this is in consultation, obviously, with Congress --

REP. COOKSEY: Please be brief. I'm running out of time.

MR. INDERFURTH: Okay. I'm sorry. -- are unable to create such a bridge, the waiver will lapse and the restrictions would be reimposed. But that would be done for reasons associated with the legislative process, not a policy decision or determination. Moreover, we judge that there would be minimum impact if this does occur, if this interim period lasts only for a short period of time, which we would expect.

REP. COOKSEY: Okay. Thank you.

MR. INDERFURTH: I'm sorry. It's not a surgical answer, but it's the best as I can --

REP. COOKSEY: Okay. Thank you.

REP. : It's not surgical, but he hopes it's suture. (Sounds like "hopes it suits you.") (Laughter.)

REP. COOKSEY: Right. Right. And it would be a patch -- (laughter) -- job. Steri-strip, maybe.

You know -- this is my closing comment -- I personally am really offended by people like bin Laden. I used to spend a lot of time in Kenya, Dr. Butcher, and you're from -- I assume you're from Kenya. I see your undergraduate degree is there. I was working up north of Nairobi, in the Meru (sp) area, over in Maua (sp), about 30 miles there, off and on for six years.

A lot of the people that were injured -- and, in fact, blinded in the bombing there -- were blinded because they had two bombs. There was one bomb that caused everybody to go look to see what the noise was, and the second bomb blew out the windows. And there were a lot of people that had glass in their eyes. And I know some of the surgeons that took care of them there.

Guys like bin Laden are bad guys, and it's -- and guys like bin Laden and the Taliban are terrorists, and they are responsible for killing Americans and for killing Pakistanis and Afghans and everybody else. And those people need to be taken out.

Unfortunately, they hide behind a religion, and I don't think that religion is what they claim it is. I don't think it's -- there are some really fine Muslims that do adhere to what -- the teachings of Mohammed.

But the one thing that those people do understand is they understand focus, they understand firmness, and they understand force. And when those people continue to produce opium, and they continue to shelter terrorists, and they continue to cause bedlam around the world, well, I think there's -- we have one alternative, and I think that we need to play hardball with them. They understand force and firmness, and they understand, you know, putting a bomb on top of their head. But it needs to be done in a very effective manner, and it needs to be done so that people in Kenya and people around the world can go to their embassy, go to their work, go to their homes and survive.

And I am concerned that the top person in the executive branch tends not to be focused, tends not to be firm. He was passive when I in the military 30 years ago, but that's another issue. And it just sends the wrong message to these people, and they think they can get by with murder. And they've done it.

So unless you can get everybody on board and present this message, this image, this message that we are -- there are some tough Americans that will be tough on bad guys, I think we're going to continue to suffer because of this lack and firmness and focus and leadership in the top of your -- of the executive branch.

REP. BEREUTER: Thank you, Dr. Cooksey.

REP. COOKSEY: But I have a lot of confidence in people in the State Department. There are some very professional people that I think are indeed very firm and very professional.

REP. BEREUTER: Thank you, Dr. Cooksey.

We turn now to the vice chairman, Mr. Royce, for his questions under the five-minute rule.

REP. ED ROYCE (R-CA): Thank you, Mr. Chairman.

We've talked at length about this issue of Afghanistan, and I just want to raise the point again that if there had been no Taliban, there would not be a bin Laden, in my view; there wouldn't have been these opportunities, there wouldn't be this safe harbor.

And I guess the frustration that some of my colleagues are expressing here today is the feeling that perhaps there's been a laissez faire attitude, you might say, in terms of how we approach the problem of Afghanistan. And maybe it's because it seemed insoluble. But the point is that I think for my colleague from California, he feels a little like a Cassandra who has warned again and again of what's coming, and now sees exactly what he warned about coming before us here and there still isn't the focus or the understanding. I mean, for those who have gone to Afghanistan and seen the orphans and seen the devastation and seen the commitment for violence that's coming out of that caldron, as my colleague from California has done, there is this feeling that no one really understands just what is in store for that region and for the world. And so perhaps at times we get a little frustrated.

I've had many meetings with the administration where I tried to encourage broadcasts, a Radio Free Afghanistan concept where people could get the information so that the inevitable wouldn't happen; so the Taliban wouldn't overtake Afghanistan. Well, we didn't do that. There's been international summits where leaders around the world have tried to get together the various combatants in a way in which maybe they could contain the Taliban, but we haven't -- we've let nature take its course, you might say, in the view of many. And so here we are today with exactly what some of us feared facing us.

And I guess I would just say there's still the opportunity for concepts like Radio Free Afghanistan, there's still the opportunity to try to figure out a scenario in which we reverse what has happened there, but if we just kick the can down the road and wait for it to be someone else's problem, we may find it's one of the great challenges of our time, ultimately.

I wanted to ask you a question about General Musharraf and about the commitments he's making. And one would be, will he make a commitment to not now condone or indirectly support cross-border terrorism across the line of control of the type that was previously authorized in the Kargil mission? It is clear that, given our past experience with his judgment, that I think we now need to hear that he will follow the previous government's policy to at least try to discourage international terrorism. I'd just like to understand if he's given some assurances along that line.

MR. INDERFURTH: Congressman, on your point about Afghanistan, I'm in total agreement with the fact that our inattention or inability to address Afghanistan since the end of the Soviet occupation and the warfare that has continued since then is having increasingly serious consequences for the international community and for us, whether it be in the harboring of terrorists, whether it be in the fact that Afghanistan is now the leading producer in the world of illicit opium, whether it be in human rights abuses and the treatment of women and girls, the spillover effects of Afghanistan are ones that we have been calling attention to but we have been able to do very little about for a very long time.

And what Congressman Rohrabacher has been saying on that subject -- pay attention, Afghanistan -- we are totally in agreement. We just think he is barking up the wrong tree, thinking that we had a policy of covert support for the Taliban.

What we did have initially, was a lack of understanding about what this Taliban movement was. It came virtually, literally out of nowhere. And given the fighting, the chaos in Afghanistan, the question arose, "Might this be an answer for stability?" As soon as it was apparent that the Taliban was not that answer, our statements and policy responded accordingly. And it has ratcheted up to the point that we are now putting sanctions and taking the steps that I have mentioned here.

So again, we need to do something about this. And if we don't, we'll pay an even heavier price in the days ahead.

On the question of General Musharraf; in his speech, and indeed in a meeting that he had with Ambassador Milam, who returned to Islamabad immediately after the takeover and met with him at President Clinton's direction, certain assurances were provided, including in his speech, on a return to democracy and the rest but no timetable, dialogue with India but not specifics. He did announce a unilateral military de-escalation of pulling Pakistani forces back from their international border, not the line of control but their international border.

We will be pursuing in the days ahead firmer commitments from General Musharraf on that issue, including cross-border terrorism. The Indians have said they cannot resume Lahore, that process, until cross-border terrorism ceases. We believe steps like that should and must be taken, and we will press very hard for that.

REP. ROYCE: In closing, I would just suggest the that King Zahir Shah has put forward a plan that is pretty well received by rank and file Afghans, to move towards a "jirga" or a general assembly and a way in which to do that. And I just, in closing, would like to again encourage you to do all you can do to attempt to raise that plan because I think, with the rank and file, and even with many of the mujaheddin, it has promise, if we could just get the international community behind it and try to move the concept.

Thank you.

MR. INDERFURTH: We're aware of the former king's plan, and we stay in touch with him and his people in Rome.

REP. ROYCE: Yeah. Thank you again.

REP. BEREUTER: Thank you, Mr. Royce.

Mr. Secretary, I thought your exchange you had here with Mr. Royce earlier on the Taliban and the administration was very important. I'm going to try to make sure that the full subcommittee has that available to them.

I want to thank both of you witnesses for your patience. Dr. Butcher, we haven't asked many questions for you, but the information that you provided has been helpful to us and I very much appreciate it, as we do.

Mr. Secretary, I confess to some frustration, not with you, but with the fact that we scratched the surface only a few geographic sectors. And there are times when hearings are good methods of conducting oversight, but they ought to be supplemented, it seems to me, with informal briefings.

MR. INDERFURTH: I am available --

REP. BEREUTER: And if you would participate in that, in a members' briefing, we'll start that process periodically for next year. I think it would be helpful.

MR. INDERFURTH: I would be more than pleased to do that.

REP. BEREUTER: Thank you.

MR. INDERFURTH: Thank you.

MS. BUTCHER: Thank you.

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Prepared testimony of
Teresita C. Schaffer, Director for South Asia Center for Strategic and International Studies

Good afternoon, Mr. Chairman. I'm delighted to have this opportunity to testify before your Subcommittee. In years past, when I was in the State Department and testified before your predecessor, I always wondered what happened when the government witnesses finished, breathed their sighs of relief and sped out the door. I guess this is my chance to find out.

I will not attempt to duplicate Assistant Secretary Inderfurth's overall description of events in the region. Instead, I would like to make some observations on the dramatic developments in Pakistan in the last week, and then to share my recommendations about U.S. policy priorities for the region.

Pakistan: A Disappointing End to a Disappointing Government

Pakistan has lived under a stressed and seriously flawed democracy for the past eleven years. None of the four changes of government since 1988 has taken place through the normal electoral cycle. Each has involved serious charges of corruption and abuse of power.

The disillusionment with Nawaz Sharif's second government started about six months into its tenure, when his supporters stormed the Supreme Court and he forced out in rapid succession the Chief Justice, the president, and the Chief of Army Staff, installing people he thought more pliant in their place. With his two-thirds majority in the National Assembly, this gave Nawaz Sharif control of all the constitutional levers of power.

Unfortunately, he used his power to gain more power, not to address Pakistan's devastating systemic problems: corroded national institutions, pervasive corruption, sectarian strife and urban violence fueled by Islamic activists returning from Afghanistan, a crisis in the government's finances. Long term social problems like high population growth and widespread illiteracy have gone untended, casualties of the government's cash crunch and of mistaken priorities. Perhaps most worrisome of all is the disaffection in Pakistan's smaller provinces at what they consider domination by the larger Punjab province. As much as a year ago, many Pakistanis were ruefully concluding that democratic government couldn't deliver the goods. This long catalogue of serious ills explains why Pakistanis greeted the coup with relief rather than outrage. That is perhaps the saddest commentary on last week's events.

The military coup is yet another blow to Pakistan's struggle to develop effective democratic institutions. Pakistan's prior experience with army regimes suggests that beyond a brief honeymoon period, they have a bad effect on both army and country. We are right to call for democratic government in Pakistan. In the final analysis, that is the only way that a government can acquire the legitimacy the country craves. Furthermore, all the problems I cited a few minutes ago need to have their solutions enshrined in representative institutions. The dangerously frayed relations among Pakistan's provinces, in particular, cannot be put right without a genuine political process, real elections, and an accountable parliament in which the people of all four provinces find their voice.

But I would argue that if democracy is an absolutely vital goal, it is not the only one. Ultimately, Pakistan needs not just an elected government, but one that can deliver the goods. Among the country's problems are several which can begin to be addressed by better management, more transparent administration of justice, sound financial policymaking, and renewed attention to long term development needs. These are tasks that the new government can and must begin. A civilian transitional government will be far better placed than the military to take on these tasks, and a serious deadline for the next elections would help avoid being tempted to hang on.

U.S. Policy:

How should the United States respond to this situation? Our basic principle should be to judge the regime in Pakistan by its actions. The burden of proof is on General Musharraf to show that he is actually fulfilling the agenda he sketched out. We should watch in particular two areas: - reestablishing decent governance, as he promised in his speech last Sunday; and - management of relations with India. The army high command, having initiated the dangerous Kargil adventure, bears a large measure of responsibility for the current downward spiral in relations with India. By the same token, they are in a unique position to reverse it if they wish. General Musharraf's announcement that he will thin out forces along the international border is a useful olive branch. Stopping infiltration across the Line of Control in Kashmir would be a good next step.

If the current leadership meets these high standards, and if it then moves swiftly back to the barracks, America's democratic values and its strategic interests could both come out ahead. History does not leave one very optimistic - but we should watch what actually happens. For the duration of this military government, current law rules out most U.S. aid and military sales, and a high profile political embrace will be out of place. That is a fitting response to the overthrow of an elected government. But we should remain in close touch with Pakistan, including a serious military-to-military policy dialogue. We have other issues to pursue regional security, stopping terrorism, control of narcotics. Similarly, if the new government is able to meet the IMF conditions (as their predecessors were not), I see no reason for us to prevent international institutions from funding financial stabilization and other related programs.

Policy toward the rest of the region:

I would like to leave you with five thoughts about American policy in the rest of the region.

First, the U.S. should encourage India and Pakistan to find a real settlement to their differences - but recognize that the work of settling has to be done by those countries. I oppose naming a special envoy on Kashmir. The Administration is right. I believe, to conclude that a U.S. third party role can be effective only if both countries accept it.

While it is up to India and Pakistan to work out the terms of a settlement, both countries need to come to terms with some difficult realities. For Pakistan. this means recognizing that they will not be able to wrest Kashmir from India and may need to build a political consensus around a solution that doesn't significantly change today's territorial allocation. This was probably true before nuclear weapons came to the region. It is even more true now; ironically, in this respect nuclear weapons may have limited Pakistan's options. For India, the difficult reality is that genuine self-rule for the Valley of Kashmir, including a large measure of autonomy, is indispensable if they wish to get out of the nasty cycle of insurgency and repression.

Second, the U.S. needs to reexamine its nonproliferation priorities in light of the experience of the last 18 months. All the issues the U.S. has been pursuing are important.

However, the most crucial ones are avoiding nuclear conflict and preventing export of nuclear materials or know-how from India or Pakistan. The fighting last summer in Kargil demonstrated that India and Pakistan do not want a nuclear confrontation. It also showed, however, how easily tensions can grow when conventional forces are engaged. To me, this makes a compelling case for increasing the margin of safety through risk reduction measures. Failure in this area would not only risk the peace of the region. It would also send a dangerous message to "nuclear wannabes". As for exports, both India and Pakistan have declared that they will not export the products from their programs. Strengthening this resolve, formalizing it, and sharing information on its implementation are critical to ensuring that unintended leakage doesn't occur.

I strongly support signature and ratification of the CTBT, and hope that despite the Senate's action last week the U.S. will ratify the treaty in time. But in all candor, I believe that the CTBT matters less to the safety of the world than these two other issues. Moreover, having failed to ratify we would probably enhance our credibility by giving top billing to other aspects of nonproliferation. In all these areas, once again, our primary concern is with performance. Commitments are important, but not as important as behavior.

Third, delink India and Pakistan policy where possible. The military regime in Pakistan clearly will inhibit major U.S. policy initiatives toward Pakistan. There is no need to subject relations with India to the same inhibitions. Waiving sanctions on India makes sense even if Pakistan is now under new sanctions. Developments in Pakistan should not lead the President to cancel his plans to visit South Asia: a visit to India and Bangladesh could still serve U.S. interests.

Fourth, in much of the region, the greatest potential lies in economics. This is especially true in India, where economic reforms launched in 1991 are beginning to bear fruit. The existing level of economic reform has been accepted across the political spectrum. Growth rates for the past decade are markedly higher than in previous decades, and with a new government with a more stable majority the prospects of sound economic policies are much improved.

In Bangladesh, a country already well known for its effective efforts to improve the lives of the poor through bootstrap programs and microcredit, the discovery of commercial quantities of natural gas offers the prospect of having a resource in addition to people to develop the country. In Sri Lanka, despite the ravages of the ethnic conflict, economic growth rates have been encouraging for most of the decade. Encouraging economic trends in all these countries represent a base on which to build more robust relations with the United States. as well as a brighter future.

Now that economic and commercial sanctions waiver authority is in place, the job of exploiting this economic promise is back where it belongs - with the private sector, and with the governments in the region. It is important to note, however, that the cuts in the U.S. aid budget over the past fifteen years fell disproportionately on countries like those in South Asia, and especially on Sri Lanka. When I was ambassador there in the mid-1990s, development assistance figures were in the $12-15 million range, with food aid providing an additional $40-70 million per year. This year's Congressional Presentation calls for $3 million in development assistance and no food aid. Countries whose poverty doesn't make the front pages and whose economic management is reasonably decent are at the end of the line when scarce aid resources are being doled out. I support the idea of a gradual and planned "raduation", with the host country taking over financial responsibility for important development activities as the donors phase out. But an over 90% cut in overall aid funds in four years seems a high price to pay for success.

Finally, don't lash the rest of the region to India and Pakistan. Given the problems between those countries and the potential dangers if policy is mishandled, both the Administration and Congress rightly devote most of their South Asia energy to India and Pakistan. However, I would urge you as well as the Administration to reserve a little "air time" for the other countries of the region. Their political and economic health is not determined by India's and Pakistan's troubles. Economically, they offer smaller but still attractive markets for American business. And all have problems whose resolution would contribute to regional peace - and whose continuation poses dangers. Each of them has a more important and more troubled relationship with India than with Pakistan, reflecting India's larger size and central location. A bit of effort on our part to tend our relations with these countries can contribute to healthie