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Case Studies in Sanctions and Terrorism: Pakistan

Case Studies in Sanctions and Terrorism

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Case 99-3
US, Japan v. Pakistan (1999–2001: Coup, restore democracy)
See also Case 79-2: US v. Pakistan (1979– : Nuclear Missile Proliferation)

| Chronology of Key Events | Goals of Sender Country | Response to Target Country |
Attitude of Other Countries | Economic Impact | Assessment |
Author's Summary | Bibliography |

Chronology of Key Events

12 October 1999

Prime Minister Nawaz Sharif is ousted by General Pervez Musharraf in a bloodless coup. Over the course of the next few days, General Musharraf declares state of emergency, suspends parliament and the constitution and pronounces himself the country’s chief executive. US Department of State condemns the coup and calls for “the earliest possible restoration of democracy in Pakistan.” (New York Times, 13 October 1999, A1, A10; Washington Post, 15 October 1999, A1)
14 October 1999 IMF Managing Director Michel Camdessus states that it was “not certain” that the Fund could offer assistance to Pakistan in the wake of the coup. IMF officials say the release of next tranche of a 1997 $1.6 billion loan worth $280 million could be affected. (New York Times, 14 October 1999, A12; Wall Street Journal, 14 October 1999, A22)
15 October 1999 In light of the recent coup, Clinton administration invokes Section 508 of Foreign Operations Appropriations Act that requires US aid be cut off to any country whose democratically elected head of government is deposed by military coup or decree. Move is largely symbolic because Pakistan is already prohibited from receiving US assistance under nuclear sanctions. (Inside US Trade, 15 October 1999; International Trade Reporter, 13 October 1999; CRS 2002a, 3; Washington Post, 15 October 1999, A24; 16 October 1999, A21) (See also Case 79-2 US v. Pakistan [1979–: Nuclear Missile Proliferation])
15 October 1999 UK freezes around $33 million in direct government assistance to Pakistan in response to the coup. (Washington Post, 16 October 1999, A21; New York Times, 17 October 1999, 6)
17 October 1999 European Union condemns military coup and threatens to suspend all assistance except for humanitarian aid channeled through private agencies unless Pakistan announces a clear timetable for the restoration of democracy by mid-November. EU also postpones signature of the EU-Pakistan Cooperation Agreement that is based on commitment to human rights and democracy. (New York Times, 17 October 1999, 6; European Report, 16 October 1999)
18 October 1999 Commonwealth suspends Pakistan from participating in their meetings. The Commonwealth Ministerial Action Group unanimously condemns the coup and calls for a timetable for restoration of democracy. Final decision on its membership is to be taken at the summit in Durban, South Africa, next month. (Financial Times, 19 October 1999, 6; Washington Post, 20 October 1999, A24; Reuters, 21 October 1999)
26–27 October 1999 During visit in Islamabad, Japanese State Foreign Secretary Ichita Yamamoto announces that official development aid will only be resumed once Pakistan gives a date for elections and signs the Comprehensive Test Ban Treaty. Japan cut off between $300 million to $500 million in annual aid and loans in response to the 1998 nuclear tests. (Dow Jones, 27 October 1999; Reuters, 27 October 1999; Japan Economic Newswire, 27 October 1999)
5 November 1999 France releases submarine and Mirage fighters held since the coup to Pakistan. French foreign ministry states that aircrafts and submarine already belong to Pakistan and therefore France cannot legally prevent their delivery. (Financial Times, 5 November 1999, 6)
13 November 1999 Leaders of the Commonwealth suspend Pakistan’s membership. Commonwealth gives Pakistani military two years to reinstate civilian rule or face expulsion from the group. (Washington Post, 13 November 1999, A24)
15 November 1999 EU Council of Foreign Ministers again calls on Pakistan to announce a binding timetable for restoration of democracy, but does not suspend development assistance. (Council conclusions on Pakistan, 15 November; Bulletin of the European Union, November 1999)
25 March 2000 President Clinton makes a 6-hour stopover in Pakistan during a weeklong visit of the region. General Musharraf makes no new concessions on Kashmir, signing of the CTBT or restoration of democracy in two-hour meeting with President Clinton. However, Musharraf agrees to put pressure on the Taliban regime in Afghanistan over Osama bin Laden. (Washington Post, 26 March 2000, A1; New York Times, 26 March 2000, A1) (See also Case 99-1 US/UN v. Afghanistan (Taliban) [1999–2002: Extradition of Osama Bin Laden])
6 April 2000 Former Prime Minister Nawaz Sharif is sentenced to life in prison on charges of terrorism and hijacking. International community expresses concerns over fairness of the trial and the severity of the sentence. (Financial Times, 7 April 2000, 14)
30 November 2000 IMF approves a $596 million loan to Pakistan to help it avoid defaulting on its $36 billion foreign debt. The money is to be disbursed over next 10 months. (New York Times, 1 December 2000, A7)
20 June 2001 General Musharraf dismisses Pakistan’s president and appoints himself head of state. Musharraf announces he will abide by the Supreme Court ruling that democracy needs to be restored by October 2002. Move comes during visit of Pakistani foreign minister Abdul Sattar to Washington to persuade US to remove economic sanctions. State Department spokesperson states that Musharraf’s action “severely undermines Pakistan’s constitutional order and casts Pakistan as a country ruled by decree rather than democracy.” (New York Times, 21 June 2000, A3; Washington Post, 21 June 2000, A1)
14 August 2001 Elections for local councils staggered over several months end. General Musharraf schedules federal and parliamentary elections for early October 2002, but does not indicate when he will hand over presidency to a civilian. (Dow Jones, 13 August 2001; Associated Press, 14 August 2001; Wall Street Journal, 15 August 2001, A1)
11 September 2001 Terrorist attacks in New York and Washington kill more than 3,000 people die in the attack. US officials and investigators quickly identify Osama bin Laden as mastermind behind the attacks. (Washington Post, 14 September 2001, A9; New York Times, 21 September 2001, A1, B3)
22 September 2001 President Bush waives all remaining nuclear related sanctions as well as prohibitions on Export-Import Bank credits in recognition of Pakistan’s cooperation with the US-led war against terrorism and imminent military action in Afghanistan. Coup-related restrictions on economic and military aid as well as sanctions imposed against specific Pakistani entities over missile related concerns remain in place. US and Pakistan sign an agreement on the rescheduling of $379 million of Pakistani arrears. Pakistan is also in negotiations with IMF for a $2.5 billion to $3 billion three-year IMF program. (Financial Times, 24 September 2001, 4; Wall Street Journal, 24 September 2001, A26; CRS 2003, 13; Presidential Determination No. 2001-28, 22 September 2001)
28 September 2001 President Bush determines that the release of $50 million in emergency aid to Pakistan is “important to the security interests of the United States.” (Presidential Determination No. 2001-31, 28 September 2001; Washington Post, 2 October 2001, A12)
1 October 2001 Canadian Minister of Foreign Affairs John Manley announces that in recognition of Pakistan’s support in the war on terrorism Canada will restore economic aid to Pakistan suspended after the 1998 nuclear tests. Canada will also convert up to $447 million in outstanding loans to be uses for development programs. (Canadian Department of Foreign Affairs and International Trade, News Release, 1 October 2001)
16 October 2001 Following Senate approval, US House of Representatives approves legislation allowing the president to waive restrictions on US aid to Pakistan imposed after the coup for two years, if he determines it to be important for US counterterrorism efforts. (International Trade Reporter, 11 October 2001, 1607; 18 October 2001, 1651; PL 107-57; CRS 2003, 13)
26 October 2001 Japan lifts its sanctions against Pakistan in recognition of its support for the US-led war on terrorism. Previously Japan had conditioned the resumption of its aid program on signing of the CTBT and restoration of democracy. (Yomiuri Shimbun, 27 October 2002; BBC Monitoring, 29 October 2002; CRS 2002b, 10)
11 November 2001 After meeting with General Musharraf in New York, President Bush announces a $1 billion US aid package for Pakistan in exchange for its support in the war in Afghanistan. However, administration rejects Pakistan’s request for the release of F-16 fighters. Musharraf sought the release of F-16 fighters despite the agreement reached with President Clinton as “the most visible sign” of Pakistan’s status as a US ally. (Washington Post, 11 November 2001, A1; New York Times, 10 November 2001, A1; 13 November 2001, B4)
11 December 2001 European Commission includes Pakistan under special Generalized System of Preferences program (GSP) for countries combating drugs for the period 2002–2004. Inclusion in the special GSP eliminates all existing duties on Pakistan’s textiles exports. EU also increase Pakistan’s quota for textile and apparel exports by 15 percent. (International Trade Reporter, 18 October 2001, 1651; Financial Times, 11 December 2001, 6; Bulletin of the European Union, December 2001)
14 December 2001 Paris Club of official creditors agrees to restructure Pakistan’s $12.5 billion sovereign debt, extending its maturity and granting a generous grace period during which no principal has to be repaid. (Financial Times, 30 October 2001, 1; 14 December 2001, 4)
13 February 2002 President Bush meets General Musharraf in Washington. Bush praises Pakistan’s contributions to the war on terrorism and offers to work with Congress on providing Pakistan about $1 billion in debt relief in FY 2003. Administration also increases market access for Pakistani textile exports worth about $142 million. Offers fall short of Pakistan’s requests. (White House Fact Sheet, 13 February 2002; Financial Times, 14 February 2002, 4)
30 April 2002 In referendum that many observers claim was marked by “excessive fraud and coercion”, General Musharraf’s term as president is extended for another five years. Government announces Musharraf was endorsed by 98 percent of voters. (New York Times, 1 May 2002, A7; Financial Times, 2 May 2002, 6; CRS 2003, 3)
21 August 2002 Ahead of national elections scheduled for October, General Musharraf amends the constitution to grant the military a formal role in the governing of the country and to increase the powers of the president. (Washington Post, 22 August 2002, A10; New York Times, 22 August 2002, A1)
10 October 2002 Pakistan holds first elections for 342-seat National Assembly since 1997. Pro-Musharraf alliance wins plurality of National Assembly seats but no party wins majority. Opposition and EU observers call elections “flawed.” In November new National Assembly chooses Musharraf supporter Mir Zafarullah Jamali to serve as Pakistan’s Prime Minister. (Washington Post, 11 October 2002, A28; Financial Times, 15 October 2002; CRS 2003, 3, 4)
24 March 2003 Despite recent threats to do more, Bush administration imposes largely symbolic sanctions in response to Pakistan’s alleged assistance to North Korea’s nuclear program and waives all coup-related sanctions against Islamabad for FY 2003. (Presidential Determination No. 2003-16, 14 March 2003; Washington Post, 31 March 2003, A4; Financial Times, 1 April 2003, 6; CRS 2003, 15)
24 June 2003 During meeting with President Musharraf in Camp Davis, President Bush announces a five-year $3 billion aid package for Pakistan. Aid will be conditioned on Pakistan’s continued cooperation with the war on terrorism, commitment to nuclear non-proliferation and progress toward democracy. US and Pakistan also sign a Trade and Investment Framework Agreement. (New York Times, 25 June 2003, A10; Washington Post, 25 June 2003, A1; USIS, 26 June 2003)

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