Sanctions: Modify'em

September 1998 By Samina Ahmed, David Cortright From The Bulletin of the Atomic Scientists (September/October 1998): 22-24.

U.S. sanctions against India and Pakistan are a classic case of how not to impose sanctions. While the U.S. ban on foreign aid and loans, military assistance, investment and credit support, and technology transfers will cause economic pain to the people of India and Pakistan, it is not likely to force either government to alter its commitment to nuclear weapons development.

Sanctions that ignore the critical distinction between government and civil society and that impose punishments without offering rewards are often counterproductive. Indeed, New Delhi and Islamabad have attempted to use U.S. sanctions to mobilize nationalist fervor and build political support for their nuclear weapons policies. On the other hand, as Washington has shown more flexibility in the implementation of sanctions, India and Pakistan have shown some willingness to consider signing the Comprehensive Test Ban Treaty.

Sanctions are most effective when they are multilateral, targeted, and flexible. Economic statecraft should also include incentives capable of influencing public opinion and persuading officials to accept nuclear restraint. U.S. sanctions meet none of these criteria and are likely to fail.

U.S. unilateral sanctions were mandated by the Arms Export Control Act, approved by Congress in 1994. Also known as the Proliferation Prevention Act, the law is a prime example of a punitive approach to sanctions. It was designed to be draconian in an effort to deter India, Pakistan, and other would-be proliferators from nuclear testing or other overt nuclear weapons activity. Once India and Pakistan crossed the nuclear Rubicon, sanctions became mandatory. Having failed as a deterrent, sanctions became policy.

Doubts about the sanctions emerged soon after they were imposed. When farm state senators realized that the sanctions would block grain exports and thereby harm their constituents, they quickly passed legislation exempting American farmers from the ban on export credits and guarantees.

Concerns were also raised about the lack of a waiver provision. As originally written, the Proliferation Prevention Act contains no sunset clause or mechanism for lifting sanctions. A separate act of Congress is required to remove or modify the sanctions. The president thus lacks the option of easing sanctions as part of carrots-and-sticks diplomacy. That limits the ability of the United States to influence the future direction of Indian and Pakistani nuclear policies.

In response to these concerns, members of the Senate have introduced legislation to provide presidential waiver authority. The Clinton administration also called for the authority to lift or ease the sanctions, arguing that greater flexibility in the imposition of sanctions would enable the United States to negotiate more effectively with New Delhi and Islamabad.

The sanctions are likely to have negative humanitarian consequences. According to Deputy Secretary of State Strobe Talbott, the United States has attempted to "avoid bringing hardship to the peoples of India and Pakistan . . . especially the poor." But general trade sanctions inevitably cause the greatest harm to the most vulnerable.

In contrast to targeted "smart sanctions" strategies now favored by sanctions experts and many U.N. officials, these congressionally mandated sanctions are blunt instruments that impose their greatest impact on those farthest from the seat of power. The withdrawal of U.S. backing for several power generation projects in India, for instance, will impede economic development and pose special hardships in communities plagued by recurring electricity outages.

The cut in U.S. foreign assistance has already caused postponement of a $21 million housing subsidy project and a $5 million greenhouse gases program in India.

The sanctions require the United States to oppose World Bank funding in India, much of which goes for health care and rural development. Washington lacks the voting power to block these projects, however, and has voted for them on humanitarian grounds.

In Pakistan the impact of sanctions is likely to be more severe. The sanctions, although less extensive than those applied to India, will seriously damage Pakistan's faltering economy, already burdened by huge external debt payments and dangerously low currency reserves.

The sanctions require the United States to vote against International Monetary Fund credits that are keeping Pakistan's enfeebled economy afloat. Recognizing that such action could have devastating consequences, however, the United States has abstained from voting on financial support for Pakistan, thereby allowing IMF funding to proceed.

The sanctions have caused a general lowering of business confidence in both countries. The United States is the largest market for Pakistani exports and the largest trade and investment partner of India. The decline of U.S. investment and trade has combined with the continuing Asian financial crisis and New Delhi's unrealistic budget projections to generate growing economic uncertainty.

The stock market in Mumbai (formerly Bombay) nose-dived 22 percent in the month after the Indian nuclear tests. The Indian rupee lost nearly 10 percent of its value during the same period. Perhaps most ominously for India, Moody's Investors Service downgraded India's debt offerings, causing an immediate spike in interest rates and raising the cost of borrowing for all Indian businesses, even those not directly affected by sanctions.

The cumulative impact of these mounting pressures has already caused political difficulty, especially in India. Business executives complain that the government has not acted forcefully enough to counteract the effect of sanctions. Opposition political leaders criticize the Hindu nationalist government for jeopardizing previous economic gains and undermining India's political standing in the world.

If economic and social hardships mount, these pressures could intensify, leading to greater xenophobia and nationalism. Intolerance and Hindu nationalism are on the rise in India; right-wing forces have been active in Pakistan. The greater political polarization resulting from the nuclear tests and sanctions may make it more difficult for New Delhi and Islamabad to compromise on nuclear and security policy.

Sanctions can be effective at times, but they must be guided by a strategic design. They should exert pressure on decision-making elites while exempting innocent populations and, if possible, empowering reform constituencies.

A targeted sanctions policy would identify the Hindu nationalist leaders of the Bharatiya Janata Party (BJP) in India as the group responsible for precipitating the nuclear crisis. In Pakistan it would target the military leaders and nuclear scientists who have controlled military policy and long championed the nuclear option.

Measures against these elites might include freezing their overseas financial assets, blocking financial transactions, canceling visas and residency permits for leaders and their families, and banning travel. The cancellation of visa and residency permits would be especially onerous, because many Indian and Pakistani leaders send their children to universities in North America and Europe and have business connections there.

Accompanying such sanctions would be a series of incentives designed to influence the political dynamics of the two countries in ways that favor accommodation. Incentives should empower political constituencies most likely to favor military and nuclear restraint. This would involve offering assistance to institutions in civil society that advocate democracy, human rights, and reordered spending priorities.

It would also mean supporting programs for increasing literacy, especially among women, and encouraging a more informed and diverse public debate about the risks of nuclear weapons. One of the most powerful incentives for South Asia would be a "debt for disarmament" swap in which major countries and the international financial institutions agree to forgive portions of the huge foreign debt owed by each country in exchange for a commitment to denuclearize.

Such a policy could have enormous economic and social benefits, especially in Pakistan, freeing vast resources for critically needed human development programs. To work as a denuclearization initiative, a debt-relief policy would have to stipulate that the money saved from reduced debt servicing be directed solely to social development purposes. This would help create a broad social constituency in favor of the debt forgiveness program while empowering constituencies that are more likely to support denuclearization.

Washington's efforts to encourage nuclear restraint in South Asia have been undermined by contradictions in U.S. nonproliferation policy. New Delhi and Islamabad argue that the United States has no moral basis for imposing sanctions when it has conducted more than a thousand nuclear tests of its own, and while it maintains an arsenal of 10,000 strategic nuclear weapons.

Washington would be in a stronger position to pressure India and Pakistan if it were to agree to serious negotiations aimed at the eventual elimination of these weapons. India has said it will give up the bomb as part of a global ban on nuclear weapons, and it has urged U.N. Secretary General Kofi Annan to begin negotiations for a nuclear weapons convention. Meanwhile, Pakistan has said it will abandon the nuclear option if India does. (In 1994 and 1996, public opinion surveys sponsored by the Fourth Freedom Forum confirmed widespread support for nuclear disarmament in India and Pakistan.)

The United States and the other major powers have committed themselves to nuclear disarmament on many occasions, most significantly in the Nuclear Non-Proliferation Treaty. In 1995, when the treaty was made permanent, the United States and the other nuclear weapons states promised "the determined pursuit . . . of systematic and progressive efforts to reduce nuclear weapons globally with the ultimate goal of eliminating those weapons."

It is time for the United States and the other nuclear states to live up to those commitments by putting forward a technically sound blueprint for moving toward the elimination of nuclear weapons. Only if the United States leads by example in eliminating nuclear arms will it have broad political backing for sanctioning other would-be proliferators.

A universal, nondiscriminatory disarmament regime offers the best hope for restraining Indian and Pakistani nuclear ambitions and containing the global proliferation threat. It would also provide a solid foundation for sanctioning countries that violate such a regime.

An initiative by the major powers to begin negotiations for a nuclear weapons convention, and an invitation for India and Pakistan to sit at the table and join the process, would transform the dynamics of nuclear policy in South Asia. It would also lay the foundations for a nuclear-weapons-free world.

Until then, the United States, as well as other states, must demonstrate their collective resolve to oppose nuclear proliferation in India and Pakistan by imposing wisely designed checks on irresponsible governmental behavior and by offering rewards for steps toward nuclear restraint.

David Cortright and Samina Ahmed are co-editors of Pakistan and the Bomb: Public Opinion and Nuclear Options(Notre Dame Press, 1998).