Major Powers Block Loans to India, Pakistan

Some of the world’s most powerful nations Friday tightened the economic squeeze on India and Pakistan by cutting off access to nonhumanitarian international loans amid indications that growing world pressure may be swaying South Asia’s two new nuclear powers.

The move will potentially cut off billions of dollars in badly needed funds to help develop two of the world’s poorest countries.

The emergency summit here of Russia and the Group of 7 industrialized nations coincided with a disputed invitation by India to Pakistan to resume their long-stalled negotiations June 22 in New Delhi.

Talks between the two nations deadlocked in September over the issue of the Kashmir region, a hotly contested territory that has been the cause of two wars on the subcontinent.

“India is committed to fostering a relationship of trust and friendship with Pakistan based on mutual respect and regard for each other’s concerns,” India’s External Affairs Ministry spokesman, K. C. Singh, said in a statement.

But Pakistan later denounced the unilateral announcement of renewed talks. In Islamabad, the capital, Foreign Minister Gohar Ayub Khan was quoted as saying India was “trying to pull a fast one” by announcing the talks without Pakistan’s agreement.

Still, some analysts saw even discussion of new talks between the two nations as a sign that they are trying to avert an escalation of their nuclear arms race, ignited when India, and then Pakistan, conducted nuclear test blasts last month.

Further, the United States welcomed recent comments by both sides that they will observe at least a temporary moratorium on nuclear tests.

“These are indications that we are beginning to have some impact,” said a senior U.S. official accompanying Secretary of State Madeleine Albright at a meeting of leading nations in London.

U.S. officials here expressed hope Friday that the Indian and Pakistani foreign ministers will meet before an Asian regional summit at the end of July.

But major obstacles must still be overcome.

Pakistan wants the talks to be based on terms the two sides agreed to in June 1997--centering on Kashmir and security issues; earlier discussions on these topics had lasted three months. India, however, is pushing new topics, which it offered in January.

The Clinton administration has said it will sustain its campaign to build world support to get the two rivals to grapple with their deadly disputes. After dealing with the flash points, Washington wants New Delhi and Islamabad to step back from further development of atomic weapons and join the nuclear nonproliferation movement.

“Our meeting [here] sends the message that the world community is united, not just in outrage and dismay, but in action,” Albright said Friday.

She called the two sides’ proclaimed temporary moratorium on further nuclear tests “encouraging” but “not sufficient.”

Acting on an American proposal, foreign ministers of the powers represented here--the United States, Britain, France, Germany, Japan, Canada, Italy and Russia--agreed Friday to block loan money critical to development.

Although Washington has strong influence on lending institutions like the World Bank and International Monetary Fund, it cannot unilaterally deny funds.

Still, the American pressure has been felt: The World Bank last week postponed a $206-million loan to India, bringing to more than $1 billion the total funds denied that country since the U.S. called for punitive economic measures to prod the governments in New Delhi and Islamabad to back off any arms race.

The one exception to the latest lending limits is loans for humanitarian needs.

The officials here called on India and Pakistan to:

* Accept the Comprehensive Test Ban Treaty, the 1996 international accord outlawing nuclear tests.

* Refrain from the next two critical steps in a nuclear arms race--adapting atomic devices to weapons such as missiles and deploying those weapons.

* End production of fissile material and join international talks on a new treaty on the material basic to nuclear production.

* Pledge to refrain from exporting equipment, material and technology for weapons of mass destruction.

Russia and the industrialized nations also urged India and Pakistan to reduce tensions between them by avoiding threatening military movements, provocative acts or statements, and cross-border violations such as hot pursuits; discouraging terrorist support and any backing for extremist actions; creating confidence-building measures and promoting economic cooperation; and resuming direct talks on their root disputes--notably Kashmir--to find “mutually acceptable solutions.”

After the major powers’ meeting here, Albright hosted an expanded companion session attended by four countries that have renounced nuclear weapons--Argentina, Brazil, South Africa and Ukraine--and the Philippines, as representative of the Assn. of Southeast Asian nations.

This group’s discussions, she said, proved that “the problem before the international community is not that the nuclear haves are lining up against the have-nots. It is, instead, a difference both of principle and judgment between the overwhelming majority of nations who want to see fewer nuclear weapons on our planet.”