Background Notes on Selective South Asian Countries from the Department of State

BANGLADESH

Historical and Cultural Highlights

The area which is now Bangladesh has a rich historical and cultural past, combining Dravidian, Indo-Aryan, Mongol/Mughul, Arab, Persian, Turkic, and West European cultures. Residents of Bangladesh, about 98% of whom are ethnic Bengali and speak Bangla, are called Bangladeshis. Urdu-speaking, non-Bengali Muslims of Indian origin, and various tribal groups, mostly in the Chittagong Hill Tracts, comprise the remainder. Most Bangladeshis (about 83%) are Muslims, but Hindus constitute a sizable (16%) minority. There are also a small number of Buddhists, Christians, and animists. English is spoken in urban areas, and among the educated.

About 1200 AD, Muslim invaders, under Sufi influence, supplanted existing Hindu and Buddhist dynasties in Bengal. This incursion led to the conversion to Islam of most of the population in the eastern areas of Bengal, and created a sizable Muslim minority in the western areas of Bengal. Since then, Islam has played a crucial role in the region's history and politics.

Bengal was absorbed into the Mughul Empire in the 16th century, and Dhaka, the seat of a nawab (the representative of the emperor), gained some importance as a provincial center. But, it remained remote and thus a difficult-to-govern region--especially the section east of the Brahmaputra River--outside the mainstream of Mughul politics.

Portuguese traders and missionaries were the first Europeans to reach Bengal, in the latter part of the 15th century. They were followed by representatives of the Dutch, the French, and the British East India Companies. By the end of the 17th century, the British presence, on the Indian subcontinent, was centered in Calcutta. During the 18th and 19th centuries, the British gradually extended their commercial contacts and administrative control beyond Calcutta to Bengal. In 1859, the British Crown replaced the East India Company, extending British dominion from Bengal--which became a region of India--in the east, to the Indus River in the west.

The rise of nationalism throughout British-controlled India, in the late 19th century, resulted in mounting animosity between the Hindu and Muslim communities. In 1885, the All-India National Congress was founded with Indian and British membership. Muslims seeking an organization of their own founded the All-India Muslim League in 1906. Although both the League and the Congress supported the goal of Indian self-government, within the British Empire, the two parties were unable to agree on a way to ensure the protection of Muslim political, social, and economic rights.

The subsequent history of the nationalist movement was characterized by periods of Hindu-Muslim cooperation, as well as by communal antagonism. The idea of a separate Muslim state gained increasing popularity among Indian Muslims after 1936, when the Muslim League suffered a decisive defeat in the first elections under India's 1935 constitution. In 1940, the Muslim League called for an independent state in regions where Muslims were in the majority. Campaigning on that platform in provincial elections in 1946, the League won the majority of the Muslim seats contested in Bengal. Widespread communal violence followed, especially in Calcutta.

When British India was partitioned and the independent dominions of India and Pakistan were created in 1947, the region of Bengal was divided along religious lines. The predominantly Muslim eastern half was designated East Pakistan--and made part of the newly independent Pakistan--while the predominantly Hindu western part became the Indian state of West Bengal.

Pakistan's history from 1947 to 1971 was marked by political instability and economic difficulties. Dominion status was rejected in 1956 in favor of an "Islamic republic within the Commonwealth." Attempts at civilian political rule failed, and the government imposed martial law between 1958 and 1962, and again between 1969 and 1972.

Almost from the advent of independent Pakistan in 1947, frictions developed between East and West Pakistan, which were separated by more than 1,000 miles of Indian territory. East Pakistanis felt exploited by the West Pakistan-dominated central government. Linguistic, cultural, and ethnic differences also contributed to the estrangement of East from West Pakistan. Bengalis strongly resisted attempts to impose Urdu as the sole official language of Pakistan. Responding to these grievances, Sheikh Mujibur Rahman--known widely as "Mujib"--in 1949 formed the Awami League (AL), a party designed mainly to promote Bengali interests.

Mujib became president of the Awami League, and emerged as leader of the Bengali autonomy movement. In 1966, he was arrested for his political activities. After the Awami League won all the East Pakistan seats of the Pakistan national assembly in 1970-71 elections, West Pakistan opened talks with the East on constitutional questions about the division of power between the central government and the provinces, as well as the formation of a national government headed by the Awami League.

The talks proved unsuccessful, however, and on March 1, 1971, Pakistani President Yahya Khan indefinitely postponed the pending national assembly session, precipitating massive civil disobedience in East Pakistan. Mujib was arrested again; his party was banned, and most of his aides fled to India, where they organized a provisional government. On March 26, 1971, following a bloody crackdown by the Pakistan army, Bengali nationalists declared an independent People's Republic of Bangladesh. As fighting grew between the army and the Bengali mukti bahini ("freedom fighters"), an estimated 10 million Bengalis, mainly Hindus, sought refuge in the Indian states of Assam and West Bengal.

The crisis in East Pakistan produced new strains in Pakistan's troubled relations with India. The two nations had fought a war in 1965, mainly in the west, but the refugee pressure in India in the fall of 1971 produced new tensions in the east. Indian sympathies lay with East Pakistan, and in November, India intervened on the side of the Bangladeshis. On December 16, 1971, Pakistani forces surrendered and Bangladesh--meaning "Bengal nation"--was born; the new country became a parliamentary democracy under a 1972 constitution.

ECONOMY

Although one of the world's poorest and most densely populated countries, Bangladesh has made major strides to produce domestically and import from abroad enough food to feed its rapidly increasing population. The land is devoted mainly to rice and jute cultivation, and the country is largely self-sufficient in rice production.

Nonetheless, an estimated 10% to 15% of the population faces serious nutritional risk. Bangladesh's predominantly agricultural economy depends heavily on an erratic monsoonal cycle, with periodic flooding and drought. Although improving, infrastructure to support transportation, communications, and power supply is poorly developed. The country has limited reserves of coal and oil, but estimates of natural gas reserves look promising. While Bangladesh's industrial base is weak, unskilled labor is inexpensive and plentiful.

Since independence in 1971, Bangladesh has received more than $30 billion in grant aid and loan commitments from foreign donors, about $15 billion of which has been disbursed. Major donors include the World Bank, the Asian Development Bank, the UN Development Program, the United States, Japan, Saudi Arabia, and West European countries.

Bangladesh has historically run a large trade deficit, financed largely through aid receipts and remittances from workers overseas. Foreign reserves dropped markedly in 1995 and 1996, but had stabilized at low levels by the middle of 1997.

Land, Climate, and Demographics

Bangladesh is a low-lying, riverine country located in South Asia with a largely marshy jungle coastline of 600 kilometers (370 mi.) on the northern littoral of the Bay of Bengal. Formed by a deltaic plain at the confluence of the Ganges (Padma), Brahmaputra (Jamuna), and Meghna Rivers and their tributaries, Bangladesh's alluvial soil is highly fertile but vulnerable to flood and drought. Hills rise above the plain only in the Chittagong Hill Tracts in the far southeast and the Sylhet division in the northeast.

Straddling the Tropic of Cancer, Bangladesh has a subtropical monsoonal climate characterized by heavy seasonal rainfall, moderately warm temperatures, and high humidity. Natural calamities, such as floods, tropical cyclones, tornadoes, and tidal bores affect the country almost every year. Bangladesh also is affected by major cyclones--on average 16 times a decade.

Bangladesh is the most densely populated agricultural country in the world. With a per capita GDP of $276, it is also one of the poorest. Bangladesh's 126 million people are concentrated in an area about the size of Wisconsin. Its population growth rate is estimated at about 1.5% annually; population is expected to reach 129 million by the year 2000. At present, 45% of the population is under 15 years of age.

Urbanization is proceeding rapidly, and it is estimated that only 30% of the population entering the labor force in the future will be absorbed into agriculture, although many will likely find other kinds of work in rural areas. The areas around Dhaka and Comilla are the most densely settled. The Sundarbans, an area of coastal tropical jungle in the southwest, and the Chittagong Hill Tracts on the southeastern border with Burma and India are the least densely populated.

Moves Toward a Market Economy

Following the violent events of 1971, during the fight for independence, Bangladesh--with the help of large infusions of donor relief and development aid--slowly began to turn its attention to developing new industrial capacity and rehabilitating its economy. The statist economic model adopted by its early leadership, however--including the nationalization of much of the industrial sector--resulted in inefficiency and economic stagnation.

Beginning in 1975, the government gradually gave greater scope to private sector participation in the economy, a pattern that has continued. Some state-owned enterprises have been privatized, but many, including major portions of the banking and jute sectors, remain under government control. Population growth, inefficiency in the public sector, and limited natural resources and capital have continued to restrict economic growth.

In the mid-1980s, there were encouraging, if halting, signs of progress. Economic policies aimed at encouraging private enterprise and investment, denationalizing public industries, reinstating budgetary discipline, and liberalizing the import regime were accelerated. In 1985, the government also began an economic structural adjustment program with the International Monetary Fund.

Although the Khaleda Zia Government (1991-96) initially took significant strides toward pro-market reform, preoccupation with its domestic political troubles helped stall progress on this critical front in the last year of its tenure. The Government of Prime Minister Sheikh Hasina, elected in June 1996, has indicated that it will continue along the path toward privatization and open-market reform, but progress has been slow. In the government's first year, real GDP growth of 5.7%, and inflation of 2.6%, were the best figures in the 1990s. However, industrial growth was very slow, and serious structural macroeconomic problems persisted.

Efforts to achieve Bangladesh's microeconomic goals have been problematic. The privatization of public sector industries has proceeded at a slow pace, due in part to worker unrest in affected industries. The government has also proven unable to resist demands for wage hikes in government-owned industries. Economic growth has been further slowed by an archaic banking system which has impeded access to capital--a serious problem in rural areas where many farmers have difficulty obtaining credit at reasonable rates.

Agriculture

Most Bangladeshis earn their living from agriculture. While rice and jute are the primary crops, wheat is assuming greater importance, and tea is grown in the northeast. Because of Bangladesh's fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas.

Due to a number of factors, Bangladesh's labor-intensive agriculture has achieved steady increases in foodgrain production despite the often unfavorable weather conditions. These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 18 million metric tons produced in 1993, rice is Bangladesh's principal crop. By comparison, wheat output in 1993 was 1.2 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap.

Underemployment remains a serious problem, and a growing concern for Bangladesh's agricultural sector will be its ability to absorb additional manpower. Finding alternative sources of employment is a daunting problem, particularly for the increasing numbers of landless peasants who already account for about half the rural labor force.

Industry and Investment

Industrial development has been a priority for successive Bangladesh governments. Although small, the industrial sector contributes significantly to export receipts, and provides employment and a market for cash crops. Jute products--mainly burlap sacking and carpet-backing for export--and cotton textiles for domestic consumption remain important.

Production of ready-made garments for export to the U.S., Canadian, and European markets has grown rapidly and now dominates Bangladeshi exports. Bangladesh is the fifth-largest supplier of cotton apparel to the United States, and has begun to diversify its garment exports away from the North American market to the West European market. On July 4, 1995, the Bangladesh Garment Manufacturers Export Association, International Labor Organization, and UNICEF signed a memorandum of understanding on the elimination of child labor in the garment sector. Implementation of this pioneering agreement began in the fall of 1995.

The labor-intensive process of shipbreaking for scrap has developed to the point where it now meets most of Bangladesh's domestic steel needs. Other industries include sugar, tea, leather goods, newsprint, pharmaceutical, and fertilizer production.

The Ershad Government (1982-90) sought to increase industrial growth by removing barriers to private sector participation in economic development, providing incentives to domestic and foreign private investors, and denationalizing public sector industrial units and banks. Key to this change in policy was the denationalization of about half of the public sector's jute looms, one-third of its cotton textile looms, a number of other industrial units, and several banks. In addition, several new private sector banks were established. The Khaleda Zia Government continued down the path of reform, though progress on privatiza-tion of public sector enterprises has been very slow.

The Bangladesh Government continues to court foreign investment. In 1989, it established a board of investment to simplify approval and start-up procedures for foreign investors, the same year it signed a bilateral investment treaty with the United States. Bangladesh also has established export processing zones in Chittagong and Dhaka and plans to create additional zones elsewhere in the country.

GOVERNMENT

The president, while chief of state, holds a largely ceremonial post; the real power is held by the prime minister, who is head of government. The president is elected by the legislature (parliament) every 5 years.

The president's normally circumscribed powers are substantially expanded during the tenure of a caretaker government. (Under the Thirteenth Amendment, which the parliament passed in March 1996, a caretaker government assumes power temporarily to oversee general elections after dissolution of the parliament.) In the caretaker government, the president has control over the Ministry of Defense, the authority to declare a state of emergency, and the power to dismiss the Chief Advisor and other members of the caretaker government. Once elections have been held and a new government and parliament are in place, the president's powers and position revert to their habitually ceremonial role.

The prime minister is appointed by the president; the prime minister must be a Member of Parliament (MP) who the president feels commands the confidence of the majority of other MPs. The cabinet is composed of ministers selected by the prime minister and appointed by the president. At least 90%of the ministers must be MPs. The other 10% may be non-MP experts or "technocrats" who are not otherwise disqualified from being elected MPs. According to the constitution, the president can dissolve parliament upon the written request of the prime minister.

The legislature is a unicameral, 330-seat body. About 300 of its members are elected by universal suffrage every 5 years. The remaining 30 seats are reserved for women MPs, elected by the parliament.

Bangladesh's judiciary is a civil court system based on the British model; the highest court of appeal is the Appellate Court of the Supreme Court.

At the local government level, the country is divided into divisions, districts, subdistricts, unions, and villages. Local officials are elected at the union level. All larger administrative units are run by members of the civil service.

Military

The Bangladesh army, navy, and air force are composed of regular military members. Many of the senior officers and non-commissioned officers served in the Pakistan military before the 1971 independence war. Senior officers include "repatriates" who were interned in Pakistan during the war, and "freedom fighters" who fought against Pakistan.

The 100,000-member, seven-division army is modeled and organized along British lines, similar to other armies on the Indian subcontinent. It is supported by artillery, armored, and combat units. In addition to traditional defense roles, the military has been called on to provide support to civil authorities for disaster relief and internal security. The Bangladesh air force and navy, with about 7,000 personnel each, perform traditional military missions. A coast guard has been recently formed, under the Home Ministry, to assume some functions currently performed by the navy.

Recognition of economic and fiscal constraints has led to the establishment of several paramilitary and auxiliary forces, including the 40,000-member Bangladesh Rifles; the Ansars and Village Defense Parties Organization, which claims 64 members in every village in the country; and a 5,000-member specialized police unit known as the Armed Police. Bangladesh Rifles, under the authority of the Home Ministry, are commanded by army officers who are seconded to the organization.

In addition to in-country military training, some advanced and technical training is done abroad, including grant aid training in the United States. China, Pakistan, and Eastern Europe are major defense suppliers to Bangladesh. In 1995, the Bangladesh air force made its largest purchase from the U.S. to date--12 jet trainers. A 2,300-member Bangladesh army contingent served with coalition forces during the 1991 Gulf war. Bangladesh is currently the second leading contributor to UN peacekeeping operations.

POLITICAL CONDITIONS SINCE INDEPENDENCE

The provisional government of the new nation of Bangladesh was formed in Dhaka with Justice Abu Sayeed Choudhury as President, and Sheikh Mujibur Rahman ("Mujib")--who was released from Pakistani prison in early 1972--as Prime Minister.

Sheikh Mujibur Rahman, 1972-75

Mujib came to office with immense personal popularity but had difficulty transforming this popular support into the political strength needed to function as head of government. The new constitution, which came into force in December 1972, created a strong executive prime minister, a largely ceremonial presidency, an independent judiciary, and a unicameral legislature on a modified Westminster model. The 1972 constitution adopted as state policy the Awami League's (AL) four basic principles of nationalism, secularism, socialism, and democracy.

The first parliamentary elections held under the 1972 constitution were in March 1973, with the Awami League winning a massive majority. No other political party in Bangladesh's early years was able to duplicate or challenge the League's broad-based appeal, membership, or organizational strength.

Relying heavily on experienced civil servants and members of the Awami League, the new Bangladesh Government focused on relief, rehabilitation, and reconstruction of the economy and society. Economic conditions remained precarious, however. In December 1974, Mujib decided that continuing economic deterioration and mounting civil disorder required strong measures. After proclaiming a state of emergency, Mujib used his parliamentary majority to win a constitutional amendment limiting the powers of the legislative and judicial branches, establishing an executive presidency, and instituting a one-party system, the Bangladesh Krishak Sramik Awami League (BAKSAL), which all members of parliament were obliged to join.

Despite some improvement in the economic situation during the first half of 1975, implementation of promised political reforms was slow, and criticism of government policies became increasingly centered on Mujib. In August 1975, Mujib, and most of his family, were assassinated by mid-level army officers. His daughter, Sheikh Hasina, happened to be out of the country. A new government, headed by former Mujib associate Khandakar Moshtaque, was formed.

Ziaur Rahman, 1975-81

Successive military coups resulted in the emergence of Army Chief of Staff Gen. Ziaur Rahman ("Zia") as strongman. He pledged the army's support to the civilian government headed by President Chief Justice Sayem. Acting at Zia's behest, Sayem dissolved parliament, promising fresh elections in 1977, and instituted martial law.

Acting behind the scenes of the Martial Law Administration (MLA), Zia sought to invigorate government policy and administration. While continuing the ban on political parties, he sought to revitalize the demoralized bureaucracy, to begin new economic development programs, and to emphasize family planning. In November 1976, Zia became Chief Martial Law Administrator (CMLA), and assumed the presidency upon Sayem's retirement 5 months later, promising national elections in 1978.

As President, Zia announced a 19-point program of economic reform and began dismantling the MLA. Keeping his promise to hold elections, Zia won a 5-year term in June 1978 elections, with 76% of the vote. In November 1978, his government removed the remaining restrictions on political party activities in time for parliamentary elections in February 1979. These elections, which were contested by more than 30 parties, marked the culmination of Zia's transformation of Bangladesh's Government from the MLA to a democratically elected, constitutional one. The AL and the Bangladesh Nationalist Party (BNP), founded by Zia, emerged as the two major parties. The constitution was again amended to provide for an executive prime minister appointed by the president, and responsible to a parliamentary majority.

In May 1981, Zia was assassinated in Chittagong by dissident elements of the military. The attempted coup never spread beyond that city, and the major conspirators were either taken into custody or killed. In accordance with the constitution, Vice President Justice Abdus Sattar was sworn in as acting president. He declared a new national emergency and called for election of a new president within 6 months--an election Sattar won as the BNP's candidate. President Sattar sought to follow the policies of his predecessor and retained essentially the same cabinet, but the army stepped in once again.

Hussain Mohammed Ershad, 1982-90

Army Chief of Staff Lt. Gen. H.M. Ershad assumed power in a bloodless coup in March 1982. Like his predecessors, Ershad suspended the constitution and--citing pervasive corruption, ineffectual

government, and economic mismanagement--declared martial law. The following year, Ershad assumed the presidency, retaining his positions as army chief and CMLA. During most of 1984, Ershad sought the opposition parties' participation in local elections under martial law. The opposition's refusal to participate, however, forced Ershad to abandon these plans.

Ershad sought public support for his regime in a national referendum on his leadership in March 1985. He won overwhelmingly, although turnout was small. Two months later, Ershad held elections for local council chairmen. Pro-government candidates won a majority of the posts, setting in motion the President's ambitious decentralization program.

Political life was further liberalized in early 1986, and additional political rights, including the right to hold large public rallies, were restored. At the same time, the Jatiya (People's) Party, designed as Ershad's political vehicle for the transition from martial law, was established.

Despite a boycott by the BNP, led by President Zia's widow, Begum Khaleda Zia, parliamentary elections were held on schedule in May 1986. The Jatiya Party won a modest majority of the 300 elected seats in the national assembly. The participation of the Awami League--led by the late Prime Minister Mujib's daughter, Sheikh Hasina Wajed--lent the elections some credibility, despite widespread charges of voting irregularities.

Ershad resigned as Army Chief of Staff and retired from military service in preparation for the presidential elections, scheduled for October. Protesting that martial law was still in effect, both the BNP and the AL refused to put up opposing candidates. Ershad easily outdistanced the remaining candidates, taking 84% of the vote. Although Ershad's Government claimed a turnout of more than 50%, opposition leaders, and much of the foreign press, estimated a far lower percentage, and alleged voting irregularities.

Ershad continued his stated commitment to lift martial law. In November 1986, his government mustered the necessary two-thirds majority in the national assembly to amend the constitution and confirm the previous actions of the martial law regime. The President then lifted martial law, and the opposition parties took their elected seats in the national assembly.

In July 1987, however, after the government hastily pushed through a controversial legislative bill to include military representation on local administrative councils, the opposition walked out of parliament. Passage of the bill helped spark an opposition movement that quickly gathered momentum, uniting Bangladesh's opposition parties for the first time. The government began to arrest scores of opposition activists under the country's Special Powers Act of 1974. Despite these arrests, opposition parties continued to organize protest marches and nationwide strikes. After declaring a state of emergency, Ershad dissolved parliament and scheduled fresh elections for March 1988.

All major opposition parties refused government overtures to participate in these polls, maintaining that the government was incapable of holding free and fair elections. Despite the opposition boycott, the government proceeded. The ruling Jatiya Party won 251 of the 300 seats. The parliament, while still regarded by the opposition as an illegitimate body, held its sessions as scheduled, and passed a large number of bills, including, in June 1988, a controversial constitutional amendment making Islam Bangladesh's state religion.

By 1989, the domestic political situation in the country seemed to have quieted. The local council elections were generally considered by international observers to have been less violent and more free and fair than previous elections. However, opposition to Ershad's rule began to regain momentum, escalating by the end of 1990 in frequent general strikes, increased campus protests, public rallies, and a general disintegration of law and order.

On December 6, 1990, Ershad offered his resignation. On February 27, 1991, after 2 months of widespread civil unrest, an interim government oversaw what most observers believed to be the nation's most free and fair elections to date.

Khaleda Zia, 1991-96

The center-right BNP won a plurality of seats and formed a coalition government with the Islamic fundamentalist party Jamaat-I-Islami, with Khaleda Zia, widow of Ziaur Rahman, obtaining the post of Prime Minister.

Only four parties had more than 10 members elected to the 1991 parliament: The BNP, led by Prime Minister Begum Khaleda Zia; the AL, led by Sheikh Hasina Wajed; the Jamaat-I-Islami (JI), led by Golam Azam; and the Jatiyo Party (JP), led by acting chairman Mizanur Rahman Choudhury while its founder, former President Ershad, served out a prison sentence on corruption charges.

The electorate approved still more changes to the constitution, formally re-creating a parliamentary system and returning governing power to the office of the prime minister, as in Bangladesh's original 1972 constitution. In October 1991, members of parliament elected a new head of state, President Abdur Rahman Biswas.

In March 1994, controversy over a parliamentary by-election, which the opposition claimed the government had rigged, led to an indefinite boycott of parliament by the entire opposition. The opposition also began a program of repeated general strikes to press its demand that Khaleda Zia's Government resign and a caretaker government supervise a general election.

Efforts to mediate the dispute, under the auspices of the Commonwealth Secretariat, failed. After another attempt at a negotiated settlement failed narrowly in late December 1994, the opposition resigned en masse from parliament. The opposition then continued a campaign of marches, demonstrations, and strikes, in an effort to force the government to resign. The opposition--including the Awami League's Sheikh Hasina Wajed--pledged to boycott national elections scheduled for February 15, 1996.

In February, Khaleda Zia was re-elected by a landslide in voting boycotted and denounced as unfair by the three main opposition parties. In March 1996, following escalating political turmoil, the sitting parliament enacted a constitutional amendment to allow a neutral caretaker government to assume power nd conduct new parliamentary elections; Former Chief Justice Mohammed Habibur Rahman was named Chief Advisor (a position equivalent to Prime Minister) in the interim government. New parliamentary elections were held in June 1996, and were won by the Awami League; party leader Sheikh Hasina became Prime Minister.

Sheikh Hasina, 1996-Present

Sheikh Hasina formed what she called a "Government of National Consensus" in June 1996, which included one minister from the Jatiya Party and another from the Jatiyo Samajtantric Dal, a very small leftist party. The Jatiya Party never entered into a formal coalition arrangement, and party president H.M. Ershad withdrew his support from the government in September 1997.

Only three parties had more than 10 members elected to the 1996 parliament: The Awami League, BNP, and Jatiya Party. Jatiya Party president, Ershad, was released from prison on bail in January 1997.

Although international and domestic election observers found the June 1996 election free and fair, the BNP protested alleged vote rigging by the Awami League. Ultimately, the party decided to join the new parliament. The BNP soon charged that police and Awami League activists were engaged in large-scale harassment and jailing of opposition activists. At the end of 1996, the BNP staged a parliamentary walkout over this and other grievances, but returned in January 1997 under a four-point agreement with the ruling party. The BNP asserted that this agreement was never implemented, and later staged another walkout in August 1997. Subsequently, the BNP called two nationwide general strikes, and a road and rail blockage, between August and October 1997. Pitched street battles were fought on several occasions during these months as police, sometimes joined by ruling party activists, enforced a new ban on political rallies on public streets in the capital. The BNP returned to Parliament in March 1998.

FOREIGN RELATIONS

Bangladesh pursues a moderate foreign policy that places heavy reliance on multinational diplomacy, especially at the United Nations.

Participation in Multilateral Organizations

Bangladesh was admitted to the United Nations in 1974 and was elected to a Security Council term in 1978. Foreign Minister Choudhury served as president of the 41st UN General Assembly in 1986. The government has participated in numerous international conferences, especially those dealing with population, food, development, and women's issues. In 1982-83, Bangladesh played a constructive role as Chairman of the "Group of 77," an informal association encompassing most of the world's developing nations. In 1983, Bangladesh hosted the foreign ministers meeting of the Organization of the Islamic Conference (OIC). It has taken a leading role in the "Group of 48" developing countries.

Since 1975, Bangladesh has sought close relations with other Islamic states, and a prominent role among moderate members of the OIC. The government also pursued the expansion of cooperation among the nations of South Asia, bringing the process--an initiative of former President Ziaur Rahman--through its earliest, most tentative stages to the formal inauguration of the South Asia Association for Regional Cooperation (SAARC) at a summit gathering of South Asian leaders in Dhaka in December 1985. Bangladesh has served in the chairmanship of SAARC and has participated in a wide range of ongoing SAARC regional activities.

In recent years, Bangladesh has played a significant role in international peacekeeping activities. Several thousand Bangladeshi military personnel are deployed overseas on peacekeeping operations. Under UN auspices, Bangladeshi troops have served or are serving in Somalia, Rwanda, Mozambique, Kuwait, Bosnia, and Haiti. Bangladesh responded quickly to President Clinton's 1994 request for troops and police for the multinational force for Haiti, and provided the largest non-U.S. contingent.

Bilateral Relations with Other Nations

Bangladesh is bordered on the west, north, and east by a 2,400-kilometer land frontier with India, and on the southeast by a land and water frontier (193 kilometers long) with Burma.

India: India is Bangladesh's most important neighbor. Geographic, cultural, historic, and commercial ties are strong, and both countries recognize the importance of good relations. During and immediately after Bangladesh's struggle for independence from Pakistan in 1971, India assisted refugees from East Pakistan, intervened militarily to help bring about the independence of Bangladesh, and furnished relief and reconstruction aid.

Indo-Bangladesh relations have not been without strains. Flooding in Bangladesh, a phenomenon which is believed by many Bangladeshis to originate largely in India, has aggravated bilateral tensions. Bilateral relations warmed in 1996, due to a softer Indian foreign policy and the new Awami League Government. A 30-year watersharing agreement for the Ganges was signed in December 1996. An earlier bilateral water-sharing agreement for the Ganges River lapsed in 1988, and efforts are being undertaken to rework the agreement. Both nations have also cooperated on the issue of flood warning and preparedness. The government and tribal insurgents signed a peace treaty in December 1997, which allowed for the return of tribal refugees-who fled into India, beginning in 1986, to escape violence caused by an insurgency in their homeland in the Chittagong Hill Tracts.

Pakistan: Bangladesh enjoys warm relations with Pakistan, despite the strained early days of their relationship. Landmarks in their reconciliation are:

Still to be resolved are the division of assets from the pre-1971 period and the status of more than 250,000 non-Bengali Muslims (known as "Biharis") remaining in Bangladesh, but seeking resettlement in Pakistan.

Burma: Bilateral ties with Burma are good, despite occasional border strains and an influx of more than 270,000 Muslim refugees (known as "Rohingya") from predominantly Buddhist Burma. As a result of bilateral discussions, and with the cooperation and assistance of the UNHCR, most of the Rohingya refugees have now returned to Burma. As of 1997, about 21,000 refugees remained in camps in southern Bangladesh.

Former Soviet Union: The former Soviet Union supported India's actions during the 1971 Indo-Pakistan war and was among the first to recognize Bangladesh. The U.S.S.R. initially contributed considerable relief and rehabilitation aid to the new nation. After Sheikh Mujib was assassinated in 1975 and replaced by military regimes, however, Soviet-Bangladesh relations cooled.

In 1989, the U.S.S.R. ranked 14th among aid donors to Bangladesh. The Soviets focused on the development of electrical power, natural gas and oil, and maintained active cultural relations with Bangladesh. They financed a showcase project, the Ghorasal thermal power station--the largest in Bangladesh. Bangladesh began to open diplomatic relations with the newly independent Central Asian states in 1992.

China: China traditionally has been more important to Bangladesh than the former U.S.S.R., even though China supported Pakistan in 1971. As Bangladesh's relations with the Soviet Union and India cooled in the mid-1970s, and as Bangladesh and Pakistan became reconciled, China's relations with Bangladesh grew warmer. An exchange of diplomatic missions in February 1976 followed an accord on recognition in late 1975.

Since that time, relations have grown stronger, centering on trade, cultural activities, military and civilian aid, and exchanges of high-level visits, beginning in January 1977 with President Zia's trip to Beijing. The largest and most visible symbol of bilateral amity is the Bangladesh-China "Friendship Bridge" completed in 1989 near Dhaka.

Other Countries in South Asia: Bangladesh maintains friendly relations with Bhutan, Maldives, Nepal, and Sri Lanka, and strongly opposed the Soviet invasion of Afghanistan. Bangladesh and Nepal recently agreed to facilitate land transit between the two countries.

U.S.-BANGLADESH RELATIONS

Although the U.S. relationship with Bangladesh was initially troubled because of strong U.S. ties with Pakistan, U.S.-Bangladesh friendship and support developed quickly following Bangladesh's independence from Pakistan in 1971. U.S.-Bangladesh relations are excellent, as demonstrated by the visits to Washington, DC in August 1980 by President Zia; in 1983, 1988, and 1990 by President Ershad; 1992 by Prime Minister Khaleda Zia; and in 1996 and 1997 by Prime Minister Shakh Hsina. In 1995, First Lady Hillary Rodham Clinton visited Bangladesh. U.S. policy has focused primarily on efforts to promote Bangladesh's economic development and the strength of its democratic institutions.

A centerpiece of the bilateral relationship is a large U.S. economic aid program, totaling about $94 million in 1995. U.S. economic and food aid programs--which began as emergency relief following the 1971 war for independence--now concentrate on long-term development. Objectives of U.S. assistance include stabilizing population growth, protecting human health, encouraging broad-based economic growth, and building democracy.

In total, the United States has provided more than $3.4 billion in food and development assistance to Bangladesh. Food aid under Titles I, II, and III of PL-480 (congressional "food-for-peace" legislation) has been designed to help Bangladesh meet minimum food requirements, promote food production, and moderate fluctuation in consumer prices. Other U.S. development assistance emphasizes family planning and health, agricultural development, and rural employment. The United States works with other donors, and the Bangladesh Government, to avoid duplication and ensure that resources are used to maximum benefit.

Since 1986--with the exception of 1988-89, when an aircraft purchase made the trade balance even--the U.S. trade balance with Bangladesh has been negative, due largely to growing imports of ready-made garments. Jute carpet-backing is the other major U.S. import from Bangladesh; total imports from Bangladesh were about $1.343 billion in 1996. U.S. exports to Bangladesh (some $210 million in 1996) include wheat, fertilizer, cotton, communications equipment, aircraft, and medical supplies, a portion of which is financed by the U.S. Agency for International Development (USAID). A bilateral investment treaty was signed in 1989. U.S. investment, primarily in the gas and power sectors, is undergoing a rapid expansion.

Relations between Bangladesh and the United States were further strengthened by the participation of Bangladesh troops in the 1991 Gulf war coalition, and the 1994 multinational force in Haiti, as well as by the assistance of a U.S. Naval task force after a disastrous March 1991 cyclone in Bangladesh. The relief efforts of U.S. troops are credited with having saved as many as 200,000 lives.

INDIA

PEOPLE

Although India occupies only 2.4% of the world's land area, it supports over 15% of the world's population. Only China has a larger population. Almost 40% of Indians are younger than 15 years of age. About 70% of the people live in more than 550,000 villages, and the remainder in more than 200 towns and cities.

Over thousands of years of its history, India has been invaded from the Iranian plateau, Central Asia, Arabia, Afghanistan, and the West; Indian people and culture have absorbed and changed these influences to produce a remarkable racial and cultural synthesis.

Religion, caste, and language are major determinants of social and political organization in India today. The government has recognized 16 languages as official; Hindi is the most widely spoken.

Although 83% of the people are Hindu, India also is the home of more than 120 million Muslims--one of the world's largest Muslim populations. The population also includes Christians, Sikhs, Jains, Buddhists, and Parsis.

The caste system reflects Indian historical occupation and religiously defined hierarchies. Traditionally, there are four castes identified, plus a category of outcastes, earlier called "untouchables" but now commonly referred to as "dalits," the oppressed. In reality, however, there are thousands of subcastes and it is with these subcastes that the majority of Hindus identify. Despite economic modernization and laws countering discrimination against the lower end of the class structure, the caste system remains an important factor in Indian society.

HISTORY

The people of India have had a continuous civilization since 2500 B.C., when the inhabitants of the Indus River Valley developed an urban culture based on commerce and sustained by agricultural trade. This civilization declined around 1500 B.C., probably due to ecological changes.

During the second millennium B.C., pastoral, Aryan-speaking tribes migrated from the northwest into the subcontinent. As they settled in the middle Ganges River Valley, they adapted to antecedent cultures.

The political map of ancient and medieval India was made up of myriad kingdoms with fluctuating boundaries. In the 4th and 5th centuries A.D., northern India was unified under the Gupta Dynasty. During this period, known as India's Golden Age, Hindu culture and political administration reached new heights.

Islam spread across the subcontinent over a period of 500 years. In the 10th and 11th centuries, Turks and Afghans invaded India and established sultanates in Delhi. In the early 16th century, descendants of Genghis Khan swept across the Khyber Pass and established the Mughal (Mogul) Dynasty, which lasted for 200 years. From the 11th to the 15th centuries, southern India was dominated by Hindu Chola and Vijayanagar Dynasties. During this time, the two systems--the prevailing Hindu and Muslim--mingled, leaving lasting cultural influences on each other.

The first British outpost in South Asia was established in 1619 at Surat on the northwestern coast. Later in the century, the East India Company opened permanent trading stations at Madras, Bombay, and Calcutta, each under the protection of native rulers.

The British expanded their influence from these footholds until, by the 1850s, they controlled most of present-day India, Pakistan, and Bangladesh. In 1857, a rebellion in north India led by mutinous Indian soldiers caused the British parliament to transfer all political power from the East India Company to the Crown. Great Britain began administering most of India directly while controlling the rest through treaties with local rulers.

In the late 1800s, the first steps were taken toward self-government in British India with the appointment of Indian councilors to advise the British viceroy and the establishment of provincial councils with Indian members; the British subsequently widened participation in legislative councils. Beginning in 1920, Indian leader Mahatma Gandhi transformed the Indian National Congress political party into a mass movement to campaign against British colonial rule. The party used both parliamentary and non-violent resistance and non-cooperation to achieve independence.

On August 15, 1947, India became a dominion within the Commonwealth, with Jawaharlal Nehru as Prime Minister. Enmity between Hindus and Muslims led the British to partition British India, creating East and West Pakistan, where there were Muslim majorities. India became a republic within the Commonwealth after promulgating its constitution on January 26, 1950.

After independence, the Congress Party, the party of Mahatma Gandhi and Jawaharla Nehru, ruled India under the influence first of Nehru and then his daughter and grandson, with the exception of two brief periods in the 1970s and 1980s.

Prime Minister Nehru governed the nation until his death in 1964. He was succeeded by Lal Bahadur Shastri, who also died in office. In 1966, power passed to Nehru's daughter, Indira Gandhi, Prime Minister from 1966 to 1977. In 1975, beset with deepening political and economic problems, Mrs. Gandhi declared a state of emergency and suspended many civil liberties. Seeking a mandate at the polls for her policies, she called for elections in 1977, only to be defeated by Moraji Desai, who headed the Janata Party, an amalgam of five opposition parties.

In 1979, Desai's Government crumbled. Charan Singh formed an interim government, which was followed by Mrs. Gandhi's return to power in January 1980. On October 31, 1984, Mrs. Gandhi was assassinated, and her son, Rajiv, was chosen by the Congress (I)--for "Indira"--Party to take her place. His government was brought down in 1989 by allegations of corruption and was followed by V.P. Singh and then Chandra Shekhar.

In 1989, the Janata Dal, a union of opposition parties, dislodged Rajiv Gandhi's Congress (I) Party with the help of the Hindu-nationalist Bharatiya Janata Party (BJP) on the right and the communists on the left. This loose coalition collapsed in November 1990, and the government was controlled for a short period by a breakaway Janata Dal group supported by Congress (I), with Chandra Shekhar as Prime Minister. That alliance also collapsed, resulting in national elections in June 1991.

On May 27, 1991, while campaigning in Tamil Nadu on behalf of Congress (I), Rajiv Gandhi was assassinated, apparently by Tamil extremists from Sri Lanka. In the elections, Congress (I) won 213 parliamentary seats and put together a coalition, returning to power under the leadership of P.V. Narasimha Rao. He was the first Congress Party Prime Minister in 30 years who did not come from the Gandhi/Nehru family.

Rao's Congress Government served a full 5-year term. This period marked the beginning of a gradual process of economic liberalization and reform, which has opened the Indian economy to the globe. India's domestic politics also took a new shape, as divisions of caste, creed, and ethnicity gave rise to a plethora of small, regionally based political parties. The final months of the Rao-led Government in the Spring of 1996 were noted for several major political corruption scandals, which contributed to the worst electoral performance by the Congress Party in its history. The Hindu-nationalist Bharatiya Janata Party (BJP) emerged from the May 1996 national elections as the single largest party in the Lok Sabha, but without enough strength to prove a majority on the floor of parliament. Under Prime Minister Atal Behari Vajpayee, the BJP lasted 13 days in power. With all political parties wishing to avoid another round of elections, a 14-party coalition led by the Janata Dal emerged to form a government known as the United Front, under the former Chief Minister of Karnataka, H.D. Deve Gowda. His government lasted less than a year, as the leader of the Congress Party withdrew his support for the Deve Gowda Government in March 1997. Mr. Inder Kumar Gujral replaced Deve Gowda as the consensus choice for prime minister of a 16-party coalition in the United Front.

In November 1994, the Congress Party again withdrew support for the United Front and the President called for elections. In the February 1998 elections, the BJP again received the largest number of seats in Parliament, 182, but fell far short of a majority. On March 20, 1998, the President inaugurated a BJP-led coalition government with Vajpayee again serving as Prime Minister.

On May 11 and 13, the government of Prime Minister Vajpayee conducted a series of underground nuclear tests. U.S. President Clinton imposed economic sanctions on India pursuant to the 1994 Nuclear Proliferation Prevention Act.

GOVERNMENT

According to its constitution, India is a "sovereign, socialist, secular, democratic republic." Like the United States, India has a federal form of government. However, the central government in India has greater power in relation to its states, and its central government is patterned after the British parliamentary system.

The government exercises its broad administrative powers in the name of the president, whose duties are largely ceremonial. The president and vice president are elected indirectly for 5-year terms by a special electoral college. Their terms are staggered, and the vice president does not automatically become president following the death or removal from office of the president.

Real national executive power is centered in the Council of Ministers (cabinet), led by the prime minister. The president appoints the prime minister, who is designated by legislators of the political party or coalition commanding a parliamentary majority. The president then appoints subordinate ministers on the advice of the prime minister.

India's bicameral parliament consists of the Rajya Sabha (Council of States) and the Lok Sabha (House of the People). The Council of Ministers is responsible to the Lok Sabha.

The legislatures of the states and union territories elect 233 members to the Rajya Sabha, and the president appoints another 12. The elected members of the Rajya Sabha serve 6-year terms, with one-third up for election every 2 years. The Lok Sabha consists of 545 members; 543 are directly elected to 5-year terms. The other two are appointed.

India's independent judicial system began under the British, and its concepts and procedures resemble those of Anglo-Saxon countries. The Supreme Court consists of a chief justice and 25 other justices, all appointed by the president on the advice of the prime minister.

India has 25 states* and 7 union territories. At the state level, some of the legislatures are bicameral, patterned after the two houses of the national parliament. The states' chief ministers are responsible to the legislatures in the same way the prime minister is responsible to parliament.

Each state also has a presidentially appointed governor who may assume certain broad powers during state government crises. The central government exerts greater control over the union territories than over the states, although some territories have gained more power to administer their own affairs.

Local governments in India have less autonomy than their counterparts in the United States. Some states are trying to revitalize the traditional village councils, or panchayats, and introduce "grass-roots democracy" at the village level, where much of the population still lives.

POLITICAL CONDITIONS

Prime Minister Atal Bihari Vajpayee took office in March 1998 after a general election in which no single party emerged with an absolute majority. He leads a diverse and unwieldy 13-party coalition government. The coalition reflects the ongoing transition in Indian politics away from the historically dominant and national-based Congress Party toward smaller, narrower-based regional parties. This process has been underway throughout much of this decade and appears to be the continuing trend of the future.

Political Parties

The Bharatiya Janata Party emerged as the single largest party in the Lok Sabha (lower house of parliament) elections in February 1998. The BJP currently leads a coalition government under Prime Minister A.B. Vajpayee. Party President Kushabhau Thakre was elected by the Party National Executive in April 1998. The Hindu-nationalist BJP draws its political strength from the Hindi belt in the northern and western regions of India. The party holds power in the states of Rajasthan, Gujarat, Maharashtra (in coalition with the Shiv Sena), Uttar Pradesh (in coalition with several small parties), Himachal Pradesh (in coalition with Himachal Vikas Congress) and in Delhi. Long associated as the party of the upper caste and trading community, the BJP has made strong inroads into the lower caste vote bank in recent state assembly elections.

The Congress (I) Party, led by Sonia Gandhi (wife of the late Prime Minister Rajiv Gandhi), holds the second largest number of seats in the Lok Sabha. Priding itself as a secular, centrist party, the Congress has been the historically dominant political party in India. Its performance in national elections has steadily declined during the last decade. The Congress still rules in the states of Madhya Pradesh, Orissa, Goa, and three of the smaller states in the northeast. The political fortunes of the Congress have suffered badly as major groups in its traditional vote bank have been lost to emerging regional and caste-based parties, such as the Bahujan Samaj Party and the Samajwadi Party.

The Janata Dal Party claims to be a national party. Former Prime Minister Gujral is a member of the JD from Bihar. During the 1998 elections, the party strength in the Lok Sabha shrank from 40 seats to 6. In fact, the party currently holds significant strength only in Karnataka. It advocates a secular and socialist ideology and draws much of its popular support from Muslims, lower castes, and tribals. The party split in the state of Bihar in July 1997, with former Chief Minister Laloo Prasad Yadav resigning under corruption charges and forming his own Rastriya Janata Dal which now rules the state under the leadership of his wife, Rabri Devi.

ECONOMY

India's population continues to grow at about 1.8% per year and is estimated at 952 million in 1997. While its GDP is low in dollar terms, India has the world's fifth-largest economy in terms of purchasing power parity. About 62% of the population depends directly on agriculture.

Industry and services sectors are growing in importance and account for 29% and 42% of GDP, respectively, while agriculture contributes about 29% of GDP. More than 35% of the population live below the poverty line, but a large and growing middle class of 150-200 million has disposable income for consumer goods.

India embarked on a series of economic reforms in 1991 in reaction to a severe foreign exchange crisis. Those reforms have included a liberalized foreign investment regime, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, a liberalized foreign exchange regime, and significant adjustments in government monetary and fiscal policies.

The reform process has had some very beneficial effects on the Indian economy, including higher growth rates, lower inflation, and significant increases in foreign investment. Real GDP growth averaged about 7% for three consecutive fiscal years, but fell to just over 5% in the 1997-98 fiscal year. Growth in the 1998-99 fiscal year will be adversely affected by sanctions imposed by the U.S. and other countries in the wake of India's nuclear tests in May 1998. Other factors of concern include the after-effects of the Asian currency crisis, a decline in the value of the rupee, rising domestic inflation, and a general slowdown in domestic industrial production. Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991 and have contributed to healthy foreign currency reserves ($24.4 billion in June 1998) and a moderate current account deficit of about 1.5% (1997-98). India's economic growth is constrained, however, by inadequate infrastructure, cumbersome bureaucratic procedures, and high real interest rates. India will have to address these constraints and the impact of economic sanctions in formulating its economic policies and by pursuing further reforms to maintain recent trends in economic growth.

India's trade has increased significantly since reforms began in 1991, largely as a result of staged tariff reductions and elimination of nontariff barriers. The outlook for further trade liberalization is mixed. India will have to eliminate quantitative restrictions on imports of about 2,700 consumer goods over the next several years to meet its WTO commitments. On the other hand, the government has imposed "additional" import duties of 9% on most products over the past 2 years. The U.S. is India's largest trading partner; bilateral trade in 1997-98 was about $10.5 billion. Principal U.S. exports to India are aircraft and parts, advanced machinery, fertilizers, ferrous waste and scrap metal, and computer hardware. Major U.S. imports from India include textiles and ready-made garments, agricultural and related products, gems and jewelry, leather products, and chemicals.

Significant liberalization of its investment regime since 1991 has made India an attractive place for foreign direct and portfolio investment. The U.S. is India's largest investment partner, with total U.S. direct investment estimated at $6-7 billion (market value) in 1996. U.S. investors have also provided an estimated 60% of the $9 billion of foreign portfolio investment that has entered India since 1992. Proposals for direct foreign investment are considered by the Foreign Investment Promotion Board and generally receive government approval. Automatic approvals are available in many sectors for investments involving up to 51% foreign equity, and investments of up to 100% may be approved on a case-by-case basis. Foreign investment is particularly sought after in power generation, telecommunications, ports, roads, petroleum exploration and processing, and mining.

India's external debt was about $93 billion in September 1997, down from a peak of $99 billion in March 1995. The country's debt service ratio has fallen to about 21.4 %. Bilateral assistance totaled about $950 million in 1996-97, with the U.S. providing $30.7 million. Several donors, including the U.S., Japan, and a number of European countries, have stopped or reduced future aid flows in reaction to India's nuclear tests, however. Loans from international financial institutions, including the World Bank and the Asian Development Bank, are also likely to be put on hold as a result of sanctions. The World Bank had planned to approve loans worth about $3 billion for India in 1998.

FOREIGN RELATIONS

India's size, population, and strategic location give it a prominent voice in international affairs, and its growing industrial base, military strength, and scientific and technical capacity give it added weight. It collaborates closely with other developing countries on issues from trade to environmental protection.

The end of the Cold War dramatically affected Indian foreign policy. India remains a leader of the developing world and the Non-Aligned Movement (NAM), and hosted the NAM Heads of State Summit in 1997. India is now also seeking to strengthen its political and commercial ties with the United States, Japan, the European Union, Iran, China, and the Association of Southeast Asian Nations. India is an active member of the South Asia Association for Regional Cooperation (SAARC) and the Indian Ocean Rim Association for Regional Cooperation (IORARC).

India has always been an active member of the United Nations. India is now seeking a permanent seat on the UN Security Council in addition to other UN reforms. India has a long tradition of participating in UN peacekeeping operations and most recently contributed personnel to UN operations in Somalia, Cambodia, Mozambique, Kuwait, Bosnia, Angola, and El Salvador.

Bilateral And Regional Relations

Pakistan. India's relations with Pakistan are influenced by the centuries-old rivalry between Hindus and Muslims which led to partition of British India in 1947. The principal source of contention has been Kashmir, since the Hindu Maharaja chose in 1947 to join India although a majority of his subjects were Muslim. India maintains that his decision and the subsequent elections in Kashmir have made it an integral part of India. Pakistan asserts Kashmir's rights to self-determination through a plebiscite in accordance with an earlier Indian pledge and a UN resolution. This dispute triggered wars between the two countries in 1947 and 1965.

In December 1971, following a political crisis in what was then East Pakistan and the flight of millions of Bengali refugees to India, Pakistan and India again went to war. The brief conflict left the situation largely unchanged in the west, where the two armies reached an impasse, but a decisive Indian victory in the east resulted in the creation of Bangladesh.

Since the 1971 war, Pakistan and India have made only slow progress toward normalization of relations. In July 1972, Indian Prime Minister Indira Gandhi and Pakistani President Zulfikar Ali Bhutto met in the Indian hill station of Simla. They signed an agreement which called for resolving peacefully, through bilateral negotiations, the problems resulting from the war. Diplomatic and trade relations were re-established in 1976.

After the 1979 Soviet invasion of Afghanistan, new strains appeared in India-Pakistan relations; Pakistan supported the Afghan resistance, while India implicitly supported Soviet occupation. In the following 8 years, India voiced increasing concern over Pakistani arms purchases, U.S. military aid to Pakistan, and Pakistan's nuclear weapons program. In an effort to curtail tensions, the two countries formed a joint commission. In December 1988, Prime Minister Benazir Bhutto concluded a pact not to attack each other's nuclear facilities. Agreements on cultural exchanges and civil aviation also were initiated.

In 1997, high-level Indo-Pakistani talks resumed after a 3-year pause. The prime ministers of India and Pakistan met twice and the foreign secretaries conducted three rounds of talks. In June of 1997, the foreign secretaries identified eight "outstanding issues" around which continuing talks would be focused. The dispute over the status of Jammu and Kashmir, an issue since partition, remains the major stumbling block in their dialogue. India maintains that the entire former princely state is an integral part of the Indian union, while Pakistan insists that UN resolutions calling for self-determination of the people of the state must be taken into account.

In September 1997, the talks broke down over the structure of how to deal with the issues of Kashmir and peace and security. Pakistan advocated that the issues be treated by separate working groups. India responded that the two issues be taken up along with six others on a simultaneous basis. Following the nuclear tests in both countries in May 1998, attempts have been made to restart the talks.

SAARC. Certain aspects of India's relations within the subcontinent are conducted through the South Asia Association for Regional Cooperation (SAARC). Its members are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Established in 1985, SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics, and terrorism.

SAARC has intentionally stressed these "core issues" and has not served as a forum for more divisive political issues, although political dialogue is often conducted on the margins of SAARC meetings. In 1993, India and its SAARC partners signed an agreement to lower tariffs within the region over time. With the implementation of the South Asian Preferential Trade Agreement (SAPTA), SAARC now has set as a goal to finalize the South Asian Free Trade Agreement (SAFTA) by 2005.

China. Despite the historical suspicions that remain following the 1962 border war between India and China and the continuing territorial/boundary disputes, their relations have improved in a gradual manner since 1988. Both countries have sought to reduce tensions along the frontier, expand trade and cultural ties, and normalize relations.

A series of high-level visits between the two nations has played a useful role in improving relations. In December 1996, Chinese President Jiang Zemin visited India on a tour of South Asia. While in New Delhi, he signed, with the Indian Prime Minister, a series of confidence-building measures along the disputed Sino-Indian border. These measures include troop reductions and weapons limitations along the border.

Sino-Indian relations received a set back in May 1998 when India blamed its nuclear tests on potential threats from China. These accusations followed criticism of Chinese "aggressive actions" in Pakistan and Burma by Indian Defense Minister George Fernandes.

New Independent States of the Former Soviet Union. The collapse of the Soviet Union and the emergence of the Commonwealth of Independent States (CIS) had major repercussions for Indian foreign policy. Substantial trade with the former Soviet Union plummeted after the Soviet collapse and has yet to recover. Long-standing military supply relationships were similarly disrupted due to questions over financing, although Russia continues to be India's largest supplier of military systems and spare parts.

Russia and India have decided not to renew the 1971 Indo-Soviet Peace and Friendship Treaty and have sought to follow what both describe as a more pragmatic, less ideological relationship. Russian President Yeltsin's visit to India in January 1993 helped cement this new relationship.

DEFENSE

Supreme command of India's armed forces--the third-largest in the world-- rests with the president, but actual responsibility for national defense lies with the cabinet committee for political affairs under the chairmanship of the prime minister. The minister of defense is responsible to parliament for all defense matters. India's military command structure has no joint defense staff or unified command apparatus. The ministry of defense provides administrative and operational control over the three services through their respective chiefs of staff. The armed forces have always been loyal to constitutional authority and maintain a tradition of non-involvement in political affairs.

The army numbers about 1.1 million personnel and fields 34 divisions. Designed primarily to defend the country's frontiers, the army has become heavily committed to internal security duties in Kashmir and the Northeast.

The navy is much smaller, but it is relatively well-armed among the Indian Ocean navies, operating one aircraft carrier, 41 surface combatants, and 18 submarines. The fleet is aging, and replacement of ships and aircraft has not been adequately funded. India's coast guard is small and is organized along the lines of the U.S. Coast Guard. With India's long coast line and extensive Exclusive Economic Zone, the navy and coast guard work hard to patrol the waters dictated by India's economic and strategic interests.

The air force, the world's fourth largest, has over 600 combat aircraft and more than 500 transports and helicopters. The air force takes pride in its ability to fly low and fast, as well as to operate in the extremes of temperature and altitude ranging from the Thar Desert to the Siachen Glacier. The air force has enhanced the capability of its fighter force with the addition of the multi-role Sukhoi 30, and it hopes to replace much of its Mig-21 fleet with the indigenous Light Combat Aircraft currently under development.

NEPAL

PEOPLE

Perched on the southern slopes of the Himalayan Mountains, the Kingdom of Nepal is as ethnically diverse as its terrain of fertile plains, broad valleys, and the highest mountain peaks in the world. The Nepalese are descendants of three major migrations from India, Tibet, and Central Asia.

Among the earliest inhabitants were the Newars of the Kathmandu Valley and aboriginal Tharus in the southern Terai region. The ancestors of the Brahman and Chetri caste groups came from India, while other ethnic groups trace their origins to central Asia and Tibet, including the Gurungs and Magars in the west, Rais and Limbus in the east, and Sherpas and Bhotias in the north.

In the Terai, a part of the Ganges Basin with 20% of the land, much of the population is physically and culturally similar to the Indo-Aryan people of northern India. People of Indo-Aryan and Mongoloid stock live in the hill region. The mountainous highlands are sparsely populated. Kathmandu Valley, in the middle hill region, constitutes a small fraction of the nation's area but is the most densely populated, with almost 5% of the population.

Religion is important in Nepal--Kathmandu Valley has more than 2,700 religious shrines alone. Nepal is 90% Hindu, the official state religion. Hinduism, however, has synthesized with Buddhism in Nepal. As a result, Buddhist and Hindu shrines and festivals are respected and celebrated by all. Nepal also has small Muslim and Christian minorities. Certain animistic practices of old indigenous religions survive.

Nepali is the official language, although a dozen different languages and about 30 major dialects are spoken throughout the country. Derived from Sanskrit, Nepali is related to the Indian language, Hindi, and is spoken by about 90% of the population. Many Nepalese in government and business also speak English.

HISTORY

Modern Nepal was created in the latter half of the 18th century when Prithvi Narayan Shah, the ruler of the small principality of Gorkha, formed a unified country from a number of independent hill states. The country was frequently called the Gorkha Kingdom, the source of the term "Gurkha" used for Nepalese soldiers. After 1800, the heirs of Prithvi Narayan Shah proved unable to maintain firm political control over Nepal. A period of internal turmoil followed, heightened by Nepal's defeat in a war with the British from 1814 to 1816. Stability was restored after 1846 when the Rana family gained power, entrenched itself through hereditary prime ministers, and reduced the monarch to a figurehead. The Rana regime, a tightly centralized autocracy, pursued a policy of isolating Nepal from external influences. This policy helped Nepal maintain its national independence during the colonial era, but it also impeded the country's economic development.

In 1950, King Tribhuvan, a direct descendant of Prithvi Narayan Shah, fled his "palace prison" to newly independent India, touching off an armed revolt against the Rana administration. This allowed the return of the Shah family to power and, eventually, the appointment of a non-

Rana as prime minister. A period of quasi-constitutional rule followed, during which the monarch, assisted by the leaders of fledgling political parties, governed the country. During the 1950s, efforts were made to frame a constitution for Nepal that would establish a representative form of government, based on a British model.

Democracy Develops

In early 1959, King Mahendra issued a new constitution and the first democratic elections for a national assembly were held. The Nepali Congress Party, a moderate socialist group, gained a substantial victory in the election. Its leader, B.P. Koirala, formed a government and served as prime minister.

Declaring parliamentary democracy a failure 18 months later, King Mahendra dismissed the Koirala government and promulgated a new constitution on December 16, 1962. The new constitution established a "partyless" system of panchayats (councils) which King Mahendra considered to be a democratic form of government closer to Nepalese traditions. As a pyramidal structure progressing from village assemblies to a Rastriya Panchayat (National Parliament), the panchayat system enshrined the absolute power of the monarchy and kept the King as head of state with sole authority over all governmental institutions, including the Cabinet (Council of Ministers) and the parliament.

King Mahendra was succeeded by his 27 year-old son, King Birendra, in 1972. Amid student demonstrations and anti-regime activities in 1979, King Birendra called for a national referendum to decide on the nature of Nepal's government--either the continuation of the panchayat system with democratic reforms or the establishment of a multiparty system. The referendum was held in May 1980, and the panchayat system won a narrow victory. The king carried out the promised reforms, including selection of the prime minister by the Rastriya Panchayat.

Movement To Restore Democracy

In 1990, the political parties again pressed the king and the government for change. Leftist parties united under a common banner of the United Left Front and joined forces with the Nepali Congress Party to launch strikes and demonstrations in the major cities of Nepal. This "Movement to Restore Democracy" was initially dealt with severely, with more than 50 persons killed by police gunfire and hundreds arrested. In April, the king capitulated. Consequently, he dissolved the panchayat system, lifted the ban on political parties, and released all political prisoners.

An interim government was sworn in on April 19, 1990, headed by Krishna Prasad Bhattarai as prime minister presiding over a cabinet made up of members of the Nepali Congress Party, the communist parties of Nepal, royal appointees and independents.

The new government drafted and promulgated a new constitution in November 1990, which enshrined fundamental human rights and established Nepal as a parliamentary democracy under a constitutional monarch. International observers characterized the May 1991 elections as free and fair in which the Nepali Congress won 110 seats out of 205 to form the government. The largest opposition, the United Marxist and Leninist Party (UML), won 69 seats. Girija Prasad Koirala became prime minister and formed the government. In May/June of 1992 the structure of Nepal's new democratic government was completed following local elections in which the Nepali Congress Party scored a convincing victory.

GOVERNMENT AND POLITICAL CONDITIONS

Nepal is a constitutional monarchy with a democratic, parliamentary form of government that is multiethnic, multilingual, Hindu, and retains the king in the role of head of state. The former "partyless" panchayat system of government was abolished in April 1990 (see "Movement to Restore Democracy.").

The 1994 election defeat of the Nepali Congress Party by the UML has made Nepal the world's first Communist monarchy. The politically-

moderate UML also was a champion of multiparty democracy during the years of struggle, and has supported the country's free-market reforms. Man Mohan Adhikary, 72, the president of the Communist Party who spent 17 years in prison for fighting to restore democracy, is the new prime minister.

The Communist Party formed a minority government in December 1994. The new Government's major policy statements call for continued, if somewhat slower, economic liberalization and privatization of state enterprises, land reform, and the establishment of a Human Rights Commission.

Political parties agreed in 1991 that the monarchy would remain to enhance political stability and provide an important symbol of national identity for the culturally diverse Nepali people.

Nepal's judiciary is legally separate from the executive and legislative branches and has increasingly shown the will to be independent of political influence. The judiciary has the right of judicial review under the constitution. The king appoints the chief justice and all other judges to the supreme, appellate, and district courts upon the recommendation of the judicial council. All lower court decisions, including acquittals, are subject to appeal. The Supreme Court is the court of last appeal. The king may grant pardons and may suspend, commute, or remit any sentence by any court.

There are hundreds of small privately-owned newspapers in addition to the two state-owned newspapers. Views expressed since the 1990 move to democracy are extremely varied and vigorous. Radio and television media remain state owned and normally follow the views of the government. The law strictly forbids the media to criticize or satirize the king or any member of the royal family.

ECONOMY

Nepal ranks among the world's poorest countries with a per capita income of under $200. An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. The country has, however, made progress toward sustainable economic growth since the 1950s and is committed to a program of economic liberalization:

Nepal has completed seven economic development plans and began its eighth in 1991; its currency was recently made convertible, and a number of state enterprises have been earmarked for privatization. Government priorities over the years have been the development of transportation and communication facilities, agriculture, and industry. Since 1975, improved government administration and rural development efforts have been emphasized.

Agriculture remains Nepal's principal economic activity, employing 81% of the population and providing almost half of the country's income. Only about 20% of the total area is cultivable; another 33% is forested; most of the rest is mountainous. Rice and wheat are the main food crops. The lowland Terai region produces an agricultural surplus, part of which supplies the food-deficient hill areas.

Economic development in social services and infrastructure have made progress. A countrywide primary education system is under development and Tribhuvan University has several campuses. Although eradication efforts continue, malaria had been controlled in the fertile but previously uninhabitable Terai region in the south. Kathmandu is linked to India and nearby hill regions by road and an expanding highway network.

Major towns are connected to the capital by telephone and domestic air services. A system of internal finance and public administration has been established. The export-oriented carpet and garment industries have grown rapidly in recent years and together now account for some 80% of merchandise exports.

Nepal's merchandise trade balance has improved somewhat in recent years with the growth of the carpet and garment industries. The trade deficit steadily rose in the early 1990s, fueled by the results of trade disputes with India and erratic monsoons. Despite a rapid increase in manufactured exports during the past five years, particularly carpets and garments, imports have increased even faster and trade deficit has accordingly climbed from $432 million in 1992 to $687 million in 1993 and may reach $840 million in 1994. The annual monsoon rain or lack of it strongly influences economic growth. Real GDP growth fell from 6% in 1990 to 3% in 1992 and 1993 before recovering to 8% in 1994.

Strong export performance, including earnings from tourism, and external aid have helped improve the overall balance of payments situation and increase international reserves. Nepal receives substantial amounts of external assistance from India, the People's Republic of China, the United Kingdom, the United States, Japan, and Germany. Several multilateral organizations, such as the World Bank, the Asian Development Bank, and the UN Development Program also provide assistance. By 1994, Nepal had foreign exchange reserves equal to eight months of imports.

Progress has been made in exploiting Nepal's major economic resources--tourism and hydroelectricity. With eight of the world's ten highest mountain peaks--including Mt. Everest at 8,800 m (29,000 ft)--

hiking, mountain climbing, and other tourism is growing. Swift rivers flowing south through the Himalayas have massive hydroelectricity potential to service domestic needs and the growing demand from India. The two countries have joint irrigation-hydroelectric projects on the Kosi, Trisuli, and Gandaki rivers. Several other hydroelectric projects, at Kulekhani and Marsyangdi, have been completed; still others are planned.

The environmental impact of Nepal's hydroelectric projects (HEP) has been limited by the fact that most are "run-of-river" with no water storage. The largest under active consideration is the controversial Arun III 201 megawatt project. A national electricity grid is in place and consumption is increasing at 15% to 20% a year.

Population pressure on natural resources is increasing. At current rates of growth, Nepal's population will reach 20-22 million by the turn of the century. Over-population is already straining the "carrying capacity" of the middle hill areas, particularly the Kathmandu Valley, resulting in the depletion of forest cover for crops, fuel, and fodder and contributing to erosion and flooding. Although steep mountain terrain makes exploitation difficult, mineral surveys have found small deposits of limestone, magnesite, zinc, copper, iron, mica, lead, and cobalt.

DEFENSE

Nepal's military consists of an army of about 35,000 troops organized into a royal guards brigade, seven infantry brigades, a special forces unit, an air wing, four support brigades (logistics, engineer, signal, and artillery), and 44 independent infantry companies. Training assistance is provided by India, Pakistan, Bangladesh, and the United Kingdom. U.S. training assistance is provided via an annual $100,000 International Military Education and Training Program (IMET) grant.

The Royal Nepalese Army has served with distinction in numerous UN peacekeeping missions and currently has contingents deployed with the UN Interim Force in Lebanon (UNIFIL), the UN Protective Force (UNPROFOR), and in Somalia with UNOSOM II. Nepalese troops have fought in the British army since 1814 and for the Indian army since 1947, which inherited some of the British army's regiments at independence. Agreements allowing the British and Indians to recruit in Nepal still exist.

HUMAN RIGHTS

Progress has been achieved in the transition to a more open society and greater respect for human rights since political reform began in 1990; however, substantial problems remain. Poorly trained police forces often use indiscriminate force in quelling leftist-inspired protests. In addition, there have been reports of torture under detention and widespread reports of custodial abuse. The Government's unwillingness to investigate or enforce accountability for recent and past abuses remains a concern.

Some restrictions continue on freedom of expression. Trafficking in women and child labor remain serious problems. Discrimination against women and lower castes is prevalent.

FOREIGN RELATIONS

As a small, landlocked country wedged between two larger and far stronger powers, Nepal seeks good relations with both India and China. Nepal formally established relations with China in 1956 and since then their bilateral relations have generally been very good. Because of strong cultural, religious, linguistic, and economic ties, Nepal's association with India traditionally has been closer than with China. India and Nepal restored trade relations in 1990, after a break caused by India's security concerns over Nepal's relations with China. The two countries have since undertaken renegotiations regarding trade and transit terms.

Nepal has played an active role in the formation of the economic development-oriented South Asian Association for Regional Cooperation (SAARC) and is the site of its secretariat. On international issues, Nepal follows a non-aligned policy and often votes with the Non-aligned Movement in the United Nations. The country also participates in a number of UN specialized agencies and is a member of the World Bank, International Monetary Fund, Colombo Plan, and the Asian Development Bank.

U.S.-NEPALESE RELATIONS

The United States established official relations with Nepal in 1947 and opened its Kathmandu embassy in 1959. Relations between the two countries have always been friendly. U.S. policy objectives toward Nepal include supporting democratic institutions and economic liberalization, promoting peace and stability in South Asia, supporting Nepalese independence and territorial integrity, and the alleviation of poverty.

The United States has provided more than $500 million in bilateral economic assistance to Nepal since 1951. In recent years, annual bilateral U.S. economic assistance through the Agency for International Development (AID) has averaged $15 million. AID supports agriculture, health, family planning, environmental, democratization, and economic liberalization efforts in Nepal. The United States also contributes to international institutions and private voluntary organizations working in Nepal. Multilateral contributions to date approagh an additional $500 million, including humanitarian assistance. The Peace Corps operation in Nepal--established in 1962 and one of the largest in the world--has projects in agriculture, education, health, and other rural programs. About 140 Peace Corps volunteers work in Nepal.

PAKISTAN

People

The majority of Pakistan's population lives along the Indus River valley and along an arc formed by the cities of Faisalabad, Lahore, Rawalpindi/Islamabad, and Peshawar.

Although the official language of Pakistan is Urdu, it is spoken as a first language by only 9% of the population; 65% speak Punjabi, 11% Sindhi, and 24% speak other languages (Pushtu, Saraiki, Baloch, Brahui). Urdu, Punjabi, Pushtu, and Baloch are Indo-European languages; Brahui is believed to have Dravidian (pre-Indo-European) origins. English is widely used within the government, the officer ranks of the military, and in many institutions of higher learning.

History

Archeological explorations have revealed impressive ruins of a 4,500-year old urban civilization in Pakistan's Indus River valley. The reason for the total collapse of this highly developed culture is unknown. A major theory is that it was crushed by successive invasions (circa 2000 B.C. and 1400 B.C.) of Aryans, Indo-European warrior tribes from the Caucasus region in what is now Russia. The Aryans were followed in 500 B.C. by Persians and, in 326 B.C., by Alexander the Great.

The "Gandhara culture" flourished in much of present-day Pakistan. The Indo-Greek descendants of Alexander the Great saw the most creative period of the Gandhara (Buddhist) culture. For 200 years after the Kushan Dynasty was established in A.D. 50, Taxila (near Islamabad) became a renowned center of learning, philosophy, and art.

Pakistan's Islamic history began with the arrival of Muslim traders in the 8th century. During the 16th and 17th centuries, the Moguls dominated most of South Asia with an empire marked both by administrative effectiveness and cultural refinement.

British traders arrived in South Asia in 1601, but the British Empire did not consolidate control of the region until the latter half of the 18th century. After 1850, the British or those influenced by them governed virtually the entire subcontinent.

In the early 20th century, South Asian leaders began to agitate for a greater degree of autonomy. Growing concern about Hindu domination of the Indian National Congress Party, the movement's foremost organization, led Muslim leaders to form the all-India Muslim League in 1906. In 1913, the League formally adopted the same objective as the Congress--self-government for India within the British Empire--but Congress and the League were unable to agree on a formula that would ensure the protection of Muslim religious, economic, and political rights.

Pakistan and Partition

The idea of a separate Muslim state emerged in the 1930s. On March 23, 1940, Muhammad Ali Jinnah, leader of the Muslim League, formally endorsed the "Lahore Resolution," calling for the creation of an independent state in regions where Muslims constituted a majority.

At the end of World War II, the United Kingdom moved with increasing urgency to grant India independence. However, the Congress Party and the Muslim League could not agree on the terms for a constitution or establishing an interim government. In June 1947, the British Government declared that it would bestow full dominion status upon two successor states--India and Pakistan. Under this arrangement, the various princely states could freely join either India or Pakistan. Consequently, a bifurcated Muslim nation separated by more than 1,600 kilometers (1,000 mi.) of Indian territory emerged when Pakistan became a self-governing dominion within the Commonwealth on August 14, 1947. West Pakistan comprised the contiguous Muslim-majority districts of present-day Pakistan; East Pakistan consisted of a single province, which is now Bangladesh.

The Maharaja of Kashmir was reluctant to make a decision on accession to either Pakistan or India. However, armed incursions into the state by tribesman from the NWFP led him to seek military assistance from India. The Maharaja signed accession papers in October 1947 and allowed Indian troops into much of the state. The Government of Pakistan, however, refused to recognize the accession and campaigned to reverse the decision. The status of Kashmir has remained in dispute.

After Independence

With the death in 1948 of its first head of state, Muhammad Ali Jinnah, and the assassination in 1951 of its first Prime Minister, Liaqat Ali Khan, political instability and economic difficulty became prominent features of post-independence Pakistan. On October 7, 1958, President Iskander Mirza, with the support of the army, suspended the 1956 constitution, imposed martial law, and canceled the elections scheduled for January 1959. Twenty days later the military sent Mirza into exile in Britain and Gen. Mohammad Ayub Khan assumed control of a military dictatorship. After Pakistan's loss in the 1965 war against India, Ayub Khan's power declined. Subsequent political and economic grievances inspired agitation movements which compelled his resignation in March 1969.

General elections held in December 1970 polarized relations between the eastern and western sections of Pakistan. The Awami League, which advocated autonomy for the more populous East Pakistan, swept the East Pakistan seats to gain a majority in Pakistan as a whole. The Pakistan Peoples Party (PPP), founded and led by Ayub Khan's former Foreign Minister, Zulfikar Ali Bhutto, won a majority of the seats in West Pakistan, but the country was completely split with neither major party having any support in the other area. Negotiations to form a coalition government broke down and a civil war ensued. India attacked East Pakistan and captured Dhaka in December 1971, when the eastern section declared itself the independent nation of Bangladesh. Yahya Khan then resigned the presidency and handed over leadership of the western part of Pakistan to Bhutto, who became President and the first civilian Chief Martial Law Administrator.

Bhutto moved decisively to restore national confidence and pursued an active foreign policy, taking a leading role in Islamic and Third World forums. Although Pakistan did not formally join the non-aligned movement until 1979, the position of the Bhutto government coincided largely with that of the non-aligned nations. Domestically, Bhutto pursued a populist agenda and nationalized major industries and the banking system. In 1973, he promulgated a new constitution accepted by most political elements and relinquished the presidency to become Prime Minister.

Although Bhutto continued his populist and socialist rhetoric, he increasingly relied on Pakistan's urban industrialists and rural landlords. Over time the economy stagnated, largely as a result of the dislocation and uncertainty produced by Bhutto's frequently changing economic policies. When Bhutto proclaimed his own victory in the March 1977 national elections, the opposition Pakistan National Alliance (PNA) denounced the results as fraudulent and demanded new elections. Bhutto resisted and, after endemic political violence in Pakistan, arrested the PNA leadership.

1977-1985 Martial Law

With increasing anti-government unrest, the army grew restive. On July 5, 1977, the military removed Bhutto from power and arrested him, declared martial law, and suspended portions of the 1973 constitution. Chief of Army Staff Gen. Muhammad Zia ul-Haq became Chief Martial Law Administrator and promised to hold new elections within 3 months.

Zia released Bhutto and asserted that he could contest new elections scheduled for October 1977. However, after it became clear that Bhutto's popularity had survived his government, Zia postponed the elections and began criminal investigations of the senior PPP leadership. Subsequently, Bhutto was convicted and sentenced to death for alleged conspiracy to murder a political opponent. Despite international appeals on his behalf, Bhutto was hanged on April 6, 1979.

Zia assumed the Presidency and called for elections in November. However, fearful of a PPP victory, Zia banned political activity in October 1979 and postponed national elections.

In 1980, most center and left parties, led by the PPP, formed the Movement for the Restoration of Democracy [MRD]. The MRD demanded Zia's resignation, an end to martial law, new elections, and restoration of the constitution as it existed before Zia's takeover. In early December 1984, President Zia proclaimed a national referendum for December 19 on his "Islamization" program. He implicitly linked approval of "Islamization" with a mandate for his continued presidency. Zia's opponents, led by the MRD, boycotted the elections. When the government claimed a 63% turnout, with more than 90% approving the referendum, many observers questioned these figures.

On March 3, 1985, President Zia proclaimed constitutional changes designed to increase the power of the President vis-a-vis the Prime Minister (under the 1973 constitution the President had been mainly a figurehead). Subsequently, Zia nominated Muhammad Khan Junejo, a Muslim League member, as Prime Minister. The new National Assembly unanimously endorsed Junejo as Prime Minister and, in October 1985, passed Zia's proposed eighth amendment to the constitution, legitimizing the actions of the martial law government, exempting them from judicial review (including decisions of the military courts), and enhancing the powers of the President.

The Return of Democracy

On December 30, 1985, President Zia removed martial law and restored the fundamental rights safeguarded under the constitution. He also lifted the Bhutto government's declaration of emergency powers. The first months of 1986 witnessed a rebirth of political activity throughout Pakistan. All parties --including those continuing to deny the legitimacy of the Zia/Junejo government--were permitted to organize and hold rallies. In April 1986, PPP leader Benazir Bhutto, daughter of Zulfiqar Ali Bhutto, returned to Pakistan from exile in Europe.

Following the lifting of martial law, the increasing political independence of Prime Minister Junejo and his differences with Zia over Afghan policy resulted in tensions between them. On May 29, 1988, President Zia dismissed the Junejo government and called for November elections. In June, Zia proclaimed the supremacy in Pakistan of Shari'a (Islamic law), by which all civil law had to conform to traditional Muslim edicts.

On August 17, a plane carrying President Zia, American Ambassador Arnold Raphel, U.S. Brig. General Herbert Wassom, and 28 Pakistani military officers crashed on a return flight from a military equipment trial near Bahawalpur, killing all of its occupants. In accordance with the constitution, Chairman of the Senate Ghulam Ishaq Khan became Acting President and announced that elections scheduled for November 1988 would take place.

After winning 93 of the 205 National Assembly seats contested, the PPP, under the leadership of Benazir Bhutto, formed a coalition government with several smaller parties, including the Muhajir Qaumi Movement (MQM). The Islamic Democratic Alliance (IJI), a multi-party coalition led by the PML and including religious right parties such as the Jamaat-i-Islami (JI), won 55 National Assembly seats.

Differing interpretations of constitutional authority, debates over the powers of the central government relative to those of the provinces, and the antagonistic relationship between the Bhutto Administration and opposition governments in Punjab and Balochistan seriously impeded social and economic reform programs. Ethnic conflict, primarily in Sindh province, exacerbated these problems. A fragmentation in the governing coalition and the military's reluctance to support an apparently ineffectual and corrupt government were accompanied by a significant deterioration in law and order.

In August 1990, President Khan, citing his powers under the eighth amendment to the constitution, dismissed the Bhutto government and dissolved the national and provincial assemblies. New elections, held in October of 1990, confirmed the political ascendancy of the IJI. In addition to a two-thirds majority in the National Assembly, the alliance acquired control of all four provincial parliaments and enjoyed the support of the military and of President Khan. Muhammad Nawaz Sharif, as leader of the PML, the most prominent Party in the IJI, was elected Prime Minister by the National Assembly.

Sharif emerged as the most secure and powerful Pakistani Prime Minister since the mid-1970s. Under his rule, the IJI achieved several important political victories. The implementation of Sharif's economic reform program, involving privatization, de-regulation, and encouragement of private sector economic growth, greatly improved Pakistan's economic performance and business climate. The passage into law in May 1991 of a Shariat bill, providing for widespread Islamization, legitimized the IJI government among much of Pakistani society.

After PML President Junejo's death in March 1993, Sharif loyalists unilaterally nominated him as the next party leader. Consequently, the PML divided into the PML Nawaz (PML/N) group, loyal to the Prime Minister, and the PML Junejo group (PML/J), supportive of Hamid Nasir Chatta, the President of the PML/J group.

However, Nawaz Sharif was not able to reconcile the different objectives of the IJI's constituent parties. The largest fundamentalist party, Jamaat-i-Islami (JI), abandoned the alliance because of its perception of PML hegemony. The regime was weakened further by the military's suppression of the MQM, which had entered into a coalition with the IJI to contain PPP influence, and allegations of corruption directed at Nawaz Sharif. In April 1993, President Khan, citing "maladministration, corruption, and nepotism" and espousal of political violence, dismissed the Sharif government, but the following month the Pakistan Supreme Court reinstated the National Assembly and the Nawaz Sharif government. Continued tensions between Sharif and Khan resulted in governmental gridlock and the Chief of Army Staff brokered an arrangement under which both the President and the Prime Minister resigned their offices in July 1993.

An interim government, headed by Moeen Qureshi, a former World Bank Vice President, took office with a mandate to hold national and provincial parliamentary elections in October. Despite its brief term, the Qureshi government adopted political, economic, and social reforms that generated considerable domestic support and foreign admiration.

In the October 1993 elections, the PPP won a plurality of seats in the National Assembly and Benazir Bhutto was asked to form a government. However, because it did not acquire a majority in the National Assembly, the PPP's control of the government depended upon the continued support of numerous independent parties, particularly the PML/J. The unfavorable circumstances surrounding PPP rule--the imperative of preserving a coalition government, the formidable opposition of Nawaz Sharif's PML/N movement, and the insecure provincial administrations--presented significant difficulties for the government of Prime Minister Bhutto. However, the election of Prime Minister Bhutto's close associate, Farooq Leghari, as President in November 1993 gave her a stronger power base.

In November 1996, President Leghari dismissed the Bhutto government, charging it with corruption, mismanagement of the economy, and implication in extra-judicial killings in Karachi. Elections in February 1997 resulted in an overwhelming victory for the PML/Nawaz, and President Leghari called upon Nawaz Sharif to form a government. In March 1997, Sharif proposed and Parliament passed a constitutional amendment removing the President's power to dissolve Parliament and making his power to appoint military service chiefs and provincial governors contingent on the "advice" of the Prime Minister.

Sharif has cited tackling the economic crisis, corruption and institutional reform as his three primary objectives. In October 1997, Sharif's government secured a $1.6-billion IMF assistance program. Approval of the program is expected to trigger support from other international financial institutions as well as give a boost to business confidence and the markets. An increase in sectarian violence and a lengthy confrontation over appointments of Supreme Court judges have distracted the government from its stated objectives.

Government

The Pakistan constitution of August 1973, amended substantially in 1985 under Zia, provides for a President (Chief of State) elected for a 5-year term by an Electoral College that consists of the Senate, National Assembly, and the members of the four provincial assemblies; and a Prime Minister (head of government) elected by the National Assembly in a special session. After the election, the President invites the Prime Minister to create a government. The constitution permits a vote of "no confidence" against the Prime Minister by a majority of the entire National Assembly, provided that it is not in the annual budget session.

The National Assembly -- 217 members (10 of whom represent minorities) elected directly by universal adult suffrage -- has a 5-year term. In 1990, a constitutional provision which established 20 reserved seats for women expired and has not been renewed. The Senate consists of 87 members elected indirectly for 6 years (19 from each of the provincial assemblies, 8 from the federally administered tribal areas, and 3 from the federal capital area). One-third of the senate members stand for reelection every 2 years.

Two lists--federal and concurrent--designate jurisdiction on legislative subjects; all residual powers belong to the provinces. According to the 1973 constitution, the President, after consulting with the Prime Minister, appoints provincial governors, who act on the advice of the Cabinet or Chief Minister of the province.

The Supreme Court is Pakistan's highest court. The President appoints the chief justice, and they together determine the other judicial appointments. Each province has a high court, the justices of which are appointed by the President after conferring with the Chief Justice of the Supreme Court, the provincial governor, and the provincial chief justice. During the martial law period, the powers and autonomy of the civilian judiciary were curtailed. Several martial law decrees extended the jurisdiction of military tribunals and prohibited the civilian judiciary from reviewing the procedures and decisions of military courts.

 

National Security

Pakistan's 585,000-member armed forces, the world's eighth largest, are well trained and disciplined. Pakistan operates military equipment from several foreign sources, among which the United States, China, France, and the United Kingdom are the most significant. Much of this equipment is becoming dated. The government's extensive efforts to modernize Pakistan's defense capability are frustrated by the country's limited industrial base and fiscal resources.

Until 1990, the United States provided military aid to Pakistan to modernize Pakistan's conventional defensive capability. The United States allocated about 40% of its assistance package to Pakistan to nonreimbursable credits for military purchases; the remainder of the program was devoted to economic assistance. U.S. government military and new economic assistance to Pakistan, excepting counter-narcotics assistance and disaster relief, was suspended in October 1990 due to the Administration's inability to certify under the Pressler Amendment that Pakistan did not possess a nuclear explosive device.

Economy

Extreme poverty and underdevelopment in Pakistan obscure the reality of a country which has the resources and entrepreneurial skill to support rapid economic growth. In fact, the economy averaged an impressive growth rate of 6.2% per year during the 1980s and early 1990s. However, the economy is extremely vulnerable to Pakistan's external and internal shocks, such as in 1992-93, when devastating floods and political uncertainty combined to depress economic growth sharply. Average real GDP growth from 1992 to 1997 dipped to 3.9% annually.

Since the early 1980s, the government has pursued market-based economic reform policies. Market-based reforms began to take hold in 1988, when the government launched an ambitious IMF-assisted structural adjustment program in response to chronic and unsustainable fiscal and external account deficits. Since that time, the government has removed barriers to foreign trade and investment, begun to reform the financial system, eased foreign exchange controls, and privatized dozens of state-owned enterprises. Progress on reducing the budget and current-account deficits has been mixed, however. The budget deficit in FY 1996-97 was an estimated 6.2% of GDP, down only 0.1% over the previous fiscal year. Over the same 2-year period, the Pakistani rupee has been devalued twice, losing about 30% of its value against the U.S. dollar.

However, macroeconomic stability and sound fiscal policies were restored during the second half of 1993 under the interim government of Prime Minister Moeen Qureshi. Largely as a result, Pakistan was able to secure a $1.3 billion financing package from the IMF in February 1994. The government's FY 1994-95 budget was designed to broaden structural reforms and reduce the budget deficit through tax reform and other revenue mobilization measures. It also sought to contain defense spending which, together with debt servicing, exceeds government revenue.

With a per capita GDP of about $470, Pakistan is considered a low-income country by the World Bank. No more than 39% of adults are literate, and life expectancy at birth is about 62 years. The population, currently about 135 million, is growing at about 2.8% per year, roughly the same rate as GDP growth. Relatively few resources have been devoted to socio-economic development or infrastructure projects. Inadequate provision of social services and high population growth have contributed to a persistence of poverty and unequal income distribution.

Agriculture and Natural Resources

The country's principal natural resource is arable land (25% of the total land area is under cultivation). It boasts one of the largest irrigation systems in the world. Agriculture accounts for about 24% of GDP and employs about 50% of the labor force. The most important crops are wheat, cotton, and rice, which together account for almost 70% of the value of total crop output. Intensive farming practices have enabled Pakistan to become a net food exporter. Pakistan exports rice, fish, fruits, and vegetables, and imports wheat, vegetable oil, and sugar.

The economic importance of agriculture has declined since independence (when its share of GDP was around 53%). Following the poor harvest of 1993, the government introduced agriculture assistance policies, such as increasing support prices for many agricultural commodities, expanding the availability of agricultural credit, and providing incentives for the import of agricultural machinery. From 1993 to 1997, real growth in the agricultural sector averaged 5.7%, compared to about 4% for the economy as a whole. Pakistan has extensive energy resources, including fairly sizable natural gas reserves, some proven oil reserves, coal, and large hydropower potential. However, the exploitation of energy resources has been slow due to a shortage of capital and domestic political constraints. For instance, domestic petroleum production totals only about half the country's oil needs. Moreover, despite plans to build several large power plants in the coming years, Pakistan's energy grid is unable to meet the country's growing needs, creating an energy gap which represents a major constraint on economic growth. The need to import oil also contributes to Pakistan's persistent trade deficits and the shortage of foreign exchange. Consequently, the government has made development of the energy sector its first economic priority. In FY 1996-97, real growth in the electricity and gas distribution industry was nearly 12%. The latest policy aims to develop thermal and hydropower generation capacity through private sector investment while also encouraging development of offshore oil reserves.

Industry

Pakistan's manufacturing sector accounts for about 20% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 50% of total exports. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing. Despite ongoing government efforts to privatize large-scale parastatal units, the public sector continues to account for a significant proportion of industry. In FY 1996-97, gross fixed capital formation in the public sector accounted for about 38% of the total, a level that has remained stable throughout the decade. In the face of an increasing trade deficit, the government hopes to diversify the country's industrial base and bolster export industries.

Foreign Trade and Aid

Weak world demand for its exports and domestic political uncertainty have contributed to Pakistan's widening trade deficit. In FY 1996-97, Pakistan recorded a current account deficit of $4.3 billion, up from $1.8 billion in FY 1987-88 and only a slight improvement over the FY 1995-96 trade gap of $4.6 billion. Pakistan's exports continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Major imports include petroleum and petroleum products, edible oil, wheat, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products. External imbalance has left Pakistan with a growing foreign debt burden. Principal and interest payments in FY 1996-97 totaled $2.5 billion, more than double the amount paid in FY 1987-88. Annual debt service now exceeds 27% of export earnings.

Pakistan receives about $2 billion per year in loan/grant assistance from international financial institutions (e.g., the IMF, the World Bank, and the Asian Development Bank) and bilateral donors. Increasingly, the composition of assistance to Pakistan has shifted away from grants toward loans repayable in foreign exchange. All new U.S. economic assistance to Pakistan was suspended after October 1990, when then-President Bush could no longer certify under the Pressler Amendment to the Foreign Assistance Act [Section 620e(e)] "that Pakistan does not possess a nuclear explosive device and that the proposed assistance package reduces significantly the risk that Pakistan will acquire a nuclear explosive device."

Foreign Relations

Pakistan is a prominent member of the Organization of the Islamic Conference (OIC) and an active member of the United Nations. In 1989, Pakistan rejoined the British Commonwealth. Its foreign policy encompasses historically difficult relations with India, a desire for a stable Afghanistan, long-standing close relations with China, extensive security and economic interests in the Persian Gulf, and wide-ranging bilateral relations with the United States and other Western countries.

India

Since partition, relations between Pakistan and India have been characterized by rivalry and suspicion. Although many issues divide the two countries, the most sensitive one since independence has been the status of Kashmir.

At the time of partition, the princely state of Kashmir, though ruled by a Hindu Maharajah, had an overwhelmingly Muslim population. When the Maharajah hesitated in acceding to either Pakistan or India in 1947, some of his Muslim subjects, aided by tribesmen from Pakistan, revolted in favor of joining Pakistan. In exchange for military assistance in containing the revolt, the Kashmiri ruler offered his allegiance to India. Indian troops occupied the eastern portion of Kashmir, including its capital, Srinigar, while the western part came under Pakistani control.

India addressed this dispute in the United Nations on January 1, 1948. One year later, the UN arranged a cease-fire along a line dividing Kashmir, but leaving the northern end of the line undemarcated and the vale of Kashmir (with the majority of the population) under Indian control. India and Pakistan agreed with Indian resolutions which called for a UN-supervised plebiscite to determine the state's future.

Full-scale hostilities erupted in September 1965, when India alleged that insurgents trained and supplied by Pakistan were operating in India-controlled Kashmir. Hostilities ceased 3 weeks later, following mediation efforts by the UN and interested countries. In January 1966, Indian and Pakistani representatives met in Tashkent, U.S.S.R., and agreed to attempt a peaceful settlement of Kashmir and their other differences.

Following the 1971 Indo-Pakistan conflict, President Zulfiqar Ali Bhutto and Indian Prime Minister Indira Gandhi met in the mountain town of Shimla, India, in July 1972. They agreed to a line of control in Kashmir resulting from the December 17, 1971 cease-fire, and endorsed the principle of settlement of bilateral disputes through peaceful means. In 1974, Pakistan and India agreed to resume postal and telecommunications linkages, and to enact measures to facilitate travel. Trade and diplomatic relations were restored in 1976 after a hiatus of 5 years.

India's nuclear test in 1974 generated great uncertainty in Pakistan and is generally acknowledged to have been the impetus for Pakistan's nuclear weapons development program. In 1983, the Pakistani and Indian governments accused each other of aiding separatists in their respective countries, i.e., Sikhs in India's Punjab state and Sindhis in Pakistan's Sindh province. In April 1984, tensions erupted after troops were deployed to the Siachen Glacier, a high-altitude desolate area close to the China border left undemarcated by the cease-fire agreement (Karachi Agreement) signed by Pakistan and India in 1949.

Tensions diminished after Rajiv Gandhi became Prime Minister in November 1984 and after a group of Sikh hijackers was brought to trial by Pakistan in March 1985. In December 1985, President Zia and Prime Minister Gandhi pledged not to attack each other's nuclear facilities. (A formal "no attack" agreement was signed in January 1991.) In early 1986, the Indian and Pakistani governments began high-level talks to resolve the Siachen Glacier border dispute and to improve trade.

Bilateral tensions increased in early 1990, when Kashmiri militants began a campaign of violence against Indian Government authority in Jammu and Kashmir. Subsequent high-level bilateral meetings relieved the tensions between India and Pakistan, but relations worsened again after the destruction of the Ayodhya Mosque by Hindu extremists in December 1992 and terrorist bombings in Bombay in March 1993. Talks between the Foreign Secretaries of both countries in January 1994 resulted in deadlock.

After taking office in February 1997, Sharif moved to resume the official dialogue with India. Meetings which have taken place at the Foreign Secretary and Prime Ministerial level have featured positive atmospherics and a mutual determination to keep the process going. However, procedural issues have -- at least for the moment (November 1997) -- stalled further progress. Tensions remain, particularly over Kashmir, nuclear and ballistic missile proliferation and other defense and internal security matters, communal concerns, and economic issues.

Afghanistan

Following the 1979 Soviet invasion of Afghanistan, the Pakistani Government played a vital role in supporting the Afghan resistance movement and assisting Afghan refugees. After the Soviet withdrawal in February 1989, Pakistan, with cooperation from the world community, continued to provide extensive support for displaced Afghans. From 1992 to 1997 the United States has provided nearly $85 million in humanitarian assistance for Afghan refugees in Pakistan, mainly through multilateral organizations. In 1997, more than 1.2 million Afghan refugees remained in Pakistan, as fighting between rival factions continued in parts of the country.

Russian Federation

Under military leader Ayub Khan, Pakistan sought to improve relations with the Soviet Union; trade and cultural exchanges between the two countries increased between 1966 and 1971. However, Soviet criticism of Pakistan's position in the 1971 war with India weakened bilateral relations, and many Pakistanis believed that the August 1971 Indo-Soviet Treaty of Friendship, Peace and Cooperation encouraged Indian belligerency. Subsequent Soviet arms sales to India, amounting to billions of dollars on concessional terms, reinforced this argument.

During the 1980s, tensions increased between the Soviet Union and Pakistan, because of the latter's key role in helping to organize political and material support for the Afghan rebel forces. The withdrawal of Soviet forces from Afghanistan and the collapse of the former Soviet Union have resulted in significantly improved bilateral relations.

People's Republic of China

In 1950, Pakistan was among the first countries to recognize the People's Republic of China (P.R.C.). Following the Sino-Indian hostilities of 1962, Pakistan's relations with China became stronger; since then, the two countries have regularly exchanged high-level visits resulting in a variety of agreements. China has provided economic, military, and technical assistance to Pakistan.

Favorable relations with China have been a pillar of Pakistan's foreign policy. The P.R.C. strongly supported Pakistan's opposition to Soviet involvement in Afghanistan and is perceived by Pakistan as a regional counterweight to India and Russia.

Iran and the Persian Gulf

Historically, Pakistan has had close geopolitical and cultural-religious linkages with Iran. However, strains in the relationship appear to have recently intensified. Pakistan and Iran support opposing factions in the Afghan conflict. Also, some Pakistanis suspect Iranian support for sectarian violence which has plagued Pakistan. Nevertheless, Pakistan pursues an active diplomatic relationship with Iran.

Despite popular support for Iraq in 1991, the Pakistani government supported the coalition against Iraq's invasion of Kuwait and sent 11,600 troops to defend Saudi Arabia. Pakistan provides military personnel to strengthen gulf-state defenses and to reinforce its own security interests in the area.

 

U.S.-Pakistan Relations

The United States and Pakistan established diplomatic relations in 1947. The U.S. agreement to provide economic and military assistance to Pakistan and the latter's partnership in the Baghdad Pact/CENTO and SEATO strengthened relations between the two nations. However, the U.S. suspension of military assistance during the 1965 Indo-Pakistan war generated a widespread feeling in Pakistan that the United States was not a reliable ally. Even though the United States suspended military assistance to both countries involved in the conflict, the suspension of aid affected Pakistan much more severely. Gradually, relations improved and arms sales were renewed in 1975. Then, in April 1979, the United States cut off economic assistance to Pakistan, except food assistance, as required under the Symington Amendment to the Foreign Assistance Act of 1961, due to concerns about Pakistan's nuclear program.

The Soviet invasion of Afghanistan in December 1979 highlighted the common interest of Pakistan and the United States in peace and stability in South Asia. In 1981, the United States and Pakistan agreed on a $3.2-billion military and economic assistance program aimed at helping Pakistan deal with the heightened threat to security in the region and its economic development needs.

Recognizing national security concerns and accepting Pakistan's assurances that it did not intend to construct a nuclear weapon, Congress waived restrictions (Symington Amendment) on military assistance to Pakistan. In March 1986, the two countries agreed on a second multi-year (FY 1988-93) $4-billion economic development and security assistance program. On October 1, 1990, however, the United States suspended all military assistance and new economic aid to Pakistan under the Pressler Amendment, which required that the President certify annually that Pakistan "does not possess a nuclear device." Since then, both countries continue to cooperate in areas of common interest such as UN peace-keeping missions.

There have been several incidents of violence against American officials and U.S. mission employees in Pakistan. In November 1979, false rumors that the United States had participated in the seizure of the Grand Mosque in Mecca provoked a mob attack on the U.S. embassy in Islamabad. The government's delayed response enabled the mob to burn the embassy. Four people died, two of them U.S. nationals. The American Cultural Center in Lahore also was destroyed by fire. At the time of the incident, U.S. assistance to Pakistan had been suspended because of concerns about Pakistan's nuclear program. In 1989, there was an attack on the American Center in Islamabad, where six Pakistanis were killed in the crossfire with the police. In March of 1995, two American employees of the consulate in Karachi were killed and one wounded in an attack on the home-to-office shuttle.

During the second Clinton Administration there has been renewed U.S. Government interest in South Asia. The U.S. Government has been encouraged by developments in the region, including resumption of official dialogue between Pakistan and India, economic reforms in the region, and strengthened democratic governments in all but two countries in the region. This renewed interest is manifested in a series of high-level visits of U.S. officials including the Under Secretary of State for Political Affairs in October 1997, the Secretary of State in November 1997, and a planned Presidential visit in the first quarter of 1998.

SRI LANKA

PEOPLE

Sri Lanka is ethnically, linguistically, and religiously diverse. Sinhalese make up 74% of the population and are concentrated in the densely populated southwest. Ceylon Tamils, citizens whose South Indian ancestors have lived on the island for centuries, total about 12% and live predominantly in the north and east.

Indian Tamils, a distinct ethnic group, represent about 6% of the population. The British brought Indian Tamils to Sri Lanka in the 19th century as tea and rubber plantation workers and they remain concentrated in the "tea country" of south-central Sri Lanka. In accordance with a 1964 agreement with India, Sri Lanka granted citizenship to 230,000 "stateless" Indian Tamils in 1988. Under the pact, India granted citizenship to the remainder, some 200,000 of whom now live in India. Another 92,000 Indian Tamils who themselves or whose parents once applied for Indian citizenship now wish to remain in Sri Lanka. Although technically not citizens of Sri Lanka, the Government has stated that this group will not be forced to return to India.

Other minorities include Muslims (both Moors and Malays), at about 7% of the population; Burghers, who are descendants of European colonists, principally from the Netherlands and the U.K.; and aboriginal Veddahs.

Most Sinhalese are Buddhist; most Tamils are Hindu. The majority of Sri Lanka's Muslims practice Sunni Islam. Sizable minorities of both Sinhalese and Tamils are Christians, most of whom are Roman Catholic. The 1978 constitution, while assuring freedom of religion, grants primacy to Buddhism.

Sinhala, an Indo-European language, is the native tongue of the Sinhalese. Tamils and most Muslims speak Tamil, part of the South Indian Dravidian linguistic group. Use of English has declined since independence, but it continues to be spoken by many in the middle and upper middle classes, particularly in Colombo. Both Sinhala and Tamil are official languages.

HISTORY

The actual origins of the Sinhalese are shrouded in myth. Most believe that they came to Sri Lanka from northern India during the 6th century BC. Buddhism arrived from the subcontinent 300 years later and spread rapidly. Buddhism and a sophisticated system of irrigation became the pillars of classical Sinhalese civilization (200 BC-1200 AD) that flourished in the north-central part of the island. Invasions from southern India, combined with internecine strife, pushed Sinhalese kingdoms southward.

The island's contact with the outside world began early. Roman sailors called the island Taprobane. Arab traders knew it as "Serendip," the root of the word "serendipity." Beginning in 1505, Portuguese traders, in search of cinnamon and other spices, seized the island's coastal areas and spread Catholicism. The Dutch supplanted the Portuguese in 1658. Although the Dutch were ejected by the British in 1796, Dutch law remains an important part of Sri Lankan jurisprudence. In 1815, the British defeated the king of Kandy, last of the native rulers, and created the Crown Colony of Ceylon. They established a plantation economy based on tea, rubber, and coconuts. In 1931, the British granted Ceylon limited self-rule and universal franchise. Ceylon became independent on February 4, 1948.

Post-Independence Politics. Sri Lankan politics since independence have been strongly democratic. Two major parties, the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP) have generally alternated rule.

The UNP ruled first from 1948-56 under three prime ministers--D.S. Senanayake, his son Dudley, and Sir John Kotelawala. The SLFP ruled from 1956-65, with a short hiatus in 1960, first under S.W.R.D. Bandaranaike and then, after his assassination in 1959, under his widow, Sirima. Dudley Senanayake and the UNP returned to power in 1965.

In 1970, Mrs. Bandaranaike assumed the premiership. A year later, an insurrection by followers of the Maoist "Janatha Vimukthi Peramuna" (JVP, or "People's Liberation Front") broke out. The SLFP government suppressed the revolt and declared a state of emergency that would last six years. In 1972, Mrs. Bandaranaike's Government introduced a new constitution, which changed the country's name from Ceylon to Sri Lanka, declared it a republic, made protection of Buddhism a constitutional principle, and created a weak president appointed by the prime minister. Its economic policies during this period were highly socialist and included the nationalization of large tea and rubber plantations.

The UNP, under J.R. Jayewardene, returned to power in 1977. The Jayewardene Government opened the economy and, in 1978, introduced a new constitution based on the French model, a key element of which was the creation of a strong presidency. President Jayewardene was elected president by parliament in 1978 and by nationwide elections in 1982. By a 1982 referendum, the life of parliament was extended by another six years.

The UNP's Ranasinghe Premadasa, Prime Minister in the Jayewardene Government, narrowly defeated Mrs. Bandaranaike (SLFP) in the 1988 presidential elections. The UNP also won an absolute majority in the 1989 parliamentary elections. Mr. Premadasa was assassinated on May 1, 1993, and was replaced by then-Prime Minister Dingiri Banda Wijetunga, who appointed Ranil Wickremesinghe to be Prime Minister.

The SLFP, the main party in the PeopleÔs Alliance (PA) coalition, returned to power in 1994 for the first time in 17 years. The People's Alliance won a plurality in the August 1994 parliamentary elections and formed a coalition government with Chandrika Bandaranaike Kumaratunga as Prime Minister. Prime Minister Kumaratunga later won the November 1994 presidential elections and appointed her mother (former Prime Minister Sirima Bandaranaike) to replace her as Prime Minister.

Communal Crisis. Historical divisions continue to have an impact on Sri Lankan society and politics. From independence, the Tamil minority has been uneasy with the country's unitary form of government and wary that the Sinhalese majority would abuse Tamil rights. Those fears were reinforced when S.W.R.D. Bandaranaike triumphed in the 1956 elections after appealing to Sinhalese nationalism. Declaring Sinhala the country's official language--felt by Tamils to be a denigration of their own tongue--was the first in a series of steps over the following decades that appeared discriminatory to Tamils.

The decades following 1956 saw intermittent outbreaks of communal violence and growing radicalization among Tamil groups. By the mid- 1970s Tamil politicians were moving from support for federalism to a demand for a separate Tamil state--"Tamil Eelam"--in northern and eastern Sri Lanka. In the 1977 elections, the separatist TULF won all seats in Tamil areas. Other groups--particularly the "Liberation Tigers of Tamil Eelam" (LTTE)--sought an independent state by force.

In 1983, the death of 13 Sinhalese soldiers at the hands of Tamil militants unleashed the largest outburst of communal violence in the country's history. Hundreds of Tamils were killed in Colombo and elsewhere, tens of thousands were left homeless, and more than 100,000 fled to South India. Members of the TULF lost their seats in parliament when they refused to swear a loyalty oath. The north and east became the scene of bloodshed as security forces attempted to suppress the LTTE and other militant groups. Terrorist incidents occurred in Colombo and other cities. Each side in the conflict accused the other of violating human rights. The conflict assumed an international dimension when the Sri Lankan Government accused India of supporting Tamil insurgents.

Indian Peace-keeping. By mid-1987, the situation had reached an apparent impasse. In an attempt to break the deadlock, Sri Lanka brought India directly into its communal dispute. Under a July 29, 1987, accord signed by Indian Prime Minister Rajiv Gandhi and President Jayewardene, the Sri Lankan Government made a number of concessions to Tamil demands, which included devolution of power to the provinces, merger (subject to later referendum) of the northern and eastern provinces, and official status for the Tamil language. India agreed to establish order in the north and east with an Indian Peace-keeping Force (IPKF) and to cease assisting Tamil insurgents. Militant groups, although initially reluctant, agreed to surrender their arms to the IPKF.

Within weeks, however, the LTTE declared its intent to continue its armed struggle for an independent Tamil Eelam and refused to surrender arms. The 50,000-strong IPKF found itself engaged in a bloody police action against the LTTE.

Meanwhile, the Government of Sri Lanka moved ahead with the promised devolution of power. By late 1988, all eight provincial council elections had been held. Further complicating the return to peace was a burgeoning Sinhalese insurgency in the south. The JVP, relatively quiescent since the 1971 insurrection, began to reassert itself in 1987. Capitalizing on opposition to the Indo-Lankan accord in the Sinhalese community, the JVP launched an intimidation campaign against supporters of the accord. Numerous UNP and other government supporters were assassinated. The government, relieved of its security burden by the IPKF in the north and east, intensified its efforts in the south. The JVP was crushed but at a high cost in human lives.

From April 1989 through June 1990, the government engaged in direct communications with the LTTE leadership. In the meantime, fighting between the LTTE and the IPKF had escalated in the north. Finally, India withdrew all of its forces from Sri Lanka by May 1990, and fighting between the LTTE and the government recommenced. Both the LTTE and government forces have been accused of serious human rights violations. In January 1995, the Sri Lankan Government and the LTTE agreed to a cessation of hostilities as a preliminary step in a government-initiated plan for peace negotiations.

Separatist violence is largely confined to the Northeastern province, which is 6 to 8 hours by road from the capital. However, terrorist bombings directed against politicians and others have occurred in Colombo and elsewhere in the country.

POLITICAL CONDITIONS

Sri Lanka's two major political parties--the UNP and the SLFP--embrace democratic values, international non-alignment, and encouragement of Sinhalese culture. Past differences between the two on foreign and economic policy have narrowed. The SLFP, however, still has a stronger social-welfare orientation than the UNP and still envisions a broader role for the state in governance in general.

In the last general election, held August 15, 1994, Tamil parties, including the Tamil United Liberation Front (TULF), and the Eelam People's Democratic Front (EPDF), and a Muslim party, the Sri Lankan Muslim Congress (SLMC), won key swing votes in the parliament.

Political assassinations have become commonplace and have included the bomb killing of President Premadasa on May 1, 1993. Other prominent national leaders and senior military personnel have been targets and/or victims of terrorist violence. In April 1994, four bombs exploded at Colombo hotels and a group calling itself the "Ellalan Force" has threatened to target foreigners. In October 1994, UNP presidential candidate Gamini Dissanayake and 53 UNP supporters were killed during an October campaign rally by a terrorist bombing.

The People's Alliance government, which was elected in 1994, entered into preliminary peace negotiations with LTTE in mid-October, but a second round of talks was canceled after the assassination of opposition leader Gamini Dissanayake. In her November 1994 inaugural address, President Kumaratunga announced her intention to resume peace talks with the LTTE. President Kumaratunga also said her government would propose constitutional changes which would shift powers from the presidency to the office of the prime minister.

GOVERNMENT

The president of the republic, directly elected for a 6-year term, is chief of state, head of government, and commander in chief of the armed forces. Responsible to parliament for the exercise of duties under the constitution and laws, the president may be removed from office by a two-thirds vote of parliament with the concurrence of the Supreme Court.

The president appoints and heads a cabinet of ministers responsible to parliament. The president's deputy is the prime minister, who leads the ruling party in parliament. A parliamentary no confidence vote requires dissolution of the cabinet and the appointment of a new one by the president.

Parliament is a unicameral 225-member legislature elected by universal suffrage and proportional representation to a 6-year term. The president may summon, suspend, or end a legislative session and dissolve parliament. Parliament reserves the power to make all laws.

Sri Lanka's judiciary consists of a supreme court, a court of appeals, a high court, and a number of subordinate courts. Sri Lanka's legal system reflects diverse cultural influences. Criminal law is fundamentally British. Basic civil law is Roman-Dutch. Laws pertaining to marriage, divorce, inheritance are communal.

Under the Indo-Sri Lankan accord of July 1987, the Government of Sri Lanka agreed to devolve significant authority to the provinces. Provincial councils are directly elected for 5-year terms. The leader of the council majority serves as the province's chief minister; a provincial governor is appointed by the president. Councils possess powers in education, health, rural development, social services, agriculture, security, and local taxation. Many of these powers are shared, or subject to central government oversight. Predating the accord are municipal, urban, and rural councils with limited powers.

ECONOMY

With an economy of about $11 billion a year, and per capita GDP of $600, Sri Lanka has been coping with a decade long civil insurgency. In 1989, GDP growth fell to a low of 2%, but recovered and hit a high of 7% in 1993. With several rounds of local and national elections in 1994, growth fell to about 5.2%. The forecast for 1995 is clouded, as the private sector awaits proof that the new government will deliver on its promises of creating an environment conducive to vigorous, private- sector growth.

The service sector is the largest component of GDP (50%), partly reflecting an extensive government apparatus and welfare state, but also including a rapidly growing tourism sector. The booming industrial sector now accounts for 20% of GDP. Garment manufacturing dominates industry.

Agriculture, the traditional leading sector, contributes 20% of GDP and provides employment to about half the population. Rice, the staple cereal, is cultivated extensively. The plantation sector--tea, rubber, and coconut--also is a major employer and, until the recent growth of the textile industry, provided the bulk of export earnings.

Since 1990, a successful new stock exchange has been founded; all exchange controls on current account transactions have been eliminated; and more than 40 state firms have been privatized. Generous tax policies and other incentives have made Sri Lanka attractive to outside investors. Direct foreign investment inflows were about $200 million in 1994. The expectation is that investment inflows will continue to rise and that GDP growth should average 5% to 6% for the remainder of the decade.

Trade and Foreign Assistance. Exports to the United States--Sri Lanka's single most important export market--were valued at over $1 billion in 1994. The U.S. was Sri Lanka's largest market for textiles in 1994, followed by Germany, UK, and Japan. Japan was Sri Lanka's largest source of imports in 1994, followed by East and South Asian nations such as India and Hong Kong. Imports from the U.S. amounted to about $200 million in 1994.

Sri Lanka is highly dependent on foreign assistance and has received about $500 million a year since 1990. With the end of the JVP insurrection and a systematic decline in human rights abuses by the security forces, Western donor countries have increased support of Sri Lanka's economic liberalization programs. Foreign assistance has been critical in the successful development of the large Mahaweli River Basin Project, privatization of state-run industry, development of the stock exchange, and the building of infrastructure.

Labor. Perhaps one-quarter of Sri Lanka's 6.8 million labor force is unionized, with more than 1,300 registered unions and 10 federations. The largest labor group is the National Trade Union Conference. Many unions are affiliated with political parties. One of the largest unions is the Ceylon Workers Congress (CWC), which represents Indian Tamil workers on tea and rubber plantations. It claims a membership of 360,000. Its president, S. Thondaman, is Minister of Livestock Development and Rural Industries. The CWC's agenda includes political issues, such as citizenship status for stateless Indian Tamils.

FOREIGN RELATIONS

Sri Lanka follows a nonaligned foreign policy. It participates in multilateral diplomacy, particularly at the United Nations, where it seeks to promote sovereignty, independence, and development in the developing world. Sri Lanka was a founding member of the Non-Aligned Movement and hosted its 1976 summit. It also is a member of the Commonwealth, the South Asian Association for Regional Cooperation (SAARC), the World Bank, International Monetary Fund, Asian Development Bank, and the Colombo Plan. Sri Lanka continues its active participation in the Non-Aligned Movement, while also stressing the importance it places on regionalism by playing a strong role in SAARC.

U.S.-SRI LANKAN RELATIONS

The United States enjoys cordial relations with Sri Lanka that are based, in large part, on shared democratic traditions. U.S. policy toward Sri Lanka is characterized by respect for its independence, sovereignty, and moderate, non-aligned foreign policy; support for the country's unity, territorial integrity, and democratic institutions; and encouragement of its social and economic development.

U.S. assistance has totaled more than $1.3 billion since Sri Lanka's independence in 1948. Through the U.S. Agency for International Development (USAID), it has contributed to Sri Lanka's economic growth with projects designed to reduce unemployment, improve housing, and develop the Colombo stock exchange. In 1994, the U.S. delivered about $55 million in aid, including about $25 million in free wheat, $18 million in low interest 40-year loans for additional wheat, and about $12 million in a variety of other direct assistance activities.

In addition, U.S. Peace Corps volunteers are active in much of Sri Lanka; the Voice of America operates a radio transmitter; and U.S. Naval vessels call regularly at Colombo.