Peterson Institute research staff
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
RSS News Feed Search

Case Studies in Sanctions and Terrorism: India

Case Studies in Sanctions and Terrorism

<< Case Studies Index

Case 98-1
US v. India (1998- : Nuclear Weapons Proliferation)

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

Chronology of Key Events

March 20, 1998

Bharatiya Janata Party (BJP)-led coalition government under Prime Minister Atal Vajpayee is sworn in. The Hindu-nationalist BJP's campaign platform includes proposal to add nuclear weapons to India's arsenal. (Wall Street Journal, 12 May 1998, A1; Washington Post, 14 May 1998, A28; US Department of State, Background Notes-India, 1998)

April 7, 1998

Pakistan successfully tests its new medium-range missile capable of reaching deep into Indian territory. According to experts, the missile is based on smuggled North Korean technology. (Financial Times, 7 April 1998, 6; New York Times, 11 April 1998, A3)

April 26, 1998

Senior US officials say Russia is helping India build a sea-based ballistic missile with a range of 200 miles, allowing it to reach deep into Pakistan. (New York Times, 27 April 1998, A1)

May 11-13, 1998

India conducts a series of five nuclear weapons tests. After the first round of tests an aide to Prime Minister Vajpayee announces that India's test "has proven capability for a weaponized nuclear program." (Washington Post, 13 May 1998, A1)

May 13, 1998

President Clinton imposes sanctions against India as required by the Glenn amendment (Section 826-a of the Nuclear Proliferation Prevention Act of 1994), which mandates sanctions against nonnuclear states that detonate nuclear devices. Sanctions include a ban on financial assistance, except for humanitarian purposes; a ban on financing from Trade and Development Agency, Overseas Private Investment Corporation, and Export-Import Bank; restrictions on US exports of high-technology products; opposition to loans from international financial institutions; and a ban on US bank loans to the government of India. Clinton administration threatens Pakistan with similar sanctions if it responds in kind. (USIS, 13 May 1998; New York Times, 12 May 1998, A10; 14 May 1998, A13)

May 13-15, 1998

UN Security Council condemns India's nuclear tests and "strongly urges India to refrain from any further tests." Japan announces the suspension of $25 million in nonhumanitarian aid to India. In protest over the second round of tests, Japan also suspends $1 billion in new loans to India and announces policy of "cautious examination" of loans by the World Bank and Asian Development Bank to India. Canada cancels about $9.8 million of nonhumanitarian aid to India. Germany calls off talks with India scheduled for the following week and puts a hold on new development aid worth $168 million. Sweden cancels $119 million and Denmark freezes $28 million in aid to India. (New York Times, 14 May 1998, A13; Japan Economic Newswire, 14 May 1998; Wall Street Journal, 14 May 1998, A14; USIS, 14 May 1998; Agence France-Presse, 16 May 1988)

May 18, 1998

At summit meeting in Birmingham, England, G-8 nations condemn India's nuclear weapons test, call on India to refrain from further tests and adhere to the Comprehensive Test Ban Treaty (CTBT). Canada and Japan express dissatisfaction with G-8's inability to agree on economic sanctions; France, Britain, and Russia state they do not believe sanctions on India would influence Pakistan. (USIS, 17 May 1998; Financial Times, 18 May 1998, 1)

May 21, 1998

India announces a moratorium on nuclear tests; expresses its willingness to adhere to some parts of the CTBT. US demands full and "unconditional" adherence to CTBT. (Washington Post, 22 May 1998, A35)

May 26, 1998

World Bank postpones consideration of almost $1 billion in loans to India. (Washington Post, 27 May 1998, A21)

May 28-June 1, 1998

Pakistan conducts what it claims to be five nuclear tests; US intelligence sources detect only two. President Clinton deplores the tests and announces the imposition of sanctions under the Glenn amendment. A few days later Pakistan conducts another test. (USIS, 28 May 1998; International Herald Tribune, 29 May 1998, 1; Christian Science Monitor, 1 June 1998, 1)

May 31, 1998

India suggests a new global convention for nuclear disarmament that would include "all nuclear states" (India, Pakistan, and perhaps Israel in addition to five established nuclear powers) and would apply equal terms for eventual elimination of nuclear arsenals. India also offers to negotiate a no-first-use treaty for nuclear weapons with Pakistan. Pakistan expresses willingness to enter talks with India but will not commit to such a treaty. (New York Times, 1 June 1998, 1; Wall Street Journal, 1 June 1998, A12)

June 1, 1998

Indian Finance Minister Vashwant Sinha announces new budget, which includes large increases in military spending and for nuclear and missile research. Budget appears to make no allowance for impact of US sanctions. Sinha also announces increased import duties, which commentators warn could isolate India from the world economy and further erode investor confidence. (New York Times, 2 June 1998, A8; Agence France-Presse, 2 June 1998; Economist, 6 June 1998, 41)

June 4, 1998

The five permanent members of the UN Security Council condemn the nuclear tests by India and Pakistan and call on them to halt further actions. (New York Times, 5 June 1998, A8)

June 11, 1998

Pakistan announces a moratorium on nuclear testing. (Washington Post, 12 June 1998, A18)

June 12, 1998

G-8 nations agree to freeze all nonhumanitarian lending to both India and Pakistan by multilateral agencies. (Financial Times, 2 February 1999, 8)

June 16, 1998

Prime Minister Vajpayee states that India has a "credible nuclear deterrent," and will not engage in a nuclear arms race. (Washington Post, 17 June 1998, A21)

June 18, 1998

Clinton administration announces that pending the issuance of regulations for implementing sanctions, including a list of "banned entities," the US Department of Commerce will approve licenses for exports of restricted goods and technologies on case-by case basis, but with a presumption of denial for items controlled for nuclear or missile proliferation reasons. Bank loans to privately owned firms and investment by US companies are allowed; details on banned public sector transactions remain undefined. (USIS, 18 June 1998; Washington Post, 19 June 1998, A29; Journal of Commerce, 19 June 1998, 3A)

June 20, 1998

Moody's Investors Service lowers India's sovereign credit rating on concerns about the ability of its "fractious" political environment to tackle economic reforms and about the impact of US sanctions. (Financial Times, 20 June 1998, 2)

June 23, 1998

Unocal announces it will invest $4 billion in Indian oil and gas programs over the next five years. (Journal of Commerce, 25 June 1998, 9A)

June 23, 1998

US Commerce Department announces that all sales of computers with speeds over 2,000 MTOPS to India and Pakistan will require a license. (Journal of Commerce, 24 June 1998, 3A)

Late June 1998

Russia signs a $2.6 billion deal with India to build two nuclear reactors. Russia claims the venture is strictly commercial, but a US State Department spokesman says the contract sends "the wrong signal at the wrong time." (Washington Post, 27 June 1998, A20)

June 30, 1998

World Bank approves $506.4 million in loans to India for poverty-focused development programs, following approval of $543.2 million for similar programs in Andhra Pradesh state a week earlier. India hails the decisions as a victory against sanctions, but the G-8 governments contend the loans are in line with the policy of not blocking humanitarian funds. Almost $1 billion in other planned loans to India are still being held up by the World Bank. (Financial Times, 3 July 1998, 6; World Bank Press Release, 25 June 1998)

July 15, 1998

President Clinton signs legislation that exempts export credits for farm products from the Indian and Pakistani nuclear sanctions for one year. Both houses of Congress had voted for legislation under pressure from US farmers fearing heavy losses due to sanctions. Immediate effect of legislation is to allow Pakistan to negotiate purchase of 385,000 tons of US wheat. Previously approved credit guarantees include $250 million for Pakistan and $20 million for India. (Financial Times, 15 July 1998, 5; USIS, 15 July 1998; Washington Post, 15 July 1998, A10)

August 5, 1998

State Bank of India introduces "Resurgent India Bond," which is denominated in foreign currency and is available only to Indian investors; bond is intended to appeal to patriotic expatriate Indian community. State Bank of India hopes to raise $3.5 billion in first 10 days of sales. (Far Eastern Economic Review, 13 August 1998, 53; Financial Times, 5 August 1998, 3)

September 16, 1998

Prime Minister Vajpayee hints to reporters that if India signs the CTBT, it will want nuclear energy technology from the US. (Chicago Tribune, 17 September 1998)

September 23, 1998

Pakistani Prime Minister Nawaz Sharif tells the UN General Assembly Pakistan will sign the CTBT if India will also sign it. Sharif also calls for the removal of "arbitrary restrictions and discriminatory sanctions." (Washington Post, 24 September 1998, A27, A34; Financial Times, 25 September 1998, 6)

September 24, 1998

Prime Minister Vajpayee indicates to the UN General Assembly that India is ready to sign the CTBT so that the entry into force of the treaty is not delayed beyond September 1999. (Economist, 3 October 1998, 46; Associated Press, 24 September 1998; New York Times, 25 September 1998, 1)

September 29, 1998

President Clinton cancels his scheduled November trip to India and Pakistan as a sign of disapproval of the May nuclear tests. (Washington Post, 30 September 1998, A18)

October 18, 1998

Talks between Indian and Pakistani officials in Islamabad end without any concrete agreements. India raised the possibility of advance notification of long-range missile tests, while Pakistan brought up the idea of a nonaggression pact. (Washington Post, 19 October 1998, A16)

October 20, 1998

Congress passes omnibus spending legislation that contains a provision giving the president the right to waive sanctions against India and Pakistan for up to one year, except for the prohibition on arms sales. (USIS, 19 October 1998; Financial Times, 21 October 1998, 6)

November 7, 1998

Clinton administration waives sanctions against India and Pakistan barring the US Export-Import Bank, the Overseas Private Investment Corporation, and the Trade and Development Agency from operating in India and Pakistan. International Military Education and Training (IMET) programs also resume for both nations. The US will not oppose multilateral funding to Pakistan from the International Monetary Fund, World Bank, or Asian Development Bank, but will continue to oppose nonhumanitarian multilateral development aid to India. Arms sales to both countries are still banned, as are exports of certain dual-use technologies to certain end-users. (Financial Times, 9 November 1998, 6; Washington Post, 7 November 1998, A14; Financial Express (India), 9 November 1998)

November 13, 1998

US Commerce Department unveils a list of 46 Indian companies and 40 Pakistani companies involved in nuclear and missile programs. The presumption is that export licenses will be denied for these entities. India threatens to challenge the sanctions in the World Trade Organization. (Journal of Commerce, 17 November 1998, 1A, 3A; USIS, 16 November 1998; Journal of Commerce, 18 November 1998, 3A)

December 8, 1998

Indian Defense Minister George Fernandes says the seven rounds of talks with the US "have not taken us one step nearer to a fresh understanding." Fernandes also claims India is close to finishing development of a missile with a range of more than 2,000 kilometers. (Financial Times, 9 December 1998, 10; Financial Times, 10 December 1998, 4)

December 21, 1998

India and Russia sign a 20-year military technical cooperation pact and a host of other agreements. Indian officials state that Russia will continue to support India's civilian nuclear program. (Financial Times, 22 December 1998, 6)

January 21, 1999

India assures Britain it will not conduct any further nuclear tests and will sign the CTBT later this year. Clinton administration welcomes the decision. (Financial Times, 21 January 1999, 4)

February 2, 1999

After three days of talks in Delhi, US Deputy Secretary of State Strobe Talbott and Indian Foreign Minister Jaswant Singh announce the possibility of an agreement by which India would sign the CTBT in return for removal of US and G-8 sanctions on multilateral development lending. (Financial Times, 2 February 1999, 8; New York Times, 2 February 1999, A9)

February 21, 1999

After meeting in Lahore, Pakistan, the prime ministers of India and Pakistan agree to transparency measures regarding nuclear weapons and ballistic missiles. The two rivals will provide each other information on numbers of nuclear warheads and their deployment. They will also share information on numbers of ballistic missiles and will warn each other in advance of ballistic missile tests. (Washington Post, 22 February 1999, A9)

April 11, 1999

India tests the Agni II, a ballistic missile with a range of 2,000 kilometers that can carry a nuclear warhead. The government gave advance warning to Pakistan and the world's "major powers." A US official says the test will not affect US sanctions. (Financial Times, 12 April 1999, 18; 13 April 1999, 6)

April 14, 1999

Pakistan tests its Ghauri-II missile, which has a range of up to 2,300 kilometers and can carry a nuclear warhead. Indian Foreign Minister Jaswant Singh assures the world that India and Pakistan's actions do not constitute the beginning of an arms race. (Financial Times, 15 April 1999, 10; Wall Street Journal, 15 April 1999, A14)

April 15, 1999

Pakistan tests the Shabeen-1 missile, which has a range of 600 kilometers and can carry a nuclear warhead. India declares the test will not hinder bilateral talks. (Financial Times, 16 April 1999, 4)

April 17, 1999

After narrowly losing a confidence vote in parliament, the Hindu-nationalist-led government collapses, Prime Minister Vajpayee resigns. New general elections are scheduled to be held in late September. The elections coincide with the deadline for the adoption of the CTBT. Under the terms of the treaty it can not enter into force until India and Pakistan along with 42 other states sign and ratify the treaty by 24 September 1999, three years after it was open for ratification [see Legal Notes]. With the collapse of the government it is unlikely that India will sign the CTBT before general elections are held. (New York Times, 27 April 1999, A14; 9 May 1999, A4)

October 12, 1999 Hindu nationalist Atal Vajpayee, whose 24-party coalition won the majority of seats in parliamentary elections, is sworn in as prime minister for the third time in three years. New government will consider draft report by the National Security Advisory Board outlining India's nuclear doctrine released in August. The US criticizes India's decision to develop a nuclear deterrent as "unwise" and risking an escalation of nuclear arms race in the region. (Washington Post, October 8, 1999, A1; Financial Times, October 12, 1999; August 18, 1999,4; CRS 2002b, 4, 11
October 14, 1999 Republican-dominated US Senate votes 51 to 48 against ratifying the Comprehensive Test Ban Treaty (CTBT) after majority leader Trent Lott (R-MS) schedules a surprise vote. Clinton administration warns that unless Senate ratifies the treaty, countries such as Russia, China, Pakistan, and India will renew nuclear testing. (Washington Post, October 14, 1999, A1; 15 October 1999, A1, A16)
October 14, 1999 Senate approves Department of Defense Appropriations bill including a provision that gives the president authority to permanently waive all the economic sanctions imposed against India and Pakistan in response to the nuclear tests, including for the first time, sanctions relating to military assistance and exports of high technology items. (Inside US Trade, 15 October 1999; International Trade Reporter 13 October 1999; CRS 2002a, 3)
October 27, 1999 President Clinton waives restrictions on EXIM, OPIC, TDA, USDA, and IMET support, as well as on restrictions on loans and credits to the Indian government by U.S. commercial banks. (Associated Press, 27 October 1999; Presidential Determination 2000-04, 27 October 1999; CRS 2002a, 3)
December 17, 1999 US Department of Commerce announces that 51 Indian government agencies and private companies are removed from the list of about 200 entities originally sanctioned in 1998. The removal is based on administration's decision to focus more tightly on those entities that are directly involved in proliferation activities. US policy of denial of dual-use items remains unchanged. (Dow Jones International, 17 December 1999; USIS, 17 December 1999)
March 20-25, 2000 Nuclear nonproliferation concerns and improvement of economic relations are major focus of President Clinton's 5-day visit to India. During visit, President Clinton announces $2 billion in financial support for US exports to India through Export-Import Bank. Clinton also lifts restrictions on several financial assistance programs including a $25 million initiative to provide assistance to strengthen Indian financial markets and regulatory agencies terminated in May 1998. US companies sign agreements on $4 billion in projects with Indian and Bangladeshi firms. (Presidential Determination 2000-18, 20 March 2000; Financial Times, 22 March 2000, 6; USIS, 24 March 2000; CRS 2002b, 2-3)
September 14, 2000 Indian Prime Minister Vajpayee addresses joint session of Congress urging closer economic and political ties between the two countries. During 4-day visit in Washington by Vajpayee, US officials announce $900 million in Export-Import Bank financing to help Indian businesses purchase US goods and services. (Washington Post, 15 September 2000, A8; CRS 2002b, 3)
April 6, 2001 India's foreign and defense minister Jaswant Singh visits Washington to meet with top foreign policy officials of new Bush administration. During his campaign President Bush pledged to remove remaining sanctions against India. (Washington Times, 5 April 2001, A17; US Department of State Press Releases, 6 April 2001; CRS 2002a, 3)
August 2001 Deputy Secretary of State Richard Armitage visits India and publicly states that US is interested in fully normalizing relations. Administration announces it will work with Congress on lifting sanctions in order to clear the way for greater military cooperation with India. (Washington Post, 12 August 2001, A1; International Trade Reporter, 6 September 2001, 1387; CRS 2002a, 4)
September 22, 2001 President Bush determines that denying export licenses and assistance to India is against the national interest and lifts all remaining 1998 sanctions. Movement comes after India offers US unconditional cooperation in the war against terrorism and the use of India's bases for military action in Afghanistan. (Washington Post, 17 September 2001, A9; CRS 2002b, 1; Presidential Determination No. 2001-28, 22 September 2001)
October 26, 2001 Japan lifts sanctions against both India and Pakistan in recognition of their support for the US-led war on terrorism. Previously Japan had conditioned resumption of its aid program suspended after the nuclear test in 1998 on signing of the CTBT and assurances regarding nuclear proliferation. (Yomiuri Shimbun, 27 October 2002; BBC Monitoring, 29 October 2002; CRS 2002b, 10)
November 9, 2001 President Bush hosts Indian Prime Minister Vajpayee at the White House. The two leaders agreed to expand US-Indian cooperation on a wide range of issues, including counter-terrorism, regional security, technology, civilian nuclear safety, and to broaden economic ties. (White House Press Release, 9 November 2001; CRS 2002b, 2)
July 18, 2005 During a Washington summit with Indian prime minister, President Bush announces he will push for “ ‘full civil nuclear energy co-operation,’ in return for India's agreement to grant oversight of areas of its nuclear programme to international agencies and to agree to help curb nuclear proliferation.” (Financial Times, 19 July 2005, 7)

<< top of page