U.S. Department of State 
Background Notes:  Pakistan, March 1995 
Bureau of Public Affairs 
 



March 1995

Official Name:   Islamic Republic of Pakistan 
 
PROFILE 
 
Geography 
 
Area: 803,943 sq. km. (310,527 sq mi.); about twice the size of 
California.  
Cities: Capital--Islamabad and adjacent Rawalpindi comprise a national 
capital area with a combined population of 1.5 million; Karachi 10 
million; Lahore 5 million; Faisalabad 2 million. 
 
People 
 
Nationality: Noun and adjective--Pakistan(i).  
Population (1994 est.): 128 million.  
Annual growth rate (1993): 3%.  
Density: 150 per sq. km. (389 per sq. mi.).  
Ethnic groups: Punjabi, Sindhi, Pathan, Baloch, Muhajir (i.e., Urdu-
speaking immigrants from India).  
Religions: Muslim 97%; small minorities of Christians, Hindus, and 
others.  
Languages: Urdu (national and official), English (official), Punjabi, 
Sindhi, Pushtu, Baloch.  
Education: Literacy (1993)--26%.  
Health: Infant mortality rate (1993)--97/1,000. Life expectancy (1993)--
men 59 yrs., women 59 yrs.  
Work force: Agriculture--48%. Services--39%. Industry--13%. 
 
Government 
 
Type: Parliamentary in a federal setting.  
Independence: August 14, 1947. 
Branches: Executive--president with constitutional authority, prime 
minister, cabinet. Legislative--National Assembly and Senate and 
provincial assemblies. Judicial--provincial high courts, Supreme Court, 
Federal Islamic Court. 
Political parties: The Pakistan People's Party (PPP) and the Pakistan 
Muslim League/Nawaz group (PML/N) are the most important on the national 
level. Other significant parties include the Pakistan Muslim 
League/Junejo group (PML/J), the Jamaat-i-Islami (JI), the Awami 
National Party (ANP), and the Muhajir Qaumi Movement (MQM). Suffrage: 
Universal at 21, except in the Federally Administered Tribal Areas and 
Northern Areas. Religious minorities vote for reserved seats. 
Political subdivisions: Each of the four provinces--Punjab, Sindh, 
Northwest Frontier, Balochistan--have a parliamentary system; Northern 
Areas and Federally Administered Tribal Areas (FATA) enjoy considerable 
autonomy; Federal Capital. 
 
Economy 
 
GDP (1993-94): $52 billion.  
Real annual growth rate 1993-94: 3%.  
Per capita GDP (1993-94):  $414.  
Natural resources: Arable land, natural gas, limited petroleum, 
substantial hydropower potential, coal, iron ore. 
Agriculture: Products--wheat, cotton, rice, sugarcane, tobacco. 
Industry: Types--textiles, fertilizer, steel products, chemicals, food 
processing, oil and gas products, cement. 
Trade (FY 1993-94): Exports--$6.6 billion: raw cotton, rice, cotton 
yarn, textiles, fruits, vegetables. Major partners--Japan, U.S., U.K., 
Saudi Arabia, Germany. Imports--$8.8 billion: wheat, crude oil, cooking 
oil, fertilizers, machinery. Major partners--Japan, U.S., Saudi Arabia, 
Malaysia, U.K., Sri Lanka. 
Official exchange rate (1994): about 31 rupees=U.S.$1. 
 
 
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% 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 
 
Archeology has 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 2,000 B.C. and 1,400 
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. 
 
Pakistan's Islamic history began with the arrival of Muslim traders in 
the 8th century A.D. During the 16th and 17th centuries, the Mongols 
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, 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. 
 
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. After Pakistan's loss in the 
1965 war against India, military leader Ayub Khan's power declined. 
Subsequent political and economic grievances inspired agitation 
movements which compelled his resignation in March 1969. 
 
During the brief tenure of Gen. Yahya Khan as Martial Law Administrator, 
elections were held in 1970 in which the Awami League Party won an 
absolute majority in parliament, capturing 167 out of 169 seats from 
East Pakistan. Frictions between West and East Pakistan precluded the 
convening of parliament and culminated in the 1971 army crackdown in 
East Pakistan, including the banning of the Awami League and the arrest 
of its leader, Sheikh Mujibur Rahman. Many of his aides and several 
million Bengali refugees fled to India, where they established a 
provisional government. Tensions escalated, and hostilities broke out 
between India and Pakistan in November 1971. The combined Indian-Bengali 
forces quickly overwhelmed Pakistan's army in the East. By the time 
Pakistan's forces surrendered on December 16, 1971, India had acquired 
control of a large area of East Pakistan. 
 
Zulfiqar Ali Bhutto, whose Pakistan People's Party (PPP) had won a 
majority of the seats in West Pakistan in the 1970 elections, replaced 
Yahya Khan. East Pakistan became the independent state of Bangladesh. 
 
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 
 
In the face of 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. 
 
Disregarding his promise to hold elections, Zia moved to 
institutionalize his own regime. Following the resignation of President 
Choudhury in September 1979, he assumed the presidency and called for 
elections in November. 
 
However, as the elections neared, it became clear that the PNA had 
fallen into disarray and the PPP was once again the strongest party 
nationwide. Fearful of a PPP victory, Zia banned political activity in 
October 1979 and postponed the 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. 
 
President Zia then announced national and provincial assembly elections 
on a non-party basis for February 1985. An attempt by the MRD to boycott 
these elections largely failed; numerous politicians abandoned their 
parties in order to stand for office. The elections were generally 
regarded as legitimate because of the 53% voter turnout and relative 
absence of fraud. The failure of the boycott accentuated divisions 
within the MRD and left Zia's opposition in further disarray. 
 
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 
constitutional 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, Prime Minister Junejo attempted to 
make his Pakistan Muslim League (PML) a political party capable of 
competing with the PPP and its MRD allies on a national level. His 
increasing political independence and differences with Zia over Afghan 
policy resulted in tensions between them. Zia was a firm advocate of the 
Afghan Resistance, which had been fighting Soviet forces since they 
invaded Afghanistan in 1979; Junejo repeatedly expressed his concern 
over the effect the conflict and the presence of some 3 million Afghan 
refugees had on Pakistan's internal security. 
 
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. Gen. 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. 
 
Ghulam Ishaq Khan announced that the elections, scheduled for November, 
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, 
dissolved the national and provincial assemblies, and announced new 
elections to be held in October. He appointed opposition leader Ghulam 
Mustafa Jatoi as caretaker Prime Minister and appointed caretaker 
governments in each of the four provinces. 
 
The October elections, observed by several international organizations, 
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. The military's participation 
in the Allied forces during the Gulf War improved Pakistan's relations 
within the world community. 
 
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. 
 
Prime Minister Nawaz Sharif wanted to place his own candidate in the 
vacant chief of army staff position, against the wishes of both the army 
and the president. Considering Sharif's intentions a direct threat to 
his political authority, President Khan used his constitutional 
privilege as commander-in-chief effectively to place his candidate, 
General Waheed, in the position. 
 
Despite this setback, Nawaz Sharif intensified his political 
confrontation with Ghulam Ishaq Khan. The prime minister appealed for 
the renunciation of the eighth constitutional amendment (created under 
Zia in 1985), which conferred upon the president the power to dismiss 
the government. Khan, hopeful for a second five-year term, argued that 
the eighth amendment was an important barrier to the ambitions of the 
prime minister. 
 
After PML Chairman 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 the president. 
 
In April 1993, President Khan, citing "maladministration, corruption, 
and nepotism" and espousal of political violence, dismissed the Sharif 
Government. The consequent interim government led by Balakh Sher Mazari 
experienced a problem of credibility because of allegations of 
corruption against its members. 
 
The Supreme Court reinstated the Sharif regime in May 1993. However, 
President Khan continued his efforts to subvert the government of Prime 
Minister Sharif by engineering the dissolution of the Punjab and NWFP 
assemblies. The continued confrontation between Sharif and Khan 
polarized Pakistani politics and threatened to undermine government 
institutions. Finally, under a compromise brokered by the military, both 
President Khan and Prime Minister Sharif resigned in July 1993. Wasim 
Sajjad, who was serving as Senate Chairman, was appointed interim 
President. 
 
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. On 
the other hand, the election of Prime Minister Bhutto's close associate, 
Farooq Leghari, as President in November 1993 gave her a stronger power 
base. 
 
During the past 15 months in office, Prime Minister Bhutto's government 
has set out clear policies to deal with key Pakistani priorities, such 
as the economy, narcotics, and human rights.  The government's economic 
plan received strong support from the international community in the 
form of an extended fund facility from the IMF in 1994.  Pakistan 
promulgated comprehensive counter-narcotics legislation in early 1995 
and stepped up efforts to eradicate poppy production in the NWFP.  In an 
effort to improve respect for human rights, the Government created a 
human rights cell in the Ministry of Interior. 
 
 
GOVERNMENT 
 
The Pakistan constitution of August 1973, amended substantially in 1985 
under Zia, provides for a president (chief of state) elected for a five-
year term by an electoral college, consisting 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 subject 
to dissolution by the president. In 1990, a constitutional provision 
which established 20 reserved seats for women expired and has not been 
renewed. The Senate, not subject to dissolution, 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 800,000-member armed forces, the world's 8th 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 obsolete. 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, a portion of U.S. aid to Pakistan was used to help 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 
economic transfers to Pakistan, excepting counter-narcotics assistance 
and disaster relief, were suspended in October 1990 due to the 
administra- tion's inability to certify under the Pressler Amendment 
that Pakistan did not possess a nuclear weapons program. 
 
Principal Government Officials 
 
President--Farooq Ahmad Khan Leghari 
Prime Minister--Benazir Bhutto 
Minister of State for Foreign Affairs--Sardar Assef Ali 
Ambassador to the U.S.--Maleeha Lodhi 
Ambassador to the UN--Ahmad Kamal 
 
Pakistan maintains an embassy in the United States at 2315 Massachusetts 
Avenue, N.W., Washington, DC 20008 (tel. 202-939-6200). 
 
 
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 6.2% 
per year during the 1980s and early 1990s and grew by 3% in FY 1993-94. 
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 sharply depress economic growth. 
 
Since the early 1980s, the government consistently pursued market-based 
economic reform policies.  Market-based reforms firmly took 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 
successfully 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. In 1993, 
for example, during a period of extreme political instability, 
Pakistan's foreign exchange reserves were almost completely drawn down, 
and the budget deficit reached nearly 8% of GDP. 
 
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 seeks to contain defense 
spending, which together with debt servicing, has consumed as much as 
two-thirds of all government revenue in recent years. 
 
With a per capita GDP of about $415, Pakistan is considered a low-income 
country by the World Bank. Only about 26% of adults are literate, and 
life expectancy at birth is  about 59 years. The population, currently 
about 128 million, is growing at about 3% per year, and is expected to 
double within 20 years. 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. 
Consequently, the government recently launched the social action program 
(SAP), which provides a framework for the provision of basic social 
services, primary education, health care, family planning, and rural 
water supply and sanitation. 
 
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 26% of 
GDP and employs more than 45% of the labor force. The most important 
crops include 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 significantly since 
independence (when its share in GDP was around 53%). Moreover, in recent 
years, severe environmental pressures (floods, droughts, and crop 
disease) have diminished agricultural production; in 1993, crop output 
declined by 3.9%. As a result, 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. 
 
Pakistan has extensive energy resources, including fairly sizable 
natural gas reserves, some proven oil reserves, 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 bottleneck to economic growth. The need to import oil 
also contributes to Pakistan's persistent trade deficits and the 
depletion of foreign exchange. Consequently, the government has made 
development of the energy sector its first economic priority. In 1993, 
21% of the total public sector development budget was allocated to 
energy. The latest policy aims to develop new thermal and hydropower 
generation capacity through private sector investment. 
 
Industry 
 
Pakistan's industry accounts for about 19% of its GDP. Cotton textile 
production and apparel manufacturing are Pakistan's largest industries, 
accounting for about 50% of total exports (FY 1993). Other major 
industries include cement, fertilizer, edible oil, sugar, steel, 
tobacco, chemicals, machinery, and food processing. The public sector 
produced about 30% of FY 1991 manufacturing output. However, its share 
is on the decline because of ongoing government efforts to privatize 
large-scale parastatal units. 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, combined with disastrous floods and 
domestic political uncertainty in 1993 weakened Pakistan's balance of 
payments, which had improved significantly by 1992. In 1993, the current 
account deficit increased to $3.7 billion, compared to $1.5 billion in 
1991, but declined again to about $2.4 billion in 1994. 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. Amortization of 
Pakistan's large, but manageable, external debt (about $19.2 billion) 
consumed about 23% of export earnings in 1993. 
 
Pakistan receives about $2 billion per year in loan/grant assistance 
from international financial institutions (e.g., the IMF, the World 
Bank, and Asian Development Bank) and bilateral donors. However, 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 
possess a nuclear explosive device." Increasingly, the composition of 
assistance to Pakistan has shifted away from grants toward loans 
repayable in foreign exchange. 
 
 
FOREIGN RELATIONS 
 
Pakistan is a non-aligned country, 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 (including cordial relations with Iran), 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 half 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 to hold a UN-supervised plebiscite to 
determine the state's future, but India did not fulfill this commitment. 
 
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-Pak conflict, President Zulfiqar Ali Bhutto and 
Indian Prime Minister Indira Gandhi met in the mountain town of Simla, 
India, in July 1972. They agreed to a line of control in Kashmir 
resulting from the December 17, 1971, cease-fire, and settlement of 
bilateral disputes through peaceful means. In 1974, Pakistan and India 
agreed to resume postal and telecommunications linkages and measures to 
facilitate travel. Trade and diplomatic relations were restored in 1976, 
after a hiatus of 5 years. 
 
India's self-proclaimed "peaceful nuclear explosion" in 1974 generated 
great uncertainty in Pakistan, and is generally acknowledged to have 
been the impetus for Pakistan's nuclear weapons research 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. Indian and Pakistani 
troops engaged in combat in the remote Siachen Glacier region. 
Meanwhile, the Indian Government intensified its criticism of Pakistan's 
clandestine nuclear weapons program. 
 
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 
challenged the authority of the Indian Government. 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 were inconclusive. Therefore, tensions remain, particularly 
over Kashmir, nuclear and ballistic missile proliferation and other 
defense and internal security matters, communal concerns, and economic 
issues. Until the Kashmir dispute is resolved, bilateral relations will 
remain tense. 
 
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. The United 
States has provided nearly $500 million in humanitarian assistance for 
Afghan refugees in Pakistan, mainly through multilateral organizations. 
In 1994, more than 1.4 million Afghan refugees remained in Pakistan, as 
fighting between rival factions kept large parts of the country in a 
state of warfare. 
 
The Former Soviet Union 
 
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 organizing 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, 
and the two countries since 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 essential to 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. Although the two countries enjoy cordial relations, 
Pakistan's relations with Iran are tempered by its extensive relations 
with Saudi Arabia and other Arab Persian Gulf states. 
 
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. Nevertheless, Pakistan pursues an active 
diplomatic relationship with Iran. 
 
 
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 involvement 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 U.S. 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. 
 
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 slow reaction of police authorities 
allowed time for the embassy to be burned. Six persons died, four of 
them U.S. nationals. The American cultural centers in Rawalpindi and 
Lahore also were destroyed. At the time of the incident, U.S. assistance 
to Pakistan also had been suspended because of concerns about Pakistan's 
nuclear program. Consequently, relations between the countries weakened 
considerably. 
 
The Soviet invasion of Afghanistan in December 1979 highlighted the 
common interest of Pakistan and the U.S. in peace and stability in South 
Asia. In 1981, the U.S. 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. Since October 1, 1990, the United States 
has suspended all economic and military assistance to Pakistan because 
of concerns about the development of Pakistan's nuclear program. Since 
then, despite constraints resulting from the U.S. sanctions against 
Pakistan's nuclear capabilities, both countries continue to cooperate in 
areas of common interest such as contributing to UN peace-keeping 
missions in Somalia and toward achieving a political settlement in 
Afghanistan. 
 
Principal U.S. Embassy Officials 
 
Ambassador--John C. Monjo 
Deputy Chief of Mission--John C. Holzman 
Defense Attache--Col. John B. Longenecker 
Defense Representative--Frederick R. Wilhelm 
Director, USAID Mission--John S. Blackton 
Counselor for Political Affairs--Eric Kunsman 
Counselor for Economic Affairs--Rafael L. Marin 
Public Affairs Officer--Ray Peppers 
Consul--June H. Kunsman 
Consul General, Karachi--Mary Gin Kennedy 
Consul General, Lahore--Eric Tunis 
Principal Officer, Peshawar--Richard Smyth 
 
The U.S. embassy is located at the Diplomatic Enclave, Ramna 5, 
Islamabad [tel. (92)-(51)-826161 through 79; telex 82-5-864].  
 
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Published by the U.S. Department of State, Office of Public 
Communication 
Washington, DC  April 1995   
Managing Editor--Peter A. Knecht 
 
Department of State Publication 7748 
Background Notes series 
This material is in the public domain and may be reprinted without 
permission; citation of this source is appreciated. 
 
For sale by the Superintendent of Documents, U.S. Government Printing 
Office, Washington, DC 20502 
 
 
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