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G8 to deny loans to India, Pakistan

Taking their lead from US Secretary of State Madeleine Albright, the G-8 -- the eight foremost industralised nations in the world -- decided on Friday to deny all non-humanitarian loans to India and Pakistan, in retaliation for the nuclear tests carried out by both countries in May.

"By choosing to test, India and Pakistan have diminished their security and damaged their prestige," Albright said at the conclusion of the meeting involving the foreign ministers of all eight nations.

"Our action sends the message that the world community is united not just in outrage and dismay but in action as well," she said.

The joint communique approved by G-8 -- United States, Britain, France, Germany, Japan, Canada, Italy and Russia -- at its meeting in London today further urged India and Pakistan to halt further testing, and to refrain from deploying nuclear warheads on their missiles.

Further, the communique required the two nations to "deal with the root causes" of tensions between them, especially focussing on the Kashmir issue, which in the opinion of G-8 was the most contentious issue on the sub-continental agenda.

Albright urged all other nations to refrain from nuclear co-operation with India and Pakistan. At the same time, she welcomed the steps announced by India and Pakistan to hold negotiations later in the month.

She warned the foreign ministers present that there should be unity in opposing the recent tests by both countries, and that their relations with India and Pakistan "must not drift back into business as usual." She suggested that various steps aimed at ensuring this unity be put in place, including coordinated voting when global financial institutions took up for consideration loans to either of the two countries.

She, however, indicated that loans for purposes that "meet basic human needs" would be exempt from the joint action.

Such action is in fact already in evidence. A week ago, the World Bank postponed two loans, totalling $ 206 million, to India.

This takes the total of loans delayed because of India's tests on May 11 and 13 to the level of $ 1 billion.

Senior US officials attending the G-8 summit meeting meanwhile indicated that a concerted effort was on to unite the world in a hard stance against both India and Pakistan, thus achieving the added objective of discouraging other nations from following their example.

"The idea is to build up world opinion, and enforce existing arms control agreements," a US official said.

Though the London summit was essentially intended to formulate a joint response by G-8 nations to the nuclear tests in India and Pakistan, foreign ministers from Argentina, Brazil, South Africa and Ukraine were also present, as were the ambassadors of the Philippines and China.

The idea was to present a united face to both India and Pakistan, and indicate the solidarity of the world in opposing the nuclear tests, an official said.

In Delhi, Finance Minister Yashwant Singh said the G-8 decision to deny aid to India would not have an "immediate effect on the country."

"If approved projects are not held up, the decision will not affect us immediately," he said, adding that he would need to study in detail the implications of the decision on the economy.

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