AFP, NEW DELHI: Based on the experiences of India and Pakistan since they tested nuclear weapons in 1998, North Korea could be forgiven for thinking the price of carrying out an atomic test is worth paying.
The South Asian rivals at first triggered global condemnation, only to emerge stronger as key partners in the US-led “war on terror”.
The two countries became the target of international sanctions — led by the United States and Japan — after conducting underground tests in May 1998.
US sanctions included a selective ban on bilateral and multilateral loans and a blacklist of 40 Indian and Pakistani agencies and their 200 subsidiaries that US firms were banned from dealing with.
India's trade ministry estimated the measures cost 1.14 billion dollars — less than a two billion dollar estimate put out by the White House.
New Delhi contained the economic fallout by approving investment proposals worth 11.5 billion dollars during the first year of sanctions. It also raised over four billion dollars via a foreign currency bond — called the Resurgent India Bond — issued to expatriate Indians.
“Despite the gloom and doom of living with sanctions there was no irretrievable damage for the resilient Indian economy,” said Hari Dhaul of the Independent Power Producers Association of India.
“India efficiently neutralised the effects of the sanctions by tailoring government policies to attract investment and floating overseas bonds,” he added.
The sanctions, however, cut deeper for a Pakistan struggling to turnaround its anaemic economy and relieve the burden of over 37 billion dollars in foreign debt.
“The post-test sanctions hurt Pakistan badly and we came very close to defaulting on our international payments,” said Riffat Hussain, head of the department of strategic studies at Islamabad's Quaid-e-Azam University.
However, analysts say the September 11, 2001 terrorist attacks in the US changed Washington's priorities. Most sanctions were soon lifted, save some defence sale ones.
“India and Pakistan won a reprieve as Washington was keen to shore up support in the South Asian nations for President George Bush's war against terror,” said Uday Bhaskar, head of the Indian military thinktank, Institute for Defence Studies and Analyses.
“The September 11 terrorist strikes in the US have re-arranged everything.”
In March 2003, Bush dispensed with the final set of punitive measures against Pakistan following General Pervez Musharraf's bloodless 1999 coup.
Bush has also upgraded relations with Pakistan by formally naming it as a major non-NATO ally.
“Pakistan would have continued to suffer under economic sanctions but the events of September 11 created a situation wherein the US assigned greater priority to combating terrorism over all other foreign policy considerations,” said Hasan Askari, former head of the political science department at Pakistan's Punjab University.
“It enabled Pakistan to stage a comeback on the international scene and derive economic advantages from the changed international environment.”
Pakistan has emerged as a key US ally, severing its links to Afghanistan's Taliban rulers, who protected the Al-Qaeda network.
Pakistan's status as a non-Nato ally makes it eligible for a series of benefits in the areas of foreign aid and defence co-operation, including priority delivery of defence items.
US Secretary of State Condoleezza Rice has said that Washington is trying to build relations with Pakistan and India and defended the decision to sell F-16 fighters to Pakistan. The revived sale will form part of a three-billion-dollar assistance programme spread over five years.
The United States has also declared plans for “a decisively broader strategic relationship” with India and has not ruled out helping it develop nuclear power plants.
Rice underlined the need to pay close attention to India's regional role saying “India is an element in China's calculation, and it should be in America's too.”
Japan, a close US ally, is also seen to be cooperating with Washington in a new drive to build closer ties with India in response to China's growing influence.
Tokyo lifted sanctions on India in 2001. Prime Minister Junichiro Koizumi last month visited India and then Pakistan where he lifted a seven-year freeze on yen loans.
India, bidding for a seat on an expanded UN Security Council, has seen top politicians parade through its capital, keen to strengthen ties with a nation of more than one billion people and one of the fastest-growing economies.
“The US is now looking at India not as a counter-balance to Pakistan but to China,” said Rahul Bedi, analyst with the London-based Jane's Defence Weekly.
“It sees India as a strategic partner because it has the only navy in this region with carrier capability and long-range strike airforce. India is also a nuclear missile weapon state.”
