The US position is that if New Delhi and Islamabad made more progress towards meeting its non-proliferation objectives, there will be more waivers of sanctions, assistant secretary of state Karl F Inderfurth told Indian and Pakistani reporters in a special briefing here on Friday. He said the US hopes the forthcoming talks between prime minister Atal Behari Vajpayee's special envoy Jaswant Singh and deputy secretary of state Strobe Talbott in Rome later this month "will be a very productive and very good exchange".

Asked why development loans from the World Bank and Asian Development Bank are allowed to Pakistan but not to India, Inderfurth said: "It is not discrimination because Pakistan has a desperate need and India can take care of itself despite the American sanctions imposedthrough the international institutions."

Inderfurth said president Bill Clinton is expected early next week to place before Congress his decision last week to relax some of the sanctions against India. The Rome talks come under the shadow of a disclosure by US intelligence that next month China may test a new mobile missile and reports that more powerful inter-continental ballistic missiles were under development, analysts noted.

This has happened at a time US is trying to convince India that there would be no security threat along its borders with Pakistan and China if New Delhi agreed to disarm itself by abandoning the nuclear and missile programmes. Without referring to the Chinese development, another state department official said: "Frankly, at some point it will be necessary for India to have a kind of dialogue with China because restraint for India will not only relate to Pakistan but also restraint will have to take into account the strategic decisions and actions of China."

He did not give theUS assessment of whether the Chinese will be willing to reduce their arms to the level that India will deem safe for it to exercise the kind of restraint the US is calling for. The official defended the American decision to impose its unilateral sanctions laws on the World Bank and other international financial institutions, which are supposed to be apolitical, by arguing that the administration is bound by laws passed by Congress.

That, however, said analysts, did not explain the American action in mobilising other G-7 members behind what basically is an action that undermines the independence of the World Bank and other institutions to treat development loans on merits.

American banks operating in India and Pakistan have been exempted from the purview of the US sanctions following the nuclear tests and would be free to lend to any private company or government entities, a senior state department official said on Saturday.

Though the relaxation covers only one year, steps have been taken to ensure thatthe issue is not raised again after a year, he told reporters here.

Initially the treasury department was to slap an embargo on the banking sector as well, but with president Bill Clinton easing some of the sanctions it has decided not to impose any restriction covering private banks, analysts said.

The decision, they pointed out, was prompted by the fact that the position of these banks would have become very difficult had the sanctions been imposed, because in India they are subject to the law of the land.

Meanwhile, Democratic Congressman Frank Pallone, founder of the Congressional caucus on India, has criticised the Clinton administration's discrimination against India while waiving economic sanctions.

Clamp on nuclear, defence entities

In a sweeping punitive move, the Clinton administration has publicly identified almost all of India's nuclear installations, defence research institutions and some private companies with a view to denying them the right to import goods from the UnitedStates, expecting a crippling effect on their activities. The list, which has been under preparation for the last five months and was released here on Friday, covers every single major Indian entity even remotely linked to defence or military-related functions.

A similar action has been taken against about 100 Pakistani government and private companies. The action was in pursuance of the Glenn Amendment, an American law under which the administration had slapped economic sanctions on India and Pakistan in protest against their nuclear tests in May. The US commerce department, which issued the list, said the announcement specified Indian and Pakistani entities believed to have been involved in Indian or Pakistani nuclear, missile and military programmes.

Under the sanctions, the identified agencies and companies would be barred from buying goods that might have nuclear or military applications.

US officials maintained that naming of the agencies and companies did not mean fresh sanctions. The actionmandated by the Glenn Amendment would clarify the situation for American businesses so that non-lethal trade activities could continue unhindered following the lifting of economic sanctions.

The entity list has about 20 nuclear-related agencies which include Atomic Energy Commission and Atomic Energy Regulatory Board (both in Mumbai), Indira Gandhi Centre for Atomic Research, fast breeder test reactor. Fast reactor fuel reprocessing plant, Kapakkam reprocessing plan, Kamini research reactor and prototype fast breeder reactor (all in Kalpakkam in Tamil Nadu), nuclear fuel research complex, (Hyderabad) and Saha Institute of Nuclear Physics, Calcutta.

The Department of Space and Indian Space Research Organisation (Bangalore) have also been singled out for denial of US goods.

Also in the list are almost all defence-related installations like Defence Research and Development Organisation (New Delhi), defence laboratory (Jodhpur), defence research and development establishment (Gwalior) and missiledevelopment complex and defence research and development laboratory (Hyderabad). India's parastatal and private entities involved in nuclear or missile activities have also been included in the US list which include Baroda Ammonia Plant, Gujarat Fertilisers, Bharat Dynamics, Bharat Earth Movers, Bharat Electronics Ltd and Fertiliser Corporation of India.

Kirloskar Brothers, Larsen and Toubro, Mishra Dhatu Nigam, Godrej and Boyce Manufacturing Ltd and Ramakrishna Engineering Works are also placed on the entities list.

--UNI