The latest measure, which the senate approved unanimously, allows Clinton to waive sanctions by restoring assistance from the export-import bank, overseas private investment corp, and trade and development agency. "It is intended to provide the administration with the flexibility to wave sanctions for a 12-month period, during which I am hopeful some semblance of economic stability, particularly in Pakistan, can be restored,'' said senator San Brownback, sponsor of the measure.The amendment does not allow the White House to waive sanctions on defence materials, design and construction services or licenses for export of US munitions.

"It is intended to provide the administration with the flexibility to waive sanctions for a 12-month period, during which I am hopeful some semblance of economic stability, particularly in Pakistan, can be restored," the republican senator from Kansas said, adding it would also help reopen important markets for US exports. Brownback referred to provisions still on the sanctions list, such as those disallowing waivers on US sale of defence-related products, and said, "keeping these provisions on the sanctions list sends an important message to India and Pakistan."

"We do not want to contribute to additional irresponsible behaviour by India and Pakistan, and possibly endanger our own national security interests. "There is a crisis in south Asia and the US is disengaged. Sanctions policy is well-intentioned, and has served us well in discouraging othercountries from testing nuclear weapons, but is now the prime impediment to our re-engaging in this vital region," he said.

Giving details of the amendment, Brownback said it "allows the president to waive provisions contained in the Arms Export Control Act. It restores export-import bank programmes, overseas private investment corporation and trade and development agency funding." The amendment also provides for support to extension of loans, or financial or technical assistance, by international financial institutions such as the IMF, World Bank, Asian Development Bank or Asian Development Fund to India and Pakistan.

"It also permits US banks to make loans and provide credit, and waives the Pressler Amendment regarding provision of assistance to Pakistan," Brownback said.

However, the amendment does not permit waivers for US government sales of defence articles, design and construction services, and licences for export of US munitions list items.

"It does not waive foreign military financing underthe Arms Export Control Act. Nor does it waive exports of specific goods and technology relating to the Export Administration Act of 1979," Brownback noted.

India and Pakistan, he said, "are paying a significant political and economic cost for their nuclear testing. India is in financial trouble, but Pakistan is on the verge of collapse. India's economy is in a slowdown; it grew an estimated 5 per cent for the fiscal year ending march 31, 1998, down from 7.5 per cent in 1996-97." "Foreign direct investment is down and India's foreign reserves dropped from 30 billion dollars in August 1997 to 27.3 billion dollars in February of this year. There has been considerable capital flight from the country following imposition of sanctions."

"Pakistan's situation is desperate -- facing a hefty foreign debt of over $30 billion The country's foreign reserves have dropped to $1 billion," Brownback said, initiating the amendment.