First and foremost, there can be no distinction between humanitarian and non-humanitarian loans. World Bank funding for projects adds to employment and output in the country and, therefore, helps to remove poverty, a laudable humanitarian achievement. If international agencies provide funding for projects, the Indian government will be able to spend more on health and education andpoverty-alleviation programmes. Secondly, let's examine the proposition that the IMF needs to save Pakistan. In the absence of IMF funding, Pakistan will face a funds crunch which will, sooner or later, force that country to reorder its priorities. Instead of funding a proxy war with India and spending huge amounts on defence, lack of funds will force Pakistan's rulers to adopt policies which will benefit its masses.

The IMF must consider whether its bailout programme for Pakistan is aimed at improving the standard of living of its masses, or will merely enable its rulers to siphon off some more money out of the country and consolidate their position within. The IMF has much to learn from its experience in Russia. Pakistan's rulers have done little for the country's masses, preferring, instead, to buttress their privileged positions with talk of Islamisation. IMF loans will do little to change that picture. The US government's policy towards the sub-continent continues to be dictated by its geopoliticalview of the world. In terms of this view, India needs to be contained by China and Pakistan, and that's all there is to the matter.

Given this US policy stance, there is little that India can do except exploit to the hilt the removal of sanctions on OPIC and Exim Bank financing. The aim must be to develop links between US business and India to the point where it will not be the Indian government, but powerful US business interests which will point out to the US administration the folly of equating India to Pakistan.