The Rediff Special /Robin Raphel

The long-standing tensions between India and Pakistan will retard their aspirations for greater influence outside the region

Prime Minister Deve Gowda's centre-left United Front government, a coalition of 16 disparate parties, is constrained by its diverse political composition. But the government has embarked on a successful effort to improve relations with its smaller neighbours, and has laid plans to encourage unprecedented levels of international trade and investment.

The government's budget, presented late last month, has lowered import duties and simplified customs and excise procedures, reduced corporate and individual tax rates while proposing measures to widen the tax base, and provided new incentives for capital markets. These measures demonstrate a commitment to continue economic reforms begun in 1991 an effort that the United States strongly supports and will continue to encourage.

In Pakistan, President Leghari dismissed the government of Benazir Bhutto on November 5 for corruption, incompetence and human rights abuses. New parliamentary elections on February 3, observed by domestic and international groups including the National Democratic Institute. The Pakistan Muslim League of Nawaz Sharief won close to two-thirds of the seats in the national assembly and is expected to win a majority of senate seats in indirect elections today. Prime Minister Sharif has promised to address Pakistan's serious economic crisis, brought on by the classic combination of overspending and revenue shortfalls. We will work closely with his government, as we did with that of his predecessor.

It is encouraging that the democratic process has persisted and matured in Pakistan despite the many challenges it has faced. We hope that Prime Minister Sharief and opposition leader Benazir Bhutto will work together to address a host of problems facing Pakistan, including the economic crisis and rampant corruption in the political parties and in the bureaucracy. A genuine dialogue between the political parties could end the confrontational political culture which has helped sustain political turmoil in Pakistan over the past several years.

I would add that we remain concerned about discrimination against religious minorities and the exploitation of religious differences to provoke unrest. Most recently in Pakistan's Punjab province there has been sectarian violence between extremist Islamic groups and attacks by a mob on Christian villages. Both Prime Minister Sharief and the chief minister of Punjab have visited the villages, expressed their concern for the victims of these attacks and offered compensation. The United States has long urged Pakistan to repeal discriminatory religious legislation which in many ways sustains an environment conducive to these kinds of abuses.

In Bangladesh, political institutions also have survived rigorous challenges. A year ago, a serious political impasse between the ruling and opposition parties had virtually paralysed the country's political system and economy. Bangladeshis overcame these difficulties to hold elections last June, bringing the opposition Awami League to power for the first time since 1975. However, the intense and personal partisanship that has long plagued Bangladesh perpetuates a contentious and difficult political environment.

We have established a good working relationship with Prime Minister Sheikh Hasina who met President Clinton last month when she participated in the microcredit summit in Washington. Her government has continued most of the market-oriented policies of its predecessor, and has made a particular effort to attract foreign investment, especially in energy. It has tendered for power plants to address chronic electricity shortages and has signed agreements for natural gas developing. Following major discoveries of new gas reserves, American companies have committed or are considering major investments.

As in other countries in the region, child labour has been a major problem in Bangladesh. In an innovative first for the region, Bangladesh garment manufacturers, working together with UNICEF and ILO, have launched a creative effort to address the problem of child labour. Children are moved off the factory floors, enrolled in special school programs, and given a monthly stipend. This plan is significant for its effort to address the causes of child labour, illiteracy and poverty. Nevertheless, Bangladesh and other South Asian countries need to do more to eliminate child labour.

I am happy to note that Bangladesh and India have gone a long way toward resolving their historical dispute over sharing of Ganges River water, recently concluding a water use agreement. We hope that the progress made here will lead to further agreements on areas of common concern ot the benefit of the people of both countries. I also hope that your resolution will encourage further progress on these issues throughout the region.

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