Relations between Pakistan and the United States now appear to have improved after reaching a low point earlier in the year.

Shortly before his meeting with the Pakistani Prime Minister, Nawaz Sharif in Washington, President Bill Clinton announced a suspension of many sanctions imposed by America following Pakistan's nuclear tests in May.

President Clinton: sanctions waived

The US and Pakistan have traditionally enjoyed close relations. During the Cold War, when India aligned itself to the Soviet Union, Washington valued Islamabad as an anti-Communist ally in South Asia.

The Americans were also able to take advantage of their close ties with Pakistan to back Afghan rebels who were fighting against the Soviet occupation of their country in the 1980s.

Strained relations

However relations between Pakistan and the United States have at times been strained, principally because Washington has always tried to prevent Islamabad from developing nuclear weapons.

In the early 1990s, tension between the two countries came to a head when a resolution known as the Pressler Amendment was passed in the American Congress.

This prevented Pakistan from acquiring 40 F-16 fighter jets which it had already paid for. The Pressler Amendment specified that America should not provide military or economic aid to Pakistan unless it was satisfied that Pakistan was not building up its nuclear weapons.

The New Zealand government now says it intends to buy the aircraft, allowing Pakistan to recover some of the $680m it paid for them.

While the Pressler Amendment unquestionably curtailed military co-operation between the two countries, it did not stop American investment from pouring into Pakistan.

The US is one of Pakistan's largest overseas aid donors in addition to its substantial business interests in the country, which amount to several billion dollars.

Sanctions

That is why the imposition of sanctions by America against Pakistan following its nuclear tests earlier this year threatened to de-rail the Pakistani economy.

At one point, it looked as Islamabad may have to default on its foreign debt, a development that would have led to a catastrophic loss of international confidence in the Pakistani economy.

In the end, however, Pakistan was only forced into the less radical measure of de-valuing its currency.

Many commentators argued that America would not have allowed Pakistan to go bankrupt completely, because Washington was not willing to countenance the prospect of political instability in a country that is capable of detonating a nuclear bomb.

Now that Pakistan has said that it may sign the Comprehensive Test Ban Treaty next year, relations with the United States seem to have improved.

In addition to lifting most of its sanctions, Washington now says that it will not stand in the way of Pakistan's agreement last week with the IMF to re-schedule its debt.

But President Clinton has warned Nawaz Sharif that he expects Pakistan to stop the production of fissile material and commit itself towards preventing the further spread of nuclear missile technology.