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Saturday, December 19, 1998 Published at 13:06 GMT

World: South Asia

Pakistan agrees refund for US jets

The F-16 dispute has lasted eight years

The Pakistani Prime Minister Nawaz Sharif says he has resolved a long-standing dispute with the United States over its purchase of 28 F-16 fighter planes which were never delivered.

Mr Sharif said President Clinton had telephoned him and acknowledged that it was "not fair" to keep both the money and the planes.

He said the president had acted in a "statesmanlike manner" by working out the terms as he promised during Mr Sharif's visit to Washington last month.

[ image: Mr Sharif said he was keen not to damage relations with the US]
Mr Sharif said he was keen not to damage relations with the US
Pakistan paid around $650m for the aircraft eight years ago but their delivery was stopped in protest at Pakistan's nuclear programme.

Under the so-called Pressler Amendment, US military sales are barred to countries with military programmes.

Mr Sharif said most of the money would be returned this month, and the remainder - less a service charge to the US - would be paid in kind within two years. Pakistan has already received a refund of $157m. He said he did not know whether the cash amounting to some $326.9m would be used to service Pakistan's foreign debt or to buy other planes.

Persistent problem

"This was only agreed last night. I don't know whether the money will go into the general kitty or will be used to purchase alternative aircraft," he said.

Mr Sharif said the dispute had been "a long-standing and persistent irritant in our bilateral relations with the United States".

He said the agreement for part-payment in trade was "entirely satisfactory and as good as receiving cash" because Pakistan had to make annual purchases of wheat in any case.

Pakistan is struggling to pay off a foreign debt of $32bn following a hard currency drought caused by sanctions and the suspension of International Monetary Fund programmes as a result of its nuclear tests in May.

Last month Pakistan and the IMF agreed on a framework to resume IMF loans, but it is not thought that the money will be available until February at the earliest.

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