Big US Contracts Won in Pakistan Help Mend Fences

AMERICAN investment prospects in Pakistan appear to have been livened up after the recent return to Washington of Hazel O'Leary, the United States Energy secretary, following a five-day presidential mission to the Asian nation. Business executives accompanying Ms. O'Leary used the opportunity to sign 16 contracts worth roughly $4 billion, mainly in power-generation and oil-exploration sectors.

That investment commitment is one of the largest in the history of Pakistan. In the past 47 years, American businesses have invested only about $450 million in equity in Pakistan. O'Leary's visit also marks a turning point in the two countries' bilateral relations, which were at their lowest point until recently.

Less than two years ago, Washington considered declaring Pakistan a terrorist state. The US cut military and economic aid to the country for almost four years under a US congressional provision, dubbed the Pressler Amendment. It restricts assistance unless Islamabad accepts international safeguards on its nuclear facilities.

However, the two sides appear to be trying to expand contacts through areas such as private business investment. These are not barred under the Pressler law. ``[O'Leary's] visit here signifies the broadening of the US-Pakistan relationship; this is a multidimensional relationship,'' declared Benazir Bhutto, the Pakistani prime minister, as she presided over a ceremony celebrating the signing of the contracts.

Other officials from the US and Pakistan acknowledge that the two countries are trying to contain the difficulties over the nuclear issue so that the issue does not harm a broad range of potential contacts, especially business opportunities.

This month, the Clinton administration announced a $10 million grant for nongovernmental groups working to improve Pakistan's social sector. And Pakistani officials are examining prospects for purchase of up to $20 million in US soybean oil.

These amounts may seem small compared with the more than $7 billion committed by the US in military and economic aid to Pakistan during the height of the 1980s cold war when Islamabad played a key role in supporting the Western alliance against the Soviet occupation of Afghanistan. But they have added to the enthusiasm of Pakistani officials, who say the two countries are now out of the crisis mold.

``We have brought in the US delegation of businesspeople, the best experts that we have to offer,'' O'Leary said at the end of her visit. She repeatedly commended Pakistan's energy policy during her stay. That policy, which has now opened the doors for American businesses, has been welcomed by a wide range of businesspeople since its announcement this year.

Under the policy, a complicated procedure to seek official permission for setting up an electricity-generating plant has been replaced by a ``one window'' government office in Islamabad. There prospective investors can get the official paperwork processed at a fast pace.

Also, the government's decision to assure investors a bulk tariff rate of 6.5 cents per kilowatt hour for electricity generated in such new plants marks one of the most attractive incentives the Pakistan government has ever offered.

Pakistan officials hope progress over the energy projects will help attract US investments in other sectors, too. Many officials here are heartened about the $10 million grant and the possible soybean-oil sale.

These initiatives represent an important shift at a time when, despite little movement over the nuclear issue, Pakistan wants to mend fences with the US.