Pakistan warned it could be declared a 'terrorist state': US says Islamabad must end its support for Kashmiri militants Pakistan warned it could be declared a 'terrorist state'

THE State Department's top South Asia official is in Pakistan this week to warn the interim government that it must end assistance to militants in Kashmir if the country is to avoid being declared a 'terrorist state' by Washington.

According to administration sources, the US will decide this summer whether Pakistan should be put on the list of countries that sponsor terrorism, in the company of Libya, North Korea and Iran. Earlier warnings to Islamabad had resulted in a reduction of support for the militants, they said, but not a complete halt. The next two or three months would be the test: at this time of year the Himalayan passes between the Indian and Pakistani sides of Kashmir are free of snow; arms and recruits can flow across the ceasefire line, and the Muslim insurgency against Indian control usually reaches its height.

Pakistan's caretaker Prime Minister, Balkh Sher Mazari, said on Saturday there was no place for terrorists in Pakistan and told Arab militants to go home. Pakistan, he said, would not allow any person or organisation to use its territory for terrorist activities.

More than 6,000 people have been killed in Kashmir since the revolt began in 1990. Human rights organisations have accused the insurgents as well as Indian security forces of gross abuses. A joint report published at the weekend by two US-based groups, Asia Watch and Physicians for Human Rights, says rape is being used as a 'tactic of war' by both sides.

Pakistan complains of discrimination, citing India's record in Kashmir and its claims that New Delhi sponsors terrorism in the Pakistani province of Sind. Islamabad believes that the US has tilted towards India since the end of the Cold War and the 13-year conflict in Afghanistan, during which US weapons and aid were channelled through Pakistan.

'There has not been a policy decision on our part to discard Pakistan,' said a US official. 'The problem is the action they are taking.' Members of Pakistan's military intelligence as well as groups committing acts of terrorism in Kashmir had spoken openly of assistance coming from Islamabad, while Pakistan had never been able to give similar proof of Indian attempts to create unrest across the border.

If Pakistan is declared a terrorist state, mandatory sanctions would come into force. Aid, already restricted as a result of Pakistan's nuclear weapons programme, would be cut off, and dollars 360m ( pounds 238m) worth of American investment - almost half of total foreign investment in the country - would be jeopardised by the cancellation of tax concessions and the imposition of tariffs. American representatives in international financial organisations would be under orders to vote against any assistance to Islamabad.

Pakistan's interim government, installed last month, has replaced the head of military intelligence appointed by the ousted prime minister, Nawaz Sharif. It is expected to ask the State Department's head of South Asian affairs, John Malott, for more time to root out those suspected of giving covert help to Kashmiri militants. An administration source commented: 'Pakistan was saying the same thing a year ago, but now they at least seem to be taking our threats seriously.'