The Battle of Kargil
The Battle in Kargil was one of the most pivotal moments in the history of the region. If it had not been undertaken by Pakistan, it could have lost its strategic significance and slipped into an economic mayhem from which it may not have recovered.
During the cold war, former US President Kennedy saw India as a potential partner in containing China. Pakistan regarded India as the major threat to its own security. The United States perceived China as its major foe in Asia.
Ayub (former President of Pakistan) saw China as a potential partner against India. But in the 1990s, American and Pakistani policies were on a COLLISION COURSE. 
By 1998, Afghan Taliban backed by Pakistan had defeated the Northern Alliance which was supported by India and Russia. Over 90% of Afghanistan was in their control. Indian presence in Afghanistan, what little that existed, was completely gone.
Cooperation with Afghanistan was vital for any aspiring regional power to gain access from energy rich Central Asia. For this, Pakistan was now the front runner. India would now strive to cooperate with any power that was willing to cut Pakistan down to size.
For the US also, Pakistan was beginning to look ominous as Pak would look to strengthen its ties with Muslim countries in the region ultimately giving rise to a strong Islamic bloc. Though such an alliance would’ve taken decades but preventing it was the strategic goal of the US.
For the US and India there were one of two ways to isolate Pakistan. One was the economic sanction route and the other was for India to sever the Sino-Pak land link from its position in the Siachin Glacier and threaten the Skardu and Gilgit area.
Coming to the first option: when India conducted a series of underground nuclear tests on 11 May 1998, Pakistan was nearly bankrupt but had to make a choice. Pakistan’s foreign exchange reserves were less than $1 billion.
If Pakistan opted for the nuclear tests, severe US economic sanctions were on the cards. Pakistan spent seventeen days deliberating and finally decided to conduct the tests. As expected, the US enforced the 1994 non-proliferation act.
4 consecutive corrupt governments since 1988 drew huge un-audited loans from the IMF and World Bank which had put Pakistan in deep financial deficit. The US voted against further loans from the IMF and World Bank after the nuclear tests in 1998.
At that point, Pakistan was down to only $600 million in foreign exchange reserves against an outstanding foreign debt of $38 billion. The nuclear tests by Pakistan had given the US the much needed advantage over Pakistan through which it hoped to reign in Pakistan.
To ease the economic pressure, Saudi Arabia agreed to a three year plan to accept deferred oil payments from Pakistan in 1998. According to one Western diplomat, the Saudis after three years of deferred payments practically wrote off the payments. 
In 1998, according to Guardian when the Saudis bailed out Pakistan, oil prices had fallen to $10 a barrel and “the Saudis had an unprecedented budget deficit and even had to borrow money” 
Now the second option was for India to cut Pakistan’s land link to China and threaten the Skardu and Gilgit area thus carving out a land route into Central Asia.
In September 2003, Shireen Mazari wrote a book on the Kargil conflict and provided a diverse point of view.
According to Shireen Mazari, the Kargil conflict was the result of Indian army’s movement along Kashmir’s Line of Control (LOC). India had already violated the LOC agreement by encroaching into Siachin.
Pakistan had observed that India was using helicopters to move artillery guns, armed personnel, armoured and air defense regiments and other logistical units in September 1998.
To prevent India’s plans for further adventurism in Siachin, Pakistan established strategic military posts to target the Dras-Kargil road that was used by India to provide food and military supplies to its 20,000 soldiers in Siachin.
Lt Gen P.N Hoon of the Indian army was interviewed by Rediff on 5 Aug 1999 in which he disclosed the real intentions of Siachin offensive. Hoon called himself the brain behind Operation Meghdoot 1984.
“Siachin has to be held for some time. Till we consolidate. We concentrate our force and keep it ready for a riposte through an area at a time of our convenience when I will hit Pakistan with this force even in winter I will just go and take Gilgit, Skardu and hit the Karakoram highway in Pakistan”.
Before the conflict in Kargil had erupted, mobilization of Indian forces in the Kargil area was assisted by Russian technical experts. The cooperation of India and Russia is understandable keeping in view the conversations between Strobe Talbott (former US Deputy Secretary of State), Jaswant Singh (former Indian foreign minister) and Yevgeny Primakov (former Soviet Premier).
After the US launched sixty Tomahawk cruise missiles into Afghanistan on 20 Aug 1998, Jaswant Singh arrived in Washington and pointed out to Talbott:
“A nuclear armed India was a natural ally of the United States in the struggle against Islamic fundamentalism, while a nuclear armed Pakistan was a threat to both the countries”.
Talbott was given similar warnings from Soviet Premier Yevgeny Primakov who had told him that “the globe cannot live with a Talibanized Pakistan that has the bomb”.
Meanwhile fighting erupted in the mountains of Kargil which lasted for just over two months. Despite losing a number of its soldiers, India failed to dislodge the occupiers.
With 20,000 Indian troops desperate for food and military supplies in the Siachin Glacier because of Pakistan’s control of Dras-Kargil road, President Clinton convinced PM Nawaz Sharif to withdraw the troops. But importantly, Pakistan got the much needed economic relief.
The London Club agreed to schedule their $860 million loan to Pakistan. This was in addition to the already rescheduled loan of $3.2 billion from the Paris Club Creditors. 
On 6 July 1999, it was reported that Pakistan and a number of foreign banks had agreed to a 3 year restructuring of $510 million worth of commercial debt. Additionally by 28 July 1999, IMF gave indications that they were willing to release an instalment worth $280 million. 
According to an interview given by Admiral Sushil Kumar (Indian Chief of Naval Staff 1998-2001) to The Indian Express, India was ready to run a naval blockade against Pakistan and to achieve victory ‘we were poised to hit their soft underbelly’.
But this wasn’t possible because at the time of the Kargil crisis, Pakistan had already acquired the Agosta submarine from France as per a $1.2 billion joint venture and this was quite an effective weapon to have in Pakistan’s naval arsenal.
As we can see that there were multiple dynamics at play by the time the Kargil conflict came on the scene. To see the Kargil conflict in isolation would be a mistake.
- Kux, The United States and Pakistan 1947-2000, p. 141
- ‘Saudis agree to defer Pakistan oil payments’, 12 July 2008
- Brian Whitaker, ‘Cashing in on the oil riches’, 13 Sept 2000, The Guardian
- 3 July 1999, Business Recorder
- 6 July 1999, Reuters