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FOREIGN RELATIONS OF THE UNITED STATES 1964-1968, Volume XXV South Asia
Department of State |
297. Telegram From the Embassy in New Zealand to the Department of State/1/ Wellington, February 20, 1966. /1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 US/HUMPHREY. Top Secret; Flash; Literally Eyes Only for the President. No time of transmission appears on the telegram, which was received at 2:23 p.m. and passed to the White House at 3 p.m. 490. To the President. From the Vice President. Subject: Notes on the Vice President's visit with Prime Minister Gandhi at her home Thursday evening, February 17, 1966. Present were Prime Minister Gandhi and Foreign Minister Swaran Singh and Ambassadors Harriman, Bowles, and the Vice President. The earlier conference, 3:00 to 5:00 p.m.,/2/ which covered all aspects of our economic and political relations with India, left some matters indefinite and requiring a more responsive and definitive answer from the Prime Minister and her Ministers. Earlier in the day we had met with the Ministers of Agriculture, Planning, Finance, and subsequently with the Minister of Defense and the Chief Military Officers, and the Minister of Foreign Affairs. In each of these conferences I had reviewed in detail the Honolulu Conference, my observations on Vietnam, my discussions in Thailand, Laos, and Pakistan. I had underscored the growing threat of Chinese Communist militancy in all of Southeast and South Asia. I had further emphasized the importance that President Johnson placed upon the development of human resources and the concept of self-help. I had pointed out that we were going to give particular emphasis to education, training, health and health facilities, agricultural production and the modernization of agricultural techniques through technical assistance and education. I had emphasized the importance of the allocation of greater resources by the respective countries to these fields. I made it manifestly clear that the quantity of our aid would be related directly to the amount of self-help undertaken by the respective countries. /2/In his earlier conversation with Gandhi, Humphrey had discussed the food crisis in India, and had informed her that the United States was prepared to negotiate a $100 million non-project loan with India. He also indicated that he told the Defense Minister and the Chiefs of Staff that the United States was prepared to consider commercial and credit sales of nonlethal military equipment, and that if progress in the spirit of the Tashkent Declaration continued, it might become possible to discuss other aspects of military assistance. The conversation was mainly devoted to a discussion of developments in Vietnam. Humphrey stressed the danger of Chinese aggression and asked that India use its good offices whenever possible to try to facilitate negotiations to bring an end to the fighting in Vietnam. He asked Gandhi to restrain judgmental public pronouncements by Indian officials on the conflict. The United States was not asking for an endorsement of its policies in Vietnam, and it welcomed private exchanges concerning the conflict, but Humphrey said it affected relations between the two countries if Indian officials continued to throw "dead cats at the U.S." (Memorandum of conversation, February 17; ibid.) Of course, there was a detailed discussion of the Communist activities in all of these areas, and particularly the intrusion of North Vietnamese troops and trained political cadres into the Southeast Asian area. In each conference we had spelled out our conviction that the attack in Southeast Asia was but the first manifestation of Communist militancy in a war-like posture which could easily spread to other areas. In other words, there was and continued to be a threat to all Asian countries from the aggressive militant attitude and policies of the ChiCom regime. In our earlier conference with the Indian Prime Minister and her advisers, I had the feeling that she was aware of these matters but that her young adviser, Mr. Singh (not the Foreign Minister), was more or less an apologist for a neutrality that leaned to the Russians and even tried to explain away some of the Chinese Communist activities in Southeast Asia. It should be clear that all Indians were very much aware of the Chinese Communist threat to India. But their thinking had not taken them to the position that the ChiCom threat extended all the way across the bottom of Asia to the southeast. I pounded away at the interrelationship of Communist activities in the subcontinent and Southeast Asia. Now, in order to pin all of this down, and particularly to get some specific positions by the Indians on a number of matters, I asked Mrs. Gandhi to sit with me on the occasion of the dinner at her home to go over a few matters. Here are some of the questions I asked and here are the answers: 1. I pointed out to Mrs. Gandhi that we had reviewed in detail the matter of Indian commitment to improved agricultural production. This had been discussed with the Ministers of Agriculture, Finance and Planning. I asked her directly, "Will you support the position of your Minister of Agriculture on the allocation of resources to the agricultural sector, and will you give your commitment to support the agreements arrived at between Secretary Freeman and Indian Agricultural Minister Subramanian?" Her answer was a clear and unequivocal yes. She added that the GOI would not only do this, but was actively supporting family planning and also actively supporting agricultural research in new crops and expanded production. I explained to Mrs. Gandhi that there was a limit to what India could expect from the public treasury of the United States. We had serious problems on foreign aid. In fact, I made it clear several times during the day that while India had her problems with her parliament, we had ours too. I also said that what India needed was capital and techical know-how. Most of this was available in the private sector of our country and other countries. Therefore, does India welcome and, indeed, encourage the injection of inclusion of private resources into her economy? Has India revised her laws and regulations so as to create a favorable environment for private investment? This, of course, refers to investment in fertilizer plants, machinery, and other lines of equipment. The Prime Minister assured me that the necessary changes in laws and regulations had been made to create a favorable environment. I asked for specific answers. She and the Foreign Minister promised us a paper which would outline in detail the several changes in laws and regulations which added up to a favorable environment for investment by private capital from other countries. I made it clear that I was not speaking for U.S. capital alone, since we were concerned about the outflow of U.S. capital and its effect on our balance of payments deficit. What I was talking about was a general policy which could and should encourage private investment from Japan, Germany, France, England, etc., as well as the United States. The Prime Minister and the Foreign Minister gave an affirmative response. The Prime Minister did add that it was the feeling of their own people that insofar as possible, Indian resources should be used and outside capital should be a supplement. With this we had no disagreement. She mentioned the problem of foreign exchange required for repatriation of profits. I replied that if the enterprise was profitable and investment climate friendly, the companies would most likely reinvest profits in India. 2. Now on Vietnam. During the late afternoon conference we had a long discussion on Vietnam. I was not fully satisfied with the responses of the Prime Minister and her advisers. I had a feeling that Mrs. Gandhi recognized that India should be cooperative with the U.S., but her young adviser, Mr. Singh, seemed to indicate doubt and at times a contrary attitude. Therefore, I admonished Mrs. Gandhi and her advisers that the least India could do if she disagreed with some of our policies was to express that disagreement discreetly in the channels of diplomacy rather than in public statements and in the press. Both Averell and I spent a great deal of time going over our position in Vietnam--why we were there, our objectives, namely the right of people to make their own choice; and that we were going to stay until the job was finished. We made it unqualifiedly clear that America was committed to the defense of South Vietnam. I pointed out that we did not seek to escalate the war. To the contrary, we were using limited power for limited objectives. Our bombing of North Vietnam was under very careful control, directed at routes of infiltration, military depots, bridges, etc. I assured her that you personally were giving daily attention to all military operations in order to avoid any act that might precipitate confrontation with either the Chinese or the Russians. I did stress, however, that we were determined to resist and beat the aggression. We would not retreat. I informed Mrs. Gandhi the opposition in the U.S. was mainly vocal--a limited number, and in no way represented the majority view of the American people. These assurances seemed to satisfy her and she appreciated the burdens you were carrying and our desire for peace. She then asked what India might do to be of help. And I responded that we would appreciate their good offices with the Soviets and if possible to use their contacts in Hanoi. I reminded Mrs. Gandhi that India was a member of the ICC and we wanted India to act fairly and objectively in that capacity. She and her Foreign Minister insisted they were acting fairly, but did point out that if India was to have any influence on the Russians, she would have to be wise and somewhat quiet in her ICC role. Mrs. Gandhi expressed deep concern over Communist China's aggressive policies. I reminded her that it was the same Communist China that attacked India which was aiding North Vietnam and the Vietcong. She agreed to this. And, therefore, I suggested that we had a common cause in stopping Red China. I asked her to think through what India would do if Communist China should attack us in Vietnam. Would India move her forces into Tibet as a diversion? Would India continue to pin down large Chinese armies on her frontier by maintaining or increasing India's military forces on her northern frontier? I asked for no immediate answer, but simply wanted to have the Indian officials think through some of these potential situations. In other words, I faced the Indian Prime Minister and the Foreign Minister with some hard realities. It is my view that Mrs. Gandhi is yet somewhat uncertain in her leadership position. She depends a great deal on her Ministers. Our friends in Australia who know her, however, say that in a short time she will be in command. She is bright, experienced in the ways of politics, tough-minded, and knows how to use power. This is the view of Lord Casey, Governor General of Australia, who has known her a long time. I informed Mrs. Gandhi that she had to be prepared for some frank, down-to-earth discussions when she arrived in Washington. I told her we were deeply committed to Indian freedom and independence and Indian security, but we would expect the same commitment on India's part to the U.S. It would be well for her and her Ministers to think through the cooperative relationships between India and U.S. in the defense against Communist China in Southeast Asia and the subcontinent. I would say the visit was helpful. The President of India is a realist. He promised to use his good offices to bring pressure to bear on the Soviets to exert more influence on Hanoi for peace. He is well aware of the Chinese Communist threat and plans. He is friendly to the U.S., and our Australian allies have a high regard for him. Favell
298. Memorandum From Secretary of Agriculture Freeman to President Johnson/1/ Washington, March 4, 1966. /1/Source: Johnson Library, National Security File, Memos to the President, Walt W. Rostow, Vol. 21, 3/3/66-3/30/66. No classification marking. SUBJECT Official estimates of foodgrain production in India are still holding at 76 million tons. Grain imports from all sources are expected to average about a million tons monthly in March, April, and May. Grain procurement and efforts at belt tightening are moving slowly. Rationing programs instituted thus far cover 34 million people or 7 percent of the total population. An additional 20 million may be added by June 1, bringing the total up to 11 percent. This will cover most of the major urban centers but very little of the country outside these centers. The riots in Kerala protesting the lack of rice have subsided for the present, but scattered food protests and demonstrations are occurring elsewhere in India. Dissatisfaction with food policies At the annual convention of the Congress Party, the Government's food production and distribution policies came under fire. Minister Subramaniam, as Minister of Food and Agriculture, bore the brunt of the attack. At times the Party Leaders nearly lost control of the convention delegates who were loudly demanding the abolition of the food zones. Most of the criticism came from the deficit states, which this year out-number the food surplus states by about 3 to 1. At one time Minister Subramaniam threatened to resign. This is not the first time he has used this threat, but there is probably a limit to the number of times this tactic can be effectively used. There is little doubt but that Subramaniam's position has been weakened somewhat by the current crisis and the unrest and dissatisfaction it has generated. Subramaniam appears to be fighting hard to implement the policies agreed upon in Rome. Despite the fact he got Cabinet and Parliament concurrence, he has been facing some strong opposition. At the annual convention of the Congress Party, Subramaniam was openly reprimanded by Congress Party Chief Kamaraj for having signed an overly generous agreement with an American firm permitting it to construct and operate a fertilizer plant. Subramaniam insisted that the Indian Government must live up to its agreement and he prevailed. Subramaniam was also criticized by Kamaraj for the recent decision to permit foreign private investors to price and market their own fertilizer. Again he held his ground and won out. Kamarj later partially retracted his criticism of Subramaniam, saying that in fact this decision was made by the Government of India. The 1966/67 crop We are thinking ahead to the 1966/67 crop in India. Historical records indicate that crop production does not usually recover completely after a serious monsoon failure such as that experienced this past year, even if the next monsoon is a good one. Reports of serious and worsening power shortages indicate water levels in irrigation reservoirs are far from optimal. Scattered readings of soil moisture levels indicate these are far below normal throughout most of the Indian subcontinent. Fertilizer supplies for 1966/67 crop A third key factor affecting the 1966/67 crop and on which we already have some information is fertilizer supplies. As things now stand, supplies of all three major nutrients will be well below the levels for 1966/67 agreed upon in Rome. Nitrogen fertilizer supplies are expected to range between 700,000 and 800,000 tons. This is up from the 550,000 tons used in 1965/66 but far short of the 1,000,000 ton level agreed upon in Rome. We do not have complete data on phosphate and potash supplies for 1966/67 but the shortfalls may be even greater than for nitrogen. The Indians have used all of the $50 million loan you announced on December 10. They more than matched that loan with foreign exchange of their own as they had agreed they would. Even so, they are falling far short of targets. Several factors account for this. Fertilizer prices have risen sharply over the past several months. Our $50 million loan did not go nearly as far as it would have a year or two ago. World supplies of fertilizer raw materials, particularly sulphur, are in short supply. The inability to obtain adequate supplies of raw materials coupled with the failure to allocate enough foreign exchange for spare parts has prevented domestic plants from operating at anything near full capacity. Getting fertilizer consumption up to target It now seems quite clear that fertilizer consumption will be well below target in 1966/67 unless strong action is taken. We might very well press Mrs. Gandhi to find enough foreign exchange to get fertilizer consumption up to the agreed upon levels. It appears that Subramaniam could not carry the point alone again. From a political point of view, it would be very desirable to involve Mrs. Gandhi more directly in agricultural policy making. This would take some of the direct pressure off Subramaniam. I recommend we use every way possible to get them to free enough of their own foreign exchange to get fertilizer consumption up to target. If this does not work, I would suggest we urge them to go again to some of the other advanced countries such as West Germany and Japan asking them to supply specific quantities of fertilizer on concessional terms so they can meet their consumption targets. These additional fertilizer needs would total about $100 million. After all, they did not have any great qualms about asking us for $750 million worth of foodgrains. If we decide none of these will work, you might want to consider an additional $100 million loan to be used specifically for fertilizer, fertilizer raw materials and spare parts. One pound of fertilizer produces on the average 10 pounds of grain. Fertilizer supplied now will reduce the amount of grain we will be asked to contribute next year. If we let them off this year, it will be almost impossible to get them back on target in subsequent years. Preparing for Mrs. Gandhi's visit Later this week I am sending Les Brown, my key India expert, to India to take a last reading of conditions there before Mrs. Gandhi comes here. He will take a close look at the progress, or lack of it, in getting new fertilizer plants under construction, and in carrying forward the Rome agreement. Brown will also be investigating the feasibility of attempting to shift cotton land into the production of foodgrains in India. If this proves feasible, we could work off some of our heavy cotton stocks under P.L. 480 while reducing their import needs for U.S. wheat. This proposition seems logical on the face of it, but will need to be examined in terms of the economic implications, particularly to the producers involved, as well as the political overtones. The fact that Poage brought this up in an open hearing and that it got in the newspapers means it has already reached India. It may have created political problems for Subramaniam and will possibly create more if we try to move in this direction. Nonetheless, I have discussed it with leaders in the cotton industry and also cotton Congressmen and Senators and we will thoroughly investigate it. I will send you a complete up-to-date report when Brown returns.
299. Memorandum From Secretary of State Rusk to President Johnson/1/ Washington, March 16, 1966. /1/Source: Johnson Library, National Security File, Country File, India, Gandhi Visit Papers, 3/27-30/66. Top Secret; Limited Distribution. SUBJECT India may, at any time, decide to embark on a nuclear weapons program. While we do not expect such a decision soon, barring major unexpected changes in the situation the US Intelligence Board estimates that on balance India probably will do so within the next few years. I concur in this assessment. At the same time, it remains in the interests of the United States to curb nuclear proliferation, and an Indian decision to manufacture nuclear weapons would increase the probability that other countries would also decide to do so. I believe that we should, therefore, attempt to head off an Indian decision to produce nuclear weapons. To do so, we might in time have to be more responsive to Indian security needs, preferably in some way that will minimize our own commitment. However, we must recognize that this response would almost certainly involve an increased and more specific US commitment in the subcontinent and would entail important costs in terms of probable reactions of other states. The enclosed staff study/2/ reviews briefly our efforts to deal with this problem, defines the issue and sets forth the broad alternatives, and outlines some illustrative arrangements that could be considered if it is eventually decided to offer some form of nuclear sharing to India. I do not propose that you should now decide upon any one of these alternatives. These alternatives, including the possible nuclear sharing arrangements, are intended merely to illustrate for your background the possible general lines of action which may have to be considered. /2/The attached undated 12-page paper, entitled "Possible Assurances and Nuclear Support Arrangements for India," is not printed. I propose that when Mrs. Gandhi comes to Washington you let her know that we are sympathetic to her policy of using nuclear energy for peaceful purposes only, and to her efforts to give priority to India's economic needs and development. I believe you should indicate that you agree that nuclear powers should try to work out some arrangements to safeguard the security interests of non-nuclear powers. As she is aware, we have raised the matter privately with the Soviet Union, and it has also been a subject of continuing discussion at Geneva. I believe you should also say that in any case if a growing Chinese Communist nuclear capability should ever pose a serious threat to India, you hope she would frankly discuss the question with us so that we could examine together possible means to meet that threat without nuclear proliferation and without Indian assumption of the heavy economic and other burdens of a nuclear weapons program. Implicit in the over-all question of assurances to India is the basic issue of what degree of nuclear support the United States is willing to proffer to non-nuclear nations. In this connection I recommend that you not offer India any bilateral nuclear assurances at this time. You might also wish to tell Mrs. Gandhi that we are prepared to make available to her periodically (as we did for Prime Minister Shastri) intelligence on the Chinese Communist nuclear capability. Secretary McNamara and Mr. Foster concur in this recommendation. (The Joint Chiefs of Staff would prefer not to offer India at this time any nuclear assurances beyond those given by you in October, 1964.) We would of course wish to continue to examine other possible arrangements outlined in the enclosed study. We will continue to study these alternatives./3/ /3/Airgram A-256 to New Delhi, March 29, instructed the Embassy to report all indications of possible Indian nuclear weapons activity. (National Archives and Records Administration, RG 59, Central Files 1964-66, DEF 12-1 INDIA; also available on the Internet, National Security Archive (www.gwu.edu/nsarchive), Electronic Briefing Book No. 6, "India and Pakistan--On the Nuclear Threshold," Document 8) Dean Rusk
300. Telegram From the Department of State to the Embassy in India/1/ Washington, March 18, 1966, 6:49 p.m. /1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, SOC 10 INDIA. Confidential; Priority. Drafted by Arthur C. Bauman (NEA/SOA) on March 17; cleared by Laise, Officer in Charge of Economic Affairs Guy C. Mallett, Jr. (NEA/SOA), Horbaly (USDA/FAS), Officer in Charge of Indian Affairs in AID's Office of South Asian Affairs Walter C. Furst, Economic Officer in Charge of French-Iberian Affairs Edgar J. Beigel (EUR/WE), and Alan D. Berg (M/FFP); and approved by Hare. Repeated to Paris. 1751. Deptel 1561, Paris 44./2/ Indian Food Crisis. /2/In telegram 1561 to New Delhi, February 19, the Department noted what was perceived in Washington as a "let-up" in the effort of the Indian Government to obtain maximum support from third countries to meet the crisis in food requirements. The Embassy was instructed to urge a greater effort on India's part. (Ibid.) 1. We believe Mrs. Gandhi should be aware before her departure of our continued concern with Indian efforts to obtain maximum assistance from other countries and that we expect to discuss this with her. We understand GOI reluctance to appear at home to be unable manage food problem without massive foreign assistance but do not think this should affect vigor of Indian effort to organize assistance from other governments. Impression here that GOI is relying heavily on U.S., is discounting capability or willingness of other countries to help, and is not sufficiently aware our determination that other countries share burden. Items which disturb us are failure to establish donor country coordinating committee, which we believe strongly favored by other major donors, lack of Indian initiative on bilateral basis in seeking more than token contributions from industrial countries, about which Australians also greatly concerned, and disinclination make high level approach to other governments as they have promised they would do. We would hope that Mrs. Gandhi would take opportunity to ask for something better than present meager French contribution when she sees President deGaulle. 2. Leave to your discretion best way of insuring GOI officials and Mrs. Gandhi well briefed; it also desirable that you bring back full report on GOI recent efforts and present intentions regarding international effort, including any renewed approaches to third countries. Rusk
301. Memorandum for Record/1/ Washington, March 22, 1966. /1/Source: Johnson Library, National Security File, Country File, India, Vol. VII, Cables, 1/66-8/66. Secret. Prepared on March 25. President's meeting with Ambassador B.K. Nehru. The President's Tuesday (March 22) appointment with B.K. Nehru was quite informal and largely social in character. The President first took Ambassador Nehru on a long tour of the White House grounds, during which he met several of Mrs. Johnson's luncheon guests, and then had Ambassador Nehru to lunch with Secretaries Rusk and McNamara and members of the White House staff. During this period the President made several points to Nehru along the following lines. First, he said that he was not asking India to go into the Dominican Republic or Vietnam; all we wanted was greater Indian understanding of our problems in such areas and such help as they could give in bringing peace. We did not want to command or direct the Indian Government, nor even to make a "trade" with it. However, there were two things which we needed in order to be able to help India. After all, we needed the support of the U.S. Congress, especially on food. It was essential to get other countries to help meet India's famine needs so that the Congress would not feel we were being called upon to do the whole job. We needed to be able to say to our people that we and the Indians had explored all other avenues. Moreover, we had to make an equitable proposal to the Congress--we could start out by saying that we would do half the remaining job if others would contribute half. If this didn't work we could say we would do two-thirds. If this didn't prove feasible, then we might have to do yet more. The second essential prerequisite was self-help. Anyone we were working with must be able to demonstrate that they were doing the most that they could for themselves. Subramaniam had made a big impression here by describing what India intended to do for itself in agriculture. Now the President wanted to move at Mrs. Gandhi's pace. But he had to be able to convince our people that Mrs. Gandhi was doing the best for her country first. Ambassador Nehru replied that India was doing more for itself than any other country in the free world. He offered to prove to the President that India was financing more of its own development effort than any other country, and was receiving far less per capita aid than most. The President said that he had to prove three things to the Congress: first, that others were fully participating in help for India; second, that India was doing everything that she could do for herself; and third, that in providing aid for India and Pakistan, we were not fueling an arms race. On the political side, the President said that he understood the Indian position on China and wanted India to understand ours. In order to support Mrs. Gandhi we wanted to throw all of her enemies off balance. To this end, we would do the opposite of what people were claiming we were going to do in terms of pressing India. Ambassador Nehru replied that India was prepared to accept the World Bank's advice if the World Bank were prepared to put up the cost. He explained briefly how India would need a cushion of aid if it were to liberalize the economy. The above were the highlights of a rather disjointed conversation. Later Ambassador Nehru left with Mr. Komer a set of charts which he had planned to give to the President to demonstrate that India's own development effort was extensively self-financed; that India's economic progress had indeed been substantial; and that India's recent economic growth compared quite favorably to that of Pakistan. He also left a memo/2/ on Indian aid requirements for the Fourth Plan which called for gross consortium aid during the 5-year period of $8.65 billion; deducting debt service charges of $2.6 billion during the period left a net aid requirement of roughly $6 billion. /2/Not found. RWK
302. Memorandum From the President's Acting Special Assistant for National Security Affairs (Komer) to President Johnson Washington, March 23, 1966, 7:10 p.m. [Source: Johnson Library, National Security File, Memos to the President, McGeorge Bundy. Top Secret; Sensitive. 1 page of source text not declassified.]
303. Memorandum From the President's Deputy Special Assistant for National Security Affairs (Komer) to Secretary of Agriculture Freeman/1/ Washington, March 24, 1966. /1/Source: Johnson Library, National Security File, NSC Histories, Indian Famine, August 1966-February 1967, Vol. I. Confidential. Copies were sent to the President's Assistant Joseph A. Califano, Jr., and to AID Administrator David E. Bell. India Food Message. In discussing the food problem with Secretary Rusk, Ambassador Bowles, and myself/2/ today, the President expressed the following views. /2/Jack Valenti was also present and prepared handwritten notes on the meeting. His notes indicate that he did not participate in the discussion. (Ibid., Office of the President File, Valenti, Jack, Meeting Notes (Handwritten) 2/26/66-4/6/66) 1. We should be ready to go with a message by Tuesday. 2. He does not want to make any more interim allocations prior to putting the whole matter before the Congress. 3. He believes that we must propose specific quantities in the message, as otherwise it will get amended in this sense on the Hill. 4. His own current thinking is to request on the order of 2.5 million tons of wheat, a million tons of milo, and some cotton--all to be included in the message. By not asking for any more we would keep up the pressure on other countries to contribute. 5. He is open-minded on the subject of a formula. I am sure that the President would be prepared to hear argument on these points, but I wanted to be sure you had his current thinking. R.W. Komer/3/ /3/Printed from a copy that bears this typed signature.
304. Memorandum From Secretary of State Rusk to President Johnson/1/ Washington, March 26, 1966. /1/Source: Johnson Library, National Security File, Country File, India, PM Gandhi Visit Papers, 3/27-30/66. Confidential. SUBJECT Discussions held since the submission of our strategy and talking points papers/2/ have indicated the desirability of restating in brief and specific terms the economic bargain we hope to strike with Mrs. Gandhi, if we reach the desired understanding on political issues. /2/The strategy and talking points papers, prepared as background for the Gandhi visit, are ibid. In sum the proposition is this: 1. On the economic front the basic issue is confidence: confidence on our part that India will press forward aggressively to accelerate its economic development through liberal economic policies and emphasis on agriculture; and confidence on Mrs. Gandhi's part that the U.S. can be counted on to provide necessary financial support. 2. We believe Mrs. Gandhi is prepared to make the following points: a. India plans to liberalize its import control policies and its internal price, marketing and other business controls and to adjust its exchange rate and tax policies to support such liberalization. If assured of U.S. support, India is ready to work out the details of these measures with the World Bank and IMF and to take the necessary actions this spring. b. In order to move rapidly toward self-sufficiency in food production, India will follow through on emphasizing agricultural development, including making adequate fertilizers available to farmers and vigorously seeking to attract foreign private investment in fertilizer production. c. India has already made a good start on family planning and will accelerate its efforts to control population growth. 3. We would recommend the following U.S. response: We realize that a liberalized import program is possible only with assurances of substantial Consortium financial support. The U.S. will provide its share of that support in coordination with the World Bank and the rest of the Consortium. We suggest that India's key finance and planning people come to Washington as soon as possible to work out the details with the World Bank and the IMF. We will work with them and talk to our key consortium partners. [Our financial support for FY 1967 would involve about $385 million A.I.D. loans and $50 million EX-IM loans--the same levels as pledged in recent years--and $35 million as the U.S. share of readjustment of Indian debt. In future years A.I.D. loans may go up a bit, if Indian performance warrants.]/3/ /3/Brackets in the source text. 4. While the foregoing would be the key points in any bargain, the following points are also important: a. We are disappointed that India has not moved forcefully enough to attract foreign private investment in fertilizer production. No special financial backing is needed for action on this score; and the vigor of Indian performance in seeking fertilizer investments will certainly affect our judgment as to how vigorously we can expect India to move on other economic fronts. We do not expect India to accept unreasonable terms from foreign investors, but we do expect India to make every effort to tap this large resource of financing and know-how. We are not doctrinaire on the public sector-private sector question; we have financed public sector plants and may well again, but only after we are sure India is doing all it can to capitalize on available private resources. b. Congratulations might be offered on India's promising initiation of its family planning program. Dean Rusk
305. Telegram From the Embassy in Pakistan to the Department of State/1/ Karachi, March 26, 1966, 1600Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL INDIA-PAK. Secret; Immediate. Repeated to Rawalpindi, New Delhi, and London. Passed to the White House at 1:45 a.m. 1805. Dept pass White House. Ref: Embtel 1804/2/ and Deptel 1340./3/ Conversation with President Ayub re Indo-Pak relations. /2/In telegram 1804 from Karachi, March 26, McConaughy reported on that part of his conversation with Ayub on March 24 that dealt with an impending visit to Pakistan by a delegation of senior Chinese officials. McConaughy expressed regret at what he described as the unfortunate aspects of the visit, particularly in that it coincided with Prime Minister Gandhi's visit to the United States. Ayub represented the visit as the logical outgrowth of his visit to China in 1965, and part of the process of normalizing Pakistan's relationship with a potentially dangerous neighbor. He noted that the Chinese trip had been planned well in advance of the announcement of the Gandhi visit. (Ibid., POL 7 CHICOM) /3/Telegram 1340 to Karachi, March 10, expressed the Department's concern about the outcome of the first round of Ministerial talks between Indian and Pakistani officials growing out of the Tashkent agreement. The talks took place in Rawalpindi March 1-2 and did not proceed beyond the Pakistani insistence on a full discussion of the Kashmir dispute. The Indians refused to discuss the substance of the issue and the talks broke off. The Department instructed the Embassy to make the point to the Government of Pakistan that if the Tashkent process was to lead to peace, each side must approach the bargaining table with some flexibility, and not allow its tactics to become a stumbling block that threatened the entire process. (Ibid., POL INDIA-PAK) 1. In same March 24 conversation with President Ayub, I took up, pursuant to reftel, recent unsatisfactory development of Indo-Pak relations. I discussed forthcoming Washington visit Indira Gandhi, confirming that we would seek to promote acceptance by GOI of need for peaceful solution of all essential Indo-Pak issues as a necessary contribution to security of India as well as Pakistan. We were urging both parties to seek constructive atmosphere for continuation of bilateral ministerial talks, with recognition that each side would have to show some flexibility in every round if momentum was to be maintained. Urged Paks to seek progress on all fronts where essential interests of two countries touched, including trade, arms limitation, refugees, and territorial disputes, as well as Kashmir. I said that, in all candor, we felt disappointment that Paks apparently had shown needlessly rigid and negative attitude in recent first round of Ministerial talks at Rawalpindi, particularly citing apparent GOP unwillingness to negotiate restoration of various services and relationships interrupted by war. 2. President Ayub denied that Pakistan had been the cantankerous party in the talks. He said the Indian refusal to engage in even preliminary discussion of mechanism for later Kashmir negotiations had torpedoed the Ministerial talks, not any Pak intransigence. He condemned Indian self righteousness in pretending they were the wholly reasonable party and Pak stubbornness entirely responsible for lack of accomplishment. President said GOP would not refuse to consider restoration remaining usual operating connections between the two countries, but he felt that restoration was relatively small matter which could not provide any basic solutions and that routine questions should not be mixed at Ministerial level with the matters which did fundamentally matter, which he identified as settlement of basic dispute (Kashmir) and arrangement to live with each other in peace and security without threat posed by excessive military capability. President said Indians were as delinquent on issue of arms build-up as on Kashmir. Pakistan could have no feeling of confidence or security about the future in such circumstances and would have to condition its posture on that of India, which was unyielding as to Kashmir and threatening as to arms build-up. Ayub felt that we were over-estimating the importance of day to day relationships such as trade, bilateral air services, communications and travel between the two countries. He said that existence of these facilities had not prevented the outbreak of war in 1965 and restoration would not solve the current deep difficulties in Indo-Pak relations. He was not sure that a normalization of ordinary relationships would be timely or appropriate at this juncture. The tragic losses inflicted during the war were only a few months back and people could not and should not forget them and go about ordinary day to day business as though nothing had occurred. 3. I said we felt that it was right and proper to go about the healing process as rapidly as possible, beginning with modest measures if that was the best that could be done at the moment. We thought that restoration of any and all normal ties and reestablishment of the fullest possible intercourse between the two counties would accelerate the healing process, tending to lower the barriers of hate and misunderstanding, some of which grew out of ignorance and disruption of normal links. 4. I told President we thought it was possible that GOI might be prevailed upon in a later bilateral session to agree to discussion its national security requirements as to Kashmir, and to consider the Pak view of its national security requirements as affected by the Kashmir issue. I suggested that in a pre-election year, this might be about all the Indians could realistically be expected to do and it might be the forerunner of a broader joint exploration of other aspects of the Kashmir issue later on. I suggested that a joint Indo-Pak examination of defense requirements and ceilings might also be undertaken. I probed to see how receptive the President might be to this approach. 5. Ayub was less than lukewarm to this suggestion, indicating that while national security of Kashmir was of major importance, it could hardly be separated out from other aspects of the issue, all factors being closely inter-related. He was not willing to say that he saw promise in this approach but he indicated he would think about it. I told him that some such exchange could be construed by each side as the "visible effort" that needed to be made by each party. I told Ayub we were watching closely the performance of each side, and as Vice President Humphrey had intimated, the willingness of both India and Pakistan to make accommodations in the spirit of Tashkent would have a bearing on our ability to reestablish our economic and technical assistance programs on a fuller scale. Tactics by either side incompatible with their responsibility for maintenance of peace and negotiating progress would militate against our ability to restore our aid programs in the way that we would like to. 6. President Ayub expressed GOP willingness to do full part to contribute to peace and maintain progress along lines Tashkent declaration but asserted corresponding Indian willingness was so far missing. He cited alarming scale of Indian rearmament, including recent acquisition large number Communist tanks, not suitable for use in Himalayas, and certainly intended only for employment against Pakistan. He referred to swollen Indian military budget and large diversion of Indian resources to arms purchases, facilitated by foreign economic assistance. He said Indians were well aware of domestic political difficulties posed for him after Tashkent by their talk about Kashmir and their commitment to arms race. Nevertheless, he was willing to continue ministerial talks and expected to schedule another round some time after Washington talks. 7. Ayub said Indians were greatly encouraged to follow aggressive course by sympathetic and generous attitude they are encountering from aid-giving counties. He said Indians felt they were riding high and "Indian balloon needs to be pricked." He said this could only be done by one of the major foreign powers, obviously referring to US and Soviet Union. He said Indians would come down to a realistic negotiating basis very quickly if only one of their great power friends would prick the balloon. 8. I told President we were fully aware that Indira Gandhi talks in Washington would have bearing on Pak interests as well as Indian, and we expected to have something to communicate about the outcome of the talks later on. President affirmed his particular interest. McConaughy
306. Memorandum From the President's Deputy Special Assistant for National Security Affairs (Komer) to President Johnson/1/ Washington, March 27, 1966, 3 p.m. /1/Source: Johnson Library, National Security File, Country File, India, PM Gandhi Visit Papers, 3/27-30/66. Confidential. Final Notes on Gandhi Visit. This is my valedictory as your Mid-East hand, but fittingly so because I don't think there's been a more important substantive meeting since Kennedy met Khrushchev in Vienna. The flow of people and memos citing this as a historic opportunity to settle on a new course with 500 million Asians suggests that this is more than a Chet Bowles promotion. Moreover, I think that we finally have the Indians where you've wanted them ever since last April--with the slate wiped clean of previous commitments and India coming to us asking for a new relationship on the terms we want. Circumstances helped (famine and the Pak/Indian war), but seldom has a visit been more carefully prepared, nor the Indians forced more skillfully to come to us (note how little press backlash about US pressure tactics--when it's been just that for almost a full year). The proof is that India is now talking positively about buying all the World Bank reforms; its line is now that it wants to go boldly in this direction, but can only do so if the consortium will help pay the inevitable cost. This is precisely where we wanted to maneuver the Indians--into saying they'll help themselves if we'll respond in turn. The Nature of the Economic Bargain. This is aptly described in Dean Rusk's memo/2/ at Tab A. I'd only add two points. First, I'd break away from the old pledge figure (435) and talk privately in terms of around a half billion dollars from all US sources--it sounds more generous while the arithmetic is the same--plus at least half a billion in food. This is over $1 billion--a generous response in anyone's league. /2/Document 304. Second, I'd stress that this can be a self-enforcing bargain--in two critical respects. Most of our dollar loan aid plus debt rollover (and the consortium's as well) can be tied directly to import liberalization, as we did with the Paks. If India doesn't liberalize to our taste, it just doesn't get the dough. Similarly, you have already proved how our holding back on PL-480 can force India into revolutionizing its agriculture. Once the famine is licked, I'm for continuing to ride PL-480 with a short rein--it will be painful but productive. If these points don't add up to requiring self-help, I'll eat them. That tough-minded George Woods and the World Bank are with us is reassuring. You've read the VP's report on his talk with Woods,/3/ and at Tab B is Gaud's memo/4/ on his views. Woods talks about "double or nothing" being the only sensible course on India aid, and it's true that on any per capita basis our aid to India is very low (less than a dollar per person ex-food), while India's own self-help contribution to its development is higher than that of almost any other LDC (twice that of Pakistan). /3/Not found. /4/In a March 25 memorandum to the President, Gaud summarized World Bank views on India. He noted that if the Indian Government agreed to liberalize import controls, proceed vigorously with the new agricultural program, and keep up the momentum on population control, the World Bank would lend full support. (Johnson Library, National Security File, Country File, India, PM Gandhi Visit Papers, 3/27-30/66) But as I explained the other day I think we can get real results in the next two years without going to Congress for a lot more money. Debt rollover is the backdoor financing key, and it's the same as aid. If India takes off as a result of our strategy, then we'll have a solid case to take to the Hill. Political Conditions. We're not going to get as much from Indira on the political side, especially on Vietnam and Pakistan. She's new at being PM, scared of the coming elections, and lacking as yet in the confidence in her own position which would let her talk big. But we have a strong ally moving India toward us on these matters--Mao Tse-tung. Just as he forced the Soviets in our direction, he's done the same with India. So the Indians are increasingly serious about China, and all we need do is nudge this trend along. On Pakistan, the one thing that really gravels Indians--Dinesh Singh and B. K. Nehru are prime examples--is that we "equate" 500 million Indians with 100 million Paks. If you would just tell Mrs. Gandhi that we can count, it would reassure her enough about our basic intentions, that she'd stop any carping about our aid to the Paks. If she raises military aid, I'd short circuit this by saying that it's far less important than economic issues and we plan no decisions for a while, beyond perhaps allowing sales. Nor do we intend to re-arm Pakistan to where it can threaten India. In fact, we favor both countries putting a ceiling on military outlays; we don't intend to finance an arms race indirectly via US economic aid. But India too must realize that forcing the Pak military to depend on Peking for arms would be folly from India's own viewpoint. She's also ready to say in spades that India has no intention of taking over Pakistan. Get her to say so, and you can use it as powerful reassurance to Ayub. It's the best you can get him, because she simply can't give anything now on Kashmir (and it only creates useless trouble for us to try). Emergency food is the trickiest problem. What's needed is both to give her reasonable confidence that Uncle Sam will help generously and to keep enough pressure on her to seek other help and push on with reforms. The best bet is to say you'll put it up to the Congress. But you should know that all your Executive Branch advisers are deeply worried lest Hill debate get out of hand, and create a sour aftermath to a successful visit. Even the sober Ellsworth Bunker reminded me of the 1951 experience when Mr. Truman went up for a $190 million food loan to India; Bunker said the violent criticisms voiced in the debate set back our political relations far more than the food helped fill bellies. Ellender talking about sacred cows certainly won't help. You might ask Bunker about this. You're the judge on Congress. I'd only urge that we design the message to create the least flap and give you the most room to maneuver. This means avoiding tight formulas which box us in, since the worst of the famine is yet to come. Also, what happens if you ask for only 3.5 million tons of wheat/milo, and then want to authorize another tranche around September when Congress is out of session? Visit tactics. All those who know her urge you see her alone first, put her at her ease, and then trigger her spiel by asking where she sees India going. If she says the right things, you have a whole range of responses. I'd be generous but general, telling her that if she does what she says we'll respond in kind. We'll abide by what India works out with the World Bank (up to around a half billion--including debt rollover and EXIM). The experts say there's a strong case for moving quickly in May/June, before India gets caught up in its election campaign and Indira loses room to maneuver. So you might urge that she send her economics ministers pronto to talk with the World Bank. I'm also sending up State's briefing books, which have all the facts and background. You might want to reread the Strategy and Talking papers. I'll have an agenda for tomorrow's 10 a.m. pre-briefing session, at which we can clear up any last-minute points. R.W. Komer [Continue with the next documents]
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