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FOREIGN RELATIONS OF THE UNITED STATES 1964-1968, Volume XXV South Asia
Department of State |
442. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 10, 1967. /1/Source: Johnson Library, National Security File, Country File, India, Vol. IX, Memos & Miscellaneous, 3-7/67. Confidential. SUBJECT We can now consider releasing some of the 3 million tons offered in your food message and endorsed by the Joint Congressional Resolution. The Consortium has accepted food aid as an integral part of its work and has incorporated food targets in its overall economic goals. We have firm matching food-related aid for $97.6 million--about half of the $190 million target. Therefore, Secretary Freeman and Bill Gaud recommend (Tab A)/2/ releasing 1.5 million tons costing about $100 million (375,000 tons of that in sorghum) plus $12 million in vegetable oil. /2/Not found attached. Our main debate has been over whether to release all three million tons now. Secretary Freeman earlier recommended (Tab C)/3/ that we go ahead with the whole amount in order to boost our domestic market and take some of the steam out of farmers' criticism that the Administration deliberately increased wheat acreage last year to drive prices down. The fact is that excellent crops in Canada and elsewhere have undercut prices, but Freeman has had a hard time selling that to the farmers. However, he agrees that we should go with only half that amount now provided we release the rest early this summer. /3/An April 17 memorandum from Freeman to the President was attached at Tab C. We have good prospect of getting pretty firm matching aid for the rest of the 3 million tons by the end of June. Because food is not available for this purpose, we have devised new ways of breaking loose special financial aid that the Indians can use in buying food. These are frankly pioneering ventures in the Consortium, and we can measure their success only by seeing whether they actually make it possible for India to buy additional food. We understand that the Indians are already placing orders for 745,000 tons of grain and plan to spend another $50 million as soon as some of this financial aid is firm. But we will have a clearer idea when the Consortium working group meets again in June to pin down final arrangements for debt relief and for freeing other pledged money for food purchases. I know this second half of our matching effort may look a bit fuzzy to you at this stage. However, after reviewing the figures (see Schultze's memo attached),/4/ I regard it as an honest effort to achieve matching aid that is truly additional to regular economic aid. We're still in mid-stream, so I would not mislead you by saying that our job is done. But this is a sound effort in which I think you can have faith. /4/Not found attached. Arrival figures definitely dipped between January and May but will pick up again in June. January--685,900 Releasing 1.5 million tons now on top of expected Indian purchases should keep the Indian ports full for at least another three months and give us time after the June Consortium meeting to assess further matching, Indian purchases and best timing for our final release. Meanwhile, we are approaching the peak of the famine in Bihar. State, Agriculture and AID will shortly recommend a new CARE disaster program of about $50 million. I have insisted on a careful study which will not be along for several days. However, I wanted you to be aware of that additional proposal as you make this decision. The other recommendation in this package is to authorize $50 million program loan (Tab B)/5/ as the first slice of our own economic aid. India's fiscal year began 1 April and the Consortium pledging season will not take place until October. One of our objectives at the April meeting was to encourage as much early pledging as possible. Before that meeting, you authorized our offering this $50 million provided the Consortium meet all the targets it set for itself then. Because the food matching and debt relief questions are still pending, we have not actually met those targets. However, Gaud feels progress was good enough that holding off on this loan will not substantially increase our leverage. On the other hand, no one feels under great pressure to rush it through now. Gene's feeling is that everybody has done a good job, that we want India to get moving and that we should let this go now. On balance, I recommend approving. /5/Not found attached. I suggest you use Charlie Schultze's detailed rundown (attached) as your decision document. Walt
443. Telegram From the Department of State to the Embassy in India/1/ Washington, May 13, 1967, 2:04 p.m. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL INDIA-US. Secret; Exdis. Drafted by Coon on May 12; cleared by Heck, Spain, Handley, and Battle; and approved by Rusk. A handwritten marginal notation reads: "OK/L," suggesting that the telegram was cleared with the President. Repeated to Rawalpindi. 194039. For Ambassador from the Secretary. 1. You have seen the President's statement in his most recent letter to PriMin Gandhi (State 192874),/2/ that further increases in Indian and Pakistani defense spending would intensify his difficulties in mobilizing support for economic development in either country. I am counting on your making sure that the proper people in the GOI have fully considered the implication of our position and that this will be reflected in the budget to be presented May 25. I know you have already done missionary work on the subject, but hope that during the critical days ahead you will do everything you can to persuade the GOI that the new defense budget should clearly demonstrate India's intention to limit and cut back its defense spending. /2/See Document 441. 2. I am well aware of the hazards of asserting this kind of influence. You may assure the Indian Government that we have no desire to embarrass it; while there is no secret about our general position on Indian and Pakistani defense spending, we consider the specific representations I am asking you to undertake, and the President's letter, as highly privileged information. Obviously whatever steps both governments take in this regard, they will want to present them as their own considered decisions and not the result of our pressures. 3. You may assure the Indian officials to whom you make these representations that we are working on their Pakistani friends with equal vigor. You might point out, however, that since the Indian budget will be the first of the two to be presented, the Indians through chronological necessity will have to set the pattern: a unilateral cutback, not made publicly contingent on a matching Pakistani response. 4. Should the GOI raise questions such as the interrelationships of this matter to Kashmir, Pak-Chinese collusion etc., you should indicate we are also sensitive to these issues but tying them together deflects us from the matter at hand: defense budget levels. We must start somewhere and this is the time and place to begin to break the vicious circle. 5. I hope that the GOI is correctly interpreting the care with which we are looking into their proposed purchase of U.S.-equity Hawker Hunter aircraft from the UK as another sign of the seriousness of our intention to implement our new military supply policy towards both Pakistan and India in a manner that will inhibit either from actions that could fuel an arms race./3/ /3/In telegram 16938 from New Delhi, May 18, Bowles responded that he and the rest of the Embassy staff had been pressing the Indian Government for several months to reduce military spending. He added that on receipt of the Secretary's cable he had met with Morarji Desai for another discussion of the subject. Desai agreed with the arguments put forward concerning the importance of reducing military expenditures, but pointed to the difficulty of doing so as long as China remained a serious threat and Pakistan maintained an unyielding attitude on the issues which troubled relations on the subcontinent. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 1 INDIA) 6. FYI: Ambassadors Nehru and Hilaly will be called in next week to be given the same message./4/ End FYI. /4/Assistant Secretary Battle called in Ambassador Hilaly on May 20 to discuss Pakistan's defense expenditure. Battle referred to upcoming Indian and Pakistani budgets as a unique opportunity for both nations to begin cutting defense spending. He stressed long-standing U.S. concern on the subject at the highest levels, and pointed out that any increase in Pakistan's defense spending would make the task of mobilizing support in Congress for economic development funds for Pakistan very difficult. (Telegram 199452 to Rawalpindi, May 22; ibid., DEF 1 PAK) Rusk
444. Telegram From the Ambassador to India (Bowles) to the President's Special Assistant (Rostow)/1/ New Delhi, May 17, 1967, 1224Z. /1/Source: Johnson Library, National Security File, Country File, India, Exchanges with Bowles. Secret. The message was [text not declassified] addressed to the White House. Although I am sure that you are doing all that you can do to help keep the Indian food program moving, I would like in this private and personal message to underscore the critical nature of the food situation here. Because of unseasonal rains there is increasing hope of scraping by without mass tragedy. But this is wholly dependent upon uninterrupted maintenance of food supplies. While we are encouraged that the situation has been managed better and has deteriorated less than we feared, a large number of highly responsible people, including Steb,/2/ who have recently visited drought-stricken areas have come back with appalling stories of great human misery and malnutrition. /2/Mrs. Bowles. These reports come to us at a time when we are at a point, if we are not already past that point, where another drop in our food grain arrivals can no longer be prevented. When the experts assured us last fall there would be no slow down in the pipeline, they turned out to be wrong. Grain unloadings for the month of January were a little more than half of what they might have been. Even if we act today to ship whatever share of the 3 million tons the President is willing to approve there is a serious question whether a similar interruption will not be inevitable. I would also like to emphasize my concern about our recommendation for an additional $75 million worth of Title II foodstuffs. This would enable volunteer agencies which are doing a magnificent job in critical areas to increase the food ration from 5 ounces to 8 ounces, to extend the coverage to many desperately needy people who are trying to survive on roots, bark and grasses and keep the volunteer agency program going into December. As to the stories, which I understand appeared in the Washington Star, about Indian confusion and indifference, I can only say they are grossly inaccurate and irresponsible. When we first came to realize last fall that Bihar and U.P. would be in deep trouble we agreed that a disaster of this kind could not have hit in a worse place. In Madras, Maharastra, Gujerat, or the Punjab a crash relief effort could be handled with great effectiveness. However Bihar and U.P. are the two most backward and poorly administered states in India. Nevertheless the government employees in that area, ably supported by the volunteer agencies and by steadily increasing numbers of dedicated volunteers, students and others, have been putting on a really remarkable perform- ance in the face of enormous difficulties. The story of the diversion of Canadian milk is also a gross distortion. In fact the transfer was a temporary one which was approved by the Canadian Government to be made up later. The supply is already en route. I don't like to trouble you, the President and the Secretary with emotional appeals at a time which I know is difficult for all of you. However, I would be failing in my responsibility if I did not tell you that the situation is desperately serious and is sure to grow worse before it gets better. If you could secure some prompt decisions for us a great many people here would begin to breathe a bit easier./3/ /3/Bowles sent a similar appeal to Katzenbach on May 24 in telegram 17293 from New Delhi. (National Archives and Records Administration, RG 59, Central Files 1967-69, SOC 10 INDIA)
445. Telegram From the Department of State to the Embassy in India/1/ Washington, May 18, 1967, 9:39 p.m. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL INDIA-US. Secret; Immediate; Nodis. Drafted and approved by Rusk. 197663. Eyes Only for Ambassador from the Secretary. I have just received a FBIS excerpt (embargoed until morning May 19) reporting a message for Ho Chi Minh's birthday from Prime Minister to Ho Chi Minh, expressing the hope that "the Vietnamese people will have the good fortune of having Ho Chi Minh's wise and dedicated leadership to guide them." We cannot, of course, expect India to agree with every view of ours in international affairs. But we do expect, where vital interests of the US are concerned, that India would at least take a non-aligned position. If Mrs. Gandhi thinks that we are just good guys and will take a lot of punishment without reaction, she is underestimating the mood of the American people while we are carrying such heavy burdens. If she feels that she must slant her "non-alignment" in favor of the Communist world in order to keep her credentials clear with Moscow, she cannot maintain her credentials with the US. The general mood in this country does not permit us to act like an old cow which continues to give milk, however often one kicks her in the flanks. No one has spent more time and energy and political capital in trying to help India than has President Johnson. No one is carrying a greater burden in serving one of India's vital interests, namely, in organizing a durable peace in Southeast Asia, than the President and the young men in this country who are being killed in Viet-Nam. If Mrs. Gandhi's message to Ho Chi Minh is as I have reported on the basis of preliminary information, I do hope that you will find some way to let her know that the interests of this country are not being served by this kind of cringing and that the US can be just as tough as everybody else in deciding whether relations are to be friendly, correct and cool, or on a basis of active opposition. I hope our early information is wrong. I have met with Congressional groups five times during the first three days of this week trying to carry some of the burdens of such policies as supporting India. Just today I faced in the House Foreign Affairs Committee a demand for a full debate on the floor of the House of Representatives of the exact amounts and terms of our aid to India in the light of India's own policies. Perhaps my struggle here makes me a bit edgy but I really do think that those who pretend to be non-aligned should in fact be non-aligned and stay away from questions on which they are not prepared to take any serious responsibility. Mrs. Gandhi has no constituency in North Viet-Nam and Ho Chi Minh has no constituency in India but Mrs. Gandhi surely does have a major constituency among the American people and she had better give some thought on how to nurse it from time to time. Her own personal relations with the President of the US are perhaps the most important single aspect of India's future safety and viability. The President has not spoken to me about this but you and I know that this, too, is something which Mrs. Gandhi should think about./2/ /2/Bowles cabled in response that he understood and appreciated Rusk's strong reaction to Gandhi's birthday greetings to Ho Chi Minh. He characterized the decision to send such greetings as "silly, stupid, and misguided." Bowles felt, however, that it would be a mistake to take up the issue with Gandhi, who he said was in a tense mood with a variety of problems pressing upon her. Desai was unavailable, so Bowles took up Rusk's complaint with P.M. Harsar, who had become Executive Assistant to the Prime Minister following the resignation of L.K. Jha. Harsar agreed that the dispatch of such a message and its public release were embarrassing errors, which he attributed to disorganization and bias in the Ministry of Foreign Affairs. He anticipated taking action that would prevent similar incidents in future. (Telegram 17034 from New Delhi, May 19; ibid.) Rostow sent copies of Rusk's cable and Bowles' reply to President Johnson on May 24. (Johnson Library, National Security File, Country File, India, Vol. IX, Cables, 3-7/67) Rusk
446. Telegram From the President's Special Assistant (Rostow) to President Johnson in Texas/1/ Washington, May 29, 1967, 1829Z. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VII, Memos, 10/66-7/67. Confidential. A handwritten "L" on the telegram indicates it was seen by the President. CAP 67484. I am sorry to do this by wire, but the World Bank's Pakistan consortium meets Wednesday/2/ morning in London, and I would like to clear our position with you today if possible. /2/May 31. The Freeman-Gaud memo/3/ I have recommends: (1) We announce our willingness--subject to Congressional appropriations--to consider providing non-project aid at the same level as last year ($140 million). (2) We agree to negotiate a loan for $25 million of that $140 million now from FY 1967 funds for fertilizer imports. (3) We inform the Government of Pakistan that we are prepared to provide 1 million tons of wheat as an initial agreement against FY 1968 targets. /3/Reference is to a May 25 memorandum from Gaud to the President concerning the Pakistan aid consortium meeting. Gaud noted in his memorandum that the Department of Agriculture concurred in the recommendations. (Johnson Library, National Security File, Country File, Pakistan, Vol. VII, Memos, 10/66-7/67) There is no question that Pakistan's general economic and agricultural performance make it one of the most deserving of our aid recipients. As you read in Dick Gilbert's memo,/4/ we're looking for a major breakthrough in grain production in the next year or two. Moreover, Ayub will read our ability to announce a positive response Wednesday as an important signal of your intent to continue rebuilding our relationship. /4/Reference is to a May 9 memorandum dealing with the assistance programs for India and Pakistan prepared by Richard V. Gilbert, an economist and specialist on South Asia. (Ibid., Memos to the President, Walt W. Rostow, Vol. 29, May 25-31, 1967) Rostow recommended Gilbert's analysis to President Johnson in a May 25 memorandum. (Ibid.) Our $140 million would be 40-47 per cent of Pakistan's overall requirement for $300-350 million in non-project aid, which the consortium is expected to endorse. This will support continued import liberalization. The 1 million tons of wheat would permit Pakistan to import quickly against a projected need for about 2.25 million tons this year. Moving quickly would help undercut price increases. We would take a reading later in the year on Pakistan's remaining needs after its crop is in, but would include now about $24 million in cotton, oil and tallow. I recommend your approval of the basic package; Secretary Fowler and Charles Schultze are aboard. There are two additional issues on which we need your judgement: 1. Freeman and Gaud recommend that we make clear to the Pak Government that we expect half of Pakistan's remaining FY1968 commercial wheat purchases to be made in the US. Treasury endorses this recommendation. State recognizes that we have applied this formula to the huge Indian program but recommends against generalizing this condition to apply to other PL 480 agreements. Charlie Schultze supports State's position because he fears that gain in sales under this small program (at most 250,000 tons or $15 million) is not worth the risk of being charged with bad faith under the Kennedy Round food aid and grain agreement. As you recall, all exporters agreed there not to preempt specified shares of commercial wheat markets as a condition for giving food aid. This was part of the price we paid to get other nations to share the food aid burden. My compromise of this would be to let the Paks know our feelings but not tie them to any percentage. I understand your purpose in the Indian case which is so large as to be in a class by itself. But we probably ought to be careful in the smaller programs. They have already placed FY 1968 orders for 200,000 tons here. Approve your compromise/5/ /5/Johnson checked this option. 2. Bill Gaud tried to get Harold Linder/6/ to come in on the consortium offer, at least to the extent of a $20-25 million non-project loan for added fertilizer imports. Harold refused, so there is no such recommendation before you. But I have been trying at every turn to get the Ex-Im Bank more fully engaged in our more promising less developed countries. Given our hopes of making Pakistan the next success story both for our aid program and for the war on hunger, this seems an excellent opportunity to bring Ex-Im along. However, at this stage the only way we could do that would be for me to call Harold on your instruction and ask him to reconsider. I would listen to his arguments but try to persuade him. Pakistan itself has delayed its steel mill--for which Ex-Im had set aside $85 million--to concentrate on agriculture. I think using some of that money to help the Pak fertilizer program would be a fair reward for good sense. /6/President and Chairman of the Export-Import Bank. You may tell Linder I would like to offer See if you can persuade him; just say I asked you to /7/Johnson checked this option.
447. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 30, 1967. /1/Source: Johnson Library, National Security File, Memos to the President, Walt W. Rostow, Vol. 31, June 13-20, 1967. Confidential. SUBJECT As I wired you Saturday,/2/ the Indian Government via B.K. Nehru's firm promise has agreed to place 50% of its remaining commercial grain orders in the U.S. this year. On the strength of your Monday approval, we have let the Indians begin buying against their next PL 480 agreement on a reimbursable basis. But the following Indian aid decisions still await your approval: /2/Reference is to White House telegram 67449 to the LBJ Ranch in Texas, May 27. (Ibid., Vol. 29, May 25-31, 1967) 1. Release 1.5 million tons of wheat and sorghum ($100 million) plus some vegetable oil ($12 million) as recommended by the Freeman-Gaud memo of 10 May (Tab I-A)./3/ Our consortium effort has so far produced firm matching for $97.6 million, so the 1.5 million tons have been evenly matched under the terms of your February message to Congress. We stand a good chance of matching the whole $190 million when George Woods completes his debt relief exercise next month, but the famine is reaching its peak, and the pipeline is thinning out. Moving this half of our offer now would keep the Indian ports full as well as help our own market situations. /3/None of the tabs was attached. Release now/4/ /4/Next to this option Rostow wrote: "Under conditions set by the President." Rostow probably annotated this memorandum after reading President Johnson's handwritten response on a May 31 memorandum he sent to the President again making the case for the release of 1.5 million tons of grain to India. The President wrote "OK" on that memorandum but added a note of concern about the fact that only half of the target goal of $190 million of pledges from other donors had been met: "This doesn't smell good--Better get India busy on other 1/2." (Johnson Library, National Security File, Country File, India, India's Food Problem, Vol. IV) 2. A $50 million famine relief program for Bihar state, where the famine is worst. This is mainly to broaden the CARE program you launched in your food message to provide nutritional supplement to about half the children and mothers with babies. But we would also tell the Indians this would more than compensate them for the freight differential ($2-3 million) on their extra commercial purchases here. (Tab II) Approve 3. A $50 million program loan from FY 1967 money recommended in Bill Gaud's memo of 4 May (Tab I-B.) This is the first slice of our non-project loan to support this year's consortium effort to bolster quickly India's exchange reserves and to keep the Indians on the import liberalization route. Approve /5/Neither option under paragraphs 2 and 3 is checked on the memorandum.
448. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, July 21, 1967, 5:25 p.m. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VII, Memos, 10/66-7/67. Confidential. Mr. President: In the attached, Messrs. Schultze, Freeman and Gaud/2/ recommend that you authorize an agreement for one million tons of PL-480 wheat for Pakistan. (The agreement would also contain small quantities of tallow, oil, cotton and dry milk.) This wheat was part of the package you approved as our pledge at the May meeting of the Pakistan Aid Consortium. /2/Reference is to a July 5 memorandum to the President from Freeman and Gaud, and a July 11 memorandum to the President from Schultze. Schultze's memorandum (Tab A) gives a good summary of the case for the agreement and the things the Paks have agreed to do in return--including buying most of their commercial wheat purchases from the United States. I recommend you approve. Walt Approve/3/ /3/Johnson checked this option and added a handwritten notation that reads: "Notify new ambassador Oehlert who is still here."
449. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, July 28, 1967, 5:20 p.m. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VII, Memos, 10/66-7/67. Confidential. SUBJECT At Tab A is a draft cable,/2/ approved by Katzenbach and Nitze, which further defines our policy on arms sales to India and Pakistan. Because of the current problems on the Hill, I thought you would want to review it. /2/Not printed. You will recall that last April we announced a new arms policy for the Sub-Continent. Essentially, we: --pulled our large military advisory teams out of India and Pakistan, replacing them with small Attaché-type offices; --stopped all grant military aid to both countries, except for a little training; --banned U.S. sales of military end items to either country; --announced our intent to stop any third-country military sales to either country over which we had some control, unless such sales contribute to stabilization and/or decline in their military expenditures; --agreed to make cash sales to both countries of spare parts for equipment we have previously supplied. Neither country threw its hat in the air about his policy, but both accepted it with reasonable grace. The Paks immediately gave us a list of spare parts they want to buy. The Indians asked to buy some machine tools for an ammunition factory and some books and technical manuals about ammunition manufacturing. We agreed to the small Air Force and Navy spare parts request for Pakistan, as well as the sale of machine tools to India. The decision now is whether to agree to the larger ($9.2 million) parts request for the Pakistani Army and the technical data request from the Indians. After a careful analysis, Defense has concluded that the Pak Army request is reasonable, and that the release of information to India on ammunition-making will cause us no problems. Paragraph 1(a) of the cable raises one additional question--should ammunition be sold under the "spare parts" rule? You know the arguments; if one is willing to supply a breech mechanism necessary to fire a rifle, he looks silly refusing to provide ammunition, which is just as necessary. This must be weighed against the fact that ammunition sales may present a tougher public relations problem than ordinary spare parts. After much soul-searching, Katzenbach and Nitze have decided to recommend that we agree to consider ammunition requests on a case-by-case basis. On balance, I agree with the recommendation. These are cash sales--not the credit sales the Congress is most upset about. They are to be made under an announced policy which has been greeted pretty favorably in the press and on the Hill. If we refuse to follow through, we will lose much of our influence on military policies and expenditures in Pakistan. We would also cost Ben Oehlert a large part of the initial fund of good will he needs in dealing with Ayub. I would advise you to approve the message. We have not checked this move on the Hill. With arms sales a hot issue, the chances of a leak and a distorted story are no worse than even. If you think it necessary, however, I can ask Katzenbach to do some soundings with the appropriate people. Walt Approve message/3/ /3/Johnson checked this option and the message was sent to Rawalpindi and New Delhi on July 29 as telegram 14208. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK)
450. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, August 2, 1967, 1 p.m. /1/Source: Johnson Library, National Security File, Country File, India, India's Food Problem, Vol. IV. Secret. A handwritten note on the memorandum reads, "Rec'd 3:32 pm." SUBJECT At Tab A is a complicated memorandum from Gaud and Freeman/2/--supported by Rusk and Fowler--recommending a new PL 480 agreement to supply India with a million tons of wheat, along with other minor odds and ends. The memorandum is complex because it is very hard as a technical matter (1) to define precisely what we mean by "matching", and, whatever our definition, (2) to be sure how much matching is actually going on. Your advisers have concluded that by any measure we now have enough matching to justify another one million tons of U.S. wheat. /2/Memorandum from Freeman and Gaud to the President, August 1. (Ibid., Memos to the President, Vol. 37, August 1-10, 1967) The Matching Problem You will recall that your India food message--and the Congressional Resolution which followed--spoke in terms of 3 million tons of additional wheat this calendar year if we got "appropriate" matching from other donors. By May, we had collected pledges totalling $97 million in new food or food-related aid from the others. Therefore, you authorized a first agreement providing for 1.5 million tons of wheat, worth about $95 million. We now have a further $122 million in aid pledges from other donors--most of it in the form of debt relief. (See table at Tab B for breakdown.)/3/ Both the World Bank and the Indians argue that this is more than enough in matching pledges to justify releasing another 1.5 million tons, completing the full 3 million tons contemplated in the Resolution. /3/The table, which lists the offers of food assistance on a country-by-country basis, is ibid., NSC Histories, Indian Famine, August 1966-February 1967, Vol. IV. However, our matching proposal was designed to draw additional aid resources from the other donors--resources that otherwise would not have been supplied to India. Neither we nor the Indians gain anything from ear-marking aid as food-related which is clearly not over and above what these countries have traditionally provided through the consortium anyway. We just don't know how much of this "new" $122 million is additional. (Indeed, we know that some of it definitely is not additional--the British have told us outright that their contribution will be subtracted from their consortium pledge.) Until we see what our brethren do at the consortium meeting in October, we just won't know whether they are really providing something extra or whether they are simply putting new labels on old benefits. Despite a hot debate, your advisers have not been able to agree on precisely how much more U.S. wheat we can provide now without threatening the matching principle. But they do agree that we can clearly justify at least a million tons. The acid test of additionality is how much new grain from non-PL 480 sources the Indians have come up with since our last PL 480 agreement was authorized. Any new grain from other donors is clearly eligible for matching. Any Indian purchases beyond what they had programmed in May reflect the Indians' belief that the new aid they have received has freed more of their foreign exchange for buying food. This is not a foolproof method of measuring additionality. The Indians may be diverting money from their development budget to buy food, or they may just be wrong about what the new aid will do for them. But our people doubt that much diversion is going on, and they point out that there are tremendous pressures on the Indians to be right about their foreign exchange situation. Applying this test, we find that India has scared up 1 million tons in new grain from non-PL 480 sources since last May. They have a new Australian donation of 150,000 tons, 200,000 tons in the process of being donated by the Soviet Union and 650,000 tons in additional Indian commercial purchases. (There is some question about whether the Russians will come through, but the Indians have officially informed us that they will buy enough more themselves to cover any Russian shortfall.) Accepting the tough principle that the best proof of additionality is how much a new non-PL 480 grain the Indians actually import, we can clearly justify another million tons from the U.S. This is what your advisers recommend. The Need The Congressional Resolution and the entire matching exercise are aimed at an overall target of 10 million tons of grain imports into India this year--through food aid and commercial purchases--without forcing India to slow down her development program. According to our latest estimates, she may be able to squeeze by with 9.5 million tons without mass starvation. Even with her greatly expanded commercial purchases (44% more than last year), this will require the full 3 million tons from us mentioned in the Resolution. The central Government's stocks are now down to about two weeks' supply and dropping. Food shortages are very important factors in touch-and-go political situations in several major states. The outlook for the next four months is bleak at best. Without our grain it is hard to see how Mrs. Gandhi could handle it without completely derailing the fertilizer imports and other development expenditures which will stimulate larger Indian crops in the future. And the timing is urgent, as usual. The 1.5 million tons authorized in May will be fully delivered by the middle of September. Because of the closing of Suez and the strain on tanker supply, it now takes six weeks' leadtime to book ships, rather than 3-4. Thus, if the pipeline is not to break, we need a decision this week. The Politics The political case for food aid to India is neither better nor much worse than when you last reviewed it. The Indians played an irritating and often stupid role in the Middle East crisis. Internally, Mrs. Gandhi remains as weak and indecisive as ever; her party is having more and more difficulty maintaining its power in the states. Nobody is certain how long she can hang on. However, there is a powerful case that this makes food aid more rather than less imperative. If change is to come to India, it is very much in our interest that it be as peaceful as possible. But peaceful change is most unlikely in a context of starvation. The major immediate political point is that if we do let the pipeline break, our relations with the Gandhi government--and any successor--will turn very sour indeed. And our public explanation of why we didn't come through (presumably because we don't think we have been matched) would not be supported by the World Bank or other "neutral" observers. We could also expect some trouble at home. The Alternatives You should know that this recommendation is the result of careful examination of four alternatives: 1. Do nothing until after the October consortium meeting. 2. Do a million tons now and worry later about the additional half-million tons required to meet the 3 million tons mentioned in the Resolution. 3. Do 1.25 million tons now, on condition the Indians buy the other 250,000 tons. 4. Do 1.5 million tons now, arguing that we have matching for at least 1 million tons and that we are not committed to 1-1 matching. (On this alternative, we would have at least 6-5 matching for the full year.) No. 1 was dismissed as impossible in view of the urgent need and the dangers of delay. No. 3 was rejected as too time-consuming and too likely to force India to dip into development funds to pay for wheat. No. 4, strongly favored by State and AID, was rejected because Fowler and Freeman believe it would amount to abandoning the matching principle. That left us with No. 2 as the lowest common denominator. Its principal drawback is that it leaves us with a further 500,000 ton requirement late this year for which we now have no matching prospects in sight. The choice between Nos. 2 and 4 (1 million tons versus 1.5 million tons) reduces to whether we want a 1.5 million ton package now with an unmatched component or risk a half-million ton package later with no matching at all. You may wish to consider going ahead with the full 1.5 million now. Indian Purchases from the U.S. The Indians have taken the procurement lesson to heart. Their commercial grain purchases in the U.S. this year will be at least four times/4/ what they bought last year. And they are following through on their promise to buy at least half of all their commercial grain from us, beginning last May. /4/Johnson circled "four times" and wrote in the margin "How much?" All of the self-help conditions we have worked out for the earlier agreement would also apply to this one. Recommendation I recommend you approve the Gaud-Freeman memorandum./5/ /5/Rostow added a handwritten postscript that reads: "We started out to match $190 million. We have matched somewhere between (say) $160 million and $219 million. We are taking the lower figure here. In fact, the exercise has been more successful than we could have hoped." Walt Approve Gaud-Freeman memo (1 million tons) /6/Johnson checked this option. /7/Johnson checked this option and added the following handwritten note: "Get me someone to argue the other side please." On August 4, in response to the President's instruction, Rostow sent him three memoranda drafted by the NSC Staff that made the case for three options: no more food now, one million tons now, and 1 1/2 million tons now. (Johnson Library, National Security File, Country File, India, India's Food Problem, Vol. IV)
451. Special National Intelligence Estimate/1/ SNIE 31/32-67 Washington, August 3, 1967. /1/Source: Central Intelligence Agency, Job 79-R01012A, ODDI Registry of NIE and SNIE Files. Secret; Controlled Dissem; Limited Distribution. According to a note on the cover sheet, the estimate was submitted by Deputy Director of Central Intelligence Rufus Taylor, and concurred in by the U.S. Intelligence Board on August 3. INDO-PAKISTANI ARMS RACE AND ITS ECONOMIC IMPLICATIONS To estimate the military capabilities of India and Pakistan over the next several years in conflicts: (a) India against Pakistan; (b) India against China, (c) India against Pakistan and China; and to assess the economic implications of present and probable future force levels in India and Pakistan./2/ /2/In the Annex we examine the economic implications of a specific reduction of the armed forces of India and Pakistan as outlined by the Department of Defense. [Footnote in the source text.] Scope Note This estimate considers only the relative military capabilities of India, Pakistan, and China in a conventional war. It does not discuss the numerous domestic and international problems which would be engendered in any such conflicts. Conclusions A. India's arms buildup began after the Indo-Chinese war of 1962, and was initially directed to improving India's military capabilities against China, particularly in mountain warfare and air defense. Since the 1965 Indo-Pakistani war, India has further expanded its forces and has strengthened units facing Pakistan. India is now modernizing its armored units and its air force, and appears assured of a steady supply of modern military equipment over the next several years, mainly from the USSR. B. Pakistan, with substantial US assistance, started to modernize its armed forces in the mid-1950's. At the start of the 1965 war, Pakistan's ground forces were one-fourth the size of India's. Pakistan is seeking to bring them up to one-third India's size, and has made some progress. Achievement of this goal is, however, likely to be considerably delayed. Since 1965, China has been Pakistan's principal supplier, though considerable matériel has been ordered from France and various sources in Western Europe. Over the next few years, Pakistan appears less likely than India to have an assured source of large quantities of modern armaments and will probably fall further behind in this respect. C. We believe that India would win any war with Pakistan alone. India could also probably repel a Chinese attack before it could reach the Indian plains. We believe that India's armed forces would be able to prevent a major breakthrough by combined Chinese-Pakistani forces equipped with conventional weapons, though they might have to yield ground in Ladakh and northeastern India. D. The arms race has aggravated the economic difficulties of both India and Pakistan. In real terms, India's defense spending is about 100 percent, and Pakistan's about 70 percent higher than in 1961. But for both countries, the greatest burden has probably been the drain on foreign exchange. This includes the expenditure of hard currency for military items, and in the case of India, the export to the USSR of commodities which would otherwise have earned hard currency. Such outlays by both countries are now about three times what they were in 1961. This has caused cutbacks in development programs and in imports for civilian production. [Here follow the 11-page Discussion section of the estimate and a 1-page annex entitled "Implications of a Force Reduction."]
452. Notes of Meeting/1/ Washington, August 8, 1967, 1:25-2:50 p.m. /1/Source: Johnson Library, Tom Johnson's Notes of Meetings, Aug. 8, 1967--1:25 p.m., Tuesday Luncheon Group. Top Secret; Literally Eyes Only. Prepared by White House Deputy Press Secretary Tom Johnson. According to the President's Daily Diary, the luncheon took place in the White House. (Ibid.) NOTES OF THE PRESIDENT'S MEETING At the Tuesday luncheon The following areas were discussed at the meeting: 1. Indian Wheat The President said he had just completed discussions with Ambassador Chester Bowles,/2/ who reported that large quantities of wheat had been damaged by rains. /2/Bowles was in Washington for consultations and met with the President at noon on August 8. No other record of that meeting has been found. The President pointed out that he was unsure what course of action we should follow about additional requests for aid to India. Mr. Rostow said he was forwarding to the President a set of alternatives for his consideration. The President said it would appeal to him if some other nation would recognize their responsibilities in this nation, even the Russians. [Here follows discussion unrelated to South Asia.] [Continue with the next documents]
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