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FOREIGN RELATIONS OF THE UNITED STATES 1964-1968, Volume XXV South Asia
Department of State |
471. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, November 28, 1967, 5 p.m. /1/Source: Johnson Library, National Security File, Country File, India, Vol. X, Memos and Miscellaneous, 8/67-2/68. Confidential. SUBJECT You will recall authorizing Freeman and Gaud to start negotiations with India on the basis of a 3.5 million ton package to cover the first six months of 1968. The Indian side of the bargain was a strong self-help package headed by abolition of the inefficient zonal boundaries which now restrict movement of food between stages. The package also contained other important steps to keep farm prices up, get the central government into a position to smooth out price fluctuations, and continue to build up imports of fertilizer, pesticides and improved seeds. You asked them to report back to you when the results of the negotiation were clear and before anything was signed. At Tab B,/2/ Freeman and Gaud report that they have been able to get Indian agreement on every aspect of the package except immediate elimination of food zones. The Indian Food Minister has told us that he wants and intends to eliminate the zones, but that it would be political suicide to try to do it before next fall when the current crop is in and there is a fairly solid estimate of next year's crop. Freeman and Gaud are inclined to agree. They recommend that we go ahead with the package on the assurance that the Indians will move next fall if conditions improve as expected. Charlie Schultze supports this conclusion; his memo (Tab A)/3/ is a good summary of the proposal. (You will note that this step would involve no additional budgetary costs.) Joe Fowler asked us to tell you that his views haven't changed since October (he would like to see more contributions from others and a specific quid pro quo on commercial sales), but he is not inclined to press them again now. /2/Reference is to a November 22 memorandum from Freeman and Gaud to the President entitled "Food Aid for India in 1968." (Ibid.) /3/Reference is to a November 27 memorandum from Schultze to the President entitled "Food Aid for India." (Ibid.) Congressional Attitudes As agreed in October, Freeman's Congressional consultations have been limited to the people you sent to India last December. Congressmen Poage and Dole support the proposal as recommended, but Senator Miller would prefer to insist on full matching from other donors and to cut down the size and/or extend the duration of the agreement. (Miller's suggestions are discussed on pages 2-3 of the Freeman/Gaud memo at Tab B.) Freeman does not believe Miller can be persuaded to agree to his proposal, but he states that "he has no reason to believe" Miller will make a public fuss if we go ahead. On the merits of Miller's first suggestion, Freeman and Gaud believe--and I agree--that if we insist upon matching from other donors, we won't move much more than 1 million tons of wheat to India in all of 1968. The result would be lower U.S. wheat prices, higher CCC costs, and no pressure on India to make agricultural policy reforms. We have a matching rationale for 1968 in the Kennedy Round Grains Agreement which requires the Europeans to provide 2.3 million tons of grain per year in food aid beginning July 1, 1968. We can represent that Agreement as the multilateral matching formula we have been after, replacing our 1967 insistence on bilateral matching. Miller is right that this would result in much less than even matching of U.S. food aid. But if we want to come anywhere near the 11 million tons of wheat Agriculture wants to move next year to support domestic prices and keep CCC costs within reason, we must have a policy which allows us to provide much more to India than the other donors--rightly or wrongly--are willing to provide. Even so, the Freeman/Gaud memorandum pledges that we will keep the heat on the others as much as possible. Miller's other suggestions would (a) cut the new agreement to 2 million tons over four months or (b) keep it at 3.5 million tons but make it cover all of 1968 rather than just the first six months. The Indians might accept the first, but only at the price of eliminating some or all of the policy reforms promises they are now prepared to make. They would consider the second totally inadequate to provide a resource base for the buffer stock/price support operation we are trying to get them to set up--and they would be right. In either case, negotiations would drag on for weeks and perhaps months, during which we would not be shipping any grain and our negotiating position would be deteriorating as the bumper Indian crop hit the market. For these reasons, Freeman recommends we proceed without further contact with Miller. Timing of Announcement There is one other small issue. Freeman and Schnittker want to announce our offer immediately to get a domestic price effect. Gaud & Company would rather wait a day or two to nail things down with the Indians. It would be better international relations to wait until we have solid agreement with the Indians, but it would not cause us major problems to announce now if you agree that the domestic price needs an immediate jolt. Walt 1. Approve Freeman/Gaud/Schultze proposal/4/ /4/Johnson checked this option.
472. Telegram From the Department of State to the Embassy in India/1/ Washington, December 7, 1967, 0213Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 INDIA. Secret; Limdis. Drafted by Coon on November 22; cleared by Battle, Prescott, Colonel Fredericks (NEA/RA), Wolf, Heck, Charles A. Kiselyak (H), Rees, Director for Near East and South Asia Brigadier General Henry C. Newcomer (DOD/ISA), and Bromley Smith. Also sent to Rawalpindi and repeated to London and CINCSTRIKE. 80797. State/AID/DOD message. Ref: (a) New Delhi's 5487;/2/ (b) Rawalpindi's 1886./3/ Review of US Military Supply Policy to India and Pakistan. /2/In telegram 5487 from New Delhi, November 6, from Bowles to Rusk, Bowles stated that he was convinced that the military assistance policy the United States was following with regard to the subcontinent was not achieving its objectives. In his view, the United States was attempting to control key elements of a complex and politically sensitive situation that was largely beyond its control. He urged a careful review of the military assistance policy to bring it into better harmony with the situation that existed in the subcontinent. (Ibid.) /3/Oehlert offered his assessment of the military supply policy in telegram 1886 from Rawalpindi, November 18. He recognized that the policy was not "tidy, comfortable nor fully consistent." On the basis of the evidence in hand, however, Oehlert judged that the policy had already achieved a measure of success in Pakistan, and concluded that, if firmly and realistically implemented, it offered a better prospect for success than any alternative which had been put forward. (Ibid., DEF 12-5 PAK) We have reviewed US military supply policy which was defined and announced last April. Review was conducted in light of (1) our experience to date, (2) comments from addressees, notably per reftels, and (3) totality of our interests in subcontinent as we see them evolving under pressure of developments such as presently diminishing economic aid availabilities. Our principal conclusions, set forth below, are general in nature, reflecting broad nature of our review. Separate guidance will follow regarding more specific operational questions such as next steps re SU-7's and Hunters. I. Conclusions (A) Present US military supply policy toward India and Pakistan has proven flexible and useful tool supporting variety of US interests. (1) We should therefore continue to monitor US sales of lethal spares and third-country sales of US controlled lethal end items on case-by-case basis. Policy guidelines governing individual decisions should remain as set forth in previous messages. (2) We should continue our diplomatic efforts, both bilaterally and through Consortium, to persuade each country to exercise restraint in its defense spending, recognizing that our initiatives to this end must be carefully calculated if they are to be acceptable and credible. (3) As opportunities arise we should also continue to counsel restraint on other countries which are actual or potential suppliers of military equipment to subcontinent. (B) Present reaffirmation our policy does not imply we expect it to produce miracles. (1) On contrary, it is evident we lack decisive influence over either country's decisions on defense spending and arms acquisition, and can at best hope to maintain a restraining influence on each. (2) We recognize that India and Pakistan, as major states (with India facing direct security threat from China) are going to maintain armed forces which have at least some first-line combat aircraft and other sophisticated equipment, plus total force levels at least somewhat consistent with external threat to their security as they perceive it. Their maintenance of such forces is not necessarily inconsistent with our longer-term strategic interests; though present development and resources considerations dictate US posture of restraint, our posture should not foreclose future US options involving greater degree of cooperation in security field. (C) Another major caveat: There is an underlying relationship between magnitude of our economic aid commitment to each country and extent to which we can effectively press that country's government to exercise restraint in defense spending. (1) As long as we remain major provider of economic resources to both countries we have inescapable responsibility to do what we can to restrain each from actions leading to arms spiral between them that diverts scarce resources from development without adding to net security of either. (2) Assuming this year's aid will be cut very substantially, we should continue to oppose an arms race but should recognize that our capability to exercise a restraining influence on defense spending has been diminished. (3) If, despite our best efforts, we can get no more money from Congress next year for FY '69 aid than we appear likely to get this year for FY '68, it may be prudent to withdraw to quieter, less insistent role in dealing with GOI and GOP on defense expenditures. II. Discussion: Basic US Policy Options As we see it there are three basic policy options at least theoretically open to us. At one extreme would be some variant of highly restrictive policy such as we maintained immediately after 1965 war. At other extreme would be French-style approach of selling either country anything it wanted that it could pay for. Third or intermediate option would involve efforts to keep lid on arms race through combination of general suasion and flexible posture on individual sales cases. (A) First option, involving no lethal sales to either country, has obvious advantages and disadvantages. (1) Advantages: (a) It would constitute simple and readily comprehensible stance, avoiding disputes over interpretation, putting us at least superficially squarely on side of peace and plowshares (though Paks would regard it as pro-Indian betrayal). (b) It could in some cases (where US-controlled equipment significantly cheaper than comparable items from other sources) operate in direction of increasing cost of armament and hence of increasing fiscal pressures for restraint; and (c) It would be applauded by significant Congressional elements. (2) Disadvantages: (a) Except under circumstances such as Indo-Pak war and immediate aftermath it would seem unsound for us arbitrarily to renounce any and all use of major and established instrument of national policy capable of furthering our subcontinental interests. Our ability to carry on meaningful military supply relationships with India and Pakistan has been and continues to be such an instrument. (b) On Indian side our flexibility in using this instrument in recent months has furthered our interests in a variety of ways (see below). (c) On Pakistani side it seems evident our flexibility has played an important role in enabling Ayub to contain his country's relations with China and thereby in supporting US strategic interests in subcontinent as defined para 3 (D) of State 33331./4/ It has also made possible small but significant cut in GOP's recent current defense budget. /4/Document 457. (d) Reversion to highly restrictive policy at this stage would do incalculable harm to our interests in Pakistan and hence to our larger interests in subcontinent. (B) Second extreme option, of selling anything to anyone willing and able to pay, also has attractive features and basic weaknesses. (1) (a) It would save us painful moralizing with both India and Pakistan (though Indians would regard it as pro-Pakistan); (b) It would eliminate recurrent problems bedeviling our relations with HMG and other Western allies; (c) It would help ease balance of payments pressures; and (d) It would put us in stronger position to reduce Indian military dependence on USSR and Pak recourse to China. (2) Basic weakness is that such policy would undermine our present policy of actively opposing Indo-Pak arms race. Latter policy has been strongly affirmed cornerstone of our broader policy toward subcontinent at least since President's press backgrounder in November 1965. We believe active opposition to an Indo-Pak arms race is essential element of any US commitment to support Indian and Pak economic development in major way. Thus despite its attractive features, laissez-faire policy, like highly restrictive first option, is not satisfactory instrument for advancing current US interests in region. This leaves some variation of middle-of-the-road approach as only feasible course under present circumstances. III. Discussion: Pros and Cons of Middle-of-Road Approach Middle-of-the-road option combines (a) case-by-case reviews under certain understood ground rules of military sales cases which we control and (b) diplomatic suasion of more general nature, in which we implicitly or explicitly relate Indian/Pakistani restraint on defense spending to future economic aid availabilities. (A) Case-by-case review procedure: (1) As pointed out in ref A and also in State 207414/5/ and previous, case-by-case review procedure suffers from weakness that we do not control all supply sources, thus objections on our part to given sale we control may simply drive customer to second source we do not control. We continue however to believe that with careful handling we can exploit relative convenience and economy of India/Pakistan purchasing items which we control as opposed to comparable items from other sources, in manner permitting us to exert marginal restraining influence. This has in fact proven case. Despite difficulty over SU-7's, for example, we retain GOI's firm commitment to retire obsolete aircraft on at least a one-for-one basis as and when GOI phases in Hunters. /5/Dated June 2. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 INDIA) (2) A second problem involved in case-by-case review procedure is critical public and Congressional attitude towards arms supply of all kinds to LDC's. This has made it necessary even within terms of our policy to move cautiously, as with GOP request for tanks. Together with problems that inevitably grow out of discussions concerning a country's military inventory, this situation has definite potential for irritation, as ref (A) suggests. (3) On positive side, our review procedure has been providing essential underpinning in each country for continuing dialogue on security matters. Last July Embassy New Delhi ably described importance of our developing and maintaining such dialogue with Indians (A-14:/6/ India: Growth and Security). One of few felicitous consequences of SU-7 affair has been GOI offer review force levels with us. Recent conversation with Pak Defense Minister (Pindi 1724)/7/ well illustrates value such dialogue on Pak side. /6/Airgram A-14 from New Delhi, July 6. (Ibid., POL 1 INDIA-US) /7/Telegram 1724 from Rawalpindi, November 9, reported that Defense Minister Khan had asked whether Pakistan might approach Iran with regard to Iran's surplus M-47 tanks, which could meet Pakistan's needs. Khan said that Iran was willing to provide the tanks to Pakistan if the United States agreed. (Ibid., DEF 19-8 US-IRAN) (4) As noted elsewhere, our ability apply general suasion on defense spending levels could be diminished should forthcoming aid levels be sharply reduced. Case-by-case review procedure would not be materially affected by any such limitations. (5) Foregoing arguments appear equally applicable to case-by-case review of direct US sales cases (lethal spares) and third country lethal end item sales cases. Seems to us that direct US sales have in fact been proceeding smoothly and have contributed to advancement of our objectives in both countries. Only hitch that has developed has been in our efforts to monitor sales of third-country lethal end items, specifically Indian prevarication regarding SU-7's. On other hand our efforts to develop and apply criteria on third country lethal end items has clearly contributed to our dialogue with each government regarding its security plans. This has been particularly true in the case of Pakistan, where we have been applying rather more stringent criteria rather more successfully than has been the case in our discussions with the Indians. In Pak case, our policy in this regard succeeded for example in inhibiting German sale of Patton tanks (in period before publicity caused FRG to back down anyway). We conclude there is no more basis at this time for changing our policy with respect third country lethal end items than there is with respect to US-supplied lethal spares. (B) General Suasion re Defense Levels: (1) We know from experience that Pakistanis and particularly Indians tend to react viscerally and strongly to any démarche on our part which they construe as US effort to influence their national security decisions by threatening to reduce economic aid. We have also learned from experience that amount of leverage we obtain from given aid input varies not only with amount of aid, but also and more directly, with closeness of relationship between kind of aid we are putting in and kind of decision or policy we are trying to influence. It is there- fore likely to be far more risky and difficult to apply econ aid leverage to decisions on defense spending than, say, it is to apply food aid leverage to decisions on agricultural policy. GOP and particularly GOI could have especially acute problems in heeding our advice were public opinions within their countries to learn extent and nature our efforts. (2) Another limitation economic aid lever suffers from is its credibility. Current Congressional action will almost inevitably result in sharp cuts in FY '68 development aid to India and Pakistan but we doubt whether either GOI or GOP will conclude these cuts result primarily from any specific failure on their part to accommodate themselves to recent USG démarches re defense spending. However it is in our interests to impress GOI and GOP of Congressional sensitivities such as those reflected in Conte amendment./8/ /8/Reference is to the Conte-Long Amendment to the Foreign Assistance and Related Appropriations Act of 1968. The amendment, being debated in December 1967, was adopted as Section 119 of the Appropriations Act on January 2, 1968. The amendment directed the President to withhold economic assistance in an amount equivalent to the amount spent by any underdeveloped country other than Greece, Turkey, Iran, Israel, the Republic of China, the Philippines, and Korea for the purchase of sophisticated weapons systems. (P.L. 90-249; 81 Stat. 936) (3) Despite these limitations we should continue to impress upon both governments that they each have constituency here, and way they handle that constituency, including their decisions on defense spending, will ultimately determine character of their bilateral relations with us. It is difficult to use this argument effectively in specific field of defense spending without overstepping bounds of either propriety or credibility, but we have to continue to do best we can, as long as we continue to play major role as provider of economic resources. While it may never be in our interest actually to invoke econ aid sanction, our aid input remains of considerable importance to India and provides underlying strength to our position. Our efforts will be helped to extent we can persuade each government of inevitability and legitimacy of link between our role as restrainer on defense spending and our role as free world econ aid leader. (4) In particular we need to impress on Indians that we are going to have extremely difficult task next year in obtaining FY '69 aid appropriation sufficient to support aid level to India that we both agree situation calls for to support shared growth objectives; and that when we approach Congress we need to be armed with understanding with GOI on expected defense spending levels. Such understanding might best emerge from general defense talks Indians have recently proposed. Rusk
473. Telegram From the Department of State to the Embassy in Pakistan/1/ Washington, December 21, 1967, 1803Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK. Secret; Immediate; Exdis. Drafted by Spain and Lewis D. Junior (G/PM) on December 15; cleared by Heck, Country Director for Iran Theodore L. Eliot, Jr., Rockwell, Handley, Edwin D. Crowley (EUR/GER), Stabler (EUR/AIS), Edgar J. Beigel (EUR/FBX), Battle, Williams, and Hamilton, and in draft by Wolf, Newcomer, and Major Wix (DOD/ISA); and approved by Katzenbach. Repeated to Tehran, Rome, CINCSTRIKE, CINCEUR, Brussels, and Bonn. 87856. Ref (Notal): (a) Rawalpindi 1269;/2/ (b) State 61581;/3/ (c) Karachi 807;/4/ (d) Rawalpindi 1724;/5/ (e) Rome 3081;/6/ (f) Teheran 2471;/7/ (g) Rawalpindi 2279;/8/ (h) Teheran 2502/9/; (i) Bonn 6251;/10/ (j) Rawalpindi 2019;/11/ (k) Teheran 2563./12/ Subject: Military Supply, M-47 Tanks, and Peshawar. /2/Document 464. /3/Document 469. /4/See footnote 3, Document 469. /5/See footnote 7, Document 472. /6/Telegram 3081 from Rome, December 11, reported that the Italian Ministry of Defense was prepared to refurbish and sell 200 M-47 tanks to Pakistan if authorized to do so by the United States. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK) /7/Telegram 2471 from Tehran, December 10, from Oehlert who was visiting Iran, reported on his conversation that day with Defense Minister Khan, who was also visiting Iran. Khan was at the point of returning to Pakistan following a "tank tour," which took him to Belgium, Italy, and Iran. He felt that the terms offered by Iran were the most favorable available. Oehlert turned the conversation to the question of the extension of the agreement governing the U.S. communication facilities at Peshawar. Khan said that the Foreign Ministry would oppose an extension, but that he favored one and intended to press his viewpoint with Ayub. He anticipated that Ayub would agree with him. (Ibid.) /8/In telegram 2279 from Rawalpindi, December 12, the Embassy reported that Defense Minister Khan had reviewed the price and availability of M-47 tanks from Italy, Belgium, and Iran and indicated a preference for dealing with Iran. (Ibid.) /9/In telegram 2502 from Tehran, December 13, the Embassy expressed its reluctance to concur in the transfer of refurbished M-47 tanks from Iran to Pakistan. The Embassy noted that the proposed transfer would contribute to the problem of attempting to persuade the Shah to avoid heavy expenditures for new tanks. (Ibid.) /10/In telegram 6251 from Bonn, December 13, the Embassy reported that the Foreign Office had been impressed by a briefing provided by the Embassy concerning Congressional sensitivities with respect to arms transfers, particularly transfers to the subcontinent. (Ibid., DEF 19-8 US-GERW) /11/Document 470. /12/In telegram 2563 from Tehran, December 18, from Oehlert, he expressed sympathy with the concerns outlined in telegram 2502 from Tehran. He noted, however, that the United States had indicated to Pakistan that it would give serious consideration to a third-country request to transfer 100 tanks to Pakistan if the terms were favorable, with the possibility of a subsequent transfer of an additional 100. The terms offered Pakistan by Iran were the most favorable of the offers presented, and Oehlert was concerned that if the United States did not authorize the sale by Iran there would be resentment in Rawalpindi. In the event that the Iranian sale could not be authorized, Oehlert asked for permission to inform the Ayub government that the United States would look with favor on a request from Belgium to transfer 200 tanks to Pakistan, provided that the price was favorable. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 19-8 US-GERW) 1. While some loose ends remain, principal pieces involved in Pak tank problem now seem on table. We wish to (a) move to decision ASAP and (b) avoid possibility of misunderstanding among several parties involved in complicated procedure. US position must rest on following basic points, which Embassy Rawalpindi authorized convey (except as noted FYI) to GOP. 2. We are prepared in first instance to act only on up to 100 tanks and request to us from any seller country should be so presented. When contractual agreements are completed for the first 100 tanks, we would be willing to consider other requests including second 100 tanks. This is as responsive as we can be at this time. 3. We have now received from GOP assurances that (1) it will scrap obsolete tanks (M-24s) one-for-one for any US-controlled tanks acquired (ref d, para 3 and ref j, para 7c); (2) that GOP has total of 150-160 Chicom tanks with no additional tanks on order from Chicoms (refs d, para 3 and g, para 3); and that (3) GOP will procure no additional tanks from any source without consultation USG. 4. Approval by us of any sale would be conditioned on absolute and unequivocal confirmation of 3 above. Should it become apparent after approval that Pakistan had already arranged, by contract or other less formal mode, for more than the stated 150-160 Chicom tanks we would have to withdraw our approval. Embassy Rawalpindi should now ask for such confirmation. In addition we believe that you should reiterate importance we place on continued reduction in defense spending in both Pakistan and India which is basic objective whole military supply policy. 5. While we are gratified at close and cordial relationship between Iran and Pakistan underlying the Iranian offer described by Admiral Khan (ref f, para 2c), we strongly prefer in light current USG arms discussions with Iran that GOP go to European source rather than to Iran. 6. FYI: We do not wish to make an issue of Iranian offer with GOP and believe above is as far as you should go in explaining our negative reaction re Iranian sale. In fact, however, we would appreciate all possible efforts your part to steer GOP away from involvement with Iran in this matter. The GOI has recently informed US of plans to embark on a large new five-year military procurement program at a time when we are having difficulty in meeting our existing MAP and credit sales commitments because of Congressional action. In our efforts to persuade the GOI to reduce the scale of its military program, we believe we have been successful in persuading the Shah at least tentatively to avoid heavy expenditures for new tanks by rehabilitating older M-47s. We cannot, therefore, approve Iranian tank sales to Pakistan and an Iranian request would be extremely embarrassing to us at this time. End FYI. 7. Information we have to date on European sources, costs, condition of tanks and delivery times is as yet incomplete and in part contradictory. Subject to closer look when more facts are in, terms offered to date do not seem preclude our approval of sale. 8. Should GOP wish us act on Italian proposal, it will be necessary clarify discrepancies between ref f, para 2, in which first 50 tanks are said to be Italian owned with remainder to be procured from Germany and ref e, para 1b, which indicates all tanks to be from surplus stocks in Germany. We do not exclude possibility of Italy acquiring and rehabilitating up to 100 German tanks for GOP, but all parties concerned should understand before the event that if later pressed we will have to indicate we knew and agreed that tanks sold by FRG to Italy were to facilitate Italian sale to Pakistan. 9. FYI: Re possible FRG role, we note (ref i) that FonOff now considering whether Cabinet and Bundestag might agree to direct sale tanks to Pakistan. We would appreciate Embassy Bonn's prognosis. End FYI. 10. Paks stated second preference as M-47 source, Belgium, might be most acceptable from all points of view. If GOP seriously interested it should stimulate Belgian request to USG, complete with info on costs, condition of tanks, and projected delivery schedule. FYI: If current negotiations with Italians for cooperative logistics agreement are successful, we might prefer Italians as best source. End FYI. 11. In sum, if GOP wants action on tanks, it should: (a) unequivocally confirm assurances paras 3 and 4 above; (b) cast request in terms of 100 M-47s; (c) select optimum supply source, hopefully giving full weight to foregoing considerations; and (d) get source government to submit request to USG for approval to sell to GOP, such request to be accompanied by data on costs, condition of tanks, financing terms and delivery schedules to permit our response. FYI: We would prefer not to be faced at the same time with active requests from more than one country. End FYI. 12. FYI: We assume you will probably wish make above points to President Ayub or MOD Khan who has represented GOP in bulk of discussion this subject. We expect, however, to be filling in Pak Embassy here as well and wonder if it would not be good idea for you to touch base with MFA (perhaps Pirzada himself) in Rawalpindi also. Our views re connection between military supply and Peshawar which has appeared in discussions with Admiral Khan (refs a and f) follow in septel/13/ which should be read with this message as guidance for further handling that matter. End FYI. /13/Document 474. Rusk
474. Telegram From the Department of State to the Embassy in Pakistan/1/ Washington, December 21, 1967, 1803Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 15 PAK-US. Secret; Immediate; Exdis. Drafted by Spain; cleared by Heck, Richard E. Curl (INR/RCI), Handley, Wolf, General Newcomer, Major Wix, and Hamilton at the White House; and approved by Katzenbach. Repeated to CINCSTRIKE. 87857. Ref: (a) Rawalpindi 1269;/2/ (b) State 61581;/3/ (c) Tehran 2471./4/ Subject: Military Supply and Peshawar. For Ambassador. /2/Document 464. /3/Document 469. /4/See footnote 7, Document 473. 1. We believe time has come to try establish certain basic principles for our efforts ensure continuance Peshawar Communications Station. Department's views on these follow and we would welcome your comments on them. Throughout Peshawar discussion, we will wish leave you maximum discretion on timing and tactics but feel that following points should be made clear to GOP soon at time and in manner you deem most appropriate: (a) The Peshawar Communications Station remains of great and undiminished importance to the US and we wish to keep it--though not at any price. (b) Peshawar is integral part totality USG-GOP relationship and must not by us or GOP be specifically linked to military supply policy (ref (b), para 1). (c) Military supply policy is in itself of considerable continuing value to GOP (ref (b), paras 2-5 and ref (d)/5/) and we assume GOP wishes preserve it. (FYI: GOP requests for tanks and extension leases for naval vessels, if approved, will be further evidence this.) /5/The telegram does not include a reference (d). (d) Any GOP attempt, such as Admiral Khan may have in mind to use Peshawar to force change in military supply (refs (a) and (c)) will not be successful and would only put strain on USG-GOP relations. 2. We believe following additional points (which should not be communicated to GOP) important to our own (i.e., USG) thinking on Peshawar matter. (a) While we prepared look as favorably as possible on GOP requests designed increase its own capability at Peshawar (e.g., recent "shopping list" submitted [less than 1 line of source text not declassified]), there are limits to what we can do in this field in terms both our own technical security requirements and our inability make major direct contribution to GOP capabilities directed against neighbor who is also friend of ours. In any event, degree our forthcomingness this field not likely be decisive in future Peshawar. (b) Bearing in mind 1 (c) and (d) above, MOD Admiral Khan's indications of desire support continuance Peshawar are welcome. However, final discussions and decisions will have to be with Ayub/6/ in terms (a) and (b) above, and MFA will likely play significant role. In order try minimize danger of issue, which is one of broad national interest to both USG and GOP, being framed in terms of inter-ministry squabble within GOP, and on assumption we our own best advocate, we wonder if it would not be useful for you ease into subject of Peshawar with Pirzada at early date. /6/Oehlert met with Ayub on December 22 and informed him, as instructed, that the Peshawar facility remained of undiminished importance to the United States. Ayub agreed that Peshawar was an integral part of the relationship between the United States and Pakistan, and he also agreed that the question of the renewal of the agreement should be discussed well in advance of the expiration of the 10-year agreement governing the facility in order to avoid "crash decisions." (Telegram 2443 from Rawalpindi, December 22; National Archives and Records Administration, RG 59, Central Files 1967-69, POL 15-1 PAK) Rusk
475. Memorandum of Conversation Between President Johnson and President Ayub/1/ Karachi Airport, December 23, 1967. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VIII, Memos, 8/67-4/68. Secret. Drafted by Rostow. A note on the memorandum reads: "(Partial)." Although the memorandum is dated December 22, the President's Daily Diary establishes that President Johnson met with President Ayub during a 1-hour refueling stop at the Karachi airport on December 23. (Ibid.) President Johnson was returning to Washington from a trip to East Asia that included stops in Australia and Thailand. He did not stop in India, but sent a message to Prime Minister Gandhi from Air Force One on December 23 expressing regret that the press of time precluded a stop to meet with her. (Telegram 89247 to New Delhi; National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 US/JOHNSON) President Johnson summarized to me the operational result of his talk with President Ayub as follows: 1. We shall look urgently into the possibility of an additional PL 480 allocation of vegetable oil to Pakistan. 2. We shall look urgently at possibility of additional 500,000 tons of wheat for Pakistan, of which 400,000 would be PL 480 and 100,000 commercial purchase. The purpose would be to build up Pakistani stocks in this generally favorable environment. President Ayub said that with some exertion they could store this additional shipment. 3. President Johnson agreed to look into the possibility of replacing the 500 obsolescent Sherman tanks with Pattons. In addition to agreeing to sales from third countries (e.g., Italy and Turkey), he wanted us to examine whether we could not sell these directly to Pakistan if the Shermans were taken out of action.
476. Telegram From the Embassy in Pakistan to the Department of State/1/ Rawalpindi, December 27, 1967, 0857Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 15 PAK-US. Secret; Exdis. 2492. Ref: (a) State 87857;/2/ (b) Rawalpindi 2443./3/ /2/Document 474. /3/See footnote 6, Document 474. 1. In Pindi reftel reported Ayub conversation of December 22 re Peshawar. 2. With further reference to State 87857: A. Regardless of what we say about not linking Peshawar specifically to military supply policy (para 1(b), State 87857) it will be impossible to divorce the two from each other in the minds, tactics, and strategy of GOP and it is a fact that both negotiations must be conducted in the same time frame. The key word of the above reference is "specifically" and we will be so guided. B. The GOP will not be greatly convinced of the "considerable continuing value to GOP" of USG military supply policy (State 87857, para 1 (c)) unless either or both: I. Such policy produces reasonable quantity end items for GOP on a case to case basis; II. Such policy results in measurable reductions in GOI offensive strength. C. Admiral Khan's reference to tanks and Peshawar in same conversation can be construed not as attempt to "force change in military supply policy" (para 1 (d) State 87857) but rather as expectation that positive results will be forthcoming under that policy on a case to case basis. D. While it is agreed that we must make clear to GOP that there are limits to what we can do in the field of increasing GOP capacity at Peshawar, this proposition should rest on terms of our own technical security requirements and not on our inability to make major direct contribution to GOP capabilities [6-1/2 lines of source text not declassified]. 3. Pursuant to conversation with Ayub will be talking next week both to Khan and to Pirzada. Both will have a substantial intervention in the decision and we intend maintain dialogue with both as well as with Ayub. Oehlert
477. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, December 28, 1967. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VIII, Memos, 8/67-4/68. Secret. SUBJECT I have looked into two questions you raised after your conversations with President Ayub: 1. If they are clearly for replacement, why don't we sell tanks directly to Pakistan, rather than fuss with a complicated deal in which the Europeans sell them to Pakistan with our permission? 2. Whatever the purchase arrangements, why are we talking about 100 tanks when Ayub wants 200? There are two stock arguments against a direct U.S. tank sale to Pakistan. First, we have no tanks of the M-47 model Ayub is seeking in Europe. This was the Korean war tank we stopped making in 1954. It has long since disappeared from our active inventory and our MAP shelf. However, we do have a considerable number of newer M-48 tanks in inventory. This is an improved version of the M-47--no more armor or fire power, but better mechanical performance and electronic equipment. Moreover, Defense estimates a cost of roughly $45,000 per copy for our M-48's which compares favorably with the estimated $80,000 per copy the Europeans will charge Ayub for reconditioned M-47s. Thus, taking the question of supply alone, it appears that we could offer Ayub better tanks than he is seeking (although not enough better to give the Indians real trouble) for less money than we would have to pay the Europeans for the inferior model--and make ourselves some foreign exchange in the bargain. But we must also weigh the second argument against direct sale: that it would undermine the policy on arms sales in South Asia we announced last April. That policy is designed to exert maximum restraint on defense spending while at the same time keeping both countries, particularly Pakistan, from being forced to rely solely on the Soviets and the Chicoms as arms suppliers. The centerpiece of our policy is a ban on U.S. sales of new weapon systems to either side and a stated intent to discourage other suppliers from such sales except where clearly for replacement. This gets us out of the arms sales business in South Asia, except for spare parts, without slamming the door on Pakistan's need to maintain and modernize her largely U.S.-equipped forces. This policy is partly a reaction to past and present Congressional unhappiness with arms sales to poor countries. (You will recall the flak when U.S. tanks were firing at each other from both sides of the line during the Indo/Pak war in 1965.) It has already saved us a number of requests for planes and other sophisticated weapons from both sides. It has been the framework for substantial pressure--and some success in Pakistan--for reductions in Indo-Pak defense spending. Still it is not an entirely tidy answer. It did not, for example, keep the Paks from buying 150 tanks from the Chinese nor the Indians from buying jets from the Soviets. Indeed, it is sufficiently untidy to cause Bowles to send a strong cable/2/ recommending an immediate policy reassessment with a view to a ban on all U.S. sales to both sides of all lethal equipment--spare parts and end items. (You will recall instructing us, pursuant to the Bowles cable and a rejoinder from Ben Oehlert,/3/ to conduct a thorough review of arms sales on the Subcontinent. That review is completed and State has instructed Bowles and Oehlert that we will continue for the present with our present policy.)/4/ /2/See footnote 2, Document 472. /3/See footnote 3, Document 472. /4/See Document 472. The Congressional side of the problem has worsened considerably with the passage of the Conte amendment to the foreign aid appropriation bill which calls for reductions in foreign aid equal to poor countries' spending on sophisticated weapons. We haven't yet determined whether we must consider tanks "sophisticated." If so, the President must find the tanks deal "vital" to U.S. security and waive the effect of the amendment, or he must cut AID development loans to Pakistan by an amount equal to spending for tanks. If the past slate were clean, it is a moot point whether we would get a better reaction on the Hill to such a waiver if we were making the sale as against the Europeans doing it. But in the light of our announced policy--which would be clearly violated by any direct sale--an offer of U.S. sale would produce a situation almost precisely parallel to the F-5 problem in Latin America. We could probably expect much the same results with Henry Reuss and other liberals in both Houses. Beyond this, there is the question of credit terms. We have no unused authority to offer Ayub time payments. He can probably do better with the Europeans. In short, if we sell these tanks directly, we will violate our own announced policy against selling arms on the Subcontinent; we will thereby open ourselves to requests for other sophisticated weapons--including aircraft--from both sides; and we will do these things in the heat of Congressional displeasure with all sales of sophisticated weapons to poor countries. We will also draw heavy fire from the Indians, with whom we hope to start general defense talks in the next few weeks. Most important, we will burden the aid bill with another heavy albatross to carry in an already tough year. In spite of the advantages, therefore, I would recommend against our offering to make the sale ourselves. The question of why 100 rather than 200 tanks is a matter of international and Congressional tactics. The original Pak request was for 100, although it was clear that this was the first in a series of actions designed eventually to replace all of the 500 Sherman tanks Ayub mentioned to you. The Paks later raised the request to 200 because their foreign exchange situation loosened a bit so that they thought they could afford more. Our object is to keep the modernization process to a slow and steady pace which doesn't divert resources from development. On the Congressional side, Luke Battle talked to the Senate Foreign Relations Committee in terms of 100 tanks and got grudging approval precisely, in part, because the allowance was smaller than the request. If we wanted to do 200, we would probably have to return to Fulbright & Co. and we could not expect a pleasant reception. All things considered, I would vote that we keep talking in terms of 100 tanks to be purchased from the Europeans, probably from Italy or Belgium./5/ /5/A marginal note on the memorandum by Jim Jones reads: "I want to talk to him about this," apparently quoting the President's response to Rostow's memorandum. Walt
478. Telegram From the President's Special Assistant (Rostow) to President Johnson in Texas/1/ Washington, December 28, 1967, 1638Z. /1/Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VIII, Memos, 8/67-4/68. Confidential. CAP 671199. Subject: Wheat for Pakistan. We have some confusion in the ranks about your wishes on a new PL480 wheat agreement for Pakistan. I thought we had better check with you directly. 1. In October you made two decisions on wheat for Pakistan. --First, you authorized immediate negotiation on 500,000 tons of wheat plus oil and other commodities. It was the signing of this agreement that you saw on the ticker on Tuesday./2/ /2/December 26. --Second, you instructed Oehlert to try to work out a deal for another 250,000 tons of which we [they] would buy half and we would supply half through PL480. 2. Just before we got to Pakistan last week Ayub's people gave Oehlert their answer to the half-and-half proposition put to them in October. Their counter-offer is to buy 100,000 tons if it is part of a package containing 400,000 tons in PL480 wheat. In short, they have responded to our proposal of a 1-1 ratio between purchases and PL480 with a counter-offer of 4-1. It is this package, totaling 500,000 tons, that Ayub discussed with you. 3. Oehlert recommends we accept Ayub's counter-offer. Freeman and Gaud support that recommendation. I support the recommendation that we accept Ayub's proposal, but I want to be sure that we are following your wishes in accepting a somewhat less favorable proposition than you instructed us to put to the Pakistanis. Oehlert rightly points out that they are in a rough foreign exchange position, and that even this proposal is generous in a bumper crop year. I don't think we will do any better by pushing, although we may be able to move some more PL480 wheat for buffer stocks in 1968. For now, I recommend you authorize us to accept the Ayub proposition./3/ /3/The President approved the recommendation.
479. Telegram From the Department of State to the Embassy in India/1/ Washington, December 28, 1967, 1929Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 1 INDIA. Secret; Limdis. Drafted by Coon on December 27; cleared by Heck, Wolf, Kathryn N. Folger (H), and in draft by Spain, Acting Assistant Legal Adviser for Economic Affairs Knute E. Malmborg, Williams, and Colonel Black (DOD/ISA); and approved by Handley. Repeated to Rawalpindi, London, and CINCSTRIKE. 90381. State/AID/DOD message. Ref: State 80797./2/ Defense Talks with GOI. /2/Document 472. 1. Final passage of aid legislation with resolution House-Senate differences close to lower House levels has underscored importance of obtaining better understanding with Indians than we have been able to achieve to date regarding where they are planning to go over next several years in their defense spending and military force levels. As indicated last para State 80797 we need to have some such understanding in hand to administer FY '68 funds as well as when we discuss crucially important FY '69 aid bill with Congress. FYI: Inclusion of Conte/3/ and Symington Amendments/4/ in FY '68 aid bill has added to importance of achieving such understanding, as indicated below. End FYI. /3/See footnote 8, Document 472. /4/The Symington Amendment, Section 620 (s) of the Foreign Assistance Act of 1967, was adopted on November 14 and required the President to withhold assistance if in his view the recipient country excessively and unnecessarily diverted resources to military expenditures. (P.L. 90-137; 81 Stat. 445) 2. It is clearly sense of Congress that US economic aid resources shall not be used to support regional arms races. Congressional attitudes toward our economic aid program are influenced by degree to which such arms races are in fact taking place. As major developing country and largest aid recipient, manner in which India handles its Congressional constituency here regarding its defense spending can have important bearing on Congressional attitude toward aid as a whole. At present Congress is disturbed by reports of Indian re-equipment on extensive scale and is far from convinced that pace-setter India is genuinely anxious to hold down defense spending and avoid arms spiral with Pakistan. Evidence of Indian restraint could thus prove critical factor influencing FY '69 aid bill. 3. Meanwhile we have immediate question of applicability of Conte and Symington Amendments to current aid to India. Dept. is studying interpretation and application of amendments, and will shortly instruct the field thereon. In any event, we will soon be talking to Congress about current and proposed Indian acquisitions of sophisticated military equipment from abroad in more detail than ever before. Whatever Indians may think about Conte and Symington Amendments we hope that they will at least privately recognize it is in their interest that when we go to Hill we are familiar with Indian plans and rationale. 4. In light foregoing we believe Embassy should take early occasion get talks started with Indians. Fact that GOI officials have already expressed interest in such talks (reftel) should provide useful opening wedge. We believe Country Team has adequate manpower resources for type of talks we envision and Washington or CINCSTRIKE deputation unnecessary, but willing reconsider if you disagree. 5. Believe we should recognize both among ourselves and with GOI that main purpose of talks will be to help prepare us for administering aid in FY '68 and for next round of aid legislation and that this should determine character and subject matter of discussions. We would thus hope that talks would give us better understanding of rationale behind current GOI defense spending levels and provide us better basis for balanced independent judgement which we could support with Congress as to degree of restraint Indians showing in total defense spending. To extent it should become clear GOI intends under currently foreseeable circumstances to cut this year's defense expenditures and hold line on defense budgets for next several years, so much the better. We would also hope GOI could give us reasonably detailed picture of current and planned acquisitions of individual items of sophisticated equipment, foreign exchange costs and rate of payment of such acquisitions including estimated foreign exchange equivalent of rupee payments to Bloc, and, most important, rationale for their acquisition. Inevitably this will involve some discussion of threat estimates and force levels as well as budgetary data but we do not foresee anything on that scene comparable in detail and comprehensiveness to exercise preceding 1964 memo of understanding./5/ (Incidentally it would be helpful if Indians would come to share our sense that 1965 war completely changed the rules of the game, that questions we are interested in now relate to general trends in defense spending and to how specific planned acquisitions relate to current and prospective threat, not to whether current and planned budgets and acquisitions are consistent with a five-year plan formed in another era.) /5/See footnote 2, Document 53. 6. We recognize and sympathize with Embassy New Delhi's reluctance engage in discussions with GOI regarding Indian force levels vis-à-vis Pakistan, particularly to extent this involves estimates of Pak threat. Unfortunately we fail to see how we can examine only half a defense establishment in a sufficiently coherent way to enable us to form the kinds of judgements we are seeking here. We hope that by laying our cards on table with GOI at outset of talks we can arrive at the kinds of understandings we need without excessive diversions into blind alleys of debate regarding Pakistani intentions, capabilities, etc. 7. Recognize you may have further thoughts regarding strategy, tactics, and terms of reference. Hope we can work these out soonest and get talks started by mid-January. Timewise, fuse on Capitol Hill is likely prove short./6/ /6/Bowles reported on January 8 that he discussed the issue of India's defense expenditures with Desai on January 2, stressing the limitations placed on U.S. policy by the Conte and Symington Amendments. Desai indicated that he remained determined, for a variety of reasons, to hold defense expenditures to the minimum consistent with security requirements. Bowles noted, however, that it would be unrealistic to expect India to violate understandings with foreign suppliers in order to provide the detailed information the United States required. (Telegram 8089 from New Delhi; National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 1 INDIA) Rusk [Continue with the next documents]
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