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FOREIGN RELATIONS OF THE UNITED STATES 1964-1968, Volume XXV South Asia
Department of State |
491. Memorandum From the Assistant Secretary of Defense for International Security Affairs (Warnke) to Secretary of Defense McNamara/1/ Washington, April 11, 1968. /1/Source: Washington National Records Center, RG 330, OASD/ISA Files: FRC 72 A 1498, 680.1 Pakistan. Secret. SUBJECT We have received official notification (Tab A)/2/ this past week from the Government of Pakistan stating its intentions to terminate the Peshawar agreement when it expires on 17 July 1969. The original agreement governing the establishment of a facility at Peshawar was concluded on 18 July 1959 and was to remain in force for a period of ten years, and for a second period of ten years thereafter unless either party gives written notice to the other at least twelve months before the end of the first ten year period of its desire to terminate the agreement. I recommend we proceed as set forth below. /2/Reference is to telegram 4396 from Rawalpindi, Document 490. We know the President discussed the matter with Mr. Katzenbach and Mr. Helms last Saturday morning. A consensus apparently was reached that the USG should remain silent for the present. A period of silence is, in our opinion, the best tactic. I believe, furthermore, we should not initiate conversations with the Pakistanis until we know exactly what we want to say and why. I also believe we should be non-committal with the Press. Approve I believe there is a pretty good chance the facility can be maintained beyond 1969, but that this will require careful and thorough identification and consideration of the problems involved. There are several elements of DoD with interest in these facilities and of course other government agencies. Accordingly, I recommend my office be the focal point for DoD participation in this problem. Approve /3/Deputy Secretary of Defense Nitze initialed his approval of both recommendations on April 13. Paul C. Warnke
492. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, April 22, 1968, 5:30 p.m. /1/Source: Johnson Library, National Security File, Memos to the President, Walt W. Rostow, Vol. 72, April 12-23, 1968. Secret. SUBJECT Herewith, Messrs. Gaud and Zwick recommend a $225 million AID loan to India. This loan will provide all the AID capital assistance now planned for India during FY 1968. Charlie Zwick's memorandum (Tab I)/2/ is a reasonably short summary of requirements, self-help performance, balance of payments effect, and relation to Indian military expenditures. Gaud's memorandum (Tab II)/3/ gives you somewhat more detail. /2/Memorandum from Zwick to the President, April 12, entitled "AID Program Loan to India." (Ibid.) /3/Memorandum from Gaud to the President, April 10, entitled "$225 Million Production Loan to India." (Ibid., Country File, India, Vol. XI, Memos and Miscellaneous, 2/68-10/68) I think the economic case for the loan is clear. India is now in the first stages of a massive economic recovery, led by her record grain harvest. If she can find the foreign exchange required to get and keep her slack industrial capacity moving, she can start a cycle of growth which would be the most hopeful event in the history of our foreign aid efforts. If she can't find that foreign exchange, we can expect not only severe economic pressures, but much larger burdens on an already creaking--though still democratic--political system. As you know, we have had our problems with the Indians of late on the NPT and on their military expenditures. I think it would be a mistake, however, to withhold this loan on either count. We seem to be having somewhat more luck in establishing conversation with the Indians on the NPT precisely because we are not threatening aid cut-offs, whereas the Russians are apparently taking a very hard line which includes such threats. On the Conte amendment and military spending, we would propose to hedge the disbursements of this loan against the possibility that we will learn later that the GOI is playing fast and loose with us. As of now, we are fairly certain that no arms payments will be made during the period we have been assured that they will not. But we are prepared if we find out otherwise. This loan, like all our aid to India, would be made within the multilateral context of the consortium, in which our share will drop this year to about half the bilateral contributions. The loan would involve no balance of payments outflow. W. W. Rostow/4/ /4/Printed from a copy that bears this typed signature. Approve package /5/This option is checked and the date April 23 is written next to this line in an unknown hand.
493. Telegram From the Embassy in Pakistan to the Department of State/1/ Rawalpindi, April 22, 1968, 1320Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK. Secret; Immediate; Exdis. 4635. From Ambassador. Please pass White House. Subject: Tanks. 1. German Ambassador to Pakistan returned to Pindi on Friday/2/ from Bonn consultations. Saw him socially over weekend and he asked to see me ASAP re tanks. We met 1200 hours today. More on this subj later this tel. /2/April 19. 2. At 0900 hours today GOP Defense Minister and Secretary informed me that they were convinced that no tanks would be forthcoming for GOP from FRG through Italy because: A. FRG would in all probability not make a sale to Italy on basis which would permit tanks to come to GOP; and B. even if they were ultimately proved wrong in this respect Italy would not agree to acceptable terms. 3. Defense Minister and Secretary went on to say that there is a vital tug-of-war going on within top GOP levels re their short and long term relationships vis-à-vis USG, USSR and ChiComs. They said that in that context: A. GOP military and other elements urging closer USG relationships including Peshawar renewal for additional three years; B. "Enemies" of USG including powerful elements of MFA among others contending that USG is pro-India and anti-Pakistan, citing: I. 1962 and 1965 developments; II. Apparent unwillingness apply Conte-Symington Amendments to India despite heavy Indian rearmament program; III. No spare parts have been shipped despite fact program was announced a year ago. Comment: The reasons for this delay are understandable to us but not readily explained to GOP military and certainly not to elements already convinced that we are dragging feet and will continue to; IV. Breakdown of tank deal after tank deal, for one reason or another, also being used against us as additional evidence that we are not being helpful but are rather causing delays behind the scenes. 4. German Ambassador informed me that: A. There is no tank agreement between FRG and either Government of Italy or Italian firms; B. He strongly doubts that FRG can now make any tank agreement which would permit tanks to go from FRG to GOP through Italy because: I. India exerting strong pressure against such a transaction including threat to recognize East German Government; II. Publicity given fact that some German tanks would probably end up in Pakistan has strengthened hands German Socialist Party which is opposed to cooperation re arms for GOP, which represents approximately 40 per cent of parliamentary coalition and to which FRG Foreign Minister belongs. 5. Whatever the reasons, it is a fact that no spare parts have yet been forthcoming. 6. Whatever the reasons, it is a fact that tank possibility after tank possibility has evaporated. 7. Whatever the reasons, it is a fact that the Germany to Italy to Pakistan transaction remains an enigma shrouded in mystery. 8. It is a fact that first through spare parts and second through approval of tanks, under strict conditions, from third countries we have been moving towards arms policy liberalization here in order to: A. Maintain some reasonable forces balance on subcontinent; B. Counter Indian indigenous production capacity and USSR pipe line; C. Maintain and improve our influence here; and D. Hold at present levels or better yet diminish both USSR and ChiCom influence here. 9. During their visit here Hamilton, Spain and Heck indicated that there could be further liberalizations if necessary to obtain needed tanks and possibility limited quantities other hardware. 10. It is my considered judgement that the moment of truth has arrived and that some prompt and positive steps must be taken to: A. Convince GOP of sincerity and effectiveness our policy; and B. Forestall GOP moves for either or both profligate spending as per France and/or diminishing influence with corresponding increase influence USSR and/or ChiComs. 11. Our prior decision to see to it that GOP does get 200 tanks in early time frame and on reasonable terms is not adversely affected by Peshawar termination notice. On the contrary, I view such a notice as an added reason why we should speed up effectuating that decision at least with respect to the first 100 tanks. 12. Depending on how Peshawar comes out we may or may not be prepared to be forthcoming on the second 100 tanks and/or other items. 13. It is therefore urgently recommended that we wait no longer for the evolving of a complicated Tinker to Evers to Chance triple play but that on the contrary, we at once inform GOP that pending further evolution of arrangements with Germany, Italy and/or Belgium, they can have 100 tanks in either following ways: A. By purchase from Iran; B. By direct purchase from our own inventories; or C. From German inventory which we would reclaim from Germany and sell to GOP. The German Ambassador assures me his government would have no problems with such an arrangement. 14. By confirming publicly our agreeability to having GOP receive tanks under our control we have already invited any Indian or Congressional displeasure which might be inherent in the situation. It is difficult to see how either problem would be seriously further complicated by following any of the courses recommended in paragraph 13 above. 14. Respecting the Iranian possibility it is observed that: A. The Shah has the means and probably the determination to get the number and quality of tanks he wants--if not all from us then from some other source; B. He might be persuaded not to raise his sights re new acquisitions because of a sale of M-47s or 48s to GOP; C. It is far more important to protect vital interests here and to thwart those of USSR and ChiComs than it is to place any particular limitation on the number of new tanks the Shah purchases, especially since we may not be able to control that anyway. Oehlert
494. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 8, 1968, 4:15 p.m. /1/Source: Johnson Library, National Security File, Country File, India, Vol. XI, Memos and Miscellaneous, 2/68-10/68. Secret. SUBJECT Two weeks ago you instructed us to hold up on the $225 million AID program loan proposed for India. This loan would fill out our share of Consortium aid for Indian fiscal year 1968, which ended in April. As you know, India's economic performance and prospects are better now than ever. We have tried to use the delay to find ways to use the loan as political leverage with Mrs. Gandhi and to impress on her how painful it is to get these large sums for a country that isn't always as helpful as we could wish. I am afraid we have come up empty. Bill Gaud and Nick Katzenbach concur in the following analysis and recommendation. Setting We must start with two unpleasant but very real facts: 1. From the Indian point of view we would be trying to exert more pressure with substantially less aid. Our total capital aid to India in FY 1968, including this loan, would be about $290 million, about $100 million less than last year. Thus, as the Indians see it, we are cutting back by more than 25%. This is particularly painful now because India is in an economic recovery, led by the bumper harvest, which will cause very serious foreign exchange pressure in the Fall. And the Indians have not forgotten that we were among the leaders in the Consortium who assured them in 1966 that they would get $900 million per year in non-project aid if they agreed to devalue and make other economic re- forms. They went through with the reforms. But this year, because of our cut and the delay in IDA replenishment, they will get less than $600 million in non-project aid. This adds up to a poor base for more arm-twisting. 2. The Government of India is in a particularly weak and delicate political position. Mrs. Gandhi presides over a loose confederation of worried politicians. She is not strong enough to crack the whip over them, and they are not strong enough to withstand heavy nationalist pressures from the Parliament. This problem has been aggravated lately by the lobbying on the Non-Proliferation Treaty in which the Russians (or so the Indians say) have threatened to cut off aid unless India signs. Predictably, Mrs. Gandhi and Morarji Desai have responded with a number of belligerent statements, public and private, to the effect that anybody who tries to blackmail India with aid can take a flying leap. Whether we like it or not, we are clearly in a position where the slightest hint of an attempt to use aid as a direct lever outside the economic field will produce an outraged and counterproductive reaction. Possible Quids Pro Quo There are three major areas in which we might press the Indians to be more helpful: 1. Indian Military Spending: The Indians keep about one million men under arms. They have made several recent deals with the Russians for aircraft, frigates, submarines, and other equipment to modernize their forces. They argue that this is all needed for defense against China, and they are in fact within their 1964 defense plan worked up with our cooperation. We tried to get them to keep their military budget from rising this year, but they announced an increase of slightly less than 5%. In fact, because of price rises, this probably works out to a very small increase in real terms, but it still causes concern in Pakistan and could lead to another round or reciprocal defense increases in both countries. We have also been having trouble with India with respect to the Conte Amendment which requires us to cut economic aid in the same amount that poor countries spend on sophisticated weapons unless the President finds the arms purchase vital to U.S. security. To be brutal, the Indians have lied to us twice--once before the Conte Amendment and once after--about what aircraft they are buying from the Soviet Union. Both cases seem to be products of ignorance rather than intentional deception, and the second case does not now appear to be an actual violation of the Conte provision. But we need much better cooperation in the future. Our preferred solution to this range of problems has been formal Indo-U.S. defense talks in which we would get the information we need to administer the Conte and Symington Amendments. In theory, we might ask for such talks as a quid pro quo for this loan. But this proposal was explicitly and indignantly rejected in March by Morarji Desai during the last go-around on Conte violations--though, characteristically, he informally gave us the information we wanted in the same session. It is Chet Bowles' judgment, with which we concur, that any new approach now would not only queer any chance for military conversations, but might also derail current plans for general U.S.-GOI policy talks (proposed by the Indians) in Delhi in July where we hope to make some headway on this subject. 2. The NPT: Most Indian politicians are frightened of the NPT. They overstate the public sentiment against the Treaty (Morarji likes to say that 99% of Indian public opinion opposes it), but they do know that nobody who counts is really strongly for it and they are afraid that anybody who gets out on a limb will have it chopped off. The Cabinet has taken a formal and public decision against signing the Treaty "in its present form." But the Indian UN Representative is not lobbying with other countries against the Treaty; he is sitting quietly and observing./2/ /2/Telegram 13839 from New Delhi, May 7, reported a conversation with Homi Sethna of the Indian Atomic Energy Commission and Babha. Sethna expressed his objections to the inspection provisions in the Non-Proliferation Treaty and commented that he "did not foresee an Indian signature to NPT `unless Mrs. Gandhi wants to commit political suicide.'" (National Archives and Records Administration, RG 59, Central Files 1967-69, AE 6 INDIA-USSR; also available on the Internet, National Security Archive (www.gwu.edu/~nsarchiv), Electronic Briefing Book No. 6, "India and Pakistan--On the Nuclear Threshold," Document 17) It is conceivable that we could try subtly to tie this loan to the Treaty. But again our judgment is that this tactic would hurt us far more than it would help. Mrs. Gandhi and Desai have staked out their position on Russian blackmail; we could expect them to be at least as tough with us. Indeed, a frontal attack from us might well make it so juicy a political plum to oppose the Treaty that it would tip the final balance against it. 3. Economic Reforms: The Indians have done every major thing we have asked them to do in the economic sphere. They made agriculture their top investment priority. They devalued and liberalized imports. They are holding to the import liberalizations in fiscal year 1969 despite the prospect of serious foreign exchange shortage. They are building food buffer stocks and have agreed to make the Food Corporation into the CCC-like entity we advised. They have moved to keep farm prices at incentive levels despite the bumper crop. They have begun to relax the food zones which separated states. In short, we simply don't have any major changes in economic policy to which we could tie this loan even if the loan would provide enough leverage to get them adopted. On the other hand, if the Indians do not get this loan, economic conditions will force them to turn away from the rapid-growth, free-market track we have urged them to take. Their present balance of payments prospects are very bleak, even assuming this loan is made promptly available. If it is not, they will very soon be forced to put the clamps back on imports and put a damper on what could be the best economic year since Indian independence. We cannot say that this loan will guarantee the economic success we seek. We can say that success is impossible without this loan--and soon. Conclusions: We conclude that we can find nothing to be gained from delaying this loan. We have all learned many a lesson from you in years past about dealing with India. But this time there is nothing we want from her which we haven't already received or could possibly receive if we needle her with this loan. (I think this is true with respect to Vietnam negotiations as well.) On the other hand, there are very great costs to delay. The economic recovery led by the bumper grain crop is the most hopeful event in the developing world in at least five years. If the Indians can find the foreign exchange to take advantage of it, we could get sustained growth in the subcontinent on a scale we have only dreamed about in the past. If they cannot find the foreign exchange, we will not only have missed a great economic opportunity, we will have discredited the economic policy line we have worked many years to sell; we will face serious economic stabilization problems in India; and we will have aggravated the current political unrest by adding a host of potent economic issues. The Aid/India Consortium meets in Washington May 23-24. Only the U.S. has not formally announced an aid pledge for the Indian fiscal year just ended. (This meeting is actually supposed to be about next year's money.) It will be very embarrassing for our representative if we have not announced this loan before then. But our problems will far transcend embarrassment. The other Consortium members have maintained their contributions at historical levels despite the fact that it was obvious that the Congressional cut would force us to cut back. If we don't come through now with even our reduced contribution, we will (1) undermine efforts to raise the necessary funds for next year, and (2) make it crystal clear that we are holding out for some quid pro quo which the Indians will assume is political and may hotly denounce--probably with the support of the other Consortium members. None of this denies or excuses the fact that the Indians can be irritating and uncooperative. Nor does it excuse the fact that they have often been less than helpful on Vietnam. But I think that this is one of those times when we must swallow our discontent and go ahead with the treatment despite the patient's behavior. I recommend that you approve the loan. W. W. Rostow/3/ /3/Printed from a copy that bears this typed signature. Loan approved/4/ /4/Johnson checked this option.
495. Telegram From the Department of State to the Embassy in Pakistan/1/ Washington, May 14, 1968, 2311Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK. Secret; Limdis. Drafted by David A. Macuk (NEA/PAF), cleared by Spain and in substance by Schaffer and Reed (DOD/ISA), and approved by Battle. Repeated to New Delhi and CINCSTRIKE. 164030. 1. Ambassador Hilaly at his request called on Assistant Secretary Battle today. He opened conversation by describing changing South Asian situation brought about by UK decision to leave the area and Russian move to fill this vacuum. Referring only briefly to Indian arms buildup, he explained GOP decision reassess Pakistan's defense requirements in light these developments. 2. Hilaly then stated GOP had drawn up list of "minimum defense requirements to insure Pakistan's security." He presented "austere list" which included four hundred 106 recoilless rifles, one hundred twenty- five 175mm guns, various types ammunition, thirty armored recovery vehicles, four maritime aircraft, sixteen patrol boats with missiles, eight F-104s and various types of electronic counter measure and signal equipment. He said he understood from MOD that Embassy Rawalpindi had also been informed of list. 3. Ambassador Battle expressed appreciation for GOP's constructive attitude in making list available and applauded restraint shown by GOP in its defense spending. Battle asked whether materiel listed encompassed total requirements from all sources including Red China and Russia, noting we had heard Pakistan might be receiving SU-7s from USSR. He also inquired how long a period the list was intended to cover. Ambassador Hilaly replied list covered needed supplies from all sources, explaining he had not been informed of any plans for SU-7 deliveries and that the requirements were for "now" but he assumed they would be good for two or three years. Battle promised review list noting a substantial portion of the items were already obtainable under our current policy. He promised we would be in touch as soon as our study had been completed. 4. Hilaly pointed out that "lethal" weapons on list as well as all other matériel were defensive in character and suggested USG should reconsider ban on sale of lethal end items to Pakistan. He added list was designed to bring Pak defense forces up to, but not to augment, present capacity. 5. In closing Ambassador Battle and Country Director Spain mentioned our concern over recent flurry of interest by press representatives about information newsmen claimed to have that GOP had given USG notice termination of Peshawar communications agreement. Mentioned indications that information was supplied to other correspondents by Dawn Washington correspondent Ejaz Hussain. Hilaly first indicated doubt that leak could be attributed to Hussain or Pakistan Embassy sources; but later conceded that such was possible and he planned investigate./2/ He argued however that in such matters it was unrealistic to hope that secrecy could be maintained for any length of time. /2/In a May 20 letter to Battle Hilaly wrote that Foreign Minister Arshad Husain, who succeeded Pirzada on May 1, made the following statement on May 20 in the National Assembly in response to a question: "The agreement for establishment of a U.S. communications unit near Peshawar is to run for a period of ten years and is automatically renewed for a further period of ten years unless notice of termination by either side is served at least twelve months in advance of expiry of the first ten year period. The Government of Pakistan gave notice of termination to U.S. Government on April 6th, 1968. This step is in keeping with our policy of developing bilateral relations of friendship and mutual understanding with all countries. We can have friendly relations with U.S.S.R., China, and U.S.A. without these being at the cost of any of the others." (Ibid., DEF 15-4 PAK-US) Rusk
496. Telegram From the Department of State to the Embassy in Pakistan/1/ Washington, May 21, 1968, 0044Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, AID (US) 1 PAK. Secret; Exdis. Drafted by Battle on May 20, cleared by Spain, and approved by Battle. 167508. For Ambassador Oehlert from Battle. 1. Pakistani Foreign Minister's public statement re termination Peshawar arrangement/2/ causing deep concern here with respect to possible implications this statement on aid bill. I appreciate your vigorous efforts to prevent or moderate statement/3/ and recognize that it will be difficult undo damage. Nevertheless, in event opportunities occur I want you to be aware serious concern at high levels in Executive Branch re implications for whole aid program and trust you will do what you can to bring these home to top levels GOP. /2/See footnote 2, Document 495. /3/Oehlert reported on these efforts in telegram 5169 from Rawalpindi, May 20. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 15 PAK-US) 2. We expect to have technical study completed by Executive Branch in next few days evaluating relative importance Peshawar and will be in touch with you again then./4/ /4/In a May 23 memorandum to Rostow, Hamilton summarized the conclusions of the study. The primary conclusion was that the Peshawar installation was much less important than it had been in previous years. The study recommended against a major effort or a quid pro quo to keep the facility. (Johnson Library, National Security File, Files of Walt Rostow, Visitors--1968) Rusk
497. Information Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, May 23, 1968. /1/Source: Johnson Library, National Security File, Country File, India, Vol. XI, Memos, 2-10/68. No classification marking. A handwritten note on the memorandum indicates it was received at 11:11 a.m. SUBJECT You directed us in March to join in negotiation of a debt relief package for India, as recommended by the World Bank. Our two primary goals in the negotiation were: (1) a formula assigning the largest share of relief to countries whose aid has been on hardest terms; and (2) $100 million in total annual relief for the next 3 years. We have come out with a good bargain which meets those goals. The package is scheduled to be formally blessed by the other donors at the India Consortium meeting here today. Below is a table showing the agreed annual payments to be postponed. The U.S. share is $8.7 million per year, less than 9% of the total and less than any other major donor. Amount of Debt Relief
This package will commit the Indians to press the Soviets for comparable relief and to adopt prudent limits in accepting future credits. We're still not satisfied that all the Consortium donors are giving relief on as easy terms as they might. Therefore, though this is nominally a 3-year arrangement, we plan to participate with a firm commitment for only one year to preserve our leverage for the next two. All in all, other donors have been much more forthcoming than most of us expected. This package does not increase their total aid to India, but it makes what they do provide much more useful in economic terms. More important, it establishes the principle that those who insist on hard loan terms end up bearing the burden of debt rollover--a point we have been trying to get across for years. The U.S. amount is below the cutoff calling for Presidential review, but I thought you would be pleased to know that a fair bargain has been struck. Walt
498. Telegram From the Embassy in Pakistan to the Department of State/1/ Rawalpindi, May 31, 1968, 1245Z. /1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 PAK. Secret; Immediate; Exdis. 5405. Ref: State 173271./2/ Please pass White House. From Ambassador. /2/Telegram 173271 to Rawalpindi, May 29, instructed Oehlert not to take a specific position concerning renewal of the agreement governing the Peshawar facility during his scheduled conversation with Ayub. Such a position, the Department noted, had yet to be defined. (Ibid., DEF 15 PAK-US) 1. Yesterday Chief of Army Staff General Yaqub gave General Geary the following information: A. GOB/3/ offering only class 5 tanks, which are wrecks requiring complete overhaul. /3/Government of Belgium. B. As is price dollars twelve thousand including ten thousand USG residual (at which residual Yaqub expressed disappointment). C. Overhaul quoted at dollars fifty thousand not including parts (which would vary from dollars ten to fifteen thousand) or engines (which would cost dollars twenty to twenty-five thousand). D. Cost to get tanks here estimated at dollars five to seven thousand. E. Therefore total cost delivered here would range from dollars ninety-seven thousand to dollars one hundred nine thousand. 2. Price is therefore double limits previously established by USG. 3. Paks indicated to General Geary that they could not contemplate such a transaction. 4. When I arrived at President's house this morning I was ushered into an ante-room where I was immediately joined by the Defense Secretary, General Yaqub and General Rafi, who informed me that President Ayub had just overruled them and decided to purchase 100 Belgian tanks "as is" for dollars twelve thousand each and rehabilitate them here. The Secretary and Yaqub said that they hoped USG would waive or substantially reduce its dollars ten thousand residual. At that point I was called into Ayub's office. 5. I had previously decided that I would not request Ayub to clarify the conflicting positions to me of his MFA and MOD, but would rather only ask him if I could give President Johnson a message from him that if President Johnson should subsequently have any suggestions about Peshawar the door would be open for future discussions. I had reached this decision because I felt that if I confronted him with a ministerial conflict his only options would be: A. To refuse to answer: or B. To disavow one or the other ministry's position. 6. When I was ushered in both Foreign Secretary Yusuf and Presidential Adviser Fida Hassan were present, which confirmed in my mind the wisdom of not posing a ministerial confrontation. 7. After the usual exchange of pleasantries, he asked me to convey to President Johnson his deep appreciation for the arrival of the second watershed management team. 8. President Ayub then informed me that he had overruled his military people and decided to accept the 100 Belgian tanks as is and to rehabilitate them in this country. He said the tanks were really junk but that he was desperate, had to have some equipment and had no other place to turn. He said that whereas six months ago tanks had been available from Iran they no longer were because the Shah had decided to keep all his M-47's and M-48's and rehabilitate them himself. Ayub stated that he still needed more tanks than those first 100 and that there being no other source, he hoped that USG would sell him 100 directly. I made no response to this except to say first that I would convey his message and second that I thought he realized how difficult such a thing would be in view of our present Congressional posture. 9. I then asked him if he had any other messages for me to convey to President Johnson. 10. He responded that he would appreciate it if I would convey to both the President and to Lady Bird his sincerest affection, his sympathy for the crushing burdens which the President bears, and his prayerful good wishes for the President's success, good health and happiness. 11. I then stated that there was one message I would be pleased to be permitted to carry to President Johnson, namely: that if the President should subsequently have any suggestions about Peshawar the door would be open for future discussions. 12. For the first time in my fairly frequent contacts with him he showed visible signs of agitation. (Otherwise, in health, bearing, appearance and attitude he was his old self.) 13. He made a long and somewhat agitated statement that he had given the Peshawar matter the deepest of consideration, that he recognized its great importance to USG, that he had no desire to do anything to harm the USG, that he had the deepest affection for President Johnson, Vice-President Humphrey, Mr. McNamara and many other warm American friends, that he had been a comrade to arms with the American military and admired and respected them all (naming among others Admiral Radford and General Twining), but that the security of his country required that Peshawar be closed. He went on to say that at the time of the Powers U-2 incident Russia threatened him with nuclear attack; that at the time of the Cuban missile crisis the Russians informed him that if a conflict broke out Pakistan would receive one of the first waves of atomic missiles, and that the Russians had recently made it clear that if he permitted Peshawar to continue his country would be in grave danger. He then besought my sympathy for and understanding of his position and requested me to make that position clear to President Johnson and to express to the President Ayub's hope and concern that the President too would sympathize and understand. It is to be noted that during this lengthy monologue he did not answer my question either affirmatively or negatively. It is also interesting to note that he did not mention China. 14. At the end of his dissertation, I repeated the question in somewhat different phraseology. 15. He responded with an almost identical soliloquy. 16. I rephrased the question a third time. 17. He stood up, held his head, and said that while he had not consulted any of his advisers about what he was about to say, the only possibility which he had been able to think of was that the facility might be installed on a smaller and less visible basis, in a different location, under complete Pakistani control. 18. Given the circumstances and my several instructions, I did not see my way clear to respond forcefully to Ayub's presentation. 19. I rose again to take my leave, thanking him for the interview even though "the outcome had not been to my liking." He asked me to remain for another cup of coffee, but the conversation was confined to platitudes about my wife, children and grandchildren, the USG presidential election, etc. etc. 20. He accepted my third attempt to leave, but once more repeated his observations of paragraph 17 above. 21. It is my considered opinion that Ayub has not chosen an MFA position over a MOD position but rather that the MFA position was Ayub's position. 22. It is also my considered opinion that Ayub is convinced that closing Peshawar is required by his bilateral policy, and that: A. He will suffer punishment or lose reward from Russia, or both, if he lets Peshawar remain open even for a short time after July 17, 1969; and B. He will suffer no retribution from USG if he closes it. 23. It is further my considered opinion that Ayub will not modify his position unless he becomes convinced, either or both, that: A. He will suffer massive aid punishment if he closes it; and/or B. He will receive very substantial military equipment, but probably on a purchase basis, if he leaves it open for a time. 24. It is additionally my considered opinion that: A. We should not either threaten (A) above or withdrawal present spare parts program unless we mean to carry it out: B. We should not promise (B) above unless (1) We consider it in our national interest to do so regardless of Peshawar; or (2) The final evaluation of Peshawar is so high that we consider we must save it for at least a few years. 25. Present schedule is to leave Pindi noon Monday for Karachi and to leave Karachi 0600 hours Thursday for New York arriving Washington for consultations Monday June 17. 26. Please advise ASAP: A. If wish further representations made to Ayub before departure; or B. If wish me to postpone departure; or C. If wish me arrive for consultations prior June 17. 27. Reference State 173125,/4/ I feel most strongly that under all the circumstances we should not respond in any way in Washington or here to the hardware list until after a full posture on both Peshawar and military supply policy has been evolved, hopefully during my consultations. /4/Telegram 173125 to Rawalpindi, May 29, summarized a conversation between Pakistan Country Director Spain and Pakistani Ambassador Hilaly that dealt largely with the recent visit of Soviet Premier Kosygin to Pakistan. At the conclusion of the conversation, Hilaly asked for an early response to the hardware list he left with Assistant Secretary Battle on May 14. (National Archives and Records Administration, RG 59, Central Files 1967-69, POL 7 USSR) For the list referred to by Hilaly, see Document 495. 28. At 0830 hours tomorrow morning I will deliver a letter to MOD reading as follows: "Dear Mr. Secretary: As you know, President Ayub informed me this morning that a decision had been taken to purchase 100 M-47 tanks from Belgium in `as is' condition for $12,000.00 each. Reference is made to my letter of May 9/5/ addressed to the Minister of Defense, particularly to the following portions: /5/Not found. 1. Reference to previous undertakings on page 1. 2. Reference to estimated price on page 1. 3. Comments on pages 3 and 4. I assume that this mission will in due course receive a formal communication from your government confirming its intention, setting forth estimated cost of purchase and rehabilitation, confirming the previous undertakings referred to on page 1 of my letter of May 9, and requesting the approval of my government for the indicated transaction." Oehlert
499. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/ Washington, June 22, 1968, noon. /1/Source: Johnson Library, National Security File, Country File, India, India's Food Problem, Vol. IV. Confidential. A handwritten note on the memorandum indicates that it was received at 2:50 p.m. SUBJECT I have looked into the two questions you raised. Bill Gaud and Charlie Zwick concur in the observations that follow: 1. Would we be criticized for shoveling out money in June? Gaud doubts that we would. He told the House Appropriations Committee this spring that he would cut corners elsewhere at the end of the year to lessen the $100 million gap in Indian fertilizer financing caused by last year's aid slash. There was no objection. In any event, we have a very strong case against any such critic: --AID's FY 1968 appropriation was signed January 2, 1968, the latest ever. Congressional slowness crammed virtually all the Agency's loan obligations into less than six months. --Nevertheless, AID will commit a lower percentage of its 1968 Development Loan funds in June than ever before. If you approve the India package and a few other loans now on their way to you, AID will commit only about 23% of its loan money in June, compared to 32% in 1967 and 53% in 1966. --Including this package, only about 18% of AID loans to India in 1968 would be committed in June. --Most of this money--the $37 million for the fertilizer plant--will be expended slowly as the construction proceeds. The bulk of it will not be spent for 2-3 years and the last of it probably won't be disbursed in less than 4 years. Expenditures from both loans in FY 1968 will be nil, so that it can't be argued that we are trying to spend the money before the $6 billion cut comes into play. 2. If we don't commit this money now, will we have it for next fiscal year? Technically these loan funds would remain available next year if we didn't commit them now. In fact, however, unobligated loan money would be Passman's most powerful "evidence" that Congress was right to cut the aid bill to ribbons last year and that it should cut even more deeply this time. This is not to say that he would not push such cuts in any event, but experience suggests that this is the best argument he could have. (We may not be able to avoid giving Passman some such ammunition this year. There may be a substantial--$35-50 million--unobligated balance in Alliance for Progress Loan funds. But we should present as small a target as possible.) You should also consider the following points: --The fertilizer financing need in India must be met now, in June and July, if the ground is to be prepared for next spring's crops. India should let contracts for at least $95 million in fertilizer imports by the end of August, $33 million in June alone. The second of these loans provides some of the foreign exchange necessary to do that. If we don't commit this loan now, yet we want to help get fertilizer on the land before the spring crop, we would need to commit the money very early in FY 1969--in July or August. --This money comes from AID's Development Loan account. Along with the Alliance appropriations, this is the most important development instrument we have. It is also the most vulnerable on the Hill. Last year it was cut nearly in half--down to $435 million for loans around the world ex Latin America. This is the place we can least afford to give Passman an opening by ending the year with unobligated balances. Recommendation Delaying these loans would not save on 1969 expenditures unless AID is to abandon further help to the fertilizer program in India for this crop year. Even then, it would not save more than $20-$30 million in FY 1969. On the other hand it would weaken our support for the most hopeful current advance in the poor world--the agricultural revolution in India--and, at the same time, give Passman another potent weapon to beat the aid program. I recommend you approve the loans. Walt Loans approved/3/ /3/Johnson checked this option. [Continue with the next documents]
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