S/S Files: Lot 63 D 351: NSC 98 Series

Memorandum by the Deputy Under Secretary of State (Matthews) to the Executive Secretary of the National Security Council (Lay)

top secret

Subject: First Progress Report on NSC 98/1, “The Position of the United States With Respect to South Asia”1

NSC 98/1 was approved as Governmental policy on January 25, 1951. It is requested that this Progress Report as of April 25, 1951, be circulated to the members of the Council for their information.

Representatives of the Department of State and the Embassy in London discussed United States and United Kingdom objectives and policies with respect to South Asia with officials of the British Foreign Office and Commonwealth Relations Office on February 6–10, 1951. The United States spokesman based their presentation on NSC [Page 1693]98/1. These talks disclosed general agreement between the two governments on broad objectives in South Asia, and led to closer coordination of policy with respect to such matters as the Kashmir dispute, the Afghan-Pakistan dispute and the supply of military materiel to the South Asian countries.

The United States Government participated as a full member in the meeting of the Consultative Committee for Economic Development in South and Southeast Asia held at Colombo, Ceylon, from February 12 to 20, 1951. This meeting provided an excellent forum for making known the sympathetic interest of the United States in economic development in South Asia, although no commitments as to the nature or extent of possible United States assistance were given.

From January 25 to April 25 the number of USIE personnel, United States and local, in South Asia increased from about 360 to some 450. Priority in the USIE program has been given to India and Pakistan, personnel in India on March 31 being 344 and in Pakistan, 80. The total USIE program for South Asia is being reviewed in order to increase its effectiveness in reaching key target groups.

On February 12, 1951, the President recommended to the Congress that it authorize a grant of two million tons of food grains to India to assist that country to meet a food crisis arising from an extraordinary series of droughts, floods and other natural disasters which had seriously reduced domestic food production. Representatives of the Department of State, the Department of Agriculture and the Economic Cooperation Administration strongly supported this proposal in hearings before the House Foreign Affairs Committee on February 21 and 22, and before the Senate Foreign Relations Committee in executive session on April 16–18. A rule for a House bill authorizing a loan to India for the purchase of two million tons of grain was issued by the Rules Committee on April 25. A Senate bill authorizing the supply of two million tons of grain, one-half as a grant and one-half on credit, terms, was approved by the Foreign Relations Committee on April 20. Further Congressional action was pending on April 25.

On March 16 the Indian Government entered into an agreement, embodied in an exchange of notes, under Section 408(E) of the Mutual Defense Assistance Act of 1949, as amended, thus becoming eligible for military procurement assistance on a reimbursable basis. The Government of Pakistan had entered into a similar agreement on December 15, 1950. In addition to testing samples made available to both countries, Pakistan has received 70 medium tanks with two years maintenance spares, and India spare parts for light tanks under these agreements. Both countries have purchased other types of military equipment in open market, including such items as remanufactured [Page 1694]training aircraft. Negotiations with respect to additional matériel for both countries were in progress on April 25.

On April 19, as a consequence of representations by the United States Ambassador in New Delhi, the Government of India prohibited the export of tires and tubes. Although the ban was imposed on all destinations, its principal intent was to stop the flow of tires and tubes to Communist China.

With respect to the dispute between India and Pakistan over the future of the State of Jammu and Kashmir, the President on February 16, 1951, assured the Prime Minister of Pakistan that the United States Government would endeavor to provide a United States citizen to represent the United Nations in the next phase of the United Nations effort to settle the dispute. On February 21 the United States and the United Kingdom jointly introduced in the United Nations Security Council a resolution providing for the appointment of a United Nations Representative charged with effecting the demilitarization of the disputed state and preparing the way for a plebiscite to determine whether the people of Kashmir wished to be affiliated with India or Pakistan. The resolution further provided that matters on which the United Nations Representative was unable to achieve agreement between the parties should be referred to arbitration. This resolution, with minor amendments, was adopted by the Security Council on March 21 [30]. The Government of India indicated that the resolution was unacceptable to it; The Government of Pakistan accepted the resolution. Dr. Frank Porter Graham has agreed, with the President’s approval, to serve as the United Nations Representative provided for in the resolution and it is anticipated that he will be so designated by the Security Council on April 30.

On February 25, 1951, the Governments of India and Pakistan signed a trade agreement valid until June 30, 1952. This agreement ended a trade impasse which had existed from September 1949 when India devalued its rupee and Pakistan did not. The United States Government had no part in the negotiation of the agreement, but the Department of State had in the immediately preceding months repeatedly urged both the Indians and the Pakistanis to find some formula which would permit a resumption of trade between their complementary economies.

During the period under review the Department of State continued its efforts to persuade the Pakistan Government to accept the United States proposal of November 6, 1950, made to Afghanistan and Pakistan, for the resumption of more normal relations and, thereafter a conference between the two governments. The Afghan Government had informally indicated its willingness to accept this proposal shortly after it was put forward. The Pakistan Government on [Page 1695]April 14 stated that it was prepared to accept those portions of the United States proposal looking toward the resumption of more normal relations, but that before agreeing to participate in a conference, it wished to have the utility of such a conference explored through bilateral diplomatic channels. In the meantime and without apparent reference to the United States proposal, the two governments had in mid-April embarked on informal, exploratory talks at the official level. On April 23 the Secretary of State informed the Afghan Prime Minister,2 in this country on an unofficial visit, of the substance of the Pakistan reply to the United States proposal. Efforts to bring the two governments together were still in progress on April 25.

There were no developments to April 25, 1951 which require a revision of the policies approved in NSC 98/1 on January 25.

H. Freeman Matthews
  1. This progress report was noted by the National Security Council in NSC Action No. 483, taken at its 92nd meeting on May 23 (S/S Files, Lot 62D1, NSC Actions).
  2. Shah Mahmud Khan.