Office of the Historian

891.2546/12–1354

Memorandum by the Deputy Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Jernegan) to the Under Secretary of State (Hoover)1

secret
[Washington,] December 13, 1954.

Subject:

  • Beryl Arrangement with India

The US may be faced with the need to decide before December 31, 1954 on the renewal of its arrangement with India for procurement of Indian beryl, an atomic energy material. The OCB decided in favor of renewal on September 29 (Tab A),2 but the matter appears to have been reopened by the AEC at the November 24 meeting of the Board.3

[Page 1793]

In brief the facts are: (1) Beryl is in category I–B under the Battle Act—which means that it is of “primary strategic significance”. It is on the National Stockpile List because of its industrial uses. (2) Our beryl purchase Arrangement with India is secret. It provides for supply of Indian beryl at world market prices. The value of shipments has averaged $150,000 annually. (3) The Arrangement provides for automatic renewal for five years from September 30, 1955 if notice of termination is not given by September 30, 1954. The date of decision on termination was shifted to December 31, 1954 in order to give India time to consider our proposal to extend the original period of agreement by one year. (4) If India does not respond to our proposal by December 31, the US must be prepared to finance the five year purchase or give notice of termination.

The difficulty of the decision on the automatic five-year renewal stemmed from the fact that our AEC informed us that there was no present requirement which would support renewal for five years. Even though the AEC is prepared to finance one year of the five-year renewal periods, funds are not readily forthcoming for the full commitment which would be involved in the five year renewal.

The Department has held that the continuance of the Arrangement is important in the US interest for several reasons, including East–West trade problems involving US relations with India and possible US influence on atomic energy development in India. The Department has not presumed to anticipate future beryl requirements, but has noted the difficulty of negotiating a new Arrangement with India if the present one were terminated. (Tab B).4

The OCB on September 29 decided that the US would not act to cancel the arrangement “in any event.” However the minutes of the November 24 Board meeting (1) note the AEC report that a “misunderstanding exists” as to the Board’s earlier decision, and (2) in effect, direct the Department to attempt to negotiate a modified agreement with India.

Since November 24 the instructions for new negotiations were held up at the suggestion of the AEC in view of a reported new development which might dictate a strong United States desire for full use of the renewal provisions of the present arrangement.

Recommendation

That you (1) inform the Board that the Department of State, in light of the AEC views, has not attempted to negotiate a modified Arrangement as recommended by the Board, and (2) obtain from the Board a reaffirmation of its decision of September 29 (Tab A) that “no notice of cancellation would be filed with the GOI in any event.”

  1. This memorandum was drafted by Fluker of SOA.↩
  2. The Supplement to the OCB Minutes of Meeting, Sept. 29, 1954, has not been found in the Department of State files.↩

  3. According to a memorandum of Dec. 7, 1954, by Max W. Bishop, Special Assistant to the Under Secretary of State, to Under Secretary Hoover, the OCB at its meeting on Nov. 24 discussed the subject of Indian beryl as follows:

    “Noted report by the AEC that misunderstanding exists as to the Board’s agreement concerning the purchase of beryl from India. Noted that the current contract will be extended automatically for five years on December 30, 1954, if other arrangements are not made before that date. Agreed that it would be desirable to explore now the possibility of entering into a new contract for one year with an option to renew for another year and recommended that the Department of State ascertain whether such contract terms would be acceptable to the Indian Government.” (891.2546/12–754)

    ↩
  4. Tab B was Deputy Assistant Secretary Jernegan’s memorandum to Acting Secretary of State Smith, Sept. 29, p. 1767.↩