790D.5 MSP/7–2354
The Secretary of State to the Director, Foreign Operations Administration (Stassen)1
Dear Harold: Pakistan’s grave political and economic difficulties have been crystallized by events following upon the recent Provincial Assembly elections in East Bengal. In our opinion these difficulties threaten the stability of all Pakistan and the continuance of the present strongly pro-American Government of Pakistan: United States security interests are directly involved because of Pakistan’s importance to the resistance to communist aggression in the Middle East and Asia in general.
While the threat to Pakistan’s stability is a complex of many political and economic factors, certain immediate economic measures by the United States would serve to ease the pressing problem and to give the time necessary to attack other problems. Pakistan has requested specific commodity assistance from the United States. As you know, Pakistan is confronted with a very serious foreign exchange shortage despite its past drastic curtailment of imports and the resultant shortage of consumer goods. Even under optimistic assumptions Pakistan does not have sufficient gold and foreign exchange to meet its requirement for currency backing and a safe balance for working capital. Pakistan’s foreign exchange earnings prospects do not give promise of remedying the situation in the near future. Additional imports of goods in Pakistan are needed soon in order to counter the threat to political stability. This is difficult if not impossible without rapid aid from the United States.
The need for rapid United States action is emphasized by the fact that General Mirza, who has been made Governor of East Pakistan as a temporary emergency measure by the Central Government, is reported to be suffering from an illness which will require attention abroad within the next three months. It would be difficult for Pakistan to find another person of his capabilities to replace him in this emergency.
All signs point to the probability that Pakistan will need over the next three years additional assistance of the type which has been requested by the Government of Pakistan. We believe that your recommendation on sending a mission to Pakistan to study the economic situation and make recommendations on United States action, is an excellent one. The mission could consider the total need for additional assistance, including the short and long run requirements to maintain [Page 1858] economic stability in Pakistan, and other needs such as those connected with our military aid.2
In the meantime, however, we are of the opinion that emergency United States commodity aid should be started so as to give some insurance against the immediate political risks inherent in the present situation in Pakistan. I hope that plans for immediate agricultural commodity aid to Pakistan may be initiated so that shipments may begin as soon as possible.
Also, we shall urge the Government of Pakistan to consider the use of its IMF drawing privileges for immediate procurement of necessary industrial raw materials.
It is our belief that the longer-range need for basic economic development in Pakistan indicates the desirability of keeping our current type of developmental aid program going in Pakistan, with minimum diversion of funds from it to meet the present crisis.
There is enclosed a brief study of the situation in Pakistan, which may be of interest to you and your staff.3
Sincerely yours,