S/SNSC files, lot 63 D 351, “NSC 98—Memoranda”

Memorandum by the Acting Secretary of State to the Executive Secretary of the National Security Council (Lay)2

top secret


  • Fourth Progress Report on NSC 98/1, “The Position of the United States with Respect to South Asia.”3

NSC 98/1 was approved as Governmental policy on January 25, 1951. It is requested that this progress report as of August 6, 1952 be circulated to the members of the Council for their information.

Developments during the period April 24–August 6 continued to point up the need for urgent action with respect to implementation of our policy toward South Asia. Overt efforts of Communists to exploit their successes in the national elections in India left no doubt in the minds of government leaders as to Communist intentions; at the same time Communist efforts at disruption and subversion, although largely confined to “constitutional” channels, were energetically pursued; and the need for outside assistance in stabilizing economic conditions remained at least as great as ever.4

One of the most disturbing developments was the reduction by Congress of the aid program for South Asia from $150,000,000 to approximately $58,000,000. In a strongly worded message the President [Page 1058] stressed the danger to our national security inherent in this cut, and expressed the conviction that Congress would make additional funds available during FY 53.

Having failed to obtain agreement between the Governments of India and Pakistan on his April 8 proposal to associate the Plebiscite Administrator-Designate with the UN Representative in further negotiation of the Kashmir dispute,5 Dr. Frank Graham, UN Representative, conducted talks with Indian and Pakistan representatives in New York during June with a view to obtaining their views on the report which he intended to submit to the Security Council. When it appeared that these talks were bringing the parties no nearer to agreement, the Pakistan Government informally transmitted to Mr. Nehru (through the U.S. Ambassador in New Delhi and independently of Dr. Graham) an offer to agree to a four to one ratio on troops, in favor of India, in return for Indian agreement to immediate induction into office of the Plebiscite Administrator.

Mr. Bowles made a very strong appeal to Mr. Nehru to accept the proposal. Mr. Nehru, however, stated that the Indian position already was quite clear and that he could not move from it. He added that he thought it would be proper for Dr. Graham to make any recommendations to the negotiating bodies which seemed to him to be fair and to have some chance of success.

In mid-July Dr. Graham proposed a meeting at the ministerial level in Geneva at which he would present a revised version of the 12 points which he had previously presented to the parties. At the time of writing, both governments have agreed to this continuation of the negotiations and the meeting is expected to start on August 25.

While tension over Kashmir did not return to the high point reached in the summer of 1951, the danger of hostilities arising from an incident continued; and statements issued by Mr. Nehru late in July to the effect that the “accession of Kashmir to India” was complete were not calculated to improve relations between India and Pakistan, even though Mr. Nehru added that special relations established between India and Kashmir would not affect the UN negotiations. There was also reason to believe that Sheikh Abdullah, head of the regime in Indian-occupied Kashmir, continued to toy with the idea of independence for the state—a circumstance which would play directly into the hands of the USSR.

On May 20 the Pakistan Government asked us to make available 300,000 tons of wheat, repayable in kind, to meet an anticipated food-grain crisis resulting from droughts which had seriously reduced the current wheat crop.6 The critical period was expected to occur between [Page 1059] October 1952 and May 1953. The Department of Agriculture was convinced of the urgency of the need, and found that wheat would be available, but was unable to agree to repayment in kind. At the time of writing the Department of State is still endeavoring to find ways and means of financing at least a portion of the amount requested—possibly 150,000 tons. This request represented an unprecedented opportunity to the U.S. to demonstrate tangibly its friendship for Pakistan. Failure to respond might well raise further doubts in the minds of Pakistanis as to the sincerity of our protestations of friendship. Meanwhile the USSR has offered to furnish wheat to Pakistan, but so far as is known the offer has not yet been accepted.

Along with its wheat shortage Pakistan faced other economic problems—notably those resulting from declines in the world prices of jute and cotton, Pakistan’s major cash crops. Pakistan’s foreign exchange assets declined from the equivalent of $638 million at the end of 1951 to $408 million as of March 31, 1952. They are estimated to have fallen further to $333 million as of June 30—which would represent a decline of about 48 percent in only six months. The government has taken steps to reduce imports and to move cotton and jute in export markets, but the decline in exchange assets of such a magnitude presents a formidable problem.

There was a noticeable increase in the activities of mullahs (orthodox religious leaders) in Pakistan. There was reason to believe that in the face of growing doubts as to whether Pakistan had any real friends, more and more Pakistanis were turning to the mullahs for guidance. Were this trend to continue the present government of enlightened and Western-oriented leaders might well be threatened, and members of a successor government would probably be far less cooperative with the West than the present incumbents.

In July Pakistan requested assistance in the purchase of $200,000,000 worth of military matériel, both armor and aircraft, for which that country would pay $15,000,000 annually for three years and smaller annual payments thereafter until payment was completed. Reference was made to the “growing sense of insecurity” in Pakistan arising from what the Pakistan people and Government see as the potential threat from the USSR, Communist China or from a possible future Communist India. Pakistan was informed of our sympathy with its desire to strengthen its defense, but of our inability to grant credit assistance for arms at this time for legal reasons, and that if it wished to raise the question again in the future, we would be glad to consider it.

During the period under review the Pakistan Government, in line with its policy of maintaining correct relations with the USSR and Communist China, permitted medical and economic delegations to visit these countries.

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US observers in India continued to report that the India Emergency Food Aid Act of 19517 was accomplishing its objectives. As of July 1 MSA purchase authorizations aggregating $190,000,000 had been issued and shipments of loan grain through July 5 brought the cumulative total to 2,173,695 long tons—virtually the ultimate total of 2,175,000 tons.

The proposed resumption of talks on strategic materials between Mr. Pawley and Indian officials was postponed on account of Mr. Pawley’s illness. At the time of writing it is hoped that the talks can be held in Delhi late in October.

Negotiations with India for a Treaty of Friendship, Commerce, and Navigation have accelerated owing to the activity of the Embassy and high Indian Government officials. Restrictive Indian shipping laws have made it necessary to eliminate agreements regarding navigation and commerce. Nevertheless, if currently outstanding questions can be resolved satisfactorily a useful treaty of friendship and economic relations should be evolved.

India has requested the release of 200 Sherman tanks under Section 408(e) of the Mutual Assistance Act of 19498 for replacement purposes as well as 50 to 200 jet aircraft for delivery by early 1953 and a total of 54 transport aircraft for delivery in the fiscal years 1955 and 1956. After discussion of India’s military requirements as against its economic needs between Mr. Byroade and the Indian Ambassador, the latter decided to put aside the request for jet aircraft for the present.

National elections in Ceylon resulted in the return to power of the pro-Western and anti-communist United National Party.9 However, despite the fact that Ceylonese officials, when informally approached by the U.S., had previously said they feared application of an embargo on shipments of rubber to Communist China would hurt them politically, no steps were taken after the elections to stop such shipments despite the fact that the government emerged from the elections stronger than before. In July a mission headed by Sir Oliver Goonetilleke, Minister of Agriculture and Food, visited Washington to discuss procurement of much-needed rice for Ceylon; possible purchase by the US of Ceylon rubber; and resumption of TCA aid in the event that requirements of the Battle Act were met. Steps were taken to assist the Ceylonese in obtaining a portion of their rice requirements in the U.S., but at the time of writing questions regarding rubber and TCA assistance remain unresolved.

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In Afghanistan triennial elections to the National Assembly appeared to have been engineered in favor of Government-supported candidates, and 17 opposition leaders who protested were jailed without trial.10 There were indications, however, that the government might, in the face of resentment against its arbitrary acts, quietly release the jailed leaders. Relations with Pakistan continued strained, but no skirmishes along the border were reported. At the time of writing the Pakistan Ambassador to Afghanistan designated in March had not yet arrived in Kabul, and the Afghan Government had not appointed an Ambassador to Pakistan.

Unstable internal conditions continued in Nepal, and doubts were created as to whether the Nepali Congress Government, installed with the blessing of the Government of India, would be able to survive. There were indications that Communists were exploiting political and economic deterioration, and speculation as to whether the Government of India, despite growing resentment of its interference in Nepalese affairs, would feel compelled to intervene openly to restore order in this strategic area.

As of June 30, agreements for technical assistance projects had been assigned obligating the following amounts for FY 52: India, $53,000,000; Pakistan, $10,000,000; Afghanistan, $349,000; Nepal, $225,000. Major projects included community development schemes for India and Pakistan; the sinking of tube wells in India; importation of fertilizer for India and Pakistan; construction of a fertilizer plant in Pakistan; and agricultural extension and minerals development in Afghanistan and Nepal.

During the period additional American technicians arrived in the field, making the total, as of June 30, for India 82; Pakistan 15; Afghanistan 3; Nepal 4. The number of trainees from South Asia in the United States as of June 30 was 108—29 from India, 65 from Pakistan, 6 from Afghanistan, 5 from Nepal, and 3 from Ceylon.

Except for Ceylon, all of the countries in the South Asia area have now met the requirements of the Battle Act.11 They have given assurances that they are able to prevent the shipment to Communist areas of commodities on List I, Categories A and B.

Strengthening of USIE programs in South Asian countries, through changes in techniques and personnel, continued. At the time of writing the number of U.S. personnel in the programs in South Asia is 96—the same as that indicated in the last progress report. The number of local USIE employees has increased from 585 to 623.

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It will be seen that implementation of policy with respect to South Asia during the period under review has suffered a serious setback in the form of the drastic cut in funds requested for technical and economic assistance. Another setback will occur if means of financing wheat shipments to Pakistan are not found. Not only does Pakistan occupy a strategic position vis-à-vis the USSR and the Middle East, but its leaders—ever since the founding of their country—have demonstrated their friendship for the US in many ways, including effective cooperation at the UN and in connection with the signing of the Japanese Peace Treaty. To date Pakistan has seen little tangible evidence of U.S. friendship, and failure to respond to the request for wheat would almost inevitably affect our national interests adversely.

There were no developments to August 6 which required a revision of basic policies approved in NSC 98/1, but the problems raised by the likelihood of increased Soviet pressure on South Asia and adjacent areas and by recent approaches of the Pakistan and Indian Governments for American arms suggest the need for further consideration of those parts of NSC 98/1 pertaining to U.S. policy on military assistance to South Asian countries.

David Bruce
  1. This fourth progress report on NSC 98/1, “The Position of the United States With Respect to South Asia”, was noted by the National Security Council at its 123rd meeting on Sept. 24, 1952, in NSC Action No. 674 (S/SNSC (Miscellaneous) files, lot 66 D 95, “Record of Actions by the NSC, 1952”).
  2. NSC 98/1, “The Position of the United States With Respect to South Asia”, was adopted by the National Security Council at its 81st meeting on Jan. 24, 1951, in NSC Action No. 425 (S/SNSC (Miscellaneous) files, lot 66 D 95, “Record of Actions by the NSC, 1951”). For the text of NSC 98/1, see Foreign Relations, 1951, vol. vi, Part 2, p. 1650.

    Three progress reports on NSC 98/1 preceded this fourth report. The first two, dated May 10 and Nov. 13, 1951, are printed ibid., pp. 1692 and 1695. The third progress report, dated Apr. 23, 1952, but not printed here (S/SNSC files, lot 63 D 351, “NSC 98—Memoranda”), was noted by the National Security Council at its 117th meeting on May 28, 1952, in NSC Action No. 643 (S/SNSC (Miscellaneous) files, lot 66 D 95, “Record of Actions by the NSC, 1952”).

  3. For documentation regarding principal problems and policies in relations with India, see pp. 1633 ff.
  4. For documentation concerning efforts on the part of the United States to help resolve the Kashmir dispute between India and Pakistan, see pp. 1162 ff.
  5. For documentation regarding principal problems and policies in relations with Pakistan, see pp. 1818 ff.
  6. The India Emergency Food Act was signed into law on June 15, 1951, as Public Law 48. For the text, see 65 Stat. 69.
  7. The Mutual Defense Assistance Act of 1949 was signed into law as Public Law 329 on Oct. 6, 1949. For the text, see 63 Stat. 714.
  8. For documentation concerning U.S. policies with respect to Ceylon, see pp. 1499 ff.
  9. For documentation regarding U.S. policies with respect to Afghanistan, see pp. 1447 ff.
  10. The Mutual Defense Assistance Control Act, also known as the Battle Act, was signed into law as Public Law 213 on Oct. 26, 1951. For the text, see 65 Stat. 644.