Foreign Relations of the United States, 1952–1954, Africa and South Asia, Volume XI, Part 2

S/S–NSC files, lot 63 D 351, “NSC 5409—Memoranda”

Study Prepared by the Staff of the National Security Council

secret
NSC 5409

[Washington, undated.]

United States Policy Toward South Asia

the importance of the area

1. The United States is profoundly concerned with the future of South Asia because of its strategic location, manpower, natural resources, and growing influence in world affairs. South Asia is also a major battleground in the cold war where the efforts of leaders in some countries, such as India, to satisfy the basic needs of their peoples within a democratic framework are being tested against developments in Communist China. The loss of South Asia to communist control, although not now imminent, would be a serious psychological and political defeat for the West.

Strategic location

2. South Asia forms a great land bridge between the countries of Southeast Asia and the Middle East. It has several thousand miles of common frontier with the Soviet Union and Communist China. It is in close proximity to the communist-controlled areas of Central Asia with which it is culturally and ethnically related, a factor which might be of future advantage to the United States. It has seaports and naval bases from which control could be exercised over shipping passing through the Persian Gulf, the Arabian Sea, the Bay of Bengal and the Indian Ocean; bases and communications facilities for insuring uninterrupted communications between Europe and Southeast Asia; and some air bases of value as post-strike facilities in strategic air attacks against the USSR. In case of a protracted war, the area contains many potential sites for additional military installations from which allied power could be directed against the Soviet bloc.

3. Nevertheless, if South Asia remains free from Soviet domination, its strategic importance in the initial phases of general war would not be as great as that of Europe, the Far East, Southeast Asia, the Middle East or North Africa. The mountain and ocean barriers separating South Asia from the Soviet bloc make the area relatively immune to direct land or naval attack of significant size. The great distances involved and the relative unimportance of the industrial targets in the area would make an attack both costly and unprofitable. As a result, the area is not faced with the same threats of attack that so influence the other nations of Eurasia. The sole exception to this geographical immunity is Pakistan, which might be drawn into general war as the result of a Soviet invasion of Iranian territory. Despite these factors, the three members of the British Commonwealth, India, Pakistan and Ceylon, might make an important contribution in a global war if they made their bases and great manpower resources available to the free world.

Manpower

4. South Asia has great potentialities in manpower. The countries of the area contain some 477 million people. During World War II the Indian Army, with more than 2,000,000 troops, was an important contributor of military manpower to the British war effort. Nepal, small as it is, continues to supply troops of considerable importance to the British. In a general war involving the free use of atomic weapons by both sides, the conflict might be of short duration, in which case the manpower resources of South Asia could not be made effective and brought to bear on the enemy in time to be of value. However, in a long war requiring large combat forces this area would be of great value to the West as a source of manpower to offset that of the Soviet bloc. It is highly desirable that this manpower not pass to Soviet control during the cold war but remain available to the free world in case of need in general war.

Natural resources

5. South Asia, particularly India, has extensive natural resources including certain materials most useful to our national defense. Among them are manganese ore, mica, graphite, jute, kyanite, shellac, and other important metallurgic and fissionable materials such as beryl and monazite derivatives. The resources of the area, along with existing and possible industrial development in India, constitute a basic war potential of some importance.

Influence in world affairs

6. The countries of South Asia, particularly India and Pakistan, are developing increasing influence in world affairs. Only Afghanistan and Nepal were independent prior to 1947. Since that time, India, Pakistan, and Ceylon have each become independent, freely managing its own internal and external affairs. India and Pakistan have strengthened their ties with the Muslim nations. India and Pakistan have been especially active in UN affairs and have frequently been helpful to the United States although India, unlike Pakistan, has abstained on a number of East–West issues. India’s role in the negotiations leading to the armistice agreement in Korea was a crucial one.¹ Fifteen of the Arab, Asian and African nations represented in the UN have formed a bloc in which India and Pakistan play a leading role. On racial and colonial issues, this bloc generally presents a united front in opposition to the policies of the colonial powers as well as to the more moderate position of the United States. The growing influence of the South Asian countries in their relations with other countries in the area and elsewhere and in the United Nations makes their friendly cooperation of great importance to the United States. Furthermore, the shift in the balance of world power which has resulted from the consolidation of communist control in China has given an increased emphasis to the attitudes and actions which these countries may adopt.

“Democracy versus Communism”

7. The outcome of the competition between Communist China and certain South Asian countries operating within a democratic framework, as to which can best satisfy the needs of peoples, will have a profound effect throughout Asia. Most of the South Asian countries are underdeveloped and overpopulated, with resulting low standards of living. The principal task of the present governments in these countries, especially in India and Pakistan, is to bring about economic growth at a sufficiently rapid rate to meet the essential needs of its peoples. A similar situation has long existed in mainland China. In most of the South Asian countries this task is being tackled by governments operating on Western democratic lines, whereas in Communist China economic progess is sought by totalitarian methods. To South Asians, who thought that independence would bring immediate improvement, progress in their own countries at times seems slow compared with gains which the Communist bloc countries report. Communist political groups and communist propaganda constantly assert that Stalin and Mao have brought great economic benefits to millions of people under their control. The continuance in power of the present governments in the South Asian countries rests on their ability in the near future to demonsrate that economic progress is being achieved by democratic means. If they are unsuccessful, an increasing number of South Asians may become susceptible to Communist argument that the only alternative is the adoption of methods employed in communist countries, particularly Communist China.

Loss to communist control

8. Communist control of Afghanistan and Nepal would open invasion routes into the heart of the sub-continent and would sharply increase the pressures on India and Pakistan. Loss of India or Pakistan would constitute a major reverse to the free world and loss of the remainder of South Asia would almost inevitably follow. Loss of Ceylon would be serious primarily because of its importance as a communications center and as the site of an important naval base. The loss of all South Asia to the Soviet bloc would immediately have serious psychological and political effects throughout the world. Such loss would extend communist control to include nearly half of the world’s population. In all other free countries, confidence in the capacity of the free world to halt the expansion of communism would be greatly reduced. Effectiveness of the UN to the West would greatly decrease. In the absence of decisive Western counter-action, communist control over South Asia would be speedily followed by the loss of much of Southeast Asia. The Middle Eastern countries, particularly Iran, would be shaken. In addition, the loss of the area would eliminate any prospect of the eventual availability to us of South Asian forces and facilities, would require a diversion of Western strength to meet the new shift in world power, and would confront us with the new threat posed by the probability of considerable communist success in gradually mobilizing and exploiting the substantial economic resources of South Asia.

association of south asia with the united states and the free world

9. All of the governments of South Asia are independent, non-communist and basically friendly to the United States. The different traditions, institutions and current attitudes of the South Asian countries often obscure the extent to which their fundamental objectives are similar to those of the West. With United States assistance India and Pakistan could become useful allies, even though they are presently weak militarily and economically, compared to the United States. However, there are certain restraints to close association with the United States—(1) psychological inhibitions common to the area, and (2) serious restraints peculiar to each country except Pakistan.

Psychological inhibitions common to the area

10. For almost 450 years the Indian sub-continent was subject to exploitation by European powers. It began with incursions by trading and commercial interests and led to complete foreign control of the greater part of the sub-continent. Economic exploitation led to political domination. The subject people were colored, and in time their colonial status led to the widespread assumption by their white rulers that the colored races were inferior ones and should be treated as inferiors. Resentment of the South Asians against being regarded and treated as inferiors has been intensified over the years by discriminatory treatment as in South Africa, by exaggerated reports of mistreatment of colored people in other countries, particularly the United States, and by humiliations suffered by South Asian visitors to the United States. The irresistible force of nationalism eventually burst the bonds of foreign domination in South Asia and brought the new countries of India, Pakistan and Ceylon into being. Independence alone, however, could not remove the mental and spiritual scars of bondage, the rankling memories of and fierce resistance to color discrimination, and the deep-rooted suspicions of Western colonial nations. Moreover, the South Asian countries see that the United States is cooperating closely with the former great colonial states and consider that U.S. policy, wealth and power have supported those states in maintaining their power, particularly in the case of France, in Tunisia, Morocco and Indochina. Consequently, the United States has, despite its good record in colonial affairs, become associated in South Asian minds with memories of European colonialism, with what they regard as “economic imperialism”, and with color discrimination. The result is an emotional barrier in South Asia to closer relations with the United States.

Restraints peculiar to each country

11. India—Policy of “non-alignment”. Jawaharlal Nehru, Prime Minister and Foreign Minister, is the creator and chief exponent of India’s foreign policy. Proud, gifted and moody, he dreams of making India a great power while he concentrates on the economic and social development of his people. Although attracted as a young man to Marxian teachings, Nehru later came to reject them and now regards them as obsolete and even reactionary. He believes in strong control by the central government, but since his accession to power he has come to acknowledge the need for support from all groups of society. Contradictions arising from his racial background, western education, innate feelings of personal superiority and proud and obstinate character make dealing with him difficult. However, to deal with India one must deal with Nehru. Possessor of a powerful personality, he has a tremendous influence over India’s masses and is the single greatest force in the Congress Party and in the Indian Government, both of which he completely dominates. The strongest element in Nehru’s foreign policy is the desire for peace, which Nehru and his associates consider a prerequisite to achievement of essential economic improvement. Nehru and other Indian leaders believe that the only way to avoid war is to avoid alignment with either the Soviet Union and its satellites or the United States and its allies. Furthermore, India’s leaders are drawn to Communist China by legendary bonds of friendship and culture, and by psychological ties arising from the fact that the Chinese as a colored race and as Asians, have asserted themselves against the West. This attraction is somewhat reduced by the brutal methods which the Communist Chinese have used, their aggressive activity in Asia, and their military strength, together with their long common frontier with India. These factors have created some feelings of apprehension in India. The Indians believe, however, that Communist China can be won away from the Soviet Union, and that eventually the former will lead an independent course. It can be expected that India will go to great lengths to win Red China’s friendship. An additional problem is that India regards the United States as being closely associated with the colonial powers and responsive to the demands of those powers in protecting their interests. Since India regards the United States as the strongest of the great powers, it fears and envies it accordingly. However, the extension of United States technical and developmental aid has demonstrated to India, U.S. interest in and sympathy with India’s problems.

12. Afghanistan—Soviet proximity. During the time of British rule in India, Afghanistan maintained a precarious security as a buffer state between British and Russian power. Now with a relative power vacuum about its non-Soviet borders, Afghanistan must rely largely on public opinion and world tensions to protect it from its Soviet neighbor. Afghanistan’s political relations with the USSR were stabilized by a treaty of neutrality and non-aggression signed with that country in 1931. The Soviet Union lies along the entire length of Afghanistan’s long northern border. The people living in northern Afghanistan and on the Soviet side of the border are of the same racial origin. Afghanistan has a population of only 12,000,000 people and is weak economically and militarily. The Afghan Government therefore, tries not to offend its northern neighbor. The Soviet Union from time to time has found occasion to exert warning pressure on the Afghan Government, the most recent being the Soviet démarche to Afghanistan in August 1952 citing the treaty of 1931 and protesting oil exploration by UN experts in northern Afghanistan. Thus Afghanistan’s basic friendly feeling toward the United States and desires for closer association with us are restrained by the threatening presence of the Soviet Union. Nevertheless, Afghanistan has found it possible to develop the southern areas of its territory with loans obtained from the Export-Import Bank.

13. Ceylon–China rubber trade. Ceylon’s normally friendly relations with the United States are overshadowed by its trade in rubber, a strategic material, with Communist China. That trade necessitated suspension of United States technical assistance to Ceylon because of the provisions first of the Kem Amendment² and later of the Battle Act. Ceylon began shipping rubber to Communist China in October 1951, for which it was paid premium prices. In December 1952 Ceylon ratified a five-year agreement with Communist China whereby it agreed to provide that country with rubber at premium prices, and Communist China agreed to provide Ceylon with rice at a lower than market price. Thus Ceylon is taking the risk that a major portion of its economy may become tied to that of a communist country. In spite of some anti-American feeling in the past, the United States considers Ceylon to have a pro-United States, free world orientation, and to have tried to minimize the strain on its relations with the United States caused by its trade in rubber with China.

14. Nepal—Ties with India. Nepal is a virtual dependency of India, and that country is reluctant to permit any other to establish close relations with Nepal. In addition, the Nepalese are suspicious of all foreigners. Within those limits, Nepal is friendly to the United States although from time to time it tries to play us off against India. Nepal is small, landlocked mountain kingdom best known for its Gurkhas, who under the British, and in the Indian army, have made first-class soldiers. Nepal remained independent even during the height of British power, but since the advent of freedom in the sub-continent it has come more and more under Indian influence. India regards Nepal as of high strategic value and Nehru has declared that any attack on Nepal would be regarded as an attack on India. The Indians are apprehensive of our information and technical assistance activity in Nepal, so it is very important that they feel themselves well informed of our activities in that country. Our policy should be independent, but we should keep the Indians apprised of our objectives and what we are doing.

internal political and economic problems

15. The governments of South Asia are confronted with formidable political and economic problems. The major ones are: (a) establishment of lasting democratic political institutions; (b) perceptible economic improvement; (c) internal social conflicts; (d) threats to internal political stability; (e) regional conflicts; and (f) the threat of communism.

Establishment of lasting democratic political institutions

16. India. India adopted its constitution in November 1949 and under it became a “sovereign democratic republic” on January 26, 1950. In 1951–1952 India conducted its first nation-wide elections under that constitution, the largest free elections ever held. The constitution seems to be working satisfactorily. It is a document which in some considerable part consists of statements of goals rather than of law, some of which will take time to implement because of the rigidity of the social system. For example, the constitution abolishes “untouchability”, but the untouchable class, numbering some 50 million people, still remains as an underprivileged and discontented minority. One of the greatest achievements of the government of India following the withdrawal of the British and the partition of the subcontinent in 1947 has been the creation without bloodshed of a union of states with effective control in the hands of the central government. Although sentiment in favor of cohesion, which springs from the long struggle for independence, continues strong, there are a number of factors which tend to lead to a breaking up of Indian unity. These include: (a) its large area which is approximately half that of the United States; (b) the variety and complexity of customs and religious beliefs; (c) the diversity of its peoples and linguistic differences; and (d) regional political and economic interests. Linguistic differences are of present importance because there is an active movement for redrawing the state boundaries along linguistic lines rather than retaining the old administrative ones developed by the British. This movement has been successful in severing from the populous province of Madras the Telegu-speaking area of Andhra which on October 1, 1953 became a separate state. The movement for linguistic states, if continued, might eventually lead to disorganization within India which, at a time when India is struggling with great economic and political problems, would have serious consequences. It is also possible that disorganization in India might proceed to the point of separatism which, aside from the obvious implications for India, would create an area of great instability in South Asia which the Communist bloc could exploit at will to the disadvantage of the free world.

17. Pakistan. Pakistan has not yet been able to enact a constitution satisfactory both to the mullah-dominated proponents of an Islamic state and the progressive-minded groups who desire a secular state; nor one which is acceptable to the political groups in East Pakistan and their antagonists in West Pakistan as to the representation to be accorded their respective areas. It appears, however, that certain compromises of these basic questions are being found and a new constitution soon may become law. Meanwhile, Pakistan’s constituent assembly continues as its parliament. During the administration of the former Prime Minister, Kwaja Nazimuddin, political and economic conditions in Pakistan became so bad that the Governor General and a number of military leaders consulted together and summarily removed Nazimuddin and replaced him with Mohammed Ali, at that time Pakistan’s Ambassador to the United States. This step is believed to have been carried out in a legal manner. Recognizing the danger of creating a precedent, the present government is working vigorously on a constitution which it hopes to have accepted in the near future.

18. Afghanistan, Nepal and Ceylon. In Afghanistan progressive democratic aspirations have been granted little more than token expression. Afghanistan’s constitutional monarchy permits all Afghan men over 20 to vote, but the government is under the almost complete control of the royal family. Nepal, formerly a monarchy under the despotic control of hereditary prime ministers, since early 1951 has been struggling with almost complete lack of success to establish a popular government under cabinet rule. Ceylon’s constitution, which permits universal suffrage, has been relatively successful as a means of providing democratic government in that island.

Perceptible economic improvement

19. General. The economic problems of the countries of South Asia have reached huge proportions. The traditionally low standard of living has been further declining for over a decade. Land tenure systems are antiquated and uneconomic. Agricultural methods largely are primitive, irrigation inadequate, food shortages chronic, and famine commonplace. Natural resources and industry are acutely underdeveloped. The constantly increasing pressure of population on underdeveloped resources requires developmental measures of great magnitude. The people of the newly-independent countries had exaggerated beliefs as to the immediate benefits that independence would bring. They thought freedom from British rule would mean freedom from want, and they have been sorely disillusioned. Having rejected the low standards of living which they had accepted without complaint for centuries, the people are actively discontented with existing social and economic conditions. They are tempted by the communists, who attack and obstruct economic development plans of the present government, as well as by extremist reactionary groups. The latter, such as the Hindu Mahasabha, though small in number, have an influence disproportionate to their size, because their tenets have strong roots in Hindu culture and past Hindu glory. The South Asian governments are on trial. If democratic government is to survive in South Asia, it must prove its worth by bringing about perceptible improvement in the economic conditions of the people.

India

20. India is confronted with a number of serious problems, including popular demand for an increase in the standard of living, desirability of an increase in food production, availability of funds for economic development, and the rapid increase in India’s population which is being augmented at the rate of 1.4%, or nearly 5 million persons annually. The amount of available food is limited by the loss of food-producing areas to Pakistan in the partition of the sub-continent and to such factors as unreliable water supply, outmoded methods of cultivation, current conditions of tenancy, and fragmentation of holdings. Consumption is further limited by problems of distribution and lack of purchasing power. The Indian Census Commissioner has estimated that to barely meet the expected population increase (without raising present standards of consumption or increasing food imports) his country would have to increase agricultural production over 1951 levels by 21% by 1961, 37% by 1971, and 54% by 1981 when it is estimated that the population will reach 520 million, if not checked. India has been importing food grains at an average annual rate of 2–4 million tons, at a cost of approximately 30% of her total export earnings. However there are prospects for a considerable increase in domestic grain production in 1954. The U.S. program of technical and special economic assistance has been largely devoted to agriculture, most directly to increasing by 7.6 million tons the annual production of food grains, which is an important part of India’s Five Year Plan. Collateral objectives are: (a) production of higher proportion of high protein and protective foods; (b) improvement of distribution facilities; (c) improvement in the management of soil and water resources.

21. India’s exporting position is weak at this time. India’s cotton textile exports have been falling largely because of Japanese competition. The jute market is declining. India is meeting increasing competition in the field of manganese. This is also the case for mica, for which industrial substitutes are being developed.

22. Indian industry is in its infancy. Its two large steel mills produce relatively little capital goods. India will be unable to meet domestic steel requirements for 10 to 20 years. However, its potential is high from the standpoint of vast reserves of iron ore, coal, bauxite and other minerals, and from the standpoint of processing of these raw materials.

23. Extent of investment in India. U.S. private investment in India is very small, probably about $100 million. The most important single recent U.S. investment is the $35 million oil refinery for which Standard Vacuum Oil Company received authorization in 1953, and the recently concluded agreement for oil exploration and production in the Bengal basin. About two-thirds of the estimated $1 billion of foreign investment in India is held by U.K. nationals. Only 108 new projects involving private foreign capital have been approved by the government from early 1948 to mid–1952, of which 69 were British and only 13 American. Total private foreign capital invested in this period was only $115,857,000 and American capital only $40,257,000. In comparison, the Indian Five-Year Plan, scheduled to be completed by 1956, calls for an investment by India of the equivalent of $4.7 billion. Although it appears that India will not be able to finance the entire program, this large public investment may well stimulate more foreign and domestic private investments.

24. Need for investment in India. The need for increased production of capital goods in India is particularly great, although the Government of India has also called for increased production of consumers’ goods. Specifically, India has been seeking foreign capital for steel, ferromanganese, cellulose pulp, newsprint, raw film, industrial explosives, dye-stuffs, soda ash, moulding powders, and fertilizers. Indian industrialists have been seeking foreign capital for many small scale projects for producing simple consumers goods, such as canned goods, dairy products, pressure cookers, etc. It is not known whether government approval could be obtained for these types of private foreign investments. Rejections of applications during the past year were on the grounds that the projects were too indefinite, immature, or there was no satisfactory evidence of the financial standing of the promoters.

25. Government policy on foreign investment has been ambiguous. On the one hand the GOI has encouraged foreign investment by: statements in favor of such investment, modifications of the exchange control regulations to allow repatriation of earnings and new capital; a guarantee against compulsory expropriation for 25 years accorded to oil companies; provision of some relief on taxation of profits of foreign investors; consent to negotiate a Treaty of Friendship, Commerce and Navigation with the U.S.; and inclusion in the budget presentation of March 1953 of a statement of intention to seek a tax treaty with the United States.

26. On the other hand, however, the climate of investment in India has been impaired by various government policies which reflect Indian nationalism and a fundamental distrust of western capitalism. Among these are: (1) Past Indian emphasis on nationalization of industry, which creates the fear that other (as yet unspecified) industrial activities may be nationalized. (2) Pressure for the employment of Indian nationals. (3) Reluctance in its FCN treaty negotiations to provide for capital transfers under all conditions and a reluctance to take out of the hands of Parliament the determination of just compensation in the event of nationalization. (4) The existence of the Industries Development and Regulation Act which arouses in the minds of the potential investor fears of government interference in management, pricing, and even manufacture itself.

Pakistan

27. Pakistan’s severe economic difficulties have been somewhat concealed since partition by (1) an excellent harvest at the time of partition; (2) cash reserves gained at that time and since drawn down, perhaps unwisely; (3) the Korean boom in jute and cotton. Pakistan’s original Six-Year Plan (1951–1957), scrapped in 1953, was based on a falsely favorable estimate of her situation. A new Five-Year Plan should be formulated by the end of 1954. Pakistan’s natural self-sufficiency in food has been temporarily upset by the disruption of their agricultural system due to drought and insufficient canal water.

28. Pakistan has practically no industry. Practically all the manufacturing capacity of the sub-continent fell within the new India, at partition. The rate of capital formation and investment in Pakistan is very inadequate and foreign investment is negligible. Capital formation in the fields of textiles and power is on the rise, however.

29. About three fourths of the U.S. program of technical and special economic assistance to Pakistan is specifically devoted to agriculture, and part of the remainder will also benefit agriculture indirectly. It is proposed in FY 1955 to emphasize rapid increases in food production to avoid deficits like those of the past two years by increasing productivity on land already cultivated and by bringing new land under cultivation and extending irrigation.

Internal social conflicts

30. In all of South Asia and particularly in India, internal conflicts created by the evolution of new social patterns are a serious disuniting factor. Those conflicts were created by the impact of western ideas, religious beliefs, moral values, and productivity upon the folkways and mores of a society in which the masses are plodding, illiterate, sub-marginal farmers. All classes have been shaped by a way of life which stratified society according to caste and legalized oppression of the lowest. Western values acquired a special meaning, because they were supported by strong military force and by advanced technologies and sciences. Western experience also infused a new element into the historic Hindu-Moslem conflict which had torn the sub-continent for centuries—that of nationalism. Many South Asians have accepted Western values and discarded those of their fathers. Others have attempted to select desirable elements from both. Some have reverted fanatically to their traditional beliefs. Great numbers have relinquished their old beliefs and rejected the Western ones, and drift aimlessly, or fall prey to the false leadership of the communists. The old ways of life are giving way, or being modified; the strictures of caste and custom are being broken; and the resulting conflict is a serious source of weakness to the South Asian countries.

Threats to internal political stability

31. The governments of the South Asian countries are currently struggling with major political and economic problems such as the establishment of workable political institutions, perceptible economic improvement, internal social conflicts and various regional conflicts. While endeavoring to resolve these various problems, opposition political groups in each country are constantly taking advantage of weaknesses and failures of the governments to force them from power. Among these opposition groups, indigenous communists, although numerically small, represent a potential threat to continuing political stability. The loss of power by any one of the political parties presently in control in the South Asian countries would probably be harmful to U.S. security interest in the area.

32. India. India’s first general nation-wide election was held under full adult suffrage and with an electorate of approximately 170,000,000 voters, of which 106,000,000 actually voted, the largest number in the history of free democratic elections. The Congress Party received 44.9% of the votes, the Socialist Party 10.5% and the communist 4.5%. Membership in the Communist Party of India totals only about 40,000. The concentration of communist strength in particular areas enabled them to win 23 seats in the central House of the People as compared to 12 for the Socialists out of a total of 489 seats, and 181 seats in the state assemblies as compared to 126 for the Socialists out of a total of 3370. The Communist Party’s success in the elections considerably enhanced its opportunities for political action, but its further progress has been retarded by tactical and organizational disagreements. Unless the Congress Party can supply the needs of the people, it may lose its popular support and be succeeded by a series of weak coalition governments. In such an eventuality, there would be strong efforts by the nationalist extremists and by the communists to seize control. The outcome would indeed be uncertain, but undoubtedly harmful to U. S. interests.

33. Pakistan. In Pakistan the Muslim League is the only political organization on a nation-wide basis. It completely controls the Government, but is torn by provincialism, religious factionalism and personal ambitions and jealousies within the party leadership. Its present government is relatively strong and stable, but if unsuccessful in its efforts to obtain U.S. military assistance will be greatly weakened and might even be forced to resign. Under such circumstances, a successor government would come from the leaders of the Muslim League, but would be much less friendly to the United States. If the Muslim League is unsuccessful in bringing appreciable economic progress to Pakistan within the next few years, its leadership will be discredited in the popular mind and political opposition will then be encouraged. The communists would exert every effort to capitalize on such a situation. The Communist Party of Pakistan is weak, numbering less than 5,000, and its popular following is small. Moreover, the CPP is troubled by factionalism and chronic shortage of funds and is undisciplined and disorganized. However, in time of national crisis, it would exert every effort to embarrass the government.

34. Ceylon. The present Government of Ceylon is a moderate yet forward looking regime organized along western democratic lines. It is alive to the dangers of local communism which it vigorously opposes, but has shown considerably less concern regarding international communism. In a population of 8,000,000, the Communist Party of Ceylon has a party membership of less than 2,000. Nevertheless, by capitalizing on the government’s efforts to reduce governmental spending by sharply reducing the subsidy on rationed rice, the communists organized a strike in August 1953. The widespread rioting that paralyzed the city of Colombo and generally crippled transportation and communications throughout the Island for two days was curbed only after the government took vigorous police action. The CPC received considerable moral support when the Government of Ceylon signed a rice-rubber pact with Communist China in December 1952. The CPC remains as a small but nagging threat to the government, and will continually be on the alert to exploit any indication of governmental weakness.

35. Afghanistan. The Afghanistan Government is in practice an oligarchy, under the domination of the ruling family which has effective control of the country. Loss of control by the present ruling oligarchy could lead to bloody tribal warfare, perhaps inviting, as occurred in 1929, the entry of Soviet troops on Afghan territory.

36. Nepal. The Nepalese Government is largely under the guidance of the Indian Government and has been saved thus far from rule by extremists of the right or left only through the firm intervention of India. The present coalition continues, as its predecessors, to be weak and confused.

Regional conflicts

37. Almost all of the countries of South Asia are burdened with serious intra-regional disputes.

38. India and Pakistan—Partition disputes. India and Pakistan are in conflict on a great number of issues arising out of the partition of British India into two separate nations. The most important is the Kashmir issue, which continues to cause great tension. At the time of partition Kashmir, whose people were predominantly Muslim, was ruled by a Hindu Maharaja who, following a Muslim revolt in his state and an invasion of Muslim tribesmen, acceded to India on a provisional basis. Fighting between Indian and Pakistan troops which ensued was brought to a halt through UN efforts leading to the establishment of a cease-fire line as of January 1, 1949. Since that time, UN efforts to assist in reaching a solution have met with some success. A settlement still seems remote, however, although recently the problem has been receiving the personal attention of the prime ministers of India and Pakistan. The problem is highly fraught with religious animosities and national jealousies. The question of distribution of irrigation canal waters too has also become a serious issue. Rehabilitation of millions of refugees who crossed from each side to the other and the disposition of their property has increased the strain on Indo-Pakistan relations. As a result, the historic Hindu–Moslem religious hostility has been perpetuated in the national policies of the two countries. Friction between India and Pakistan has contributed to internal social tensions within those countries. It has induced them to incur heavy military expenditures and has deterred the development of mutually advantageous economic relations. It has also prevented them from reaching understanding on common defense of the area against outside aggression and other problems of mutual concern. If they can be induced to settle their differences, their burdens will be considerably lightened.

39. Pakistan and Afghanistan—Pushtoonistan. Afghan–Pakistan relations are strained by a controversy over the status of the Pushtu-speaking tribesmen (Pathans) living in Pakistan. Afghanistan, which is ruled by a Pathan clan, has attempted to stimulate an independence movement among those tribesmen by propaganda and other activities. Pakistan rejects Afghanistan’s claims as an unwarranted interference in Pakistan’s internal affairs. The dispute has strained relations between the two countries and restricted their trade, particularly that of Afghanistan. Its continuance could lead to exploitation by the Soviet Union.

40. India and Ceylon—Protection of immigrants. Some 900,000 Indian Tamils live in Ceylon. India’s efforts to protect the “rights” of those Tamils have created a serious problem between India and Ceylon. The majority of the Tamils have not been able to meet the severe requirements of the Government of Ceylon for proof of Ceylonese citizenship. The Government of India on its part recently has issued regulations restricting Indian citizenship. It has been estimated that a group of about 450,000 will be rendered stateless through inability to meet the qualifications for citizenship in either country. That group is particularly susceptible to communist agitation.

Threat of communism

41. Progress in solution of the internal problems of the South Asian countries has a special urgency for the United States because of the communist threat. Internal communism is not yet a serious danger to governmental stability in South Asia, but it may become so if current economic and social strains are not alleviated. The dimensions of the communist problem are magnified by the spread of communist military and political power elsewhere in Asia and by the ability of the communist powers, particularly with respect to Afghanistan and Ceylon, to use direct diplomatic or economic pressures. Communist power has been spread through Asia by a variety of means including military aggression, internal subversion and legal political activity. Its spread includes the consolidation of communist control in China, the prosecution of a three-year war in Korea, the seizure of Tibet, the continuing communist threat to Indochina and the balance of South East Asia, continual Soviet pressure on Afghanistan as illustrated by the Soviet démarche to Afghanistan in August 1952, communist-instigated disturbances in Nepal, and Communist Party gains in the Indian national elections in 1952. The physical contiguity of the Soviet Union and Communist China to the South Asian countries gives a peculiar emphasis to the potential threat of Soviet imperialism. Nevertheless, it is believed that at present the danger arises not so much from the immediate prospect of Soviet military aggression as from internal subversion and diplomatic pressure.

considerations in u.s. policy

Military Defense

42. While capable at present of maintaining internal security, the countries of South Asia do not have, in themselves, the requisite military strength to successfully counter external Communist attack. Even India, the most powerful nation of the area, which in FY ’54 allocated 35.1% of her total budget of $1,281,821,000 to defense, could not fend off an all-out Chinese Communist attack. This military weakness springs from the lack of sufficient equipment, the dependence on foreign sources for military supply, the shortage of qualified officers, the need for command and staff experience in handling large echelons and finally the want of money necessary to remedy these disabilities. If South Asia is to be defended it is quite plain that the coalition in the west must help. Such assistance should be directed towards:

a. The development of adequate military strength.

b. The establishment of a regional defense organization and its linkage with those similar groups which must likewise be developed in the Middle East and Southeast Asia.

c. The insurance of military cooperation with the remainder of the free world.

43. In the development of adequate military strength South Asian nations must be encouraged to make a realistic appraisal of their military situation vis-à-vis the Communist threat and, in the light afforded by such analysis, to budget the proper proportion of their resources to help meet their defense requirements. Likewise, the nations of the west in their own security interests may have to consider the provision of grant military aid to selected South Asian nations. Equally important is the fact that they may have to decide to what extent they will assist South Asia in case of Communist attack.

44. There is no collective defense organization in South Asia at the present time. The concept of a Middle East Defense Organization including certain western powers, the Arab States and Pakistan was set aside in the spring of 1953 because of opposition to MEDO as contemplated. NSC 155/1 states, as an alternative, that the United States should take leadership in bringing the countries of the area (Near Eastern states and other Asian and African states, particularly Pakistan) into an organization to promote U.S. security interests, to increase confidence in the United States, and to help in developing indigenous forces which can improve political stability, internal security, and the maintenance of pro-western regimes, and ultimately contribute to area defense. NSC 155/1 continues that we should select certain key states for this type of assistance, choosing those who are most keenly aware of the threat of Soviet Russia and who are geographically located to stand in the way of possible Soviet aggression. In this regard, 155/1 directs that special consideration should be given to Turkey, Iraq, Syria, Iran and Pakistan.³

45. During recent months, efforts have been made to build on Pakistan as a country at the eastern end of the northern tier of Middle Eastern states. These efforts have been assisted by indications that Turkey and Pakistan themselves wish to develop a defense arrangement which might, at a later stage, be expanded to include other Middle Eastern states, particularly Iraq and possibly Iran. The inclusion of Pakistan in a Middle East defense arrangement of some type would materially increase its importance, and, from a military point of view, would be most desirable. Meanwhile, however, premature and widespread rumors and publicity regarding the possible extension of U.S. military aid to Pakistan provoked an extreme reaction in India. India was opposed because it feared such action would advance cold war preparations into the “no war” area of South Asia and would add military strength to Muslim Pakistan in its relations with Hindu India. The Indian reaction may lead to an intensification of differences in U.S.-Indian relations and possibly to more friendly Indian relations with the Soviet bloc but would probably not lead to any major change in India’s foreign policies. It is believed that over the course of time, the violence of Indian feeling would in the absence of exacerbating circumstances, tend to subside. However, there is a danger that frictions and disagreements between the United States and India might be aggravated as a result of continuing resentment. Such a development would make it easier for India to drift into an eventual position of isolation from Western friendship and support, in which it would be more susceptible to communist pressures.

46. The countries of the area, with the exception of Pakistan, are fearful of involvement in war. India, for example, strongly advocates a policy of “non-involvement” in the struggle between the Soviet bloc and the West which it hopes will continue to permit it to concentrate on a five year plan for the economic improvement of the Indian people. Likewise, Nehru has dreams of South Asia, under his leadership, rising to become a great “third force” in the world. This attitude of “neutralism” is understandable in view of the overwhelming economic and political problems of the area and the present lack of adequate military strength among the South Asian nations. Such a neutral position may have a short-range value to both South Asia and to the free world, giving South Asia the time in which to develop its strength and affording the West the opportunity to use South Asia in a mediator’s role in dealing with the Communists. In the long run, however, in preparing to defend ourselves in a war with the Soviet bloc, the free world cannot permit South Asia to remain neutral and thereby deny the use of military facilities and strategic resources in the area. South Asia must be made to realize that its ultimate choice lies with the Kremlin or the West.

Commonwealth ties

47. India, Pakistan and Ceylon are members of the Commonwealth of Nations, an association which we favor. Their membership is helpful to them in a variety of ways. As new members they benefit from the experience of the older, more mature and more stable powers. They participate in a broad exchange of information, intelligence and techniques. They have received technical and financial assistance from other members, notably through the Colombo Plan. Their membership gives them an added stability, importance and influence which individually no one of them would have. Furthermore, though tenuous, the Commonwealth tie is an important psychological bond with the West. The three countries accepted membership in the Commonwealth only after a careful evaluation of its benefits to them, and have continued their membership on the same basis. On balance the membership of India, Pakistan and Ceylon in the Commonwealth is advantageous to the United States because of its stabilizing and moderating influence on them and because it affords an additional channel which can be employed, as appropriate, for the furtherance of United States objectives in the area.

India

48. United States policy in South Asia must necessarily give particular emphasis to the primary powers in the area—India and Pakistan. Indeed India potentially is the pivot of the whole area and the results would be very serious if its moderate regime were to be forced from power. India, with a population of over 365 million, is the strongest politically, economically and militarily of the South Asian countries (although by United States standards it is economically and militarily weak), and ranks as a major industrial nation of all Asia. It has the greatest capacity of any South Asian country for making a long-term constructive contribution to the free world although its policy of non-involvement inhibits close cooperation.

Pakistan

49. Pakistan, with its 78 million population separated into two parts by a thousand miles of Indian territory, is weaker than India economically and politically and is much less endowed with economic and military potentials. It does offer, however, the greatest possibilities, next to Turkey, for contributing to the defense of the Middle East and has indicated its willingness to enter into closer association with the United States. Like India, it has substantial need for economic assistance. Its present capacity to absorb aid in some fields, however, is less than that of its neighbor. The United States loan for wheat in 1952 was gratefully received and the wheat gift in 1953 has been tremendously appreciated. The increased friendliness toward the United States which has resulted is of great value to us, for it is felt that the combination of the strength of religious belief and the martial spirit of the people make Pakistan a country that can be relied upon as one of the great bulwarks in that area against communism.

Afghanistan

50. Afghanistan could offer only insignificant resistance to Soviet attack. However, such an aggression would serve to draw the South Asian countries closer together and toward an alignment with the West.… The kind of assistance we can now give Afghanistan can do little to prevent aggression, but we are strengthening the country against subversion through technical cooperation projects and an Export-Import Bank loan for economic development.

Nepal

51. Nepal, too, could do little to defend itself. Its government is weak, disorganized and with little democratic basis. Like Afghanistan, it is landlocked and at the mercy of its great neighbors. Its only real strength lies in its close relationship to India which some years ago indicated publicly that an attack on Nepal would be regarded as an attack on India. It would be helped by membership in the UN, a membership which we support. Working in close consultation with India the United States has conducted a limited technical assistance program in order that Nepal, the most vulnerable of the South Asian countries, may be able to make some contribution to its own advancement.

Ceylon

52. Though small and weak, Ceylon produces important quantities of tea and rubber, possesses a potentially valuable naval base (controlled by the British), and is an important communications link. Arrangements with Ceylon for the utilization and the expansion by the United States of radio broadcasting facilities in Ceylon are an important element in the capability of the United States to carry on psychological and propaganda programs in the area. Separated from the Asian land mass by the Palk Strait, it is not susceptible to attack except by naval or air power. It is not a member of the UN, so it has not considered itself bound by the UN embargo on shipments of strategic materials to Communist China. Its strategic location would make it a great communist prize and as such a threat to shipping. Our policy must be directed toward preventing any extension of communist influence while at the same time exerting every effort to make clear to the Ceylonese the perils of their present course. The problem requires great patience and forbearance.

Relationships between free Asia and Japan

53. Both India and Pakistan greeted the re-emergence of Japan as a world power with deliberate efforts to foster good will. Both countries renounced any war reparations, acts which were greatly appreciated in Japan. Trade relations were resumed in 1947, and are growing in importance. Japan now is the leading importer of Pakistan’s goods. Trade between Japan and India has developed somewhat more slowly than between Japan and Pakistan because Japanese and Indian exports are less complementary than is the case with Pakistan; Japan has extended liberal credits to Pakistan; India is fearful of Japanese competition with Indian products; and India has tried to drive very hard bargains with Japan. Japan needs the raw materials (cotton, jute, coking coal, manganese and iron ore) which Pakistan and India can offer and those countries need the machinery and other manufactured goods which Japan must export. It would appear that the possibility of mutually satisfying their respective needs would lead to the development of much greater trade, and at least in the case of Pakistan this may eventuate. U.S. security interests would be furthered by any contribution Japan could make, particularly through trade and investment, in increasing the economic strength and political stability of South Asia and the Far East. However, U.S. hopes of building political and economic strength in Japan and decreasing Japanese susceptibility to the attractions of markets on the Chinese mainland through developing a broad pattern of trade between Japan and free Asia have fallen far short of fulfillment as far as India is concerned.

54. India refused to attend the meeting at San Francisco in September 1951 to sign the Treaty of Peace with Japan,⁴ giving as its objections that the treaty did not give Japan a position of “honor, equality and contentment among the community of free nations” and did not enable all countries “specifically interested in a stable peace in the Far East” to subscribe to it sooner or later. India tried to influence other nations, including Burma, Ceylon and Indonesia to take a similar stand. India subsequently signed a liberal bilateral treaty with Japan. India would like to separate Japan from its close association with the United States and is jealous of the possible development of a great competitor in what India regards as its area of influence. U.S. interests, therefore, will be best served by development of trade and other relationships between Japan and India (as well as other South Asian countries) by the peoples of the countries themselves and any sponsorship from the United States should be quiet and unobtrusive.

U.S. aid programs

55. United States extension of developmental and technical aid, as well as emergency assistance where needed, has strengthened the governments and supported the economies of the countries of the area. United States technicians and United States advice have actively participated in the composition and direction of the countries’ developmental efforts. For example, fertilizer and tube wells furnished by the United States aid program should increase food production in South Asia during the next crop season by about 400,000 tons. Four thousand tons of DDT, 4 million resochin tablets, and numbers of sprayers and vehicles have been furnished to India to assist in its national program to eradicate malaria in five years. United States aid has stimulated the Government of India to initiate in about 22 areas, embracing over 22,000 villages and 21 million people, a “grass roots” program of community development. This program is extremely important because of the number of people it will reach. The United States program has stimulated similar community development in Pakistan and in Nepal. In Afghanistan, United States aid is supplying technical advice to the government in the administration and efficient utilization of the resources of the Helmand Valley in which project the United States already has invested $21 million in a loan to the Afghan Government by the Export-Import Bank. In general, the United States aid program is demonstrating to the masses of the people in the area United States willingness to assist in the developmental activities of their governments. United States emergency aid has been of real assistance to both India and Pakistan. The United States food aid loan of $190 million to India in 1951 for the purchase of approximately two million tons of wheat rescued that country from a desperate position. Similarly, in 1953 the United States gift of 700,000 tons of wheat to Pakistan saved that country from the ravages of famine. However, those countries still face problems which severely tax their present material and technical resources, and the nature and effectiveness of United States efforts to help them may be a strong factor in determining whether they develop into more stable and viable components of the free world or lapse into a state of internal weakness inviting communist domination. United States willingness to assist those countries has been of help in reducing the psychological obstacles to friendship with the United States, although only time can cure some of their deep-seated prejudices.

56. The need for additional investment in India is very great. Population increase is pressing so hard upon production that, as already noted, the standard of living is declining. The Indian Five-Year Plan is not too large for the need, but is probably larger than the administrative and technical talents which have been available to carry it out. In addition to the problem of a lack of foreign exchange, there are the problems of a lack of trained manpower and of internal finance. On this latter point, India’s vast population has been so close to a subsistence standard of living that there is constant pressure on available production to supply consumption requirements to the neglect of capital needs. Additional taxation for capital investment is immediately reflected in consumption levels. Deficit financing, having the same result through the inflationary process, is the chief alternative. India is carrying out a Five-Year Plan which has been estimated to cost the equivalent of $4.7 billion. Out of large sterling balance holdings, India has available about $600 million worth of sterling which it is free to use in the sterling area. An additional $100 million will be released from blocked funds for each of the four years 1954–57. However, it still appears that India may be unable by as much as $650 million, to finance the Five-Year Plan.

57. United States technical and economic assistance to the countries of South Asia has been only a very small percentage of the amounts expended by the countries themselves in their self-help efforts. United States assistance to India may reach a level of approximately $100 million a year. Grant assistance has been made available on the assumption that the loan servicing capacity of the recipient countries would be fully utilized. Since independence the IBRD has made loans to India for railway rehabilitation, agricultural machinery, power development and to increase India’s iron and steel capacity. As of June 30, 1953, these loans amounted to $109 million and an additional $50 million loan application was under consideration. Pakistan has borrowed $30 million from the IBRD for railroad rehabilitation and agricultural development, $28 million from the U. K. for development and balance of payments purposes and has received a commercial line of credit of $16 million from Japan. Afghanistan has borrowed $21 million from the Export-Import Bank for development in Helmand Valley and is presenting another application to the Export-Import Bank for about $36 million for similar purposes. It is estimated that $60 million may become available to India from other participants in the Colombo Plan.

58. The period of the next few years is likely to be one of chronic economic difficulties which the countries of the area must surmount if political crises are to be avoided or confronted successfully. United States policy may be a strong factor in determining whether the countries of the region will continue to develop in the democratic framework or will fall under communist control.

1. For documentation regarding Korea, see volume xv.
2. The Kem Amendment was subsection (a) of section 1302 of the Third Supplemental Appropriation Act of 1951, which was signed into law on June 2, 1951, as Public Law 45. For the text, see 65 Stat. 63.
3. For the text of NSC 155/1, July 14, 1953, see volume ix.
4. For documentation regarding the signing of the Treaty of Peace with Japan in September 1951, see Foreign Relations, 1951, vol. vi, Part 1, pp. 777 ff.