183. Memorandum of a Conference With the President, Washington, November 12, 1957, 8:25 a.m.1
OTHERS PRESENT
- Vice President Nixon
- Secretary Dulles
- Under Secretary Herter
- Secretary Anderson
- Mr. Brundage
- Governor Adams
- General Goodpaster
- Mr. Douglas Dillon (for part of meeting)
[Here follows a discussion of the Tunisian problem.]
Mr. Dulles said the main purpose of the meeting was to discuss the question of a loan to India. He suggested Secretary Anderson might outline the Indian finance situation. Mr. Anderson said that India has put a levy on capital of the order of 10% in some areas. The result is to scare off private investment even though some of their private people, such as Birla when he was here, make a great deal of sense in their plans and propositions. He said India is talking about a $1.4 billion deficit over the next three years. If we were to provide that kind of money we would have to go to Congress for a [Page 405] specific loan. Aid to India will be a very hard proposition to sell, because their behavior has been very offensive on the Communist issue, and because they have gone out of their way to insult us on many occasions. Any special program for an individual country, and particularly for India, might have a bad effect on the whole Congressional effort. He said that Gaillard2 and the government of France are in deep trouble, and the requirements for aid are substantial.
The President asked if Germany could not lend the Indians some money. Secretary Dulles said the Germans have shown some disposition to do something like this, and their attitude is rather encouraging. He suggested the President talk to Adenauer about this at the Paris meetings.
Mr. Dulles said that the proposal for a loan to India has implications all across the map. The impact on Turkey, Iran, and Pakistan will be great—they will be deeply offended if we give major aid to India while they are so much in need, when they have been supporting us while India has been working against us.3 The Indian military program is quite extravagant. They are buying Canberra bombers from the UK, saying they must do so because we are providing bombers to Pakistan. (This is untrue, Mr. Dulles said, and he said he had so informed Bevan,4 who had indicated Nehru had told him just the opposite.) Mr. Dulles went on to say that India has a very bad internal situation—the Communists are gaining power in several of the provinces, and this scares off private funds. He did not consider it likely that the Soviets would give massive loans to India. What is likely to happen is disintegration with the Communists taking over a piece at a time. Secretary Anderson said that if we gave the Indians the loan they are seeking, we would simply be covering their trade deficit with Germany and their purchase of bombers from Britain. He agreed that we should talk with the Germans about their trade balance with India. Mr. Dulles recalled our efforts to shift the Indian bomber program from Russia to Britain, and said that he felt the Soviets would pick up the bomber program if Britain dropped it. India wants bombers, not because Pakistan has them, but because Pakistan has none, and they can thus threaten Pakistan.
[Page 406]The Vice President asked what a program might be that would not require special legislation. Mr. Dillon thought it might be possible to prevail on the Ex-Im Bank for a bigger loan than they now plan, and it could be a balance of payments loan for purchases in the United States for the private sector. Secretary Anderson said that if we carried on aid to India at our current level, gave them $200 million from the Ex-Im Bank, and they drew down their reserves and got some aid from outside, perhaps Germany, they could squeak through. Mr. Dulles recalled that we had given them grain under PL 480 for a three-year period, and Mr. Dillon brought out that they had used this up in twenty-one months.
The Vice President surmised that if we were to do this, Turkey and Pakistan would immediately be in for aid. If we do not, the cost will be disintegration of India and its orientation toward the Communists. He said that if we do not work out something in this matter, the propaganda effect of such disintegration would be very heavy and adverse throughout Asia.
Mr. Dulles, in commenting on any idea of special legislation, said that the danger of a spectacular defeat in Congress is very great. He thought it was better to pick up bits and pieces, slow down the military program, and get the Ex-Im Bank to put up additional funds. The President said he would be glad to meet with the people concerned at the NATO session in Paris.
Mr. Dulles summarized the outcome of the meeting as follows: We will not go to Congress for a special grant; we will try to break the problem down into parts; we will try to get the Germans to cover the Indian trade deficit with them; we will try to cover our deficit through the Ex-Im Bank, perhaps $200 million, we will try to provide $50 million or so from the development fund; we will talk with them about the bomber question; and we will talk with them about their internal condition which impedes the flow of private funds. The President confirmed this, and said that we should discuss with the UK what we are doing.
- Source: Department of State, Central Files, 711.11–EI/11–1657. Personal and Confidential. Drafted by Goodpaster on November 16.↩
- Félix Gaillard, Premier of France.↩
- On November 23, Dulles told Pakistani Foreign Minister Feroz Khan Noon that while the United States was not pleased with many aspects of India’s foreign policy nevertheless it would not be good for the free world, and specifically Pakistan, if India turned to the Soviet Union for assistance. He stated that no final decision had been made on the aid question and termed any probable assistance relatively modest. (Memorandum of conversation by Bartlett, November 23; Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199)↩
- Aneurin Bevan, British Labour Party leader and Member of Parliament.↩
- Printed from a copy which bears this typed signature.↩