1. Paper Prepared by the National Security Council Planning Board2


I. Introduction—Importance of South Asia

The problem of how great an effort the Western Powers should make to build up a position of greater Free World strength in South Asia is given new prominence by the rapid growth in Chinese Communist power. The likelihood that this growth will intensify the threat posed to Free World interests in Asia over the next decade underlines the desirability of developing in India a successful alternative to Communism in an Asiatic context.
In the nations of South Asia (India, Pakistan, Afghanistan, Ceylon, and Nepal) there is considerable potential for achieving this goal. These nations have a population of over 500 million, or one quarter of the Free World total. Strategically located athwart the land and sea lanes of communication between the Middle and Far East, South Asia has valuable natural resources, including India’s rich iron and coal deposits. India and Pakistan inherited from the British a [Page 2] tradition of sound administration and a good civil service, and a common language, English, which makes possible communication between the various cultural groups inhabiting the sub-continent. India also inherited an extensive rail network.
However, critical internal problems, internecine strife among the area nations, and neutralist foreign policies by all but one of them pose serious obstacles to the emergence of a strong and stable South Asia. Despite an impressive volume of external assistance (roughly $4.5 billion provided or pledged in the last four or five years)3 the area continues beset by a multitude of political, social and economic problems. Living standards are extremely low and efforts to improve them are seriously impeded by continued rapid population growth, low productivity, inadequate financial resources, shortages in trained personnel, and inflation. As for India’s political and social life, divisive regional, linguistic, caste and religious differences still exist, despite Nehru’s partly successful efforts to eradicate them. The cohesive and popular appeal of the Congress Party is gradually deteriorating with no alternative unifying force other than the Communists in sight. In Pakistan, little sense of identity exists as yet between the vastly different eastern and western parts of the country. Ceylon suffers from governmental instability and Tamil-Sinhalese differences. In Afghanistan tribal and religious factors remain potent obstacles to the evolution of a modern state.
Except for Pakistan, which is a member of SEATO and the Baghdad Pact, the nations of the area have adopted a policy of neutralism. In India and Ceylon, the problem of growing Communist strength is a serious one. The Sino-Soviet bloc continues to give South Asia,4 especially Afghanistan and India, high priority in its long-range plans for the expansion of Communist influence in Asia. However, the governments and major political parties appear to be becoming increasingly aware of their own self-interest in blocking Communist subversion and maintaining anti-Communist policies domestically.
The withdrawal of British authority from the sub-continent and the creation of Pakistan in 1947, arising out of centuries of Muslim-Hindu antagonism, created numerous problems which have embittered Indo-Pakistan relations and have prevented the two countries from cooperating, for their mutual benefit, in the economic development [Page 3] of the sub-continent and in planning for its defense. The more important of these continuing problems are the Indus waters problem, the Kashmir question, and border disputes resulting from the failure to demarcate large stretches of the common boundaries of the two countries. In addition there is the dispute between Afghanistan and Pakistan over those Pakistani areas occupied by tribesmen ethnically related to the Afghans.
The United States has followed a consistent policy of not becoming involved in these bilateral disputes but urging the governments concerned to attempt to reach mutually agreeable settlements. By sponsoring and financing a tripartite regional transit project, the United States has sought to reduce Pak-Afghan tensions. In the case of the Kashmir question, we have supported efforts by the United Nations to facilitate such a settlement.
At the present time, there is hope that the IBRD, under the auspices of which India and Pakistan have been negotiating the Indus waters problem, will be able to secure the consent of both governments to a plan for settlement of this dispute which the Bank will soon put forward. Although the United States has not participated in the Indus waters negotiations, we have encouraged the IBRD in its efforts, and it is expected that we will be requested to participate with the IBRD and others in the financing of whatever plan may be agreed upon by India and Pakistan.
If agreement on the Indus waters problem is reached, it is hoped that tensions between the two countries will be so reduced as to make possible the achievement of settlements of the remaining disputes. Such a settlement might bring about a halt in the continuing rivalry between the two countries in building up their military forces and might lead them to cooperate in planning for the defense of the sub-continent. The possibility of rapprochement has been somewhat enhanced by the deterioration in Indian-Communist Chinese relations as a result of the Tibetan revolt and by the general re-evaluation of relations with the Communist Chinese regime occasioned throughout South Asia by that development. In this connection, the United States might discreetly utilize the Tibetan revolt and its impact in South Asia in order to improve the general position of the United States in this area.

II. Issues for Discussion

9. India’s Role in Asia. U.S. policy toward Japan (NSC 5516/1)5 provides that our “interest would best be served by a strong Japan, firmly allied with the United States, and better able to serve as a [Page 4] counterweight to Communist China and contribute to Free World strength6 in the Far East”. Our policy toward India (NSC 5701)7 provides that “It is in the U.S. national interest that the genuine independence of India be strengthened and that a moderate, non-Communist government succeed in consolidating the allegiance of the Indian people … A strong India would be a successful example of an alternative to Communism in an Asian context6 . . . .8 In view of the intensified threat to Free World interests in Asia posed by the rapid growth in Chinese Communist power, should our basic objective toward India be stated more correctly as the development of a strong India, more friendly to the United States, and better able to serve as a counterweight to Communist China?

10. Problems of Economic Development. There is strong pressure for more rapid economic growth in South Asia, particularly in India, Pakistan and Ceylon. Despite heavy foreign aid to South Asia, Pakistan and Ceylon have been barely able to maintain a constant per capita income. While India has achieved the beginnings of economic growth, a continuance of such growth will require an investment in foreign exchange over a period of years of a magnitude which may be beyond the country’s current and anticipated domestic resources. Because economic growth in this area is in the U.S. interest, the United States must determine how it can best contribute to this growth, recognizing that rates of growth depend not only on the availability of capital but on many factors, including the natural resources of a country, the efficiency with which the development effort is organized, the availability of technical and administrative skills, the rate of population growth, and the willingness of the peoples to change their customs and traditions and to forego current improvement in living standards in order to maximize investments. The United States must also determine the most effective techniques for extending aid to the nations of the area. U.S. policy is to consider the channeling of development assistance through regional development programs in areas where the governments concerned clearly manifest a desire for such regional programs and are willing to join in their financial support, and where such programs appear to offer real advantages over bilateral programs. Furthermore, it is the policy of the United States not to become a member of regional financing institutions outside the Western Hemisphere.9

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Should the United States continue to provide and continue to encourage other Free World countries to provide, economic and technical assistance to South Asia on a project or case basis?
Alternatively, is a higher rate of economic growth in South Asia of such importance as to warrant a new approach to economic assistance which would involve a significantly greater U.S. and Free World effort? If so, should the United States:
Assure the governments concerned that it will attempt to provide supplementary financing to carry out the governments’ own development plans, or
Give assurances of the willingness of the United States to assist in both the formulation and financing of programs aimed at achieving more rapid rates of economic growth?
Would the effectiveness of the U.S. programs in South Asia be enhanced if legislative authority were obtained to provide aid on a multi-year basis? Could the United States give such assurances without taking similar action in other less developed nations, e.g., in Latin America?
Should the United States move toward a regional approach to South Asia’s economic problems, taking the initiative in attempting to create a regional organization that would develop economic plans for the area, and providing at least some U.S. aid through such an organization?
To what extent is it in the U.S. interest to seek to relate U.S. assistance to the achievement of greater cooperation between India and Pakistan? For example, if the United States is called on to help finance the IBRD plan for settling the Indus waters dispute, should U.S. participation be made conditional on willingness by India and Pakistan to cooperate further, for mutual benefit, in the economic development of the sub-continent, in planning for its defense, and in terminating continuing rivalry between the two countries in building their military forces?

11. Military Aid to Pakistan. With the approaching fulfillment of the 1954 military aid commitment to Pakistan, past equipment deficiencies in the forces supported under MAP have been largely met.10 A recent review by the Joint Chiefs of Staff of U.S. force objectives in Pakistan concludes that a reduction in U.S. force objectives for Pakistan is not appropriate, at least for the near future. No major changes in these objectives are now contemplated under present planning. This review took into account such factors as Baghdad Pact and SEATO country force goals, increasing Communist Chinese strength, Pakistan’s [Page 6] economic situation, and the fact that some of Pakistan’s non-MAP-supported units constitute the sole security force in East Pakistan. However, Pakistan, for what it considers to be internal security and self-defense requirements, maintains and supports certain military and para-military forces in excess of those considered necessary by the United States on the basis of strategic requirements. The over-all Pakistan military establishment places a heavy burden on the Pakistan economy. Pakistan’s armed forces are the greatest single stabilizing force in the country, and Pakistan not only opposes reduction of its forces but has requested U.S. assistance in support of those units not now supported. Attempts by the United States to obtain Pakistan’s agreement to reduce its military establishment to the levels of U.S. force objectives and to dedicate more of its budgetary resources to economic development rather than to military spending would be more likely to be successful if tensions between Pakistan and India are significantly reduced. Should the United States:

Continue to provide military support to the current level of MAP forces, making allowance for maintenance and necessary modernization?
Seek a reduction in those Pakistani forces which are not now supported by the United States but which are in excess of U.S. strategic force goals, thus releasing Pakistani funds which could be used for economic development?
Seek to reduce Pakistan’s MAP-supported forces below the level now considered necessary to support U.S. force objectives, accepting this risk in order to assist Pakistan’s economic development?
Increase military assistance to provide support to some or all of the existing units not heretofore given military support, in order to aid the Pakistanis in meeting what they consider their irreducible minimum in defense forces?

  1. Source: Department of State, S/SNSC Files: Lot 63 D 351, NSC 5701 Series. Secret. A slightly different version of this paper was first transmitted to the NSC on May 22, under cover of a brief note by James S. Lay. According to a note on the source text, certain portions of section II of the original paper were revised on May 25 and May 26 (see footnote 8 below), and the revised paper was again submitted to the NSC on May 26, under cover of a brief covering memorandum by Lay.

    On May 26, Assistant Secretary Rountree transmitted a copy of this discussion paper to Acting Secretary Dillon, under cover of a four-page memorandum that summarized its contents. (Department of State, S/SNSC Files: Lot 63 D 351, NSC 5701 Series)

  2. Includes: since 1955 approximately $2.1 billion in economic aid (including about $1 billion under PL 480) and $500 million in military aid from the United States, $700 million from other Free World Nations and $700 million from international institutions; since 1954 $541 million in credits and grants from the Bloc, all for economic projects, except for $32 million to Afghanistan for military purchases. [Footnote in the source text.]
  3. A recent sharp increase in the tempo and scope of the Soviet economic offensive in India has been confirmed by our Ambassador in New Delhi. [Footnote in the source text.]
  4. For text of NSC 5516/1, dated April 9, 1955, see Foreign Relations, 1955–1957, vol. XXIII, Part 1, pp. 5262.
  5. Underlining added. [Footnote in the source text. Printed here as italics.]
  6. Dated January 10, 1957; see Foreign Relations, 1955–1957, vol. VIII, pp. 2943.
  7. Underlining added. [Footnote in the source text. Printed here as italics.]
  8. Ellipses in the source text.
  9. In the original version of the paper, dated May 22, this section reads as follows: “U.S. policy is to consider the channeling of development assistance through regional development programs only if such programs are established at the initiative of, and supported financially by the governments of the areas involved, and if the advantage of a regional approach over a national approach is clearly evident. Furthermore, the U.S. has not accepted [it is the policy of the United States not to accept] membership in regional financing institutions outside the Western Hemisphere.” The bracketed portion was a proposed addition by the Treasury Department. (National Archives and Records Administration, RG 218, JCS Files)
  10. The U.S. agreed to meet deficiencies in the then existing Pakistani armed forces: (a) 4 infantry divisions and 1 1/2 armored divisions; (b) 12 vessels, including destroyers and minesweepers; and (c) six squadrons of aircraft (3 fighter-bomber, 1 interceptor day fighter, 1 light bomber, and 1 transport). [Footnote in the source text.]