202. Telegram From the Department of State to the Embassy in Germany1

1937. For Ambassador. Please call on Chancellor2 and state President wishes to share his strong concern about Indian economic problem personally with Chancellor:

1.
Future of moderate government in India may depend on economic progress in next few years. Failing such progress, Communists [Page 421] may be able follow up recent electoral victory in Indian state Kerala3 with gains in more populous and strategic provinces in 1961 elections. This might set in motion trend toward political extremism and regional separatism whose end result could be gradual Communist take-over.
2.
Dimensions Indian economic problem such that it cannot be met in entirety by any one foreign country. If problem to be dealt with effectively, all those free nations which are India’s major trading partners must take energetic action to this end.
3.
U.S. planning following measures this year:
(a)
$225 million loans: $150 million from EximBank and $75 million from new Development Loan Fund.
(b)
Additional wheat to meet drought emergency, in addition to shipments under current PL 480 agreement.

This immediate action to meet urgent crisis, and will give us time to consider further action next year, including large new PL 480 agreement if adequate new authority is provided by the Congress.

4.
President recognizes this US program will not meet entire Indian need. Hopes other free countries will also take appropriate action. Gratified to note consideration Indian needs being extended by Fed Rep in negotiations beginning January 27 (re Embtels 2159 and 2220).4 President hopes Germany will take action consistent with its political interest in India as well as its strong financial position and creditor status vis-à-vis India to help meet current critical problem.
5.
Would be delighted receive Chancellor’s views. US will keep in close touch Fed Rep on this subject. If US and Fed Rep can continue keep each other fully informed concerning assessment Indian economic problem and planned actions, this will help both countries act more effectively.5

Herter
  1. Source: Department of State, Central Files, 891.10/1–2558. Confidential; Limit Distribution. Drafted by Henry Owen of S/P on January 21 and cleared with Dillon, the appropriate geographical areas, and Goodpaster at the White House.
  2. Konrad Adenauer, Chancellor of the Federal Republic of Germany.
  3. The Communist Party of India gained power in Kerala as a result of the election of March 1957.
  4. Dated January 15 and 20, respectively. (Department of State, Central Files, 891.10/1–1558 and 891.10/1–2058)
  5. In telegram 2346 from Bonn, January 30, Ambassador David K.E. Bruce reported that he called on Adenauer that morning and expressed to him Eisenhower’s views regarding aid to India as contained in telegram 1937. Adenauer replied that he agreed that all free nations must do what they can with regard to assisting India. (Ibid., 891.10/1–3058)

    In telegram 1593 to Tokyo, January 29, the Department of State requested the Ambassador in Japan, at his discretion, to bring to the attention of the Japanese Government, at the highest appropriate level, U.S. concern with India’s economic problems. The cable was largely based on telegram 1937 to Bonn. (Ibid., 791.5–MSP/1–2358)