Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

302. Memorandum From the Director of the Office of South Asian Affairs (Bartlett) to the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Rountree)¹

Washington , March 26, 1958.

SUBJECT

• Status of Pakistan Economic Assistance Projects

As you are aware, SOA has been attempting to obtain early approval of a significant DLF program for Pakistan to offset the reaction in that country to the announcement of additional aid to India. A number of reports from Pakistan, including the recent speech of Prime Minister Noon, has lent added urgency to such action.

Despite our efforts extending over several months, only two Pakistan DLF projects amounting to approximately $10 million are now close to approval. Pakistan’s major projects remain stalled by technical problems in ICA and DLF. In a further effort to spur action, I met yesterday with Mr. John Bell and his staff to express our concern once again and to ascertain more fully the reasons for continued delay. The situation of the major projects is set forth briefly below:

1. Ganges Kobadak. Embassy Karachi has urged strongly that a decision be made by the U.S. to finance pumping structures necessary to progress on the first phrase of this major East Pakistan irrigation project despite lack of positive technical judgement that the project is economically sound or of an engineering plan for the structures. They base their position on the long delay by the U.S. in reaching a decision and the political importance of the project to the East Pakistan Government.

ICA reports that the engineering study, which should have provided plans for the pumping structures, was so poorly done by Jenks and Ballou that it provided no basis for decision. They hope to have the Tudor Engineering Company complete its report on the over-all feasibility of the project and on detailed pumping plans in three to four months at which time a decision can be made. ICA points out that much of the delay is due to poor preliminary work by Pakistan, although admitting the weak performance of the most recent U.S. engineers. However, in view of the negative Jenks and Ballou report and the lack of engineering plans on which to make a contract, they see no alternative to awaiting further study results. It is also noted that even if a decision to go forward were made today, construction would require at least two years and the project would contribute little positive support for the East Pakistan Government in the coming elections.

2. Karnafuli. This power and irrigation project is the second major undertaking in East Pakistan. It was anticipated that it would receive early DLF approval as a continuing project to which $20 million of U.S. aid has been devoted already. However, it was discovered that the dam, as planned, will flood some Indian territory. Action is delayed until this problem can be resolved.

It is agreed between ICA and ourselves that Embassies Karachi and New Delhi will approach their respective governments immediately to get them to agree between themselves on an interim basis to let work proceed while concurrently studying the extent of flooding and the compensation required. Rapid action is required since costs continue at $100,000 per month, even if construction is halted.

3. Tubewells. Pakistan has requested DLF aid in constructing some 1,800 tubewells in a first step to alleviate waterlogging and salinity which are rendering useless agricultural land in West Pakistan. In view of Pakistan’s food problem, this is a very high priority project.

ICA has been doing experimental work on tubewells and the underlying ground water problem in Pakistan for several years. They expect a full report on this work, promised by the end of March, which will furnish the technical basis for project approval.

4. Richards’ Commitment for Fertilizer Plants. ICA has not yet released to Pakistan the $10 million pledged by Ambassador Richards for the construction of fertilizer plants.² You will recall that this commitment has had a long, confused history, beginning with the conflict between ICA and Pakistan as to whether the plants should be built in the public or private sector. Having resolved this issue, ICA has spent months in a technical consideration of means of waiving administrative requirements to permit them to assign money to contracts already entered into by the Government of Pakistan. Since January 1, ICA has been engaged in an exchange of correspondence on this matter with their Mission in Karachi. They are unwilling to take action until receiving an answer to their latest questions.³

1. Source: Department of State, Central Files, 890D/3–2658. Confidential. Drafted by Rufus Burr Smith.
2. Reference is to a commitment made by Ambassador James P. Richards to Pakistani officials in March 1957. Richards visited Pakistan, March 27–31, 1957, as part of a trip to 15 countries in the Middle East, South Asia, and Africa, in order to explain President Eisenhower’s proposals regarding economic and military assistance to those countries.
3. On April 15, ICA Director James H. Smith, Jr. sent a memorandum to Deputy Under Secretary C. Douglas Dillon, requesting the Department of State to proceed with the fertilizer project. (Department of State, Central Files, 790D.5–MSP/4–1558) On April 23, Dillon replied that “in view of the overriding political consideration involved,” means had been found to implement the Richards commitment. (Ibid., 790D.5–MSP/4–1558)