320. Memorandum of a Conversation, Department of State, Washington, September 24, 19581
SUBJECT
- Pakistan Finance Minister’s Call
PARTICIPANTS
- Amjad Ali, Pakistan Finance Minister
- James M. Langley, Ambassador to Pakistan
- William M. Rountree, NEA
- Henry W. Spielman, SOA
The Pakistan Finance Minister began the discussion by indicating the Canadian meeting of Commonwealth Finance Ministers was a success so far as he was concerned, and after hearing reports from other countries, he thought the situation in Pakistan was not too unfavorable.
Mr. Ali said the Canadians showed a spirit of cooperation in attempting to help Pakistan solve her economic problems. He and the Canadians agreed that Pakistan might buy $2 million worth of wheat from Canada using part of the funds allotted earlier for the Warsak project. Mr. Ali hoped that this quantity could be included in a global marketing quota under PL 480 because Pakistan is using $2 million of economic aid for this wheat. The wheat is expected to be delivered in December. Mr. Ali said that Pakistan had enough wheat on hand to carry them into December of this year. He is hopeful that new PL 480 wheat will arrive in the latter part of December and for the rest of the crop year. In answer to a question from Mr. Rountree he said that Pakistan’s requirements remained the same, 700,000 tons of wheat and 100,000 tons of rice in addition to some cotton and vegetable oils. Mr. Rountree assured the Finance Minister that the Department would make every effort to conclude an early agreement so that a food shortage might be prevented in Pakistan.
The Finance Minister then commented on the deteriorating position of the United States in Pakistan. There is increasing criticism of U.S. policies and the charge has been made that the U.S. is interfering in internal affairs of Pakistan. He thought that some of this attitude had been dormant and had been brought to life following Prime Minister Noon’s March 8 speech criticizing the United States. Since that date, there has been increasing adverse comment in the press, in public opinion, and in the National Assembly. He gave four reasons why he thought such criticism was increasing: (1) the upcoming election in which the opposition was attempting to find something with [Page 663] which it could belittle the present Government of Pakistan; (2) an attempt to find a scapegoat to explain the deteriorating economic condition and general frustration felt by many people; (3) the increasing influence of the PIDC and the antagonism of its president toward the U.S.; and (4) the Pakistanis’ inability to understand why the U.S. continues to aid India. The Finance Minister said he understood why the U.S. gave aid to India, but most of his colleagues and the large section of the general public did not. He mentioned that Indians publicly opposed the U.S. in such forums as the U.N., condemned actions taken by the U.S. to defend the free world, and yet refused to solve problems on its own door step. Mr. Rountree said that the State Department was aware of these feelings in Pakistan and the actions taken by official and non-official Indians, but that we believe it was in the interest of the free world to help India carry out its Second Five Year Plan. A strong India that is supporting democratic institutions is an important force in the free world and a good counterinfluence to communism in Southern Asia.
Mr. Ali then brought up the problem of the influence of PIDC (Pakistan Industrial Development Corporation) and its principal officer, Mr. Ghulam Faraque. He said that the PIDC was of increasing economic and political importance. It has built and is in the process of building numerous industries and today is in the position of giving employment to a large number of people at all salary levels, awarding contracts to favorite friends, purchasing supplies and equipment through cooperating firms and influencing editorial policy through its advertising in local newspapers. For reasons unexplained by Mr. Ali, Mr. Faraque has been anti-American and through his large-scale activities is able to spread his anti-American feelings.
The Finance Minister stated that the Government of Pakistan was giving no serious consideration to devaluation.
As to his own future, Mr. Ali said that he did not know what his status would be when he returned to Pakistan. He would reach Karachi on October 2 and hoped to see Mr. Dillon. Mr. Ali pointed out that it was most unusual and almost unprecedented for the Prime Minister to appoint an acting Finance Minister when the Finance Minister was out of the country.2 He hoped that on his return he would be given the Foreign Ministry portfolio and if not, he would resign from the government.