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

373. Telegram From the Department of State to the Embassy in Pakistan¹

Washington, October 21, 1959—6:21 p.m.

890. Karachi Icato 721.² Finance Minister Shoaib departed Washington October 20 for Karachi, having talked with Dillon, Murphy, Jones (twice), Bell, Bartlett in Department, FitzGerald (twice) in ICA, Brand DLF,³ Miller Agriculture,⁴ Kearns Commerce⁵ and Irwin Defense. Additionally he attended IMF-IBRD-IFC and CENTO meetings and talked with private businessmen in New York.⁶

Besides topics in reftel Shoaib’s presentation in Department centered on 1) need for imports industrial raw materials as supported by GOP study, 2) September draft of Second Five-Year Plan upping investment to 19 billion rupees, and 3) importance increase in present level Defense Support and Technical Cooperation. Shoaib repeated to several State officials Ayub’s desire for F-104 fighter aircraft, Nike-Ajax unit, Sidewinder missiles, and M-14 specifications. He offered keep defense budget unchanged and pay for 4-6 planes.

Shoaib particularly concerned by trend tie purchases under DLF loans to U.S. procurement and impact on DLF railroad loan currently under discussion. Offered promise spend at least half of loan here and favor U.S. suppliers unless price 5-8 percent over world level.

Shoaib, who knew Defense Support figure by October 16, expressed gratification initial level high as last year but asserted Pakistan urgently needed even larger subsequent increment than received last year due stringency imports and need avoid inflation. Also disappointed by cuts in jointly developed TC program. As alternative to large Defense Support aid Shoaib mentioned possible increase in PL-480 imports, notably fine cotton yarns, as means avoiding squeeze Pak economy.

All Departmental officials listened sympathetically to Shoaib’s presentation. Bell and others stressed current budgetary stringency, showed GOP equitably treated in apportionment funds, and discouraged optimism regarding subsequent increase in Defense Support.

Herter

1. Source: Department of State, Central Files, 033.90D11/10-2159. Confidential. Drafted by Stanley Wilcox of SOA and approved by Bartlett.
2. Not found.
3. Vance Brand, Managing Director of the Development Loan Fund.
4. Clarence L. Miller, Assistant Secretary of Agriculture.
5. Henry Kearns, Assistant Secretary of Commerce for International Relations.
6. Additional documentation on the Shoaib visit and memoranda of some of the conversations mentioned in this telegram are in Department of State, Central Files 033.90D, 890D.00, 790D.56, and 790D.022.