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

4. Memorandum of Discussion at the 416th Meeting of the National Security Council, Washington, August 6, 1959¹

Washington, August 6, 1959

[Here follow a paragraph listing the participants at the meeting and agenda item 1, “Significant World Developments Affecting U.S. Security.” For an extract of that discussion, see Document 134.]

2. U.S. Policy Toward South Asia (NSC 5701; OCB Report on NSC 5701, dated March 18, 1959;² Memos for NSC from Executive Secretary, same subject, dated May 22³ and August 5, 1959;⁴NSC Action No. 2094;⁵NIE 52–59;⁶SNIE 54–59;⁷NSC 5909⁸)

Mr. Gray presented NSC 5909 to the Council. (A copy of Mr. Gray’s briefing note is filed in the Minutes of the Meeting and another is attached to this Memorandum).⁹

When Mr. Gray referred to the footnote on Page 5 of NSC 5909, Secretary Dillon said that the figure of 2.1 billion in the footnote did not take account of scheduled repayments.¹⁰ He was not particularly concerned about this matter, since the new Indian third Five-Year Plan would not be adopted for six or seven months. However, he felt the word “understood” should be substituted for the word “possible” in the footnote. Mr. Dulles said he concurred in Secretary Dillon’s remarks. The President asked when the third Five-Year Plan would start in India. Secretary Dillon said in the spring of 1961.

Mr. Gray then briefed the Council on the split in Paragraph 52, dealing with information and cultural and exchange of persons programs. Secretary Dillon said the Exchange of Persons Program was vital world-wide as well as in South Asia. This Program has achieved marked successes in return for small expenditures, especially in the orientation of leaders toward the Free World. He felt the Program, on a world-wide basis, should be increased, but it might well be that the provision in the majority version of paragraph 52 was a little too specific for an NSC paper. If it were clearly understood that the Budget proposal for Paragraph 52 would not preclude an increase in the Exchange of Persons Program, he would be willing to accept the Budget language. Mr. Stans said the Budget language was not intended to prevent an increase in the Exchange of Persons Program. It seemed to him that the majority language would require an increase in this Program in each of the countries of South Asia. He felt the program should be more selective, and was willing to accept the possibility of increasing the Program in some countries of the area.

Mr. Gray then briefed the Council on Paragraphs 55 and 57 dealing with communist aggression against, or attempt to seize control from within of a South Asia state other than Pakistan. He called on the Attorney General¹¹ with particular reference to the proviso at the end of each of these paragraphs reading “provided that the taking of any military action shall be subject to prior Congressional action.” The Attorney General said he saw no objection to the language of the provisos, which obviously could not change the constitutional power of the President, the exact nature of which had never been determined. This problem had been discussed fully by the Council in 1954 and the Secretary of State at that time had concluded that the question was an academic rather than a practical one. In practice the President would probably not take military action except in close cooperation with Congress since Congress controls the funds necessary for support of the military forces.

The President said adherence to the doctrine of close cooperation with Congress had been indicated by the adoption of the Middle East and Taiwan Strait Resolutions.¹² Under the Constitution the President is Commander-in-Chief of the armed forces, but as the Attorney General had pointed out, he must obtain funds from Congress for the support of those forces. Self-defense against an attack on U.S. forces was, of course, a different question from the one posed by these paragraphs.

The Attorney General said that at any time the President wishes to use the armed forces of the United States, he can do so. As Commander-in-Chief, the President can make use of U.S. armed forces even in the absence of a declaration of war. The President felt Paragraphs 55 and 57 of NSC 5909 were consistent with the Constitution.

Mr. Gray continued his briefing. When he reached the question of U.S. military assistance to Pakistan, Mr. Stans requested that he be allowed to speak at some length.

Mr. Stans felt that Paragraph 60 of NSC 5909 stated a key issue. The findings in NSC 5909 indicated that a reduction in Pakistan forces would contribute to easing tensions in South Asia and permit an expansion of economic development. In support of this point, Mr. Stans quoted from Paragraphs 10 and 15 of NSC 5909. He then pointed out that Pakistan had maintained forces in excess of MAP goals and that India was determined to maintain a three-to-one superiority in military forces over Pakistan. He felt it was desirable to do more than merely dissuade India and Pakistan from substantially increasing their forces; the reduction of Indian and Pakistan forces should be actively encouraged. In view of the Indian determination to maintain a fixed ratio of military strength vis-à-vis Pakistan, it was possible that reduction of Pakistan forces would prompt reductions by India. In a letter of April 13 to General Draper, the Joint Chiefs of Staff had indicated that ultimate reduction of Pakistan forces would be desirable.

In connection with Paragraph 38, Mr. Stans felt that the stabilization of Pakistan forces would have the collateral benefit of reducing an irritant in Pakistan-Afghan relations. Mr. Stans believed all members of the Council were seeking ways of reducing costs, and in addition Congress was forcing a reduction in the level of assistance from $2.0 to $1.4 billion. NSC 5909 made it clear that U.S. military and economic objectives in South Asia were often in conflict and that large military forces tended to weaken rather than strengthen the countries of the area. Moreover, Paragraph 76 tended to freeze MAP-supported forces in Pakistan at present levels, with the possibility that large additional expenditures would be required for modernization. The U.S. must reduce its overseas expenditures because of the balance of payments problem. Accordingly, we should encourage Pakistan to reduce its military forces.

Secretary Dillon said that last fall a re-evaluation of U.S. military assistance to Pakistan had been undertaken by the Departments of State and Defense, ICA and the Joint Chiefs of Staff. This re-evaluation, which had just been completed, indicated that under present circumstances it was unrealistic to expect that Pakistan forces could be immediately reduced or even limited. He believed the U.S. should press Pakistan and India to agree to limit their forces at existing levels during the Indian-Pakistan negotiations in London this fall on the Indus Waters. A successful Indus Waters negotiation might create a new climate permitting an agreement on limitation of forces. Secretary Dillon did not favor an extensive modernization of the Pakistan armed forces which would substantially increase the cost of such forces. There was often a misunderstanding of the fact that the Pakistan forces over and above the U.S. strategic force goals for Pakistan were arrived at on a political basis. U.S. force goals took into account Pakistan forces in West Pakistan but not those in East Pakistan. However, East Pakistan has more than half the country’s population, so that forces are required in this area and along the Kashmir Cease-Fire Line. For the foreseeable future, the U.S. should not attempt to persuade Pakistan to reduce its forces, but should work toward a reduction of the tensions between Pakistan and India in the hope that an agreement between these two countries might lead to a reduction in MAP-supported forces in Pakistan. Secretary Dillon did not accept the argument that Indian armed forces were built up only because of U.S. military assistance to Pakistan. Indian military policy took account of the existence of Communist China and of aggressive moves made by that country in the direction of the Indian border. Secretary Dillon did not favor a reduction in Indian forces either, but favored a redeployment of these forces away from the Pakistan borders. The immediate goal of U.S. policy should be an agreement between India and Pakistan to freeze their forces at present levels. At a later date, when it became practicable, the U.S. might work toward a reduction of Pakistan forces. Any attempt to reduce the Pakistan forces at the present time might cause serious harm in U.S. -Pakistan relations. Secretary Dillon agreed that military expenditures compete with economic development expenditures, but this was true on a world-wide basis and not just in Pakistan.

Turning for a moment to Paragraph 76, Secretary Dillon suggested that the wording was too detailed for an NSC paper and proposed that, in order to allow flexibility in the future, the word “present” be deleted in the phrase “maintain Pakistan’s present MAP-supported forces”. In conclusion, Secretary Dillon said he was willing to do whatever was politically feasible to reduce Pakistan forces, but he believed that it was not feasible to bring pressure on Pakistan at the present time.

Secretary McElroy said that Secretary Dillon’s views were in essence also the views of the Department of Defense. An eventual reduction of military forces would permit greater economic development in Pakistan. However, the prerequisite to such reduction was a determination by the Pakistan Government itself that it could reduce its forces without detriment to its security position. [2 lines of source text not declassified] He felt it was unrealistic to suggest a reduction of Pakistan forces at present, and believed our policy should be to maintain Pakistan forces at their present levels.

Secretary Anderson said the Council was discussing two of the poorest countries in the world. Even if we doubled our assistance to India and Pakistan, we would not succeed in raising their standards of living. There was greater tension between Pakistan and India than between any other two countries in the world, with the possible exception of Israel and the UAR. Increased military assistance might well lead to war between India and Pakistan. We could not reduce Pakistan forces and allow Indian forces to be built up. He suggested that the trend of our policy would have to be in the direction of reducing military forces in South Asia, since neither the U.S. nor the indigenous countries can afford present levels of forces. The Financial Appendix to NSC 5909 clearly indicated the large sums of money involved. The Export-Import Bank could probably not increase loans to India and it had not been lending money to Pakistan. The Development Loan Fund could not use a large proportion of its resources on these two countries alone. The balance of payments situation made it necessary for the U.S. to consider reducing its overseas expenditures. Secretary Anderson felt that it would be unwise to attempt a policy of supporting present levels of military forces in India or Pakistan for the foreseeable future. The U.S. should bring pressure for a reduction of forces even though our pressure might be gentle and subtle. We should emphasize to the countries concerned that they cannot afford large military forces.

Secretary Dillon thought that the U.S. should seek to reduce the animosity between India and Pakistan and might work toward an ultimate reduction of Pakistan, though not Indian, forces. The figures in the Financial Appendix were rough, and he did not attach too much importance to them. In fact, he thought that the problem would not be as great as the Financial Appendix would lead one to suppose. Since India and Pakistan had half the population of the underdeveloped countries, it was reasonable to assume that a large proportion of the DLF funds would be spent in those countries. He pointed out that Pakistan belonged to the Baghdad Pact, which is under the Soviet propaganda attack focused on Iran. If we give a negative answer to Iran’s recent request for increased assistance and for a reorganization of the Baghdad Pact command structure, and in addition seek to reduce Pakistan forces, the repercussions would be serious both in Pakistan and in Iran. In fact, the latter country might try to make the best possible peace with the USSR, on the ground that we were not serious about helping countries on the Soviet periphery to resist aggression. The Department of State should have considerable discretion in timing on such a politically sensitive issue as urging the reduction of Pakistan armed forces. He was willing to work toward first a limitation, and then a reduction, of military forces in South Asia as soon as the situation was favorable, but he felt it was dangerous to proceed prematurely.

General Twining said that at the Baghdad Pact meetings, Pakistan had presented a good case, not only for its present armed forces, but for additional divisions. The Pakistanis were good professional soldiers. If we insisted on reducing Pakistan forces now, it would undoubtedly create an unfavorable reaction in Pakistan. He felt that the Pakistan forces were a great stabilizing influence in South Asia.

Secretary McElroy pointed out that all Pakistan soldiers were volunteers.

The President felt that, assuming there would be no increase in taxes in the U.S., the discussion thus far had touched only the fringes of the fundamental problem. It was necessary to take a look at the situation all around the world. U.S. assistance programs had started in Europe with the Marshall Plan and as a result of the success of that Plan Europe is a region which no longer needs economic aid. He wondered why we should not look to Europe to help support forces in other parts of the world. He thought we may have been too easy on our European allies since the success of the Marshall Plan and, referring to U.K. force reductions and large U.S. expenditures on infrastruture, wondered why Europe was putting the whole burden of its defense on us. The U.S. might start to save dollars by getting U.S. military forces out of Europe. It might be that there was need for no more than one U.S. division in Europe. The economic recovery of the U.K., France, Germany, and Italy raised the question why these countries were not capable of keeping all necessary military forces in the field. The time had probably come to review military forces in Europe and attempt to reduce U.S. expenditures on such forces. Secretary McElroy said the balance of payments problem might force the withdrawal of U.S. troops from Europe.

The Vice President thought it might be difficult to reduce U.S. assistance programs in South Asia at a time when communist activities there are increasing. When Khrushchev speaks of peaceful competition between the Soviet Bloc and the Free World he is thinking of South Asia as much as any part of the world. Pakistan is the one solid pro-U.S. country in the area. It would be unwise to consider reducing assistance to Pakistan without remembering what the Soviets are doing.

Mr. Stans felt that the views thus far expressed were not very far apart. Both Secretary Dillon and Secretary McElroy had expressed opinions in favor of the ultimate reduction of the Pakistan military forces. Mr. Stans therefore suggested that NSC 5909 be remanded to the Planning Board with instructions (1) to delete the language in the paper favoring an increase in the Pakistan armed forces and (2) to indicate in Paragraph 77 the objective of reducing Pakistan forces in language similar to that used by the Joint Chiefs of Staff in their April 13 letter to General Draper.

The President believed that attention should be directed toward trying to reduce the existing tensions between India and Pakistan. In addition, on a world-wide basis, we should seek to find places where we are “in a rut” in our spending. He had been told that the morale of Western Europe would be ruined if U.S. forces in Europe were reduced by as much as a single division. He felt that perhaps we were subject to a certain amount of blackmail by Western Europe. The U.S. must begin to make NATO understand the facts of the situation. The President wondered why West Germany was building up its forces so slowly. If we refrained from providing nuclear weapons to West Germany, we might even be able to conclude a good treaty with the Soviets. Turning to South Asia again, the President said that the U.S. would have to work more effectively to get India and Pakistan to face their true enemies, the Soviet Union and Communist China, rather than quarreling with each other. He thought the U.S. should tell Western Europe that it must carry part of the load of supporting forces in India and Pakistan.

Secretary Dillon agreed that the balance of payments problem indicated that Europe, where we are spending $2.5 billion yearly, was the principal place where we could make savings on military forces without the sacrifice of security.

Secretary McElroy agreed that U.S. forces in Europe could be reduced and added that placing Army divisions in a central pool in the U.S. would result in making more effective use of them.

Mr. Gray asked whether the President wished the Planning Board to do some work on a NATO paper. The President said Planning Board work on this subject perhaps was not necessary, but that Secretary Herter should be consulted immediately about the problem of U.S. forces in Europe.

Secretary Dillon said the timing of any steps to reduce U.S. forces in Europe would be very important. The President agreed that we should probably not take any such steps until his exchange of visits with Premier Khrushchev had been concluded. Secretary McElroy said that consideration should be given to reducing U.S. forces in Europe immediately after the exchange of visits.

The President said he did not mind taking another look at the South Asia paper, but he did not believe that substantial savings in U.S. expenditures could be made in this area. He added that the balance of payments problem was a very troublesome one. Other countries experiencing balance of payments difficulties usually took steps, such as banning certain imports, which the U.S. was unwilling to take. In looking at the balance of payments problem in the past, there had been a tendency to consider only the assistance which the U.S. is extending, and to forget the effect on the balance of payments of our expenditure abroad on our own forces.

Mr. Gray said he would take the South Asia paper back to the Planning Board and ask it to revise the Military Assistance section to reflect the Council discussion. However, he hoped the Council would this morning provide some guidance on certain other issues in the paper.

Mr. Gray then briefed the Council on Paragraph 75. Secretary McElroy felt that the language in the existing policy might be used in Paragraph 75; that is, that Pakistan should provide token forces for collective military operations outside Pakistan. Secretary Dillon and the President agreed.

Mr. Gray read Paragraph 68 and said that although this was an agreed paragraph, he believed the Acting Secretary of Commerce had some observations to make. Secretary Mueller said he was concerned because projects in the uncommitted countries were undertaken almost exclusively on a government-to-government basis, a basis which had the effect of putting the recipient government into business. This amounted to socialism. The U.S. was using money collected by taxes on the free enterprise system to help develop socialism in countries receiving assistance.

The President said it would be difficult for the U.S. in the subcontinent of India to let economic development await the appearance of the private risk-taker. In an area such as South Asia, we must accept a mixture of socialism and free enterprise. As a matter of fact, added the President, we have a certain amount of socialistic activity mixed into American free enterprise; for example, the post office and harbor improvement, both of which had preceded the New Deal. In South Asia we must be satisfied with the spirit and the needs of nations and must not insist too much on free enterprise. We must accept some degree of socialism, although normally the government should not get into production.

Secretary Mueller said he agreed with the President’s remarks but felt that we should get our own free enterprise industry interested in investing in South Asia. The President said that experience with U.S. private enterprise investing in underdeveloped countries had not been too happy. After a while, the U.S. investors say their capital is about to be expropriated and the underdeveloped country says it is being exploited. Soon private investment becomes a political issue. He would agree in principle that all nations able to do so should have the kind of economy the U.S. has, but in many places, we must be satisfied with a diluted free enterprise system.

Secretary Anderson said U.S. policy should express a philosophy which recognizes the necessity of government-to-government assistance, but which makes us “do it the hard way”. U.S. policy should say: “To the fullest extent practicable utilize U.S. economic aid so as to supplement rather than compete with private capital, and to foster the growth of private industry. Continue to limit aid to industrial enterprises which are governmentally owned or operated to exceptional cases where important precedents would not be established thereby, and where such aid would clearly be in the overall national interest of the U.S.”

The President said it was necessary to examine a country’s reputation for honesty in government. Care should be exercised to make sure that loans which we extend to other governments are not used in the support of political lame ducks and for graft. He felt the less developed countries must develop themselves or there would be a great cataclysm, with the great powers, the U.S. and the USSR, trying to keep the peace.

Secretary Dillon said there seemed to be no real difference of philosophy on this question. In the operations of the Development Loan Fund emphasis had been placed on the desirability of not competing with private industry. The DLF makes no loan until it is sure private investors are not interested. However, economic development in South Asia followed a pattern different from that in some parts of the world. We would be wrong in denying ourselves access to large sectors of the Indian economy merely because these sectors are being developed by the government. He then suggested that Ambassador Bunker might wish to say a few words.

Ambassador Bunker felt the best approach to the problem would be a case-by-case examination of specific projects. The U.S. was facing a massive increase in Soviet assistance to India. U.S. assistance should be identifiable and should have an impact, but much U.S. assistance would have to be in the public sector of the economy. Conditions in South Asia were quite different from those in the U.S. The low rate of capital formation in South Asia meant that greater government participation in economic development was inevitable.

If the U.S. stayed out of the public sector of the Indian economy, this sector would be left to the USSR to exploit, and the Indians would believe that we were trying to impose our system of free enterprise on India. Ambassador Bunker believed that India would ultimately have an economic system which contained a mixture of socialism and free enterprise; moreover, he felt that the establishment of such a mixed system under a democratic government would be a great victory for the West. He also noted that private entrepreneurs in India did not have the high ethical standards of American businessmen. He repeated that we should consider specific projects in the public sector of the Indian economy on a case-by-case basis and should not let key projects go by default. We should of course stimulate private investment in India wherever possible, but private capital could not in many cases be mobilized in sufficient amounts. For example, insufficient private capital was available for building the three steel plants which were now being built in India.

The President suggested that the U.K., France, and Germany should be encouraged to provide a greater proportion of assistance to the public sector of South Asian economies. Because of their parliamentary forms of government, these countries do not face the problem of executive-legislative relations as it exists in the U.S. However, in any event, the U.S. should support a limited number of impact projects in South Asia.

Secretary Mueller referred to a recent cable on possible assistance to the Indian Government in developing its oil resources.¹³ He thought such resources might better be developed by U.S. oil companies. The President said that U.S. oil companies were in difficulties in many parts of the world. Secretary Dillon said the cable referred to by Secretary Mueller emphasized technical assistance and indicated that the first step would be consultation with U.S. oil companies.

Secretary McElroy believed that there was a clear need for a combination of public and private enterprise in the underdeveloped countries. He felt, however, that our diplomats abroad paid insufficient attention to encouraging the underdeveloped countries to develop a climate conducive to private investment. Secretary Dillon recalled that the State Department had requested $5 million in appropriations for the purpose of developing a climate favorable to private investment in foreign countries, but that this request had been rejected by the House Appropriations Committee.

Mr. Gray believed that NSC 5909 supported the views expressed by the President and took into account the remarks made by Ambassador Bunker. However, Mr. Gray was not sure that Secretary Mueller was entirely happy. Secretary McElroy remarked that no one was entirely happy.

The President said if the U.S. was to be prosperous, happy and peaceful, sacrifice, which is never popular except in the excitement of war, would be necessary. He was constantly told that taxes should be reduced, but an examination of the problems described this morning would lead to the conclusion that no tax reduction would be possible in the foreseeable future. We should state this estimate honestly to the American people and indicate that continued sacrifice might be necessary.

Mr. Gray noted that NSC 5909 contained a split paragraph on bases in Ceylon but suggested that the Planning Board, in the light of the JCS views, might attempt a revision of this paragraph. The President thought we should not take positions on bases which would enable the indigenous countries to blackmail us.¹⁴

The Vice President remarked that government-to-government assistance was the easy way of helping underdeveloped countries. Our representatives abroad were certainly not socialistic, but they did find it easier to extend assistance on a government-to-government basis. We must constantly keep in mind the principle that government-to-government assistance is a supplement to private investment.

Secretary Dillon reported that the Business Committee for International Understanding is now sending a number of businessmen who are about to go abroad to American University to study foreign policy and languages. Conversely, he thought it might be useful if we sent some of our Foreign Service officers to visit business organizations and learn more about business.

The National Security Council:¹⁵

a. discussed the draft statement of policy on the subject contained in NSC 5909; in the light of the views of the Joint Chiefs of Staff thereon, transmitted by the reference memorandum of August 5, 1959.

b. Tentatively adopted the following amendments in NSC 5909:

(1) Page 5, footnote to paragraph 7: In the first line, substitute the word “understood” for the word “possible”, and substitute the word “does” for “may”.

(2) Page 24, paragraph 52: Include the Budget version and delete the Majority version.

(3) Page 31, paragraph 75: Include the word “token” rather than “limited”, and delete the footnotes thereto.

c. Referred the remaining unresolved paragraphs to the NSC Planning Board for review and revision in the light of the discussion at the meeting.

Marion W. Boggs

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Marion W. Boggs.
2. Not printed.
3. See footnote 2, Document 1.
4. This memorandum transmitted a memorandum from the Joint Chiefs of Staff, dated August 4, offering their views on NSC 5909, the new draft statement of U.S. policy toward South Asia. (Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5909 Series) No copy of the original version of NSC 5909 has been found, since the original paper was destroyed after the amended paper, NSC 5909/1, was adopted on August 21. Accordingly, the original wording and “split paragraphs” in NSC 5909 that are referred to in this document and the following one cannot always be reconstructed with precision.
5. See footnote 9, Document 2.
6. Document 352.
7. Document 192.
8. Not printed.
9. Not printed. The minutes of all National Security Council meetings held during the Eisenhower administration are in the National Archives and Records Administration, RG 273, Records of the National Security Council, Official Meeting Minutes File.
10. Reference is to the projected net foreign aid requirements of India’s third Five-Year Plan.
11. William P. Rogers.
12. The Middle East Resolution is a reference to the economic and military aid program requested in the President’s Special Message to Congress, January 5, 1957. Documentation is in Foreign Relations, 1955–1957, volume XII. The Taiwan Straits Resolution is a reference to the Joint Congressional Resolution of January 29, 1955. Documentation is ibid., volume II.
13. Extensive documentation on this subject is in Department of State, Central File 891.331.
14. Footnote [10 lines of text] not declassified.
15. Paragraphs a–c that follow constitute NSC Action No. 2117. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95)