69. Telegram From the Embassy in Pakistan to the Department of State1
2584. Reference: Embtel 2573.2 Settlement of one of two major issues between India and Pakistan—longstanding Indus water dispute may at last be in sight as result IBRD President Black’s just concluded visit to subcontinent where he presented Bank’s “last ditch” plan. Before departing Karachi last night, Black issued statement saying he considered talks in Delhi and Karachi “very successful”, declaring “we have succeeded in establishing principles acceptable both governments that afford firm basis for reportedly final settlement.”
In conversation with me evening of departure, Black and Iliff both confirmed that they “very encouraged” and optimistic that settlement in sight. During Delhi visit Bank team conceded reduction GOI payment to Pakistanis from $200 million to $175 million. Major concession to Pakistanis was agreement to shift location one storage site to Indus which will increase costs by something in excess $100 million. However, Iliff said Bank had included in plan some $50 [million] padding and actual increase foreign exchange costs for new site only about $20 million.
Pakistanis also agreed not to object to Indian’s building hydroelectric works on upper reaches western rivers, but no diversion to be permitted. Pakistanis willing permit construction works by India in Indian portion Kashmir “without prejudice claims on Kashmir” and GOI agreed to Mangla dam which partially in Azad Kashmir also “without prejudice” Indian claims.
Black noted in public statement that he returning to “firm-up with friendly governments the amount of financial aid they prepared extend.” Hopeful that within two months Bank can invite Indian and Pakistan representatives to meet with Bank to work out international water treaty. Iliff told me that Bank expected remain in picture till works completed. Will control letting of all contracts and will insist on international bidding. Last feature may operate to advantage of GOI since they may be in position provide low cost cement and, after year [Page 168] and half, may even be able export steel. Bank will also act as referee in any disputes arising during construction but arbitration ruled out by India.
GOP also issued press release May 18, stating that Pakistan had informed Bank that it will go forward on basis plan, and hopeful “friendly countries, US, UK, Canada and Australia” will assist in financing. Statement stressed fact all works will be under Pakistan control and “will secure independent irrigation system free from threats foreign interference.” Privately Pakistanis appeared genuinely and deeply relieved at Bank’s success in obtaining promise from GOI that water will not be diverted until replacement works operating.
In conclusion, I asked Iliff what factors he believed had influenced GOI to agree to plan. Iliff replied that foremost was probably Indian desire get something done on protracted dispute and move ahead with construction. Contributing factors in Iliff’s view were Tibet events and also relative respect for present Pakistan Government in contrast unstable predecessor. Iliff will be back in Washington about May 22–23 and said he would give full report to Department.
GOP and Bank press releases being pouched.3
- Source: Department of State, Central Files, 690D.91322/5–1959. Secret; Priority. Repeated to New Delhi, Lahore, London, Canberra, Ottawa, Dacca, and Peshawar.↩
- In telegram 2573, May 18, the Embassy reported that Black and Iliff arrived in Karachi on May 16 for talks on the proposed canal waters settlement. During dinners for the IBRD delegation on May 16 and 17, Black informed Langley that he was very encouraged by his New Delhi visit and expected that the one or two remaining issues in dispute could be resolved during discussions with the Pakistani delegation. (Ibid., 690D.91322/5–1859) Black and Iliff had been in New Delhi for talks with the Indian delegation May 12–16.↩
- These press releases were transmitted to the Department of State in despatch 1054 from Karachi, May 20. (Ibid., 690D.91322/5–2059)↩