Foreign Relations of the United States, 1961–1963, Volume XXI, Africa

247. Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Kaysen) to President Kennedy⁰

Washington, October 29, 1962.

1. You requested a review of our relations with Ghana, and raised the question of whether it might be appropriate at this point to indicate our displeasure with recent Ghanian reactions in the UN and elsewhere in some way. You yourself have just sent a rather sharper letter (Tab 1 attached)¹ to Nkrumah in response to his complaints about Governor Williams’ public statement on Ghana’s votes in the UN.

2. Ghanian reaction to your message on the Cuban situation, both in the UN and elsewhere, has not been particularly gratifying. However, it is fair to say that the reaction was about what we would have expected in terms of past policy. What we know about Ghana’s reaction is as follows. The formal response of President Nkrumah to your letter on Cuba was neutral. (See Accra 696 at Tab 2)² Nkrumah’s immediate, off-hand response was much less even-handed and more pro-Soviet (Accra 690, Tab 3).³ At the same time there were some indications that Nkrumah has decided that the more neutral line of his formal response was the right one, and he is reported to have instructed his press and radio along these lines. This instruction was delivered after a first radio reaction of a pro-Soviet type (see Accra 691 and to USIA 179, Tab 4).⁴ Ghana joined with the UAR in sponsoring a Cuban resolution in the UN Security Council on Thursday, October 25 (from New York 1450, Tab 5);⁵ it had no specific content, and was not acted on.

3. The most obvious way we could deal more harshly with Ghana is to cut down our aid program. The details of our current aid program are shown in the table at Tab 6. In summary, they are as follows. We obligated nearly $2 million in FY 1962 in development grants for a variety of educational and technical assistance projects. The big item was the Volta Project. In connection with that, we obligated $117 million last year, of which $7 million was charged against development loan funds directly; $55 million were Ex-Im Bank funds transferred to the AID account and obligated through AID; and $55 million was committed by Ex-Im directly. Next year we propose a somewhat reduced program of development grants totaling $1.4 million. This represents a continuation of the on-going programs with lower levels for some, and slightly increased levels for others. In addition, we propose once again to commit $7 million in development loans; $4.5 million for the construction of the basic science building and hospital for a medical school, and $2.5 million as capital for an investment bank. The medical school is a project close to Nkrumah’s heart. Planning on this is complete, and the project is ready to go as soon as a decision is made. The investment bank is not yet in the same state; so far the report of the survey team on the bank has not been received. AID believes we could usefully spend another $8-9 hundred thousand in development grants on more activity of the present kind, but does not now have the money to do so.

4. Current developments on the economic front in Ghana are encouraging. Ghana has been meeting all its commitments on the Volta Project. So far the Government of Ghana has disbursed $28 million, the U.S. has made no actual disbursements, and the UK has spent a very small amount. Progress on the dam has been good: the work is ahead of schedule, and costs so far are lower than the original estimates.

Another encouraging sign of some importance on the economic front is that the government is moving toward establishing an investment bank whose mission would be to finance private enterprise. As originally conceived, the institution would have the purpose of financing State-owned enterprises. Two banking experts from Czechoslovakia were brought in to advise in setting it up. More recently, Ghana has changed the concept of the bank to emphasize the financing of private business, has asked for American advisers, and has let the Czechs go home. The details are given in the attached memorandum from AID. (Tab 7)

There are still other encouraging signs. A general law regulating foreign capital investment is now being considered by the administration. The latest draft has removed two features which we thought undesirable: (1) 60% of the earnings of any foreign enterprise be reinvested in Ghana; and (2) a long list of industries was reserved for State enterprise. The law is still in its draft stage. It has many technical weaknesses, and we are not yet sure what in fact will come out. The Sunkist Tuna Fish enterprise, which involved a proposal for operating a fishing fleet and a cannery was scared away from Ghana last Spring by the conditions then proposed. They now feel that the situation has changed sufficiently to make it desirable to look again.

Another sign of a turn away from emphasis on exclusively State control of industry are the appointments of W. Halm, former Ambassador to the U.S. as Governor of the Bank of Ghana, and Adomakah, as first head to the proposed investment bank. They are both pro-Western, moderate and technically competent. Still another is the stoppage of work on the Bui Dam project by the Soviets.

Attached at Tab 8 is Chad Calhoun’s account of his most recent trip to Ghana, September 18-23. Calhoun, a Vice President of Kaiser, is enthusiastic about the progress Valco is making and is in general optimistic about the economic and political outlook in Ghana. He thinks Nkrumah is taking a definite turn away from the Soviets toward the West.

5. Recent political developments point in the same direction. The attempted assassination of Nkrumah on August 1 has resulted in a significant shake-up in the government. This shake-up has displaced some of the more radical advisers around Nkrumah. There are several reports that the next foreign minister will be Alex Quaison-Sackey who is now Ghana’s representative at the UN. We consider him a moderate, and an able diplomat.

Bill Mahoney, our Ambassador in Ghana, feels he is making a real impression on the situation. He has established good relations with Nkrumah without in any way being inhibited from speaking plainly to him. He shares the view that the outlook in Ghana is favorable to the West in general and to the U.S. in particular. I spoke to him at some length when he was here ten days ago for consultation. If not for the crisis, you would have seen him.

It still remains the case that there are no feasible alternatives to Nkrumah who promise a more helpful policy from our point of view. This was the general consensus of opinion at the time we authorized our participation in the Volta River Project. It remains substantially the consensus now.

6. You have already expressed your displeasure at Nkrumah’s comments on Governor Williams’ statements. It would be easy for Ambassador Mahoney to reinforce the effect of this by further comments on the Ghanian response to your actions on Cuba. We could take a major step beyond this to a harder policy by cutting down on aid to Ghana.

There are two arguments that can be made for a harder policy toward Ghana at this moment. First, it would be useful to make an example of one of the left-leaning neutralists, especially in the light of the present situation. Ghana is a country which lends itself well to such treatment from our point of view. Nkrumah has been extreme in his statements. Ghana is not of strategic importance to us in Africa in any direct way. Further, Nkrumah’s actions and words have alienated many of his fellow African leaders, especially his neighbors. Accordingly, a strong line by the U.S. might be welcomed by other African countries.

The considerations on the other side, however, appear to me much weightier. We have a substantial U.S. economic interest in Ghana in the shape of Valco. The present outlook for the success of that enterprise is favorable, and those in charge of its operations are optimistic. A hardening in our policy toward Ghana, whether by reduction of aid more than is inevitably required by the aid cuts of the Congress, or by other means, may endanger Valco’s prospects.

This alone would not be persuasive if there were strong political reasons for a harsher policy. However, the political reasons appear to me to go in the other direction. There are signs that Nkrumah is turning away from the Bloc and that his neutralism is moving from neutralism against us to neutralism for us. Just because has has been vociferous and virulent in his previous stand, the gains to us of a permanent change in his attitude will be large. If Nkrumah joins Toure among those who are visibly and publicly disillusioned with the results of close political alignment with, and heavy economic dependence on, the Bloc, this will be a significant gain for the U.S., not only in Africa, but more broadly. At this moment, when Nkrumah is making at least some moves in directions favorable to us, his political situation is fluid, and when the ultimate results are in doubt, it would be unwise to apply pressures on him that might well cause him to return to his previous pro-Soviet orientation. Finally, at a moment when we have won a significant victory in the world political struggle we should show a position of generosity in relation to small neutrals, even those who have been more neutral with respect to the Soviet Union than they have with respect to us.

CK

0. Source: Kennedy Library, National Security Files, Brubeck Series, Ghana Subjects, Kaysen Letters. Confidential.
1. None of the tabs is attached to the source text.
2. Dated October 26. (Department of State, Central Files, 611.3722/10-2662)
3. Dated October 23. (Ibid., 611.3722/10-2362)
4. Telegram 691 from Accra, October 24, reported that Nkrumah had telephoned Radio Ghana to express displeasure at an October 23 radio commentary that had sharply criticized the U.S. Government’s Cuba policy. (Ibid., 611.3722/10-2462)
5. Dated October 24. (Ibid., 330/10-2462)