249. Memorandum From the Under Secretary of State for Political Affairs (Harriman) to President Johnson 1

SUBJECT

  • Ghana

Nkrumah is leading Ghana towards what he calls African Socialism which is, in fact, a personal dictatorship. He is impelled by his own proclivities as well as personal fear resulting from his two close call assassination attempts. He suspects almost everybody, even the CIA. This affects his actions domestically and his attitude towards the U.S. He is driven on by his own conceit, blaming others, internally or foreign, for his own failures. The effect is that he has assumed more and more power into his own hands, leans more and more on a small group of leftists who applaud this trend, and cuts himself off from those who oppose.

He has developed a one-party political system, in itself not uncommon in Africa, but in Ghana this has meant imprisoning many of his opponents, controlling the press, and recently the courts.

All of this trend may project an eventual Tito type dictatorship, with the State assuming all political and economic direction or ownership.

However, there are still forces at work within the country which may stem this trend and at least leave the Valco operation uninterfered with. The University is still independent to a considerable degree and run by a forceful Irishman. The students oppose State interference. There is a large and prosperous small farmer production of cocoa, and the historic village owned and individually farmed general agriculture. There is a body of independent women marketers who exert strong political pressures. The Army is Western-oriented although so far it has stayed out of politics. The civil servants are also largely Western-oriented and resist as far as they can this trend.

Nkrumah himself has repeatedly stated that foreign private capital is essential to Ghana’s development. He realizes also that foreign private capital is in short supply to meet the needs of the developing nations and therefore must be catered to. His speech outlining the new seven year plan proposed development of a mixed economy with agriculture largely in private hands and “for some time to come” the need for large foreign private investments to develop industry. In my conversation with him he assured me “for some time to come” related only to the [Page 439]period of need to attract new private foreign capital and was not intended to limit the time companies investing could remain. “Kaiser,” he said, “can stay as long as he wants—50 or 100 years.” The success of the seven-year plan as presented clearly requires several hundred million dollars of new foreign private investment.

He has strong personal feelings for a few individuals as in the case of President Kennedy and also such men as Edgar Kaiser. Although he is the Chairman of the Volta River Authority, he has supported the Canadian Executive Director—Dobson. The operation has been well directed and the government has fulfilled all of its obligations so far, including putting up its share of the money as needed, more than 50%. There is no financial default on the part of the government which would be a cause for the World Bank, Export Import Bank or AID to stop their financing. President George Woods has stated to me that he sees up until now no basis for the Bank to discontinue payments under its commitment. The Valco, Kaiser’s company, is committed to take a large percentage of the power development by 1966 which necessitates the commencement of work in Ghana and the ordering of machinery this summer.

The principal difficulties we are having are the abuse of the U.S. Government, UK, and other Western powers, and the praise for Communist countries in the press, and the recent demonstrations before our Embassy. Also the arbitrary ejection from the country of U.S. and other Western individuals. The leftist trend may augur increasing difficulties.

On the other hand, the frank talks by Edgar Kaiser and Ambassador Mahoney, as well as my own, have shown some results in tempering the press and treatment of our Embassy and U.S. citizens.

Nkrumah has responded to these personal representations for a time at least. The financial situation of the country is getting into increasing difficulties as a result of an unbalanced budget and adverse balance of payments. There will be increasing inflation and payment difficulties which will necessitate severe import controls. These difficulties may force Nkrumah to turn to the I.M.F. for assistance. Bloc assistance does not usually help in this type of financial crisis.

On balance, I recommend we continue our participation in the Volta Project.

However, we should constantly watch the situation and plan a campaign of visitors to Accra to bring pressure on Nkrumah whenever his actions indicate they will cause us difficulty.2 Edgar Kaiser is probably the most effective individual. Sir Robert Jackson, now with the UN Special Fund, visits Accra periodically and has a long-time relationship. Visits [Page 440]of other influential people should be planned to support the Ambassador’s vigilant pressures.

The Valco could well be successful in its production and export even if other foreign operations are not. Nkrumah will need the income from the power purchases by Valco to pay off the international debt of the project. It would be impossible for him to operate and sell the aluminum as a Ghanaian government operation, and it would not be easy to attract bloc investment.

With Nkrumah’s desire for close personal relations with you and his respect for certain other individuals, I feel there is a reasonable chance that his attitude and activities towards the U.S. Government and Valco can be held within liveable limits.

The decision today is not whether to embark on the investment in the Volta project, but whether to continue with our commitment. I am convinced that there is more to lose in backing out now than in going ahead.3 If we back out now, we will not only lose the money already expended or irreversibly committed but also the confidence of many African and other developing nations.

The dam which I inspected is well along, with mountains of earth and rock moved. Some 60,000 people are being displaced by the enormous lake, which will begin to be filled this summer. New more modern villages are being built for them and people are beginning to move in. To stop now would leave an international eyesore. Although little work so far has been done on the Valco project, it is in fact an integral part of the whole project. The company has a fixed contract to take a large block of power. Incidentally if Valco should not go ahead the soundness of the international investment will be jeopardized.

On the other hand, I believe there is a reasonable chance of carrying the entire project through successfully.

Averell
  1. Source: Johnson Library, National Security File, Country File, Ghana, Vol. II, Cables, 3/64–2/66. Secret.
  2. Harriman met with Johnson that day at the White House. According to an April 3 NSC memorandum of the meeting, the President agreed with Harriman’s recommendation to keep pressure on Nkrumah through a series of visitors. (Ibid., Bundy Files, Vol. I)
  3. An April 15 memorandum from Brubeck to the President recommended that he approve Harriman’s proposal “that we continue participation in Volta and Valco, along with a program of visits and other means to keep Nkrumah under reasonable control.” An attached note, undated, states that the President had approved the recommendation, and a handwritten note on Brubeck’s memorandum states that the Department of State was informed on April 17. (Ibid., International Meetings and Travel File, Africa-Harriman Trip-3/64)