Foreign Relations of the United States, 1964–1968, Volume XXV, South Asia

210. Circular Telegram From the Department of State to Certain Posts¹

Washington, September 17, 1965, 5:22 p.m.

420. Joint State/AID Message. Pakistan Consortium.²

1. World Bank Position. Bank has been querying Consortium members this week on their views and plans concerning pledging session scheduled September 23. The Bank leadership had previously informed the Department on most confidential basis that it did not see how the Bank/IDA could make a pledge until the situation in the subcontinent is clarified.

2. UK Position. British Embassy informs us that London considers atmosphere for September 23 meeting basically affected by the hostilities; basis on which Pakistan aid requirements previously discussed has been altered; therefore it believes it would not be advisable hold Consortium meeting next week; hopes Bank will agree and so inform GOP.

3. US Position. Our most critical concern at this time is to obtain ceasefire. To that end we giving all support to efforts of UNSYG under UNSC resolutions September 4 and September 6. On September 8 we suspended military aid shipments to both India and Pakistan and informed both Governments accordingly. Subsequently, we have suspended all licenses for commercial shipments of military items to both countries. However, shipments are continuing in accordance existing agreements under economic aid program, including PL 480.

Pending enactment FY 66 aid appropriation, the Administration has in general not been making any new economic aid loans or grants since beginning FY 66, and both India and Pakistan have been affected. Current hostilities raise important new issues. Secretary has assured Congress that Administration would consult with appropriate members of Congress on situation in subcontinent in connection with making new economic loans or grants to either India or Pakistan. (Representative Mahon, Appropriation Committee Chairman, read out the Secretary’s assurances during House debate aid bill September 8.)

We have come to conclusion that under present circumstances we not yet in position make pledge on current year’s aid level for Pakistan.

Present US position does not in any way indicate lessening our interest in economic development of Pakistan. We hope for an early return to situation in which we could again pledge our support for its economic development program.

4. Subsequent to British approach to us, AID Regional Assistant Administrator Macomber on September 16 informally indicated to representatives major Consortium member countries our concurrence with British position and explained US thinking as outlined 3. above.

5. Believe Macomber’s discussions have met our general requirements for consultation with Consortium members. However, in addition, if you deem desirable in light queries addressed to you, you may inform host government that US has given very serious consideration to question of pledge and draw on above to describe situation as we see it. Any approach you make should be in low key so as avoid impression we applying pressure other Consortium members.

6. Will inform you further developments soonest.³

7. Separate instruction will follow for Karachi/Rawalpindi.

Rusk

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID 9 PAK. Confidential; Priority. Drafted by Sidney Sober, cleared by Mann’s staff assistant James D. Johnston and Macomber, and approved by Handley. Sent to Bonn, Brussels, The Hague, London, Ottawa, Paris, Rome, and Tokyo, and repeated to Canberra, Karachi, New Delhi, and Rawalpindi.
2. In telegram 530 from Karachi, September 17, the Embassy emphasized the importance of the scheduled consortium meeting. Because of the Kashmir crisis and the growing sense of isolation from Western support felt in Pakistan, the Embassy warned that the decisions taken with respect to the consortium meeting would be magnified in importance in terms of U.S. relations with Pakistan and Pakistan’s foreign policy orientation. (Ibid.)
3. On September 22 the Department sent a circular telegram to the same posts indicating that the World Bank had decided to postpone the Pakistan consortium meeting scheduled for September 23. (Circular telegram 459; ibid.)