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

231. Telegram From the Department of State to the Embassy in India¹

Washington, October 1, 1965, 9:19 p.m.

613. Aidto 407, info Karachi Aidto 555, Rawalpindi 118.² At meeting October 1 with Under Secretary Mann, Bhoothalingam said he understood “pause” in making good on pledge, but continued stoppage on new aid following ceasefire has come as shock. He emphasized need for very early non-project aid, including fertilizer. Said recent fighting had stimulated feeling of national unity and confidence in India which in midst very hopeful venture in economic development. Bhoothalingam wondered what would be result of irritation and frustration if Indian people felt let down by friends on whom they had counted. Said India’s basic problem remains China and Indian defense needs must be considered that context.

Mann referred to strong feeling in US that economic development incompatible with war. Said we have real problem in seeing that economic aid is not wasted in fighting. Referred to our own balance payments problems and strong Congressional concern over efficacy foreign aid programs. In concern over current appropriation bill, he noted Secretary had told Congress that Administration would consult with it before making new loans to India or Pakistan. Mann expressed hope we could find some way to get back to normal relationship on aid. Said our problem would be greatly eased if there were prospect of political solution satisfactory both India and Pakistan.

In response query how soon and under what conditions new loans would be resumed, Mann expressed hope we could see somewhat more clearly ahead in short time. Stated aid could only be effective in an otherwise favorable situation and emphasize we not intending put pressure on GOI. Said we need some more time and look forward to more talks with Indians on this issue.

Throughout conversation, Bhoothalingam and Ambassador B.K. Nehru (who also present) defended India’s position vis-à-vis Pakistan re commencement of fighting and emphasized virtual insolubility political problem under existing conditions. They offered no positive response on hope expressed by Under Secretary that some progress toward political settlement might be in cards.³

Ball

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDIA. Confidential. Drafted by Sober in SOA, cleared by Handley, and approved by Mann. Repeated to Karachi and Rawalpindi.
2. Telegram Aidto 407 to New Delhi, September 30, summarized the meeting that day between Indian Finance Secretary S. Bhoothalingam and Acting AID Administrator William Gaud. Gaud told Bhoothalingam that the existing ban on new economic assistance loans to India and Pakistan would not be lifted automatically upon passage of the foreign assistance bill. Bhoothalingam protested that this action would cause serious problems in India, and that it was severe and out of proportion to the situation on the subcontinent. (Ibid.) Bhoothalingam was in Washington for meetings of the World Bank and the International Monetary Fund.
3. On October 6 Komer also attempted to explain to Bhoothalingam the problems involved in continuing a business-as-usual approach to economic assistance in the midst of a military confrontation over Kashmir. Komer emphasized the difficulties created by the conflict for foreign assistance legislation in Congress. He also noted, however, that during the past several months there had been some “deep soul searching as to what our aid program in the subcontinent had really been accomplishing.” (Memorandum for the Record by Komer; Johnson Library, National Security File, Name File, Komer Memos, Vol. II)