338. Telegram From the Embassy Office in Pakistan to the Department of State1

639. Joint State/AID message.

I met this morning with Fin Min Shoaib and Fin Sec M.M. Ahmad for discussion of aide-memoire delivered by MFA May 17 (Embtel 636).2 Acting AID Director Bee accompanied. Shoaib introduced subject himself by saying he wanted provide Bee with copy of aide-mémoire which he knew had been given to Embassy by MFA.
I said that I was disappointed by tone and content of aide-mémoire. Shoaib countered with view that aide-mémoire should meet requirements of US Government and pave way for early decisions on aid. While phraseology might not be ideal in all respects, he considered note contained several distinct achievements in substance. He thought statement regarding GOP willingness to participate with GOI in a ministerial meeting was positive and forthcoming. He also thought that mention of reducing military forces of both countries as topic for bilateral discussion along with Kashmir was also a significant gain. Finally, he considered statement welcoming a World Bank initiative for discussion of eastern rivers problem to be a major step forward.
When I stated that we found the indicated two to one ratio of military forces to be troublesome, Shoaib countered that this was a military judgement which he was unable to question; that is, if India attacks Pakistan, Pakistan would need to have force at least half the size of Indian force in order to defend itself successfully. Shoaib went on to stress, however, that aide-mémoire did not bless this military judgement which he said Pakistan could not financially support. Limitations of Pakistan’s resources and need for development were such as to permit expenditure allocation to defense of only rs. 225 crores, or less than one-fourth of current Indian budget. Thus, he said, key word to stress in this paragraph is “nevertheless.”
Shoaib pointed out it had been by no means easy to get agreement within GOP on defense budget figures in aide-memoire, and he clearly considered it an achievement to have these figures recorded in government document. As regards level of defense spending for current fiscal year, Shoaib stated he simply could not at this juncture give a [Page 650] figure, but that he still feared it might reach as high as rs. 268 crores. He stressed that costs of war plus major equipment replacements had to be borne in the current year. He also stated that it was not possible to segregate foreign exchange expenditures for defense as between fiscal years 1965/66 and 1966/67.
I pointed out, in accordance Deptel 543,3 that US was deeply troubled by level of Pak defense expenditures currently envisaged, and expressed hope it would be possible to bring them down to levels cited during Washington discussions. Shoaib protested that, while he knew US would like lower figures, figures used in aide-mémoire were within framework of discussions he had had with Bell in Washington. Moreover, he stressed, GOP would be willing to move down from these levels if the Indians were to reduce their budget.
I then referred Shoaib to article in this morning’s Pak Times by Z.A. Suleri (see separate telegram)4 and asked whether this forecast public discussion of range of important issues two governments were dealing with. Shoaib, after reading article, stated that GOP definitely did not wish to get involved in public debate. In fact, he thought public ventilation would be embarrassing and undesirable from standpoint of GOP. He feared that there would be some further leaks on both sides and he urged utmost be done to avoid them. In this connection, he said there were some fairly embarrassing articles (for GOP) which appeared in Washington Post and other US papers at the time of his visit to Washington. Shoaib added that destructiveness of public debate on this issue clearly shown by difficulties Mehta and GOI now having with Indian Parliament.
As illustrative of continuing press problems, I called to Shoaib’s attention PPA article which appeared in most Pakistan papers May 16 regarding alleged downing of Chinese plane over Chicom territory. He indicated that he had not seen this article, but agreed that tone was nasty. (See para 3 Karachi’s 20875 to Dept.)
As regards Pakistan’s relations with China, Shoaib said that wording of final paragraph (consideration 5) was meant only to reaffirm GOP policy toward China as outlined by Ayub to Pres Johnson in December and in Ayub’s recent statements to Ambassador McConaughy (Karachi’s 2032).6
Shoaib stressed that he would need to have US answer soon. Budget speech is scheduled for June 11 and budget must go to printer around end of May. He earnestly hoped it would be possible to conclude deal before end of month and thereby achieve major step forward toward normalization US–Pak relations.
Following meeting, I spoke to Shoaib privately and reminded him there was key item to which aide-mémoire was not addressed, namely, reopening of closed AEDS installations, and that this matter clearly must be resolved and emphasized that we were awaiting MFA response. Shoaib said he understood this, adding that he had sent Ayub memo emphasizing need for GOP to move ahead on this issue.
Comment: In essence, GOP aide-mémoire: (a) has accepted upper budgetary limitation on defense expenditures conditional upon similar Indian restraint; (b) has reiterated Pak willingness to discuss with India Kashmir settlement and arms reduction; (c) has indicated would welcome World Bank initiative for discussions of eastern waters; and (d) has reasserted Pak-Chicom relationship is not inimical to other countries.
In our judgement GOP aide-mémoire can barely be considered minimal response to US proposals and this only provided GOP comes through on AEDS issue. Question is whether US should reject GOP aide-mémoire as inadequate and seek to negotiate more favorable language or proceed with aid package. We recommend against rejection unless, of course, GOP should itself reject by failure to agree to reopening of AED Stations. Outright US rejection would at this juncture be serious blow to positive elements and windfall for destructive forces in Pakistan, possibly tip delicate East-West policy balance here, and probably invite wave of charged anti-American public reaction. While it may be possible to obtain more forthcoming language by negotiation, we very much doubt if substantive result would be net improvement and justify delay and risk of giving opposition another opportunity to sabotage this effort to rebuild relations.
Accordingly, we recommend US, upon GOP agreement to reopen AED Stations, promptly advise GOP of willingness proceed with aid program as discussed with Shoaib.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) PAK. Secret; Immediate; Limdis. Repeated to Karachi, New Delhi, and Taipei and passed to the White House at 2:35 p.m.
  2. The text of the aide-mémoire was transmitted in telegram 636 from Rawalpindi, May 17. (Ibid.) The aide-mémoire is summarized in paragraph 11 of the telegram printed here.
  3. Dated May 13. (Ibid., POL 15–1 PAK)
  4. Not found.
  5. Dated May 16. (National Archives and Records Administration, RG 59, Central Files 1964–66, POL 31–1 CHICOM-US)
  6. In his conversation with McConaughy on May 5, reported in telegram 2032 from Karachi, Ayub stated that there had been and would be no deviation from the understandings concerning Pakistan’s relationship with China that had been reached during his talks with Johnson in Washington on December 14 and 15. (Ibid., POL 15–1 PAK)