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

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

Washington, June 7, 1966, 3:25 p.m.

2404. Ref: Deptel 2383 to New Delhi (Notal).² Subject: Indian Defense Expenditures.

1. Assistant Secretary Hare called in Indian Ambassador Nehru June 6 to discuss with him question of defense expenditures and to bring our discussion this subject with GOI to level of specifics we have already reached with GOP.

2. In brief remarks on Indian devaluation, Amb. Nehru described Mrs. Gandhi’s decision as “very courageous,” expressed some surprise that GOI would have made this move so far in advance of any foreseeable consortium pledging session, and suggested that devaluation will be good move only if India can “get a lot of money” to make it work prior to elections.

3. Ambassador Hare then briefly informed Amb. Nehru of Amb. Locke’s departure for Pakistan evening of 6th. Amb Hare expressed view that Amb Locke’s appointment at this time will turn out to be useful not just for US–Pak relations but useful from a subcontinent point of view. Amb Nehru agreed and expressed hope he and Amb Locke would be able to meet when Amb Locke returns in a week or two.

4. Ambassador Hare then reviewed results of Mehta mission here, specifically focussing on need to reduce defense spending. He stressed our view that peace and development in the subcontinent require that there be reasonable limitation on defense expenditures and indicated as well our unwillingness, through economic aid, to finance indirectly an arms spiral in South Asia. He then referred to Soviet military assistance which, he noted, Amb Nehru had described as not very substantial during Minister Mehta’s talk with the Secretary. Amb Hare said information gleaned from only public sources such as press and GOI statements in Lok Sabha indicates that program has an overall value of more than $250 million and that it has included large number of transport aircraft, three squadrons of MIG–21’s (in addition to production facilities acknowledged by Amb. Nehru earlier), surface-to-air missile complexes, and large number of helicopters and tanks. Amb Hare also mentioned submarines and noted that this information could well be partial since certain info of this character is often kept confidential.

5. Amb Hare said our point in raising this matter and clarifying our position is that this substantial Soviet assistance feeds fears in Pakistan and contributes to arms spiral on basis of its arrival in South Asia rather than on basis of stretched out payments. For that reason we believe that costs of Soviet military assistance should be thus reckoned on basis of deliveries.

6. Amb. Hare indicated that we had also pressed Paks hard on question of reducing defense expenditures, and he suggested that if India, as the larger power, could initiate first steps toward reduction defense spending, then it would be helpful in getting Pakistan, as smaller, to come along as well.

7. Finally, Amb Hare made point that in our annual aid reviews, we would be assigning considerable weight to subject of defense spending and to need for downward trend. He said he hoped GOI and GOP might get together on this, but if that not possible, then cooperation by independent example might have same effect.

8. Amb Nehru responded saying he had no instructions this regard and his remarks should be interpreted as his and not necessarily GOI’s. He spoke briefly of 1964 Memorandum of Understanding,³ indicating that while he agreed US would not want to fuel arms spiral, that memorandum appeared to him to have been broken by our suspension of military assistance.

9. More important, he said, is fact that GOI wants to spend no more than is absolutely necessary to meet the two-fold threat to its security. Prior to 1962, GOI spent too little on defense; now GOI needs forces deployed against the threat from China regardless of cost to other important needs. Second threat comes from Pakistan which “suffering from some kind of lunacy” that its security is threatened by India. He said GOI needs no more than parity on Pak side to protect Indian security on that front. If GOP is willing reduce forces, then GOI would be willing to reduce anti-Pak component its forces on man-for-man basis, but anti-Chicom component of Indian forces would still be very large. He went on to say there is no question of a ratio between the two armed forces since the threats they face differ; neither ratio nor costing basis is relevant. Main point, Amb Nehru said, is the threat.

10. Amb Nehru asked Amb Hare what response US had from Paks. Amb Hare pointed out Pak interest in reducing arms load and in keeping heavy emphasis on economic development. Amb Nehru said GOI has same view. GOI, he said, has already put lid on defense spending; current defense budget essentially same as last year’s, with no increase in real terms due to war. GOP’s has doubled. GOI is most interested, he emphasized, in reducing arms spending and focussing not on “military glory” but on economic progress, but GOI finds it necessary to defend itself against “psychotic Pakistan” which has allied itself with China.

11. Ambassador Hare noted that we agree GOI defense budget has not gone up appreciably, but it was precisely for that reason that we had made point about costing basis for Soviet bloc assistance, since deliveries which heighten Pakistan anxieties are not accurately reflected in current GOI defense budget.

12. Ambassador Hare recapped points he wished leave with Amb Nehru, summing up by noting that while we recognize difficulties, we consider it simple proposition. An arms spiral in South Asia causes such difficult problems for us that we believe it is essential to get the arrows pointed down rather than up. Ambassador Nehru agreed on the importance of a downward trend, saying he would report this conversation to his government and assuring Ambassador Hare that the GOI will do all it can to limit defense spending, but not below the level of the threat the GOI feels it faces.

13. For New Delhi: Embassy should, at appropriate time and level, reinforce message on defense spending Ambassador Hare conveyed to Amb Nehru.

Ball

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, DEF 1 INDIA. Secret. Drafted by Herbert G. Hagerty in SOA, cleared by Hare and Schneider, and approved by Handley. Repeated to Rawalpindi, Karachi, London, Bonn, and CINCMEAFSA for POLAD.
2. See footnote 4, Document 344.
3. See footnote 2, Document 53.