350. Telegram From the Department of State to the Embassy in India1
2477. 1. The President has approved the following US position regarding aid to India:
- (a)
- We accept the requirement of $900 mil non-project aid as calculated by the World Bank (U.S. $100 mil commodity loan announced by VP in Febr. is counted toward this total);
- (b)
- we are prepared to negotiate an immediate non-project loan in the amount of $150 mil;
- (c)
- we are prepared to make further non-project loans to India after Congressional action in order to meet share in financing India’s non-project aid requirements for the year, and we now contemplate an additional loan in the amount of $130 mil. This latter loan would be subject to Congressional action. We now contemplate that this would complete our contribution bringing U.S. total to $380 mil or 42 percent,2 which U.S. share recent years total pledges.
2. As a fall back position, the President has further authorized us to increase the contingent portion of our contribution to be provided after Congressional action, by an amount up to $55 mil which could be financed by AID, or by a combination of AID and Export-Import Bank resources. This total package assumes India sustains economic liberalization, avoids arms race and pursues peace on sub continent.
3. Subsequently, Macomber conveyed to Woods points (a), (b) and (c), further qualifying (c) as subject to appropriate burden sharing by other donors. Woods indicated he did not expect have word from British regarding their contribution until June 15. By that date Woods estimates contributions of US, UK, Canada (which he now contacting) and Bank will total somewhat over $700 mil. He plans to convey this figure to Indians June 15 noting US conditions of Congressional action and appropriate burden sharing.
4. Woods’ position as we understand it is that if Indians require immediate response to their query regarding resources to support reforms, figure of $700 mil is best Bank can do at this time. Additional contributions will take more time.
5. Principal problem Bank has encountered so far in rounding up contributions has been with Germans. Woods has informed us in [Page 681] confidence that in response to his latest query German Minister of State Westrick (please protect both sources) has replied as follows:
“We are, as I explained to your collaborators, in very hard budgetary discussions. It seems to me impossible to come to a final decision regarding the aid for India within short time. I hope that we will continue in principle to support the Indian economic development but we cannot give assurances at the present time.”
6. Bank as yet has no report from Japanese who next most significant contributor. Bank meeting June 7 asked early report from all including smaller donors but no reports yet in.
7. In our view while $700 mil figure is far from what we or Indians had hoped for, there is reasonable prospect for reaching goal of $900 mil given time. For example, if, on top of $700 mil from Bank, UK, Canada and US, others only match their last year non-project pledge the total would be over $810 mil. Obviously look for increased non-project contributions from others, particularly Germany, Japan and Italy. Principal problem, of course, is the Germans and it is up to Indians, at least in the first instance, to press the Germans for early adequate contribution. We are making this point to Indians here. Japanese are also rather unknown factor since Bank has not yet made serious individual effort with them.
8. Above information is FYI for the present. White House has authorized us to convey points (a), (b) and (c) to Indians, but we believe we should defer this until after Bank has given its overall response. We will notify you by Immediate telegram when this has been done.3
- Source: National Archives and Records Administration, RG 59, Central Files 1964–66, AID 9 INDIA. Secret; Priority; Exdis. Drafted by Schneider; cleared by Macomber (draft), Wriggins, and EUR/GER; and approved by Handley. Repeated to Rawalpindi and Karachi.↩
- Reference is to the percentage of assistance pledged by the members of the India consortium.↩
- On June 15 the Department informed the Embassy in New Delhi that the World Bank had informed the Indian Embassy about the projected levels of economic assistance. The Embassy was authorized to discuss the U.S. assistance package, as outlined in telegram 2477, with the Indian Government. The Embassy was instructed to point up the qualifications listed in paragraph 2, and to make clear that U.S. ability to proceed with additional non-project loans, as indicated in paragraph 1 (c), was dependent on Congressional action and proportionate burden sharing by other donors. (Telegram 2479 to New Delhi; National Archives and Records Administration, RG 59, Central Files 1964–66, AID (US) INDIA) The Department issued a press release on June 15 that stated that, in conjunction with the members of the consortia on India and Pakistan, the United States was in the process of resuming economic assistance to India and Pakistan. (Telegram 659 to Rawalpindi; ibid., AID (US) PAK)↩