402. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- Next PL 480 Agreement with Pakistan
The time has come to decide whether to take the next step with Ayub. When you sent Gene Locke out in June, he took with him your promise to resume economic and food aid for six months and to consider [Page 780] another six months in December or January provided Ayub met certain conditions.
You now have before you (a) Secretary Rusk’s recommendation2 for a $70 million non-project loan for the last half of FY 1967, and (b) the attached Schnittker-Gaud recommendation3 for meeting urgent Pak requests for further food aid.
The main decision is how you want to deal with Ayub. Secretary Rusk feels that he has come far enough in meeting our conditions to warrant our going ahead for another six months. Locke feels Ayub has kept faith, though performance has not been perfect.
If you want to keep the heat on, the AID loan is the better vehicle for discussing progress on our political conditions. Holding off our PL 480 decision would generate greater political pressure on Ayub than delaying the AID loan because sharply rising food prices (20% in November alone) are fast becoming his top political problem. However, I don’t believe you want to use food that way.
There are good reasons for treating the Pak food program separately from India’s. First, while the Paks suffered from drought this year too, their needs are smaller—about 700,000 tons for the rest of FY 1967. Second, they have already rounded up almost 500,000 tons—about 25% of this year’s total import needs—through purchases here and elsewhere and from other donors. They have spent 10% of their scarce foreign exchange to do this. Third, they are already performing well in agriculture. Charlie Schultze’s memo (attached)4 details what the Paks need and have done.
John Schnittker and Bill Gaud recommend (attached) that you give a go-ahead in the next week on 250,000 tons of wheat and 250,000 tons of coarse grains ($36 million) in time to negotiate an amendment to the current agreement before 1 January. Ships would have to begin leaving around 15 January to get our wheat in during the critical March–April pre-harvest period. By waiting until 1 January we would lose valuable time negotiating a totally new agreement under the unfamiliar procedures required by the new law.
If you prefer to hold off until next week when you get US harvest figures, that would cause no harm. But if they’re satisfactory, I would recommend letting the Pak negotiations proceed unless you wish to convey a completely negative political signal.
- Source: Johnson Library, National Security File, Country File, Pakistan, Memos, 10/66–7/67, Vol. VII. Secret. A handwritten note on the memorandum reads, “rec’d 12–16–66, 3:15 p.”↩
- See footnote 2, Document 398.↩
- Attached; dated December 12.↩
- Attached; dated December 16.↩
- Johnson checked this option. A handwritten note reads: “Jake Jacobsen telephoned Mr. Rostow, 9:25 am 12/20/66 and said Pres. wants to hold PL 480 and program loan until makes India announcement.”↩