408. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- Progress Report on Message to Congress on Food for India
1. We have made progress in giving shape to your idea of (a) internationalizing food aid to India and (b) other countries matching in food and additional agricultural inputs what we provide in food. A consensus has developed with Agriculture, AID, and State that the World Bank India consortium is the best place to do the job.
2. I have explored the idea at length with George Woods. He is now strongly for it; and his senior staff has been exploring the implications with our people.
3. Amb. Nehru is for it as the most efficient multilateral forum. He also thinks it will be a more dignified way to deal with food aid than rushing about the world with a “begging bowl.” We don’t yet know how the Indian government will react. They would probably like to keep things as separate as possible; but I’m confident they’ll go along once they know that you have decided food and agricultural aid should be treated as hard and multilateral.
4. The next consortium meeting is scheduled for about mid-March. This is a good time to come to grips with the new policy:
- —it is this session which, in any case, must make a fresh start on India’s next five-year plan, with its new high priority for agriculture;
- —we will have by that time a clearer fix on India’s 1967 food requirements;
- —the Indian elections will be over and blunt talk by donors will be less politically explosive.
5. The critical problem we face is to reconcile two policy requirements:
- —the need to make by about January 15 at the latest a decision on a further Indian grain allotment, in order to keep the pipeline full in March and April; and
- —the need to bring Japan, Germany, Italy, Britain, etc. along on the new method for handling Indian agricultural aid. (Canada wants to move this way; and we shall also wish to bring Australia formally into the India consortium.)
6. Ideally we would wish to announce the new policy at the time of the next Indian grain allotment. And this remains one option. But those dealing with the India consortium feel that we have a better chance to bring the industrial countries along if, before we firmly announce our position, we send abroad a first-class team to explain:
- —food aid is now hard and we are going to treat it that way from now forward;
- —the U.S. and Canada, in the consortium, Australia and the USSR, outside the consortium, have, in effect, been giving extra hard aid to India to meet the emergency;
- —since the common goal is Indian food self-sufficiency at the earliest possible time, it is possible and right for the other industrialized countries of the world to contribute more in chemical fertilizers, pesticides, etc.;
- —we are prepared to work on a 50–50 matching basis to keep Indians from starving and to hasten Indian self-sufficiency in food if Indian self-help efforts are adequate;
- —we believe the World Bank consortium is the proper place to negotiate out such a policy—along with other aspects of India aid—and propose that it be taken up at the mid-March consortium meeting.
7. The background for this feeling that prior consultation is wise is that some of the other donors feel we have acted somewhat unilaterally in the past with respect to the Indian and Pak consortium arrangements; and they are inclined to use that as an excuse for contributing less, rather than more, to the development of the subcontinent. A further step which they regard as unilateral might make a hard job harder.
8. On this view, the idea would be to send abroad, say, E.V. Rostow (or Ellsworth Bunker) and Bill Macomber to prepare the ground for the new approach in mid-March.
9. This would mean, however, that we would have to make another Indian grain decision under the new legislation before the new policy was fully and publicly announced, debated and supported by Congress.
10. There are, therefore, three options as follows:
Option one. You could let go with both barrels in an early detailed message at the time the next India food allotment was made. It would describe the need to share the burden; to increase aid in fertilizers, etc.; and set forth in some detail how you think this could be done. It would contain specific figures of what we would offer; define targets for what other countries must do to match us; and authorize 1.5 million tons interim to carry through far enough to permit serious and tough negotiations with the new government to be formed in April. This message would be issued after prompt consultations with the returned Congressional mission and Congressional leaders. If we are to expect some cooperation from other members of the consortium, at a minimum we must give them the gist of your general approach before your message and commit ourselves to send a negotiator to discuss these matters in [Page 789] detail with them after your message, but before the consortium meets in March.
Such a message is being drafted.
Its advantages:
- —before you make another interim allocation for India, this approach formally defines for Congress and our people how you would like to proceed, including international matching, the Bank’s role and what you expect others to do;
- —it dramatizes your concern for Indian agriculture, and your determination to have the burden shared more equitably.
Disadvantages:
- —our agriculture specialists and those knowledgeable on the consortium are doubtful others will match us unless we make a substantial advance diplomatic effort (or are prepared to fudge the figures). This approach does not leave time enough ahead of your message to make a maximum advance effort. If there are not full discussions in advance, the Europeans and Japan are likely to resent our effort and be even less helpful.
Option two. You could make a low-key interim allocation now and present a major message to Congress only in February, after careful advance consultations with consortium members. (JOE CALIFANO prefers this date for other reasons.)
After consultation with the returned Congressional mission and with Congressional leaders, you could authorize a second interim allocation of, say, 1.5 million tons, under the new Food for Freedom legislation, by January 15. This would carry the pipeline far enough so that the real negotiations could be with the new government which takes office in April. It could count as part of your proposed bargain for the balance of 1967. You could indicate to Congressional leaders in low-key private talk how you were proceeding; and that you were determined to have our food aid treated as “hard” and matched in the consortium. Secretary Rusk could then push urgent high-level exploratory talks with prospective European and Japanese donors. After these conversations, we could sense more accurately what we might expect of the others, before you deliver a detailed message to the Congress.
Advantages:
- —it would protect you in Congress from getting too far committed to specific matching formulae which may be unrealistic;
- —it would give our consortium specialists and George Woods time to soften up other members.
Disadvantages: [Page 790]
- —you would be making a new allocation for India without formally consulting Congress and getting a resolution;
- —you would be some way down the road before officially notifying Congress of your intentions;
- —most aspects of the deal would become publicly known before your detailed message went to the Congress.
Option three. After consultations with the returned Congressional delegation and Congressional leaders, you could perhaps combine the advantages of both options by sending a short message to Congress on January 15, sketching in general terms your intent about internationalizing and finding ways to augment agricultural assistance while sharing the burden more equitably. You could then indicate you were authorizing negotiations under the new legislation for a 1.5 million ton interim shipment. You could promise a more detailed message later in the session. After careful negotiations with prospective donors, a more accurate detailed message could be submitted.
Advantages:
- —such a two-stage approach would permit you to lay out your general strategy without having to specify so early in the calendar year figures or matching formulae;
- —it would put the world on notice of your general approach without publicly putting the finger on any specific countries before your staffs had had a shot at winning them over privately.
Disadvantages:
- —if Congress insists on extensive discussion before it gives you a resolution, Bill Gaud, Gene Rostow and Orville Freeman will have to tip most of your hand before the consortium meeting in any event.
11. I myself feel Option two is best at the present time, if you feel informal Congressional consultations would meet your criteria of what is right and necessary before making an additional interim allocation. Option three sounds good and statesmanlike; but we’re liable to fall between two stools: the message would be too thin to be impressive; too substantive to avoid appearing to force the Japanese and European hands unilaterally and without consultations.
My impression is that the way you have handled the Indian food situation in the past several months—and especially your success in smoking out Canada, Australia, and the USSR—have proved popular at home as well as educational abroad. I suspect quiet Congressional consultations could cover you on the next interim India allocation, if you were to indicate the direction of your policy; but only you can assess the matter properly.
12. I recommend, therefore, that you have an early session with Orville Freeman; Sec. Rusk and Gene Rostow; Bill Gaud and Bill Macomber to go over the track; directly hear the argument; and choose your option.
[Page 791]13. A final issue arises out of the work we have done, which you will also wish to consider; namely, the likely size of the Indian food deficit and our proper share in meeting it.
There are various estimates about as to what India will require by way of food imports for calendar 1967. They run from a high of 11 million tons to a low (Indian Embassy, Washington) of 8 million tons.
About 2.3 million tons have already been granted, loaned, or bought for 1967. That leaves somewhere between 5.7 and 8.7 million tons to be covered.
Subtract from that the 3 million tons you are willing to put up and have matched by others. That leaves between 2.7 and 5.7 milllion tons to be found elsewhere.
Here are the best figures we can now estimate—or guess—for what others might contribute on a concessional basis, over and above grants already made in 1967:
| Canada | 900,000 | tons |
| Australia | 100,000 | tons |
| USSR | 500,000 | tons |
| Others | 100,000 | tons |
| Total | 1,600,000 | tons |
This will be a million tons short of the minimum deficit and might be 4 million tons short of the maximum which your experts are now inclined to think is the more realistic figure.
More chemical fertilizers will not cover it; although they would help in 1968.
The books then could be balanced by:
- —properly prorated commercial purchases of grain;
- —an additional U.S. PL 480 contribution, above 3 million tons;
- —further Indian belt-tightening;
- —or some combination of these elements.
The trouble with commercial food purchases is that they run down Indian foreign exchange and endanger the whole program of liberalizing their domestic economy and getting the bureaucrats off the neck of the private sector, slowing up their domestic development. The World Bank, the IMF, and the whole consortium pushed India hard in this direction last year.
Also, I am told, Agriculture is worried again about piling up surpluses and lowering domestic prices—with the new wheat acreage—if we only move an additional 3 million tons to India this year.
14. The best way to balance the books, of course, would be for the other industrialized countries to put up extra money for India and [Page 792] have India use some of it to purchase U.S. and other grain, without cutting foreign exchange available for other aspects of development. In effect, our negotiators and George Woods will, in one way or another, be pushing for some such over-all increase in non-food-producers aid to India.
15. I have the strong feeling that I am telling you nothing you don’t already know; and that you discounted all this when you laid down the 3 million tons as a guideline. I have no recommendation to make; but I did wish you to know the bureaucracy will probably be pressing you for a figure higher than 3 million tons when the time comes to negotiate for matching in the consortium.
- Source: Johnson Library, National Security File, Country File, India, India’s Food Problem, Vol. III. No classification marking.↩