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

166539. For Ambassador from the Secretary.

After full consideration of alternatives, we have concluded that the US should follow a policy toward India and Pakistan designed to limit arms acquisition, to restrain military expenditures, to reduce the possibility of military confrontation, and to encourage highest priority allocation of resources to agricultural and economic development. The United States should use all useful leverage at its disposal to further this policy, including its bilateral economic assistance, its participation in the World Bank and in aid consortia, and end-use controls over US military equipment supplied directly or indirectly to third countries.
The supply of military equipment by the United States should be governed by this policy. The United Kingdom, the Federal Republic of Germany, France and the Soviet Union should be urged to follow similar restraints in their military supply policies toward India and Pakistan.
Initial implementation of this policy should include:
Withdrawal of MAAG (Pakistan) and USMSMI, making alternative, limited arrangements for providing such military representation, inspection and supervision of sales and training as may be required; the Joint Chiefs of Staff to be a party to such arrangements.
Steps to prevent the sales by third countries to India and Pakistan of military equipment which (a) includes US technology and components; (b) is produced in the US or (c) is co-produced with the US, except when the US has determined that such sales contribute to arms limitation or reduced defense expenditures.
Indicating to India and Pakistan that, although the US remains unwilling to contribute to the augmentation of the military establishment of either country through the sale of lethal military equipment, it is willing to consider on a case by case basis the sale of spare parts for previously supplied lethal equipment when there is a clearly established critical need and when such sales contribute to arms limitation or reduced military expenditures and the maintenance of a reasonable military balance between the two nations. The question is not now before us as to replacing an end item of US origin should that item be [Page 834] totally destroyed through accidental loss. That contingency will be considered when it arises.
Indicating to India and Pakistan our willingness to reinstitute training in the US for a limited number of key Indian and Pakistani military personnel under MAP.
Disbursement of remaining obligated FY-67 credit sales funds only where such expenditures will contribute to US security interests (e.g. Star Sapphire) or to support of the general policy of arms limitation. Credit sales shall be for non-lethal items only.
FY-68 credit sales planning for India and Pakistan should be predicated on the preceding paragraphs. The relevant figure in the 1968 budget should be $75 million with the following provisions:
The figure is to be classified.
It is to be an absolute ceiling, not a target.
It should under no circumstances be communicated to the Governments of India and Pakistan without specific approval of the Secretary of State.
Proposed credits will be reviewed case by case for their contribution to arms limitations.
After we have consulted with Congress you will be receiving instructions on implementation of this policy, and timing and manner of presentation. We recognize that situation will differ between New Delhi and Rawalpindi and that certain current problems including NPT may have bearing on timing of presentation in New Delhi.
  1. Source: Johnson Library, National Security File, Country File, India, Vol. IX, Cables, 3/67–7/67. Secret; Exdis. Drafted by Handley on March 14, cleared by Katzenbach and Rostow at White House, and approved by Rusk. Also sent to Rawalpindi.