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

455. Memorandum From Edward Hamilton of the National Security Council Staff to President Johnson¹

Washington, August 21, 1967.

SUBJECT

• George Ball’s Recommendation on Food for India

1. Ball’s memorandum (Tab A)² recommends that you:

• —authorize 750,000–1 million tons now;
• —tell the Congress that we do not accept at face value the debt relief offered by other donors. Therefore, we have discounted it in calculating how much more grain we can supply under the matching principle.

2. The advantage of Ball’s plan is that we could move now and still have some protection from the charge that we had accepted debt relief as matching before we knew (i) on what terms debt would be rescheduled, and (ii) whether the debt relief would be additional in regular consortium contributions.

3. The problems with the Ball proposal are that:

• —our discount would have to be arbitrary. There is no rationale for counting debt relief as 50% eligible for matching, as distinguished from 70% or 30% or 0%.
• —it would discredit debt relief as a form of aid. Up to now we have joined the World Bank in pushing the Europeans to re-schedule India’s enormous debt burden. As a practical matter, it is easier to get this kind of aid than to push large appropriation bills through parliaments. We are going to need it badly in the years ahead.
• —it would be seen abroad as welshing on our commitments. It was made clear at every stage of the matching exercise that we would accept debt relief as matching—in Gene Rostow’s testimony, in the US position at the March consortium meeting, and in the consortium press release following the April meeting.
• —it would make it impossible for us to supply any more wheat this year if the Indian situation becomes desperate. (The consensus among your advisers is that we probably will have to do more.)

4. After reading the Ball proposal, you asked that we put together a package of about 750,000 tons, supported by an air tight matching argument along the Ball line.

5. The plain fact is that we cannot justify more than about 400,000 tons on a one-to-one matching basis without using debt relief. Nor is there any prospect for further matching contributions this calendar year.

6. Therefore, if we must decide now whether and how much we have been matched, I am afraid I can offer you no choices other than the ones you have already heard.

7. There is, however, one further alternative I would suggest as superior to Ball’s, though still less attractive, in my judgment, than the earlier proposals. Essentially, you might:

• —authorize a million tons now.
• —tell the Congress that we do not know at this point precisely how much we have been matched, and we will not know until after the October consortium meeting.
• —we don’t want the Indians to starve and the subcontinent to dissolve into political chaos while we are determining precisely how much we have been matched.
• —therefore, we are going ahead with this tranche of grain on the explicit understanding that we will deduct from our consortium pledge any shortfall between the cost of this grain and the amount of “matching” funds we discover are real and additional.

8. Advantage of this approach is that it puts off the decision on the precise amount and additionality of matching until the time when we are better equipped to make such a finding. It also protects us from any charge that we are spending one penny more than we believe has been matched. At the same time it would let us move the wheat now. It would put maximum heat on the Indians and the other donors to make sure that the European consortium contributions are as generous as possible. It might even bail us out of a difficult situation at the consortium meeting, since the slashes in the Foreign Aid Bill will put us in a poor position to come up with a large consortium pledge in any event.

9. The disadvantage of this approach is that it might add the last straw to an already over-burdened camel. The consortium is in serious danger of falling apart. Everybody is tired; everybody is unhappy with the Indians; and everybody has budget problems. It is possible that the European reaction to our loading on this additional threat would be to wash their hands of the whole business. We could expect George Woods and company to be pretty upset as well. In both cases, however, the reaction would be much less violent than what we could expect if we refused to accept debt relief as matching.

10. On balance, Mr. President, I am still in favor of the proposals you reviewed last week. But I understand and share your displeasure with the Indians. And I know that there are problems to which those of us who aren’t elected are too apt to be insensitive. Thus, if we cannot go ahead with the earlier recommendation I would vote for the “we’ll deduct it from our consortium pledge” approach instead of George Ball’s plan.

EKH

1. Tell State I want to go ahead with the Ball plan at 750,000 tons _____; at 1 million tons _____.

2. Tell State I want to take the “we’ll deduct it from our consortium pledge” line at 750,000 tons ____; 1 million tons ____.

3. Go ahead with as much as we can claim has been matched without using debt relief (about 400,000 tons).

4. Go ahead with 1 million tons as originally recommended.

5. Speak to me.³

1. Source: Johnson Library, National Security File, Country File, India, India’s Food Problem, Vol. IV. Confidential. A handwritten note on the memorandum reads, “Rec’d 2:05 pm.”
2. Document 454.
3. None of the options is checked on the memorandum.