472. Telegram From the Department of State to the Embassy in India 1

80797. State/AID/DOD message. Ref: (a) New Delhi’s 5487;2 (b) Rawalpindi’s 1886.3 Review of US Military Supply Policy to India and Pakistan.

We have reviewed US military supply policy which was defined and announced last April. Review was conducted in light of (1) our experience to date, (2) comments from addressees, notably per reftels, and (3) totality of our interests in subcontinent as we see them evolving under pressure of developments such as presently diminishing economic aid availabilities. Our principal conclusions, set forth below, are general in nature, reflecting broad nature of our review. Separate guidance will follow regarding more specific operational questions such as next steps re SU–7’s and Hunters.

I. Conclusions

(A)
Present US military supply policy toward India and Pakistan has proven flexible and useful tool supporting variety of US interests.
(1)
We should therefore continue to monitor US sales of lethal spares and third-country sales of US controlled lethal end items on case-by-case basis. Policy guidelines governing individual decisions should remain as set forth in previous messages.
(2)
We should continue our diplomatic efforts, both bilaterally and through Consortium, to persuade each country to exercise restraint in its defense spending, recognizing that our initiatives to this end must be carefully calculated if they are to be acceptable and credible.
(3)
As opportunities arise we should also continue to counsel restraint on other countries which are actual or potential suppliers of military equipment to subcontinent.
(B)
Present reaffirmation our policy does not imply we expect it to produce miracles.
(1)
On contrary, it is evident we lack decisive influence over either country’s decisions on defense spending and arms acquisition, and can at best hope to maintain a restraining influence on each.
(2)
We recognize that India and Pakistan, as major states (with India facing direct security threat from China) are going to maintain armed forces which have at least some first-line combat aircraft and other sophisticated equipment, plus total force levels at least somewhat consistent with external threat to their security as they perceive it. Their maintenance of such forces is not necessarily inconsistent with our longer-term strategic interests; though present development and resources considerations dictate US posture of restraint, our posture should not foreclose future US options involving greater degree of cooperation in security field.
(C)
Another major caveat: There is an underlying relationship between magnitude of our economic aid commitment to each country and extent to which we can effectively press that country’s government to exercise restraint in defense spending.
(1)
As long as we remain major provider of economic resources to both countries we have inescapable responsibility to do what we can to restrain each from actions leading to arms spiral between them that diverts scarce resources from development without adding to net security of either.
(2)
Assuming this year’s aid will be cut very substantially, we should continue to oppose an arms race but should recognize that our capability to exercise a restraining influence on defense spending has been diminished.
(3)
If, despite our best efforts, we can get no more money from Congress next year for FY ’69 aid than we appear likely to get this year for FY ’68, it may be prudent to withdraw to quieter, less insistent role in dealing with GOI and GOP on defense expenditures.

II. Discussion: Basic US Policy Options

As we see it there are three basic policy options at least theoretically open to us. At one extreme would be some variant of highly restrictive policy such as we maintained immediately after 1965 war. At other extreme would be French-style approach of selling either country anything it wanted that it could pay for. Third or intermediate option would involve efforts to keep lid on arms race through combination of general suasion and flexible posture on individual sales cases.

(A)
First option, involving no lethal sales to either country, has obvious advantages and disadvantages. [Page 925]
(1)
Advantages:
(a)
It would constitute simple and readily comprehensible stance, avoiding disputes over interpretation, putting us at least superficially squarely on side of peace and plowshares (though Paks would regard it as pro-Indian betrayal).
(b)
It could in some cases (where US-controlled equipment significantly cheaper than comparable items from other sources) operate in direction of increasing cost of armament and hence of increasing fiscal pressures for restraint; and
(c)
It would be applauded by significant Congressional elements.
(2)
Disadvantages:
(a)
Except under circumstances such as Indo-Pak war and immediate aftermath it would seem unsound for us arbitrarily to renounce any and all use of major and established instrument of national policy capable of furthering our subcontinental interests. Our ability to carry on meaningful military supply relationships with India and Pakistan has been and continues to be such an instrument.
(b)
On Indian side our flexibility in using this instrument in recent months has furthered our interests in a variety of ways (see below).
(c)
On Pakistani side it seems evident our flexibility has played an important role in enabling Ayub to contain his country’s relations with China and thereby in supporting US strategic interests in subcontinent as defined para 3 (D) of State 33331.4 It has also made possible small but significant cut in GOP’s recent current defense budget.
(d)
Reversion to highly restrictive policy at this stage would do incalculable harm to our interests in Pakistan and hence to our larger interests in subcontinent.
(B)
Second extreme option, of selling anything to anyone willing and able to pay, also has attractive features and basic weaknesses.
(1)
Advantage
(a)
It would save us painful moralizing with both India and Pakistan (though Indians would regard it as pro-Pakistan);
(b)
It would eliminate recurrent problems bedeviling our relations with HMG and other Western allies;
(c)
It would help ease balance of payments pressures; and
(d)
It would put us in stronger position to reduce Indian military dependence on USSR and Pak recourse to China.
(2)
Basic weakness is that such policy would undermine our present policy of actively opposing Indo-Pak arms race. Latter policy has been strongly affirmed cornerstone of our broader policy toward subcontinent at least since President’s press backgrounder in November 1965. We believe active opposition to an Indo-Pak arms race is essential element of any US commitment to support Indian and Pak economic development in major way. Thus despite its attractive features, laissez-faire policy, like highly restrictive first option, is not satisfactory instrument for advancing current US interests in region. This leaves some [Page 926] variation of middle-of-the-road approach as only feasible course under present circumstances.

III. Discussion: Pros and Cons of Middle-of-Road Approach

Middle-of-the-road option combines (a) case-by-case reviews under certain understood ground rules of military sales cases which we control and (b) diplomatic suasion of more general nature, in which we implicitly or explicitly relate Indian/Pakistani restraint on defense spending to future economic aid availabilities.

(A)
Case-by-case review procedure:
(1)
As pointed out in ref A and also in State 2074145 and previous, case-by-case review procedure suffers from weakness that we do not control all supply sources, thus objections on our part to given sale we control may simply drive customer to second source we do not control. We continue however to believe that with careful handling we can exploit relative convenience and economy of India/Pakistan purchasing items which we control as opposed to comparable items from other sources, in manner permitting us to exert marginal restraining influence. This has in fact proven case. Despite difficulty over SU–7’s, for example, we retain GOI’s firm commitment to retire obsolete aircraft on at least a one-for-one basis as and when GOI phases in Hunters.
(2)
A second problem involved in case-by-case review procedure is critical public and Congressional attitude towards arms supply of all kinds to LDC’s. This has made it necessary even within terms of our policy to move cautiously, as with GOP request for tanks. Together with problems that inevitably grow out of discussions concerning a country’s military inventory, this situation has definite potential for irritation, as ref (A) suggests.
(3)
On positive side, our review procedure has been providing essential underpinning in each country for continuing dialogue on security matters. Last July Embassy New Delhi ably described importance of our developing and maintaining such dialogue with Indians (A–14:6 India: Growth and Security). One of few felicitous consequences of SU–7 affair has been GOI offer review force levels with us. Recent conversation with Pak Defense Minister (Pindi 1724)7 well illustrates value such dialogue on Pak side.
(4)
As noted elsewhere, our ability apply general suasion on defense spending levels could be diminished should forthcoming aid levels be sharply reduced. Case-by-case review procedure would not be materially affected by any such limitations.
(5)
Foregoing arguments appear equally applicable to case-by-case review of direct US sales cases (lethal spares) and third country lethal end item sales cases. Seems to us that direct US sales have in fact been proceeding smoothly and have contributed to advancement of our objectives in both countries. Only hitch that has developed has been in our efforts to monitor sales of third-country lethal end items, specifically Indian prevarication regarding SU–7’s. On other hand our efforts to develop and apply criteria on third country lethal end items has clearly contributed to our dialogue with each government regarding its security plans. This has been particularly true in the case of Pakistan, where we have been applying rather more stringent criteria rather more successfully than has been the case in our discussions with the Indians. In Pak case, our policy in this regard succeeded for example in inhibiting German sale of Patton tanks (in period before publicity caused FRG to back down anyway). We conclude there is no more basis at this time for changing our policy with respect third country lethal end items than there is with respect to US-supplied lethal spares.
(B)
General Suasion re Defense Levels:
(1)
We know from experience that Pakistanis and particularly Indians tend to react viscerally and strongly to any démarche on our part which they construe as US effort to influence their national security decisions by threatening to reduce economic aid. We have also learned from experience that amount of leverage we obtain from given aid input varies not only with amount of aid, but also and more directly, with closeness of relationship between kind of aid we are putting in and kind of decision or policy we are trying to influence. It is there- fore likely to be far more risky and difficult to apply econ aid leverage to decisions on defense spending than, say, it is to apply food aid leverage to decisions on agricultural policy. GOP and particularly GOI could have especially acute problems in heeding our advice were public opinions within their countries to learn extent and nature our efforts.
(2)
Another limitation economic aid lever suffers from is its credibility. Current Congressional action will almost inevitably result in sharp cuts in FY ’68 development aid to India and Pakistan but we doubt whether either GOI or GOP will conclude these cuts result primarily from any specific failure on their part to accommodate themselves to recent USG démarches re defense spending. However it is in [Page 928] our interests to impress GOI and GOP of Congressional sensitivities such as those reflected in Conte amendment.8
(3)
Despite these limitations we should continue to impress upon both governments that they each have constituency here, and way they handle that constituency, including their decisions on defense spending, will ultimately determine character of their bilateral relations with us. It is difficult to use this argument effectively in specific field of defense spending without overstepping bounds of either propriety or credibility, but we have to continue to do best we can, as long as we continue to play major role as provider of economic resources. While it may never be in our interest actually to invoke econ aid sanction, our aid input remains of considerable importance to India and provides underlying strength to our position. Our efforts will be helped to extent we can persuade each government of inevitability and legitimacy of link between our role as restrainer on defense spending and our role as free world econ aid leader.
(4)
In particular we need to impress on Indians that we are going to have extremely difficult task next year in obtaining FY ’69 aid appropriation sufficient to support aid level to India that we both agree situation calls for to support shared growth objectives; and that when we approach Congress we need to be armed with understanding with GOI on expected defense spending levels. Such understanding might best emerge from general defense talks Indians have recently proposed.
Rusk
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 INDIA. Secret; Limdis. Drafted by Coon on November 22; cleared by Battle, Prescott, Colonel Fredericks (NEA/RA), Wolf, Heck, Charles A. Kiselyak (H), Rees, Director for Near East and South Asia Brigadier General Henry C. Newcomer (DOD/ISA), and Bromley Smith. Also sent to Rawalpindi and repeated to London and CINCSTRIKE.
  2. In telegram 5487 from New Delhi, November 6, from Bowles to Rusk, Bowles stated that he was convinced that the military assistance policy the United States was following with regard to the subcontinent was not achieving its objectives. In his view, the United States was attempting to control key elements of a complex and politically sensitive situation that was largely beyond its control. He urged a careful review of the military assistance policy to bring it into better harmony with the situation that existed in the subcontinent. (Ibid.)
  3. Oehlert offered his assessment of the military supply policy in telegram 1886 from Rawalpindi, November 18. He recognized that the policy was not “tidy, comfortable nor fully consistent.” On the basis of the evidence in hand, however, Oehlert judged that the policy had already achieved a measure of success in Pakistan, and concluded that, if firmly and realistically implemented, it offered a better prospect for success than any alternative which had been put forward. (Ibid., DEF 12–5 PAK)
  4. Document 457.
  5. Dated June 2. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 INDIA)
  6. Airgram A–14 from New Delhi, July 6. (Ibid., POL 1 INDIA–US)
  7. Telegram 1724 from Rawalpindi, November 9, reported that Defense Minister Khan had asked whether Pakistan might approach Iran with regard to Iran’s surplus M–47 tanks, which could meet Pakistan’s needs. Khan said that Iran was willing to provide the tanks to Pakistan if the United States agreed. (Ibid., DEF 19–8 US–IRAN)
  8. Reference is to the Conte-Long Amendment to the Foreign Assistance and Related Appropriations Act of 1968. The amendment, being debated in December 1967, was adopted as Section 119 of the Appropriations Act on January 2, 1968. The amendment directed the President to withhold economic assistance in an amount equivalent to the amount spent by any underdeveloped country other than Greece, Turkey, Iran, Israel, the Republic of China, the Philippines, and Korea for the purchase of sophisticated weapons systems. (P.L. 90–249; 81 Stat. 936)