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

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

Washington, December 28, 1967, 1929Z.

90381. State/AID/DOD message. Ref: State 80797.² Defense Talks with GOI.

1. Final passage of aid legislation with resolution House-Senate differences close to lower House levels has underscored importance of obtaining better understanding with Indians than we have been able to achieve to date regarding where they are planning to go over next several years in their defense spending and military force levels. As indicated last para State 80797 we need to have some such understanding in hand to administer FY ’68 funds as well as when we discuss crucially important FY ’69 aid bill with Congress. FYI: Inclusion of Conte³ and Symington Amendments⁴ in FY ’68 aid bill has added to importance of achieving such understanding, as indicated below. End FYI.

2. It is clearly sense of Congress that US economic aid resources shall not be used to support regional arms races. Congressional attitudes toward our economic aid program are influenced by degree to which such arms races are in fact taking place. As major developing country and largest aid recipient, manner in which India handles its Congressional constituency here regarding its defense spending can have important bearing on Congressional attitude toward aid as a whole. At present Congress is disturbed by reports of Indian re-equipment on extensive scale and is far from convinced that pace-setter India is genuinely anxious to hold down defense spending and avoid arms spiral with Pakistan. Evidence of Indian restraint could thus prove critical factor influencing FY ’69 aid bill.

3. Meanwhile we have immediate question of applicability of Conte and Symington Amendments to current aid to India. Dept. is studying interpretation and application of amendments, and will shortly instruct the field thereon. In any event, we will soon be talking to Congress about current and proposed Indian acquisitions of sophisticated military equipment from abroad in more detail than ever before. Whatever Indians may think about Conte and Symington Amendments we hope that they will at least privately recognize it is in their interest that when we go to Hill we are familiar with Indian plans and rationale.

4. In light foregoing we believe Embassy should take early occasion get talks started with Indians. Fact that GOI officials have already expressed interest in such talks (reftel) should provide useful opening wedge. We believe Country Team has adequate manpower resources for type of talks we envision and Washington or CINCSTRIKE deputation unnecessary, but willing reconsider if you disagree.

5. Believe we should recognize both among ourselves and with GOI that main purpose of talks will be to help prepare us for administering aid in FY ’68 and for next round of aid legislation and that this should determine character and subject matter of discussions. We would thus hope that talks would give us better understanding of rationale behind current GOI defense spending levels and provide us better basis for balanced independent judgement which we could support with Congress as to degree of restraint Indians showing in total defense spending. To extent it should become clear GOI intends under currently foreseeable circumstances to cut this year’s defense expenditures and hold line on defense budgets for next several years, so much the better. We would also hope GOI could give us reasonably detailed picture of current and planned acquisitions of individual items of sophisticated equipment, foreign exchange costs and rate of payment of such acquisitions including estimated foreign exchange equivalent of rupee payments to Bloc, and, most important, rationale for their acquisition. Inevitably this will involve some discussion of threat estimates and force levels as well as budgetary data but we do not foresee anything on that scene comparable in detail and comprehensiveness to exercise preceding 1964 memo of understanding.⁵ (Incidentally it would be helpful if Indians would come to share our sense that 1965 war completely changed the rules of the game, that questions we are interested in now relate to general trends in defense spending and to how specific planned acquisitions relate to current and prospective threat, not to whether current and planned budgets and acquisitions are consistent with a five-year plan formed in another era.)

6. We recognize and sympathize with Embassy New Delhi’s reluctance engage in discussions with GOI regarding Indian force levels vis-à-vis Pakistan, particularly to extent this involves estimates of Pak threat. Unfortunately we fail to see how we can examine only half a defense establishment in a sufficiently coherent way to enable us to form the kinds of judgements we are seeking here. We hope that by laying our cards on table with GOI at outset of talks we can arrive at the kinds of understandings we need without excessive diversions into blind alleys of debate regarding Pakistani intentions, capabilities, etc.

7. Recognize you may have further thoughts regarding strategy, tactics, and terms of reference. Hope we can work these out soonest and get talks started by mid-January. Timewise, fuse on Capitol Hill is likely prove short.⁶

Rusk

1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 INDIA. Secret; Limdis. Drafted by Coon on December 27; cleared by Heck, Wolf, Kathryn N. Folger (H), and in draft by Spain, Acting Assistant Legal Adviser for Economic Affairs Knute E. Malmborg, Williams, and Colonel Black (DOD/ISA); and approved by Handley. Repeated to Rawalpindi, London, and CINCSTRIKE.
2. Document 472.
3. See footnote 8, Document 472.
4. The Symington Amendment, Section 620 (s) of the Foreign Assistance Act of 1967, was adopted on November 14 and required the President to withhold assistance if in his view the recipient country excessively and unnecessarily diverted resources to military expenditures. (P.L. 90–137; 81 Stat. 445)
5. See footnote 2, Document 53.
6. Bowles reported on January 8 that he discussed the issue of India’s defense expenditures with Desai on January 2, stressing the limitations placed on U.S. policy by the Conte and Symington Amendments. Desai indicated that he remained determined, for a variety of reasons, to hold defense expenditures to the minimum consistent with security requirements. Bowles noted, however, that it would be unrealistic to expect India to violate understandings with foreign suppliers in order to provide the detailed information the United States required. (Telegram 8089 from New Delhi; National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 INDIA)