486. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- $115 million AID Loan to Pakistan
In the attached (Tab A),2 Messrs. Gaud and Zwick recommend that you approve an AID loan to Pakistan of $115 million. Joe Fowler concurs.
The loan is to finance irrigation equipment, pesticides, industrial raw materials, and other goods necessary to maintain the excellent economic performance Pakistan has shown for the past five years. Together with the $25 million supplied last June, this will meet our $140 million Consortium commitment to Pakistan for FY 1968.
The timing is particularly urgent because the Paks have agreed to undertake a new liberalized import policy effective tomorrow (March 1). They need the foreign exchange cushion provided by this loan, both to quiet fears that they couldn’t stand a run and to meet any pressures on foreign exchange which do arise because of the new ground rules. Ben Oehlert is afraid that if we don’t get a firm approval to the Paks today, they may scuttle the import reform, with serious damage to our relations with Ayub.
I recommend you approve. At Tab B is a State/AID paper3 advising you that in their judgment there is no requirement that you take any step to withhold aid from Pakistan under the terms of the Symington Amendment which deals with military expenditures by poor countries.
- Source: Johnson Library, National Security File, Country File, Pakistan, Vol. VIII, Memos, 8/67–4/68. No classification marking.↩
- Attached were a February 20 memorandum from Gaud to the President entitled “Production Loan to Pakistan,” and a February 24 memorandum from Zwick to the President entitled “Proposed $115 Million Development Loan to Pakistan.”↩
- Not printed.↩
- Johnson checked this option.↩