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

11697. Ref: State 131690.2

1.
Morning March 20 I met with Morarji Desai to discuss problems arising from Conte amendment and particularly our concerns as outlined in reftel. In order to make sure Morarji thoroughly understood pertinent points we prepared carefully sanitized version of reftel, including language best calculated to emphasize (a) our understanding of GOI predicament, (b) severe legal restrictions under which we are now operating, and (c) genuineness of our efforts to find mutually acceptable way out of impasse.
2.
Morarji started to read the document, but soon stopped to challenge what he termed “US right to know” Indian force levels and other military matters. He asserted “One thing must be clear: no matter how much money you give us, we can not compromise our right as a sovereign nation to make our own decisions regarding military defense. If this has become a condition of US aid, we shall have to get along without it.”
3.
I urged Morarji to finish reading before expressing his views, which he did with exception of single comment challenging suggestion that India may be motivated to maintain good relations with USG as “hedge against China.” Morarji asserted that basis for Indo-US relations is much broader than this: we are two democracies struggling to sustain common values and objectives, etc.
4.
After reading entire “cable” carefully, Morarji made following points:
(A)
USG must recognize India is faced with major military threat. Two years ago, contrary to our repeated prediction and assurances, Pakistan, supported by Communist China, attacked India. China is now starting a campaign of organized insurgencies, through north Burma, toward east India and GOI views this as a continuing and growing threat. Consequently, highest single priority for GOI is defense and it must be sole judge of what is required.
(B)
USG must know that India is not militaristic nation bent on conquest. On contrary, with India’s massive developmental needs in mind, he personally begrudges every rupee going into military expenditures. [Page 959] He has been under heavy pressure from Defense Ministry Sharply to increase present budgets but has flatly refused to do so. However, whether we continue aid or not, India will maintain present force levels, which are minimum required for its defense.
(C)
Morarji stressed that even those Cabinet members friendly to us are adamant on this subject. For instance, there had been strong opposition to acceptance of our offer to help India with military cost-effectiveness on grounds this would be entering wedge by USG and would lead to US influence over GOI military development and priorities.
(D)

In 1963 and 1964 GOI had hoped and even assumed US would be willing help modernize India’s defense establishment. However, because of Pakistani pressure we had not only refused to assist India, thereby forcing GOI to turn to USSR, but had implied that we could offer no guarantee of support in case of non-nuclear Chinese-Pak attack.

Even now, he said, in spite of Pak flirtation with China, we are helping Pakistan, directly and indirectly, “through Iran and other sources.” This assistance is for a Pak military establishment that is openly designed to fight India. Moreover, although SEATO and CENTO have no relevance to present Asian realities we still speak of Pakistan as our “ally.”

(E)
In regard to Indian determination to withstand pressure on what it believes to be its sovereign right to make its own decisions, GOI, he said, had taken identical position with USSR when Soviets suggested that if India did not sign NPT they would have to review entire aid commitment. GOI had refused to knuckle under to Soviets on this point and now must react similarly to USG’s request, which would be interpreted as effort to control levels and patterns of Indian defense expenditures.
(F)
Morarji added that he fully understands pressures under which President Johnson, Secretary Rusk and others are operating, that he personally supports US position in Vietnam, and that he feels future of Asia depends on close working relationship between USG and GOI. If, despite these personal convictions, we are unable to develop working relationship with him, he is certain that many other key GOI leaders, whose political views are opposed to both ours and his own, would find a close USG-GOI relationship impossible.
5.
In reply I stressed that all points he made were well understood by myself and Dept., as he could see from reading cable. However, we face legal problem from which we cannot escape. It is our hope that the acute situation presented by Conte amendment is temporary; if we can muddle through next few months some acceptable measures may be found to meet our common objectives.
6.
I then asked Morarji to give me whatever facts he could on MIG deal on personal and off-the-record basis. He replied that purchase of these planes is direct result of failure three MIG plants in India to meet Soviet-set production schedule. Under special provision of original agreement if MIG’s were not produced on time in India Soviets would supply them on fly-away basis. He stated that while no MIG’s have yet been delivered there is a chance they will arrive in India sometime in June (i.e., before June 30). As matter of principle, he cannot stall their delivery or affect it in any manner. However, there will be no payment to USSR until one year after actual delivery, which means that nothing will be paid under this contract before June or July 1969. Payments will be in rupees over ten year period which Soviets will use to purchase various commodities in India.
7.
Again spelled out our legal dilemma. Morarji replied that he fully understood and only wished he could go to US next week to talk it out with President Johnson. He stated India has strong case in regard to China-Pakistan threat and he has full confidence that he could convince any responsible American Senator or Congressman of rightness of GOI position.
8.

I told Morarji that visit to US would be timely and worthwhile and I know he would be listened to carefully. He replied that in view of budget session and his responsibility as Finance Minister it would be impossible for him to leave until session adjourns on May 10, after which he would be delighted to make the trip if there is any prospect of its being effective. He would, however, need some plausible excuse so that true nature of his visit would not become evident. I asked if an honorary degree from some good university would be adequate and he replied affirmatively.

Comment and recommendations follow by septel.3

Bowles
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 INDIA. Secret; Priority; Exdis.
  2. Document 488.
  3. Bowles commented on his conversation with Desai in telegram 11696 from New Delhi, March 20. His assessment was that neither Desai nor other members of the Indian Government would budge from the position relating to the Conte Amendment outlined in telegram 11697. He recommended that the administration seek a waiver to the amendment and anticipated that the effect of such a waiver would be to encourage voluntary Indian cooperation on the question of military expenditure, which pressure could not achieve. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 INDIA)