Foreign Relations of the United States, 1977–1980, Volume XIX, South Asia

264. Telegram From the Department of State to the Embassy in Pakistan¹

Washington, September 28, 1977, 0150Z

232989. Exdis, for the Ambassador. Subject: Deferral of New Development Assistance. Refs: (A) Islamabad 7017;² (B) Islamabad 7274;³ (C) Islamabad 9527.⁴

1. We have reluctantly concluded that under present circumstances we must defer signing new development assistance agreements with Pakistan until we have an opportunity to review the situation with a post-election government. This does not mean that the Glenn Amendment has come into effect since we are not aware of any transfers of reprocessing equipment since August 4, the effective date of the amendment.⁵ However, the public reaffirmation in Paris that the reprocessing deal will go forward⁶ places us in a untenable position on new agreements now with the Congress and the public. If, shortly after we were to sign off on nearly 45 million dollars worth of pending loans plus additional grants, further transfers were to take place, not only would Glenn immediately come into effect but the adverse congressional reaction could extend to other areas with more severe consequence for bilateral relations.

2. In view of this decision, AID has taken action to authorize pending loans, which means that funds will be available in FY 78, when and if we are able to sign new agreements after elections. Grant money cannot be carried over, but we would consider reprogramming projects in the next fiscal year. AID will provide specific details in a separate message.

3. The question which now arises is how we manage the issue of an AID deferral over the next few weeks until we can have substantive discussions with a Pakistani Government. In this regard, we must rely heavily on your judgment since you are closer to the scene, although, as you are aware, we may need to deal with the question in upcoming talks with Pakistanis here and in New York. In this regard, we would like to lay out some of the considerations as seen from here.

4. It would obviously be desirable to avoid to the extent possible a public debate, particularly during the election campaign, which could foreclose the possibility of a constructive dialogue with a post-election government. At the same time, the GOP should be aware of the seriousness of our concern over the reprocessing issue and that, while we hope to move ahead with aid agreements after elections, any transfers of reprocessing equipment in the meantime would preclude this possibility by bringing the Glenn Amendment into effect.

5. We have been struck by the fact that in recent weeks Pakistani officials both here and in Islamabad have been remarkably reticent about asking questions on pending AID agreements. We conclude that there may be some disposition at the senior levels of the GOP, who are familiar with the current status of aid, not to ask the question since they would prefer not to receive a formal answer. We wonder if the present de facto deferral, left unstated and unacknowledged, as difficult as this may be to live with, might not be preferable from both our points of views as a means of keeping the issue out of the election campaign. In other words, there may be some merit in continuing our present stance unless directly queried at a high level.

6. On the other hand, we noted (reftel C) that an MFA official on September 21 inquired about the fertilizer loan. The subject of pending aid agreements may also come up during call by Finance Secretary Kazi on Governor Gilligan September 30 or at the Agha Shahi bilateral with the Secretary on October 7. Moreover, we suppose that there may be practical considerations in Islamabad which militate in favor of clarifying the situation with the GOP. Nevertheless, we see real dangers in having our decision on deferral become an election issue.

7. On balance we see some advantage in leaving our position unstated, but we believe you are in the best position to make this judgment and, if you determine otherwise, to decide on the timing and the level of an approach to the GOP. If you believe that an approach is desirable, the following points should be drawn upon. We will await word from you before including these same points on a contingency basis in the briefing materials for Governor Gilligan and the Secretary for use if the question of pending aid agreements is raised by the Pakistanis.

—It is our most earnest desire to continue and to strengthen the cooperative relations which have existed between our two countries for so many years. One of the pillars of this relationship has been our ability to discuss mutual problems frankly and openly.

—As the Government of Pakistan is aware, President Carter attaches the highest importance to the goal of limiting the spread of nuclear explosive capability. The Congress shares his concern and in August passed legislation, known as the Glenn Amendment, which supersedes the Symington Amendment. The Glenn Amendment provides similar sanctions against the provision of US development and security assistance to countries which receive from abroad reprocessing equipment, technology or materials after the date of enactment, which was August 4.

—We understand the position of General Zia that his is an interim regime which must leave policy decisions on the reprocessing issue to an elected government. We also appreciated the willingness of the Pakistanis to discuss the question with Dr. Nye in late July⁷ and we look forward to pursuing these discussions with a post-election government.

—In the meantime, however, we feel constrained to defer decisions on pending aid agreements until such discussions can take place. We believe that this is consistent with General Zia’s understandable desire to leave such policy decisions to a new government. In view of the election schedule, it is our hope that the deferral of aid will not need to be prolonged more than a few weeks.

—Our current deferral of aid does not mean the Glenn Amendment has come into effect and we hope that it will be possible to move ahead after talks with a new government. Of course, in the meantime, the GOP should be aware that if there are transfers of any equipment subsequent to August 4, signing new agreements would not be possible since the Glenn Amendment would automatically apply.

—We would like to assure the GOP that the pending aid loans for FY 77 have been authorized and thus the funds would carry over into our new fiscal year. Although grants cannot be carried over, we would consider reprogramming them next year. PL 480 would not be affected by the Glenn Amendment and we are hopeful about early action on some pending requests.

—We are sure that the martial law regime shares our desire to maintain cordial relations and our hope that nothing will transpire which would foreclose the possibility of continuing our dialogue with a successor government.

8. We are sending contingency press guidance by septel⁸ and would appreciate your comments.⁹

Vance

1. Source: National Archives, RG 59, Central Foreign Policy File, D770353–0359. Secret; Immediate; Exdis. Drafted by Coon; cleared in OES, AID, S/S–O, and by Farley, Nye, and Oplinger; approved by Dubs.
2. See Document 256.
3. Telegram 7274 from Islamabad, July 17, reported the MLA’s formal response to Hummel’s July 9 démarche (see Document 256), which indicated that, due to its temporary nature, the military government was not in a position to make any decision on the nuclear reprocessing issue. (National Archives, RG 59, Central Foreign Policy File, D770254–0602)
4. Telegram 9527 from Islamabad, September 22, reported the MFA’s September 21 inquiry about the status of a fertilizer loan and whether other “unsigned AID funds will be lost at the end of this fiscal year.” (National Archives, RG 59, Central Foreign Policy File, D770346–0350)
5. See Document 6.
6. See footnote 2, Document 260. On September 8, the French Government gave a “seemingly irrevocable pledge to proceed with the controversial sale of a nuclear fuel reprocessing plant to Pakistan, a move many countries fear might enable that poor, populous and politically unstable nation to acquire atomic weapons.” After his meeting with Shahi, de Giringaud reportedly said, “I have confirmed to Mr. Shahi that this contract will be honored by France.” (Paul Lewis, “Pakistan Atom Deal Affirmed by France,” New York Times, September 9, 1977, p. 45)
7. Telegram 7765 from Islamabad, July 31, transmitted the proceedings of Nye’s July 30 meeting with MFA officials in Islamabad. As to the results of the meeting, Hummel reported: “Although we did not achieve breakthrough on reprocessing issue—and did not think we would—meeting was held in open atmosphere, and it is evident both sides want to find a way out of the reprocessing quandary.” (National Archives, RG 59, Central Foreign Policy File, D770274–0450)
8. Telegram 232987 to Islamabad, September 28, offered contingency press guidance on the deferral of development assistance for Pakistan. The points emphasized that aid had not been cut off and that the Glenn Amendment to the Foreign Assistance Act was not in effect. (National Archives, RG 59, Central Foreign Policy File, D770353–0353)
9. In telegram 9733 from Islamabad, September 28, the Embassy concurred with the conclusion that the Pakistani Government was “reluctant to press” the issue of loans, adding that Zia was “aware that funds for loans, which cannot be signed in this fiscal year, are being held over until next fiscal year.” (National Archives, RG 59, Central Foreign Policy File, D770353–0053)