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

405. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter¹

Washington, January 8, 1980

SUBJECT

• Assistance for Pakistan (U)

This package contains items for your decision on what we can convey to the Pakistanis about our intention to provide them economic and military assistance. We have delayed our discussions with the Pakistanis so that we might be as concrete and forthcoming as possible. Now that Agha Shahi is coming to discuss these issues,² we need your guidance on a range of issues so we speak with one voice.

1. Legislation to Lift the Symington Amendment. This would be aimed at exempting Pakistan from the Symington Amendment and facilitating supplemental authorization and appropriation of FMS and ESF assistance for Pakistan which is now prohibited by law. A draft text is attached at Tab A.³ It is still being polished with OMB, so you need not approve the text, but I do need your approval to inform the Paks that we will take this legislative step.⁴

2. A Package of Military and Economic Assistance. A memorandum prepared by OMB and Henry Owen is attached at Tab B with a memorandum from Cy appended to it.⁵ They include the following items for your decision.

—$100 million FMS Credit. All agencies agree that this is required.⁶

—$100 million ESF. All agencies agree on the sum; $100 million ESF is necessary to release Pak budget resources to take advantage of our $100 million FMS credit. The only issue is whether to make the ESF aid conditional. The State Department agrees with OMB and Henry Owen that we should continue to participate in the Pakistan aid consortium and support its efforts at reform. However, State feels the impact of the aid will be vitiated if we hold up commitments or disbursals pending further Pakistan financial reforms. I agree with State and, if you approve, we will ensure that the directive to the Agencies makes clear that while we will rejoin the consortium and support it, we will not attach additional strings to this supplemental $100 million for ESF for Pakistan.⁷

—FY 81. State is prepared to let OMB and Congressional Liaison work out the modalities of the FY 81 ESF/FMS package for Pakistan but argues strongly that we should be prepared now to commit to a two-year program of $100 million ESF/$100 million FMS for each year, thus enabling us to present it to the Paks as a $400 million package. OMB would have us be somewhat more vague on FY 81 levels, both for reasons of impact and to concretely demonstrate the enduring nature of our commitment. I support State’s $400 million two-year package approach.⁸

—PL 480. Both State and OMB recommend a $10–20 million increase in PL 480 with the precise amount determined by Pak absorptive capacity and our budget limits. I agree.⁹

—IMET. State and OMB both endorse $600,000 for military training. I concur.¹⁰

—Refugees. State recommends a $6 million increase in refugee aid with a possibility of $25 million if the number of refugees doubles. OMB believes this can be met through reprogramming.¹¹

A separate issue for the future is whether to continue to supply all the aid through the UNHCR or use other channels. The UNHCR will constrain the extent to which the refugees will provide a base for the insurgents in Afghanistan.¹²

3. Military Items. A key issue is what we should sell to the Pakistanis. An illustrative initial list is attached at Tab C along with possible items for future sale.¹³ We envision a technical-level discussion with the Paks on just what they would want within the $100 million, and what their other priority items are for funding by themselves or third parties. As you can see, $100 million will not go far. The critical question, however, is not so much money as it is equipment—especially whether we are prepared to sell Pakistan advanced aircraft such as the F–16. If we are not going to provide such aircraft out of concern for India’s reaction, we should let the Paks know soon so that India does not mount a campaign against it and Pakistan does not make it a litmus test of our relationship. Accordingly, I would appreciate your guidance. If you are not prepared to sell advanced fighter aircraft to Pakistan, it would be helpful to know it. Otherwise, I will have State and Defense prepare an analysis and recommendation.

Will not sell advanced aircraft¹⁴

Prepare analysis and options

A number of other items are covered in the State and OMB/Henry Owen memoranda, such as debt rescheduling, on which you need not act now.

Tab B

Memorandum From the Director of the Office of Management and Budget (McIntyre) and the Ambassador at Large and Coordinator for Economic Summits (Owen) to President Carter¹⁵

Washington, undated

SUBJECT

• Additional Aid to Pakistan (U)

This memorandum summarizes current U.S. aid to Pakistan and presents possible options for increasing assistance. Cy Vance’s memorandum is attached.¹⁶ We agree on the basic recommendations. (U)

Background

In assessing possible options, we must be explicit about the nature of the problem we are trying to solve and the effectiveness of various initiatives in solving them. We see several possible objectives for U.S. assistance. (S)

Possible Objectives

1. Signal overall support to Pakistan. Offering substantial aid to Pakistan will send this signal. (S)

2. Solve Pakistan’s security problems. Military equipment would help in countering security threats to Pakistan, although Cy Vance notes in his memorandum that “Pakistan is unlikely to welcome any dramatic gestures of military support, at least while the Iranian hostage situation remains unsolved.” (S)

3. Solve Pakistan’s economic problems. U.S. aid can contribute to Pakistan’s economic progress if it is extended in the context of the existing aid consortium and thus encourages continuing Pakistani self-help measures. (S)

Current Aid Levels

	($ in millions)
	1979 Actual	1980 Estimate	1981 Estimate
AID	2.9	–	–
PL–480 (Title I)	40.0	40.0	42.5
IMET (Training)	.5	–	– (S)

Under the Symington amendment, no bilateral U.S. assistance (except PL–480) can be provided to Pakistan. Steps are now being taken to remove this impediment. There are no other prohibitions on aid to Pakistan. (S)

Possible Assistance Initiatives

1. Economic Assistance. The AID mission was closed in March because of the Symington amendment. As a result, we do not have the people in place to implement quickly traditional AID projects. Two large projects for rural electrification and rural roads, which meet basic human needs criteria, were in the advanced design stage when the AID program was terminated last March and might be reactivated. These funds would, however, be spent slowly over a number of years. From Pakistan’s point of view, more useful aid would be balance of payments support (perhaps tied to U.S. phosphate fertilizer imports), which would also help Pakistan offset its excessive budget deficit. Given the political/security rationale for the aid, the Economic Support Fund (ESF) would be the most appropriate source. (S)

If Pakistan is to be helped by the aid, it is important to avoid undercutting the efforts of the World Bank and other donors in the Pakistan aid consortium to encourage much needed economic reforms. Improved Pakistani policies will do more than enlarged aid to help Pakistan economically; conversely, aid that discouraged reforms would leave Pakistan worse off economically than if there had been no aid.¹⁷ (S)

Pakistan is now beginning to move in the right directions, according to the World Bank. This may lead the Bank both to double its present annual lending ($125 million) and to urge other donors to increase their present $800 million in annual aid to $1.2 billion. The United States should rejoin the consortium, from which it dropped out when U.S. aid to Pakistan ceased. In providing the new aid, the United States should join the other members of the consortium in encouraging further progress by Pakistan in the two areas which the consortium has emphasized—placing increased emphasis on agriculture and reducing the overall budget deficit. Like other consortium members, the United States would reserve the right to make up its own mind as to whether these or other policies were the right ones to urge on Pakistan, in light of changing conditions. (S)

The message that the Pakistanis would get is that U.S. aid is being resumed on the same basis that it was provided before it was cut off. This would avoid undermining other aid donors’ efforts to reform Pakistan’s economic policies but would not require us to attach onerous policy conditions to our aid, and would permit immediate resumption of our aid.¹⁸ (S)

Recognizing the basic political motivation for the aid and its open-ended balance of payments rationale, there is little basis for setting a specific amount. Pakistan’s balance of payments projection for 1980 is not in severe deficit, but the recent oil price increases and insecurity could upset present estimates. A program for FY 1980 in the range of $100 million would convey a message of serious U.S. support and would be defensible in view of the uncertainties as to Pakistan’s balance of payments. (S)

We considered asking Congress for authority to transfer some of the funds requested for Pakistan to other countries most affected by the crisis in the region in support of measures to deter Soviet aggression—a sort of contingency reserve. On closer consideration we concluded that no needy country in the region is likely to seek such support in FY 1980 except possibly in connection with U.S. military base facility negotiations, for which we are not yet able to estimate the scale or reality of contingent requirements. We recommend that the question of whether or not action is needed to meet this possible requirement should be considered separately when the facts are available. (S)

2. PL–480 Food Aid. In April, the U.S. broke off discussions on a $40 million increment of PL–480 Title-III (grant aid) because of inadequate Pakistani economic policy reforms and its nuclear activities. We would argue against resumption of discussion of a Title-III agreement. (Any Title-III agreement would be in addition to the existing $40 million Title-I agreement which we are trying to accelerate.) Cy Vance believes the possibility of a Title-III agreement should be left open, but does not propose immediate discussions with Pakistan. (S)

On the other hand, 1980 and 1981 Title-I PL–480 (concessional loans) could be increased from the presently projected $40 million. The amount of any increase would be limited, however, by U.S. budget availabilities in 1980 (unless we can get early congressional approval of the pending supplemental) and by Pakistan’s lack of need for wheat this year because of good harvests. The most likely increment would be some $10–20 million in vegetable oil in 1980 and 1981, unless more wheat is needed in 1981 because of poor harvests. (C)

3. Debt Relief. The U.S. and other creditors have consistently taken the position that no debt relief should be provided unless a country is in a situation of “imminent default” and unless it is prepared to undertake needed reforms (usually a full-fledged and politically difficult IMF stabilization agreement). The Congress has insisted on these conditions, so that debt relief does not become a way around the appropriation process. (S)

If Pakistan meets the criteria for debt relief, the creditors (mainly the U.S., Germany, Japan, Canada, and France) could reschedule up to about $200 million in 1980 with the U.S. share being up to $90 million. This would provide quick cash relief. (S)

State now will consult with other creditors, to see under what conditions they might agree to debt relief. We will have to be prepared to move quickly toward a multilateral negotiation with Pakistan, if the need arises. If a change in our traditional debt rescheduling policy is indicated, as Cy Vance suggests may be the case, we will prepare a decision memorandum for you. (S)

4. Refugee Aid. Refugee relief requirements are still tentative because most of the Afghan refugees to date have received local support from related groups in Pakistan. The United States will be stepping up aid to these refugees as rapidly as required by increased flows. Because of the slowdown in Vietnamese refugee flows, we anticipate that these new requirements can be met by reprogramming existing funds. State is preparing a memorandum on the question of bilateral and multilateral means of aiding refugees. (S)

5. Military Assistance. The level and form of U.S. military assistance to Pakistan should be sufficient to:

—demonstrate U.S. political support;

—meet Pakistan’s urgent security requirements, and

—act as a catalyst for a multilateral security effort, in which other interested countries (India, China, and other Moslem nations, as well as our Western allies) would join to provide military aid to Pakistan. (S)

The $100 million level discussed by the SCC would be a first step in meeting these requirements. It is not excessive, and would cover only a part of Pakistan’s security needs. Other countries, taken together, would have to supply a larger amount. State is discussing multilateral and bilateral approaches to this problem with other potential donors. (S)

This issue, however, is less one of the level of aid than of the types of equipment we are ready to sell. Ambassador Goheen indicates that if the equipment is largely defensive, it should not unduly alarm India, whose cooperation with Pakistan (which he believes is more feasible in the present situation) would do much to enhance Pakistan’s security, and whose increased hostility could prejudice that security. The Pakistanis, however, want precisely the types of advanced weapons that worry the Indians most, and they will be disappointed if they don’t get them. State and DOD are currently reviewing this problem. (S)

6. International Military Education and Training (IMET). Cy Vance recommends $600,000 for IMET. We agree that a training program would be desirable, assuming Pakistani interest, and will meet that need within the current budget request. (S)

7. Drawdown Authority. Under current law, the President has available $10 million in so-called “drawdown” authority (Section 506, Foreign Assistance Act) to order defense articles and services for delivery to a foreign government provided that he determines that “an unforeseen emergency exists which requires immediate military assistance to a foreign country or international organization; and that the emergency requirement cannot be met under authority of the Arms Export Control Act or any other law except this section.” If it appears that we will face serious delays because of congressional budget procedures, we may want to initiate a small program under this authority. (S)

8. Accelerated Deliveries. The Defense Department is currently reviewing the availability for early delivery of equipment to be included in the proposed military aid package for Pakistan. (S)

9. FY 1981 Assistance. If Pakistan decides to mount a determined effort to shore up its resistance to Soviet-sponsored threats to the subcontinent, it will expect U.S. support beyond FY 1980. Indeed, Zia’s decision on Pakistan’s course might turn partly on whether we and other supporting nations are committed to the long haul. A two-year package of U.S. aid involving $100 million ESF and $100 million FMS for FY 1981 would have a larger impact on his thinking than a package for only FY 1980. (S)

On the other hand, we have no basis now for determining the appropriate amount of U.S. military or economic aid in FY 1981. An arbitrary extension of the FY 1980 amounts for another year might prove inadequate for political or substantive reasons, or we might wish to reduce FY 1981 aid below these levels if the situation changes. These considerations argue for withholding specific commitments as to FY 1981 for some weeks or months until Pakistan’s needs become clearer. (S)

On balance, we believe that the following approach would meet both our diplomatic and budget requirements. We would transmit 1980 supplementals for $100 million in ESF and $100 million in FMS credits. For FY 1981 assistance, we would indicate to Zia our intent to provide further assistance of the same magnitude in our next fiscal year as Pakistan’s needs become clearer. The budget message would indicate that a budget amendment would be transmitted at an appropriate time. (S)

Recommendations¹⁹

1. ESF. $100 million to be provided to Pakistan immediately, probably for U.S. fertilizer imports; this aid to be provided through the existing economic aid consortium and in support of continued Pakistani progress toward self-help. (S)

2. FMS. $100 million, as described above and elaborated in separate memorandum. (S)

3. FY 1981 Aid Commitment and Budget Request. Defer the FY 1981 request to Congress and the specific commitment to Pakistan until Pakistan’s requirements and policies are clearer; while advising Zia now that you are planning to request similar magnitudes of aid for 1981 depending on Pakistan’s requirements.

Based on your decisions, we will forward the implementing legislation to you for immediate transmittal to Congress.²⁰

1. Source: Carter Library, National Security Affairs, Brzezinski Donated Material, Subject File, Box 32, (Meetings—SCC 293: 3/25/80). Secret; Sensitive. Sent for action. Carter wrote “Zbig, J” in the upper right-hand corner of the memorandum.
2. In telegram 159 from Islamabad, January 8, Hummel reported that, having told Shahi that decisions on assistance to Pakistan would soon be made in Washington, Shahi planned to visit after his stop at the UN in New York. (National Archives, RG 59, Central Foreign Policy File, D800014–0103)
3. Not found attached.
4. Carter checked the Approve option, to the right of which he wrote: “I would still prefer some mention of non-prolif assurances—not exceeding those we have already gotten.”
5. Tab B is printed below.
6. Carter checked the Approve option.
7. At the end of this sentence, Brzezinski wrote: “This is really important.” Carter did not check either the Approve or Disapprove option. In the right-hand margin, he wrote: “$100 mil ok. I prefer auth to waive reform requirement if necessary—Paks must be under constraint to behave economically.”
8. At the end of this sentence, Brzezinski changed the last period of the paragraph to a comma, after which he wrote: “because it indicates a longer-term political commitment.” Carter checked the option “Approve OMB approach,” to the right of which he wrote: “I may change—Let me see what Agha Shahi says”.
9. Carter checked the Approve option.
10. Carter checked the Approve option.
11. Carter checked the Approve option.
12. At the end of this sentence, Brzezinski wrote: “It should be bilateral with Pakistan.” Below this, Carter wrote: “Bilateral, at least as option.”
13. Attached but not printed at Tab C is an undated covering memorandum entitled “DOD Memorandum, Arms for Pakistan,” attached to which is a list entitled “Pakistan (Illustrative Sales)” which is broken into two sections: “List I: FMS Funding” and “List II: Funding from Non-US Sources.” In the covering memorandum, on which Carter wrote “Zbig, C” in the upper right-hand corner, the Department of Defense argued: “We need to keep India in mind as we make military supply decisions for Pakistan. India will be concerned in principle about the resumption of a U.S.-Pakistan supply relationship, and in this sense whatever we supply will be troublesome for India; none of the items proposed for FMS funding, however, would in themselves pose a significant threat to India. The Part II items would be more difficult for India to accept, and the F–16 aircraft, M48A5 tanks, and TOW-mounted helicopters, would be the most contentious.” Carter wrote: “I agree” in the left-hand margin next to this paragraph. Below this paragraph, which concluded the memorandum, Carter wrote: “We should approve quickly: Weapons which can be used to defend both Afghan & Pakis as soon as possible. In general, however, not to attack India. J.”
14. Carter checked this option.
15. Secret. Sent for action. A stamped date reads: “Jan 8 1980.” In the upper right-hand corner of the first page of this memorandum, Carter wrote: “Zbig, J.”
16. Attached but not printed. In his January 8 memorandum to Carter, Vance argued: “I firmly believe that failure to provide significant quantities of economic and military assistance over a two year period will bring into question the seriousness of our commitment to Pakistan.”
17. In the right-hand margin next to this paragraph, Carter wrote: “I agree.”
18. In the right-hand margin next to this paragraph, Carter wrote: “I agree.”
19. There is no indication of Carter’s approval or disapproval of the three recommendations.
20. Below this sentence, Carter wrote: “Answers given on Zbig’s cover memo. I want to help Pak, but preserve the Consortium approach & maintain econ reform pressures. J.”