Foreign Relations of the United States, 1969–1976, Volume XI, South Asia Crisis, 1971
Document 113
113. Memorandum From the Presidentʼs Assistant for National Security Affairs (
Kissinger
) to President
Nixon
1
Washington
,
August 03, 1971
,.
SUBJECT
Military and Economic Assistance to Pakistan as a Framework for South Asian Decisions
With mounting press and Congressional pressure on our assistance to Pakistan, I thought you should have an updated description of where issues stand. The
SRG
has met twice to refine a game plan for you. This memo is background for that.
Economic Assistance
There are three elements:
—The
U.S.
, like other consortium members, has held up on new development assistance commitments since March 25 because of the general disruption of the Pakistani development program. We are holding $75 million in
FY
1971 money against the time when a revised Pakistani development plan is available. The World Bank and
IMF
continue to oppose resumption of development lending under present circumstances while Pakistanʼs overall development effort is disrupted. Most of the other consortium members share that view.
—Meanwhile, a pipeline of $82 million is still flowing from earlier commitments. Of that $82 million, about half is already tied up in letters of credit for purchases in process; $15 million is committed to long-standing projects in East Pakistan and $5 million for projects in West Pakistan; $20 million remains to be drawn down. Pakistani drawdowns are running much lower than normal, now about $2 million per month. This means that there could still be ten months of assistance left at present rates, but we could not count on that since the monthly drawdown rate could move back to a more normal level ($5–10 million) if economic conditions improved.
—Food and relief assistance is moving at the rate it can be absorbed, and a major internal
U.S.
and
UN
effort is being developed to avert starvation in East Pakistan at the end of this year. Some 360,000

tons of
U.S.
grain remains to be shipped under existing authorizations. The total import need will be about 175,000 tons a month.
The time frame for further decisions is set by the fact that Pakistanʼs six-month moratorium on repaying debts to aid donors runs out in October. Pakistanʼs foreign exchange position now appears likely to hold until then. But at that point Pakistan will, through the aid consortium, seek relief either via formal acquiescence in the moratorium or via an
IMF
drawing which would require supporting aid from donor governments. Such aid would require some development framework, and the Pakistanis are aiming to present an interim development framework concentrating on rehabilitation in East Pakistan. That may well not satisfy either the World Bank/
IMF
or the other aid donors. The
US
may well be alone in proposing support unless the situation in East Pakistan shows improvement.
Military Supply
Because military supply procedures are intricate, it helps in understanding where the present situation stands to understand the three avenues through which Pakistan has procured military equipment here:
1.
Under our Foreign Military Sales (
FMS
) program, Pakistan has been able to buy some equipment directly from
US
military depots. In these cases, Defense maintains control over the equipment until it is turned over to a Pakistani shipping agent at the depot gate.
2.
Also under the
FMS
program, where equipment is not immediately available in
US
stocks, Defense has put a private
US
supplier under contract to furnish equipment directly to Pakistani shipping agents. In these cases, Defense control over the equipment is limited once the supplier accepts the contract.
3.
Apart from the
FMS
program, the Pakistani procurement mission here can make its own contracts directly with the supplier. Defense is not involved at all.
In addition, it is important to understand the two controls that have been used to limit shipments since the outbreak of fighting in East Pakistan:
1.
All Munitions List equipment—regardless of the channel through which it is procured—requires an export license issued by the State Department.
2.
In addition, equipment in the first category above—equipment supplied under the
FMS
program from
US
depots—is subject to administrative controls within the Defense Department.
When fighting broke out in East Pakistan on March 25, the first tentative decision was to establish an administrative hold on equipment still within
US
Government jurisdiction but not to touch equipment

which had already been turned over to a Pakistani shipping agent or was being handled directly between a
US
supplier and the Pakistani government.
This meant: (a) no new export licenses would be issued, but valid ones (good for one year) would be honored until they expired; (b) equipment in
US
depots would be administratively held. This left the following equipment moving: any equipment for which a license had been issued
and
which was under Pakistani jurisdiction, either because a
US
depot had turned it over to a shipping agent before early April or because the Pakistanis were procuring it directly from a supplier.
The rationale behind this distinction was that administrative actions over equipment within
US
Government jurisdiction could be explained for a time as bureaucratic delays, but establishing control over equipment within Pakistani jurisdiction would have had conveyed all the political signals of a full embargo. Those were signals we wanted to avoid.
It has been difficult to know exactly what the effect of these partial controls would be on the actual flow of equipment because the accounting is so diversified—through the Defense system and out into the commercial market.
What is clear now is that our policy has become more restrictive simply with the passage of time because licenses which were good for one year continue to expire. When Secretary
Rogers
wrote you on our military supply options in June,
2
it was estimated that equipment up to a value of $34 million might legally be shipped under valid licenses but—because some of that was under administrative hold—the value of actual shipments possible would have been less. By mid-July, further refinement of the list which took into account the expiration of licenses set the outside figure at $15 million under valid license, although again the amount free of administrative controls would have been less. The passage of another month is expected to reduce the amount that Pakistan could, by mid-August, still pick up anew from
US
suppliers to just under $5 million (in addition to $9.5 million in sonar equipment licensed commercially for vessels being built in the
UK
).
On the other side of the ledger, we do not know how much equipment Pakistani shippers may already have picked up before licenses expired and have in transit. Some shipments could continue to show up from time to time, but the amount is not thought to be large.
The results of this policy are twofold:
1.
The Pakistanis have played along with the administrative game and have not made an issue of our restrictions. It was clear when I was

in Islamabad that they were grateful that the
US
had not taken the formal step of imposing an embargo. The loss of military supplies bothers the military, but to
Yahya
it seems at least as important that the
US
has not joined others in condemning him.
2.
The Indians and the Congress have objected sharply to our not imposing a total embargo. The fact that very little equipment is actually moving now under present policy does not satisfy them. There are widely supported moves in the House and Senate to cut off both military and economic (except relief) assistance to Pakistan until you determine that most of the refugees are able to return home. If we hold out against embargo, we could suffer restriction on the more important economic aid for a small amount of equipment (plus the principle of avoiding embargo).
3
As a product of two
SRG
discussions I would expect to have for you very soon a game plan covering our policy on these two issues as well as on the other elements of the South Asian problem.
4
Contents
Preface
Sources
Abbreviations