493.919/9–353: Telegram
The Secretary of State to the Embassy in India1
253. Personal for Ambassador Allen. I have been considering possible effects of terminating aid to India because of shipment thorium nitrate to Communist China and have come to conclusion would be very unfortunate do so. In addition to probable effect on mutual understanding and regard are the other unfortunate results which would likely take place in connection with discussions of Asian problems, UN debates and resolutions, and India’s work as chairman NNRC. In fact we are likely in position, as result recent vote in UN on India’s participation in Korean political conference, that our action in terminating aid would be interpreted as punitive not only in India but also elsewhere.
In addition we could not expect resumption of aid within the foreseeable future because at least as positive and probably more specific assurances from India than those now acceptable would have to be obtained before aid could be reinstituted. Furthermore the whole matter would have to be made public including receipt of assurances, if not before at least as part of President’s report to Congress on Battle Act. If India will not now give the minimum of private assurances to prevent termination I do not see how we could expect later negotiation to produce even more acceptable assurances. With no resumption of aid in sight we would find ourselves in rather untenable position of believing increased stability in India as very much to our interest but not being able to do anything about it. The boost to the communist propaganda line in India and the rest of Asia would certainly be very great.
I believe your tel 4022 shows the way out and authorize you approach Pillai with following:
- 1.
- The statement already received to effect that two tons of thorium nitrate were shipped only for commercial purposes and that policy officers GOI were not aware of implications of this with respect to aid is helpful and may meet part of difficulty.
- 2.
- Something more is necessary however since it would be wasted effort unless we have understanding as to future. To meet this part of problem would he (Pillai) be able to say to you orally something like following: “The GOI of course has right to trade with anyone it pleases. For this reason it cannot accept the Battle Act as binding it to any action. I can say however that there is at present no basis on which to anticipate shipment of Battle Act commodities to prohibited [Page 1718] destinations and no intent to arrange for such shipment. I will be glad to let you (Allen) know if there is any change in the situation.”
- 3.
- If Pillai indicates he is prepared to say this to you you may respond that you will recommend to your Government that this be accepted as meeting requirements of US. It is your belief however that another occurrence could not be worked out in this fashion.
If your discussion with Pillai indicates that this would be a possible basis for agreement you should arrange for him to let you know in advance that he is prepared to proceed with the statement in order that you may communicate with us the exact understanding. We will then be in position to make necessary recommendations and obtain final concurrences here. This will then enable you respond to Pillai’s oral statement by indicating that we are accepting it as satisfactory.
FYI only. This has been discussed with Stassen and he is prepared to accept above provided arrangement for purchase entire exportable surplus thorium nitrate by US is reached in order that we be on firm ground for future. (Present thinking is along line of paying $2.75 per pound thorium nitrate as indicated acceptable by Bhatnagar in Embtel 202.3 Method of working this out to protect AEC’s price structure still under discussion. One possibility would be to make premium above AEC’s price available to GOI in rupees generated by FOA surplus commodity provision. This question under continuing study.) Stassen would in this circumstance join with me in making appropriate recommendations. End FYI.
Re Pillai’s reference to harsher treatment (para 2 Embtel 402) you may tell him that you have queried Department and are assured there has been no other case of shipment of category IA items to prohibited destination.
With respect to US purchase of thorium nitrate you may say that US is interested and prepared continue negotiations basis Embassy’s discussions with Bhatnagar July 27. (Embtel 202.)