611.9194/12–2254: Telegram
The Chargé in India (Kennedy) to the Department of State
851. Economic counselor and I attended one and one-half hour conversation with Jha, Secretary Ministry Communications, Jain and Deputy Secretary Venkatachalam regarding our latest proposal for continuation US airlines service (Embassy telegram 836).1 Conversation was basically friendly and provided for frank exchange of views and clarification proposal. Important questions which Jha raised were:
- (1)
- Was fifth freedom traffic included in our proposal, on which answer was no; (I also made clear that proposal did not give India unilateral right to change landing points as they specified in agreement).
- (2)
- Did not proposal mean that in fact new services could go into effect if consultation not concluded within 30 days, to which answer was proposal technically made that possible, but in fact it would not be reasonable to expect airlines in question would put a service in if this new service were to be shortly discontinued;
- (3)
- Would proposed interpretation of Article IX, permitting unilateral restriction of frequencies, eliminate reference through Article XI to ICAO, to which answer was no, that we still would wish to continue application of Article XI.
Jha made quite clear during course of conversation that previous consultations had been very irritating. He repeatedly referred to fact that even though agreement was reached along lines suggested, he did not see how anything but same irritation could result from sort of consultations now proposed because he said that what was really necessary was certain rules of the game in order that when two sides sat down together in consultation a mutually satisfactory agreement might be reached in a friendly manner. He was also irritated over fact that we now said it was possible to interpret Article IX to include frequencies when our position in past so far as he understood it, had been reverse. He referred to fact that, if this had been case before, India would have reduced frequencies three years ago.
In course of discussion I tried to emphasize desirability of not having clearcut break but rather of maintaining present agreement and arriving at subsidiary working understanding. Jha made point that this would put India in worse position because due to lack of time prior January 16 immediately after reaching of a new agreement as proposed, or some modification thereof, India would wish to exercise its unilateral right and on short notice. He felt it would be better if India went through with cancellation and was clearly in position to [Page 1801] take long notified unilateral action. I tried to point out that in my opinion their position would be preferable under new proposal because we would have agreed with them that right unilateral action existed under the agreement. Throughout discussion we stressed fact that in our view this was a substantial concession and constituted in effect a new approach which met India’s basic requirements with exception of fifth freedom. Jha said that even though proposal from our point of view represented a major concession, he was of the opinion that gulf between us was still too wide to jump. From this I judge that as it now stands, Jha will recommend rejection although final decision will be taken at Cabinet level. In closing he reverted to points which were raised earlier for clarification in such a way that it would appear that problems of fifth freedom traffic, referral to ICAO and absence of agreed rules of game or principles to guide consultations were real stumbling blocks. It is difficult to judge whether all these points must be met, but it would seem that some further satisfaction would be necessary. He also said that he was disappointed we had not come forward with something substantial in way of an immediate concession. Although he did not make it even as a personal proposal, and certainly not as a Government of India proposal, I gained impression from him that concession which would be very acceptable to them would be an offer on our part at this time without further consultation to see to it that the flights of Pan American and TWA were cut from 3 to 2 a week each. I am sure Government of India would be prepared to undertake immediate consultation with view to permitting their re-establishment, but my own opinion is that Government of India is determined to cut the flights of both airlines to two a week come mid-January, irrespective of whether any agreement reached or not reached prior January 16.
If this correct, issue is then really not one of protecting present flights of our airlines but of whether or not we are prepared to make further concessions to maintain facade of existing air agreement. It is impossible for me to judge how important that is, but I am of the opinion it will take something of this sort plus some other concessions on working arrangements in order to prevent termination come January 14.
Even if we go this far, I still am not sure we would succeed. Unless however, I am able give some indication to Jha of some further concessions along above lines, I am confident he will recommend and Cabinet will approve rejection of proposal.
If I am to do anything more within the time limits that exist, I should have word by noon, Indian time, Friday.