Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

6. National Security Council Report¹

NSC 5909/1

Washington, August 21, 1959.

STATEMENT OF U.S. POLICY TOWARD SOUTH ASIA

(India, Pakistan, Afghanistan, Ceylon and Nepal)

General Considerations

1. The rapid growth in Chinese Communist power and the intensification of the Soviet economic offensive in South Asia, which seem likely to intensify the threat posed to Free World interests in Asia over the next decade, underline the importance of developing in South Asia, particularly in India, a successful alternative to Communism in an Asian context. In the nations of India, Pakistan, and Ceylon, there is considerable potential for achieving this goal.

2. The South Asian nations have a population equal to about one quarter of the Free World total. Strategically located athwart the land and sea lanes of communication between the Middle and Far East, South Asia has valuable natural resources, including India’s rich iron and coal deposits. India and Pakistan inherited from the British a tradition of sound administration and a good civil service, and a common language, English, which make possible communication among the various cultural groups inhabiting the sub-continent. India also inherited an extensive rail network.

3. However, critical internal problems and strife among the area nations pose serious obstacles to the emergence of a strong and stable South Asia. Despite an impressive volume of external assistance (roughly $4.5 billion provided or pledged from Jan. 1, 1955 through June 30, 1959)² the area continues beset by a multitude of political, social and economic problems. Living standards are extremely low and efforts to improve them are seriously impeded by continued rapid population growth, low productivity, inadequate financial resources, shortages in trained personnel, and inflation.

4. It is now evident that the Soviets have designated India as a primary target in Asia. While the ultimate goal of Soviet policy in India remains the accession to power of a government strongly influenced or controlled by the USSR, the Soviet stepped-up economic offensive is aimed at gaining maximum influence over the development of India’s economy and the direction of its policies. The Soviet offensive takes three main lines, all of which capitalize on some of India’s most pressing needs. These lines are: (a) project aid programs of large magnitude to influence and impress the Indian peoples and Government; (b) trade programs which will be significant economically as well as psychologically, and which will wherever possible create situations of Indian dependence upon the Soviet Union; (c) technical assistance programs calculated to win the sympathies of a maximum number of Indian officials, scientists, engineers and students and the Indian intelligentsia in general. New Delhi announced on July 29, 1959, that it has accepted an additional Soviet offer of $378 million in aid which would be for India’s Third Five-Year Plan (1961–66). This credit brings total Soviet Bloc aid to India to $702 million.

5. Except for Pakistan, which is a member of SEATO and the Baghdad Pact, the nations of the area have adopted a policy of neutralism. In India and Ceylon, the problem of Communist strength is a serious one; however, these governments and the major political parties appear to be becoming increasingly aware of their own self-interest in blocking Communist subversion and maintaining anti-Communist policies domestically. The Communist Chinese brutal repression of the Tibetan revolt has contributed to a greater awareness of the threat from Communist China. The difficulties arising out of the Communist control of the government of the Indian state of Kerala have highlighted the Communist problem in India.

India

6. A solid basis was laid for the Indian national state by a series of domestic political successes: in dealing with the princely states, in conducting national elections, and in laying down a national constitution. But divisive regional, linguistic, caste and religious differences still exist, despite Nehru’s partly successful efforts to eradicate them. The cohesion and popular appeal of the Congress Party is gradually deteriorating with the Communist party being the next strongest party presently in sight.

7. Moreover, India is confronted with a major problem of economic development. Despite the substantial progress made to date under the First Five-Year Plan (1951–1955) and part of the Second Five-Year Plan (1956–1961), the continuing problems of unemployment and underemployment, unabated growth of population, recurrent food shortages, and the increasing public demand for economic improvement provide potential tinder for political extremism and are apparently leading to higher targets for the third plan (1961–1966). Unemployment is increasing in urban areas. As originally formulated, the current Second Five-Year Plan overemphasized industrialization at the expense of the agricultural sector. Preliminary planning indicates that the Third Plan will devote considerably more attention to agriculture though it will continue the general emphasis on industrialization. Continued deficit financing and heavy pressure on Indian foreign exchange holdings are expected. Early informal proposals by Indian Planning Commission officials have projected net foreign aid requirements for the period of the Third Five-Year Plan at $2.1 billion which is the level originally projected in the Second Five-Year Plan. (Actually $2.3 billion of external assistance has, to date, been pledged in support of the Second Five-Year Plan.) However, there have also been estimates by Indian Ministry of Finance officials as to the external assistance requirements for the Third Five-Year Plan which range as high as $5.0 billion.³ Formulation of the plan is still in the preliminary stages and a final decision by the Indian Government as to its objectives and probable financing requirements is not expected for many months.

8. Should India fail to achieve a substantial economic expansion during the crucial next five years and lose the momentum it has gained under Nehru’s leadership, it is unlikely to regain this momentum during the foreseeable future. A period of economic and political decline would almost certainly set in, popular support for the Congress Party would further diminish, dissension would grow both inside and outside the Congress Party, and serious unrest might ensue.

9. The extent of India’s economic development will have international political ramifications as well. Asia and Africa will be watching and comparing what the Indian and the Chinese Communist regimes are achieving for their peoples, in terms of rapid industrialization, as well as in terms of the impact on human freedoms and living standards. A strong India would be a successful example of an alternative to Communism in an Asian context and would permit the gradual development of the means to enforce its external security interests against Communist Chinese expansion into South and Southeast Asia. A weak India, on the other hand, would be less able to exert effective influence to counter that of Communist China in South and Southeast Asia.

10. In relation to its size and population, India maintains a relatively modest though by no means negligible military establishment. India’s abiding concern is to maintain a substantial margin of superiority over Pakistan. Pakistan’s military strength has been of concern to India because of fear of armed conflict with Pakistan arising from differences over Kashmir and the waters of the Indus River. Pakistan’s membership in Western collective security organizations is also a matter of concern to India because of the possibility that the subcontinent will thereby become involved in cold war issues. U.S. military support to Pakistan has been interpreted to India as contributing substantially to the threat of Pakistani aggression. It can be expected, therefore, that India will continue to purchase military equipment from abroad to the extent necessary to maintain its margin of superiority over Pakistan. In addition, India has recently shown increasing concern over the security of its northern borders and the Communist Chinese threat.

Pakistan

11. Despite some success in meeting the profound problems which confronted it at the outset, Pakistan after twelve years of independent existence still lacks many of the basic elements of national integrity and lasting political stability. The eastern and western wings of the country, separated by a thousand miles of Indian territory, represent two widely disparate cultures, differing in ethnic structure, language, social and economic patterns, and outlook. Chronic political instability coupled with persistent economic distress and rampant corruption led to the establishment of an authoritarian regime under army control in October 1958. This development, which many considered inevitable, was widely accepted, even welcomed, by most of the Pakistani population. The advent of martial law and abolition of the existing political system brought a temporary halt to the uncertain evolution of democratic processes in Pakistan under the parliamentary system. In its place the new regime has introduced a deliberate program of “national reconstruction” in the political field designed to promote an orderly evolution toward democracy through election of local councils, though not, for the present, democratic government at higher levels.

12. Although its political institutions to date have failed to attain viability, Pakistan has nevertheless maintained its national unity, and has made progress toward the resolution of basic economic problems. Pakistan has achieved significant gains in industrial development, and will shortly undertake a new five-year development plan expected to place heavy emphasis on improving the agricultural, power and transportation bases of the economy. The plan’s goals are directed to a major extent to remedying the recurrent food crises in both East and West Pakistan where poor marketing and storage facilities and inept administration have aggravated the problems arising from chronic low productivity. In fulfilling the plan, the immediate bottlenecks seem likely to be an unfavorable balance of payments and a shortage of technical and administrative skills. By its vigorous actions in the economic and financial spheres, the new regime in Pakistan has demonstrated a genuine determination to overcome the basic ills of the economy, and offers a better hope than its predecessors of raising general living standards in the country.

13. Over the longer term, however, there are a number of factors which may frustrate achievement of the regime’s efforts to develop the political and economic foundations for enduring stability. There are possibilities for rivalries and dissension within the military. Pressures are likely to build up among civilians, who will want more participation in running the country’s affairs than Ayub is likely to give. These pressures are likely to be stronger in East Pakistan, which is the main center of Communist activity and where the people resent West Pakistan’s domination of the government. Should the regime’s firm grip on the country be loosened, Communist influence in East Pakistan would probably expand, and could result in a serious threat to the continued unity of Pakistan.

14. The present Pakistani regime is fundamentally anti-Communist and will probably continue to pursue a foreign policy which is essentially pro-West in outlook and pro-U.S. in implementation. Pakistan’s role in various UN councils has been helpful to U.S. objectives. However, its adherence to the Baghdad Pact and SEATO is partly motivated by apprehension of India’s preponderant military position. Pakistan is also concerned with its own differences with Afghanistan and with growing Communist influence in Afghanistan. Pakistan, as a major Muslim and Asian power, can and does exert a moderating influence on the extreme nationalism and anti-Western attitudes of some members of the Afro-Asian bloc, and it is in our interest to continue to encourage Pakistan to do so.

15. Since 1954 Pakistan, with U.S. assistance, has greatly increased the military capability of its armed forces which, however, are still one-third the size of those of its large neighbor, neutralist India. Many Pakistani leaders regard their military establishment, including the U.S. supported portion thereof, primarily as a means of defense against India. Nonetheless, Pakistan’s forces have been a major factor in maintaining Pakistan’s stability and thereby contributing to Free World strength in the area.

16. The U.S. program for making up deficiencies in the Pakistan armed forces in accordance with the provisions of the 1954 commitment is virtually completed, although deliveries will continue probably through 1960. However, until international tensions in the area are relaxed, Pakistan may be expected to continue to place great emphasis on its defense and to make substantial expenditures on its military establishment. U.S. policy approved in January 1957 provided for U.S. assistance in support of Pakistan forces capable of maintaining internal security, of offering limited resistance to external aggression, and of contributing to collective security by these means and by the provision of token forces for collective military operations outside Pakistan. Current U.S. strategic force goals established under this policy include 5½ army divisions. However, Pakistan maintains an additional 2½ divisions which it uses to maintain internal security and to deter external aggression in East Pakistan and for defense along the cease-fire line in Kashmir. The maintenance of the present MAP-supported forces at an effective level of performance would require continuing U.S. military assistance and defense-support.

17. Sufficient economic development to indicate continuing progress is believed to be a necessary ingredient in maintaining reasonable political stability in Pakistan. The lack of natural resources, the shortage of technical and administrative skills, the rate of increase in population, the dire shortage of domestic savings and the financial burden of maintaining the military establishment, make the achievement of economic development difficult. The development plan, which is being proposed from 1960 to 1965, will almost certainly require substantial external assistance. The need for resources for economic development will compete with the costs of maintaining the military establishment. This conflict in demand for Pakistan’s limited resources, both domestic and foreign, could cause friction between the United States and Pakistan.

Afghanistan

18. The extensive Soviet Bloc penetration of Afghanistan is cause for serious concern and will be extremely difficult to reverse. Afghanistan has already developed so many close ties with the Communist Bloc as to threaten its future independence. The Bloc may be expected to continue its efforts to monopolize key economic sectors such as cement, coal, oil and hydroelectric power. Increasing numbers of Soviet Bloc economic and military technicians have enhanced the Communist potential for propaganda and subversive activities.

19. While traditional Afghan suspicions of the USSR almost surely persist and Afghan leaders reiterate their desire to balance relations with the Bloc with countervailing relations with the Free World, they seem in fact to be accepting increasingly closer relationship to the Bloc. Primarily because of Afghanistan’s geographic position, the United States does not have the capability of preventing close Afghanistan ties with the Bloc. We retain some leverage, however, in large part through our aid program. Through our aid on the Afghan-Pakistan transit project, the Helmand River multi-purpose scheme, and the Afghan educational system, the United States is identified with undertakings of major significance for the economic and political future of Afghanistan.

20. An additional obstacle to a more pro-Western orientation on the part of Afghanistan is its dispute with Pakistan over the Pushtu or Pathan tribes living in the Northwest frontier area of Pakistan. This dispute has aggravated Afghanistan’s sense of political and geographic isolation from the rest of the Free World. These factors, combined with the urge for rapid economic development and a belief that Pakistan poses a military threat, contributed to Afghan receptivity to Communist aid offers.

Ceylon

21. The outlook in Ceylon is for continued basic instability. An early change in government is likely, and the underlying trend toward polarization of the political scene to right and left will probably continue. Meanwhile political instability is impeding economic progress, badly needed because of an extremely high rate of population growth.

22. Ceylon has a potential strategic and political importance beyond its small size and population because of (a) its strategic location in the Indian Ocean; (b) its close association with, and active role in the Afro-Asian complex of nations; and (c) the potential availability, during periods of heightened East-West tension or hostilities, of the deteriorating but still useful former British naval installations on the island. Ceylon has achieved something of a balance in its diplomatic and economic relations with Communist and Western nations through the pursuit of a policy of non-alignment. Its relations with India are generally cordial although the presence in Ceylon of a large number of Tamils of Indian origin is the subject of a long-standing dispute which has heightened communal tensions on the island in recent years.

Nepal

23. The growing conflict of interest between Communist China and the USSR on the one hand, and India on the other, has increased the importance of Nepal. India views Nepal as a virtual protectorate and has resented interest in Nepal on the part of third powers. However, the Soviet Union and Communist China show increasing interest in Nepal, expressed in terms of economic aid and the desire to have closer diplomatic relations through the reciprocal establishment of resident embassies. In view of this increasing Communist interest in Nepal, and as a result of the establishment of complete Chinese Communist control over Tibet, India can be expected to redouble its efforts to maintain and strengthen its position as mentor and guardian of Nepal. The Nepalese, for their part, have been restive under past Indian attempts to monopolize Nepal’s external political relations and to guide Nepalese domestic policy. The Nepalese, therefore, although distressed by the Chinese Communist subjugation of Tibet, may welcome increased contact with the Soviet Union, the Chinese Communists, and the United States as affording Nepal the opportunity to play off the Communist powers, the United States and India against one another in the hope of thus obtaining more economic aid from all while achieving a position of greater psychological independence of India. The establishment of Nepal’s first popularly elected government and the opening of resident embassies in Katmandu by the Soviet Union, the United States, and probably to be followed by the Chinese Communists, mark the beginning of a new era in the history and development of Nepal.

Policy Conclusions

24. The United States has a political stake in the independence and integrity, as well as the stability and peaceful progress of all of the countries of South Asia. In India and Pakistan, particularly, that stake is a very large one. If either of these countries come under Communist influence, world-wide repercussions would result. Seriously increased political instability in either or both of these large nations could significantly increase Communist influence in the area, or alternatively, might lead to hostilities in South Asia. Either turn of events could engage great power interests to the point of threatening world peace.

25. It is necessary, therefore, to employ the means at our disposal as effectively as possible in South Asia. This will require policies developed country by country, but it will also continue to involve us in intraregional issues and we shall probably find it increasingly desirable to apply our efforts and resources toward resolving or at least keeping under control the local controversies that bulk so importantly in the political life of the subcontinent.

26. Since Pakistan’s differences with India and Afghanistan seriously complicate our relationships with South Asia, mutually acceptable resolution of the Kashmir dispute and other differences, particularly the Indus Waters question, must be an important aim of U.S. policy.

27. In many respects the capability of the United States directly to shape events in South Asia is limited. The United States cannot in the foreseeable future expect the four neutralist South Asian countries to align themselves with the United States on all East-West issues. While it cannot ensure that the economic progress which the South Asian nations desire can be achieved, nor even fully satisfy their desires for external economic assistance, progress can be made in increasing South Asian resistance to Communist ambitions and in fostering its recognition of its community of interest with the Free World.

28. Although from the point of view of hastening economic development some reduction in Pakistani and Indian military expenditures would be desirable, it does not appear to be possible at this time to obtain a reduction in the over-all military potential of the Indian sub-continent especially in view of recent evidence in Tibet and Afghanistan of increased Sino-Soviet pressures in the area.

India

29. It is in the U.S. national interest that the independence of India be strengthened and that a moderate, non-Communist government succeed in consolidating the allegiance of the Indian people. While India’s policy of non-alignment will on occasion bring India into opposition to U.S. programs and activities, and a strong and increasingly successful India will add weight to this opposition, over the longer run, the risks to U.S. security from a weak and vulnerable India would be far greater than the risks of a strong, stable, even though neutral, India.

30. It is in the U.S. interest that India should continue to make an effective assault on its development problems. For this reason the United States should continue to follow carefully the formulation and implementation of Indian development plans and support the broad objectives of these plans so long as they appear to be the best vehicle for achieving U.S. objectives in India. Other Free World nations should be encouraged to give similar support.

31. In view of the deficiencies of the Second Five Year Plan, it would be desirable that the goals of future plans be realistic in terms of the resources expected to be available, that they provide for the most effective utilization of resources in support of balanced, high priority programs, and that they take into account any settlement of the Indus River dispute.

Pakistan

32. It is in the U.S. national interest that Pakistan remain an active ally of the United States, continue its economic progress, improve its internal stability and maintain its defensive capabilities.

33. Without substantial external assistance, Pakistan’s limited resources are inadequate to sustain its present defense establishment and at the same time to support economic development at present levels. There is, in fact, little prospect that in the near future Pakistan could, unaided, support even one of these programs as presently planned.

34. The availability of additional Pakistani resources for economic development purposes would be in the U.S. interest, and some reduction in Pakistani over-all arms strength could provide resources for this purpose. However, until Pakistani relations with India and Afghanistan improve markedly and unless there is reduction of the Communist military threat to South Asia, it is unrealistic to expect Pakistan to agree to reduction in the capabilities of its armed forces. A tacit limitation by Pakistan on future arms expansion (as distinct from reduction) would be desirable as a first step, provided India could be persuaded to follow suit and provided the potential threat from a Soviet-backed Afghanistan did not increase materially. The compelling economic needs of both India and Pakistan should enhance the acceptability to them of the idea of limiting arms expansion.

35. U.S. action to reduce military assistance to Pakistan, without Pakistan’s agreement, below a level sufficient to maintain the present capabilities of MAP-supported units might lead Pakistan to retreat from its present anti-Communist pro-Western policy, jeopardize the U.S. political position in the area, weaken planned defenses designed to protect U.S. interests in the Middle East, or alienate the Pakistan military leaders who constitute the controlling element in Pakistan. It would, on the other hand, undoubtedly improve the U.S. position in India and Afghanistan. On balance, however, it would undoubtedly be undesirable at this time to consider terminating the U.S. military assistance program in Pakistan, even though the U.S. program for making up deficiencies in the Pakistan armed forces in accordance with the provisions of the 1954 commitment is virtually completed. Accordingly, it is in the national interest to continue to provide military aid to Pakistan. The Pakistanis have indicated an interest in force improvements which could result in substantial additional costs. Under present circumstances the United States should not accede to a Pakistani request for major force modernization or significantly increased manning levels for existing MAP-supported units.

36. In support of economic development in Pakistan we should be prepared to extend sound development loans consistent with relevant U.S. loan policy considerations and to continue our technical assistance programs. Our economic aid program should be aimed at improving the future economic capabilities of Pakistan to carry a larger share of its necessary expenditures, as well as increasing its political and administrative ability to make the most effective use of its military and economic resources.

Afghanistan

37. It is recognized that the USSR has certain advantages over the United States in its relations with Afghanistan, notably the geographical proximity of the USSR to Afghanistan. Nevertheless, it is possible for the United States, through its various programs in Afghanistan, to provide Afghanistan with some alternatives to complete dependence on the USSR.

38. Afghanistan-Pakistan relations are complicated by the Pushtunistan issue, which must be settled by the parties to the dispute themselves. However, the United States can, by promoting mutually beneficial regional economic development projects, bring about more amicable Afghanistan-Pakistan relations and give Afghanistan an alternative to its dependence on the USSR. As Pakistan’s military build-up is completed, stabilization and perhaps reduction of U.S. military aid to Pakistan may also reduce an irritant to Afghan relations with Pakistan and with the United States.

Ceylon

39. It is unlikely that Ceylon’s generally popular neutralist foreign policy will undergo any major change during the next two or three years, except in the unlikely event of a Communist takeover. Nevertheless, Ceylon’s need and desire for economic assistance provide the United States with a means of influencing Ceylon. U.S. aid and other programs in Ceylon should, therefore, be directed toward increasing Western influence and orientation to the extent feasible.

Nepal

40. The United States has an interest in preventing Nepal from falling under the influence of the Soviet Union or from being overrun or dominated by Communist China. These are possibilities of even more urgent concern to India, which regards Nepal as a virtual protectorate. In view of the vastly greater U.S. stake in India than in Nepal, U.S. interests would be served by a policy of close but informal consultation with India in regard to Free World economic and security interests in Nepal. U.S. interests will be served by encouraging India to take every feasible step to prevent Nepal from falling under Communist influence or control.

Objectives

41. The development in South Asia, particularly in India, of a successful alternative to Communism in an Asian context.

42. The continuance of non-Communist governments willing and able to resist Communist blandishments or pressures from within and without.

43. An increased association and identification of South Asian governments and peoples with the Free World community.

44. A lessening of the tensions among the South Asian states in order (a) to forestall a further competitive military build-up, (b) to augment their resistance to Communist tactics, and (c) to strengthen their bonds with each other and with the Free World.

45. Strong, stable, and, if possible, popularly-based government in all of the South Asian states.

46. Increasingly sound and developed economies in each of the South Asian states.

47. Military strength in the area that will contribute to area stability and, as appropriate, to the defense of the Free World.

Major Policy Guidance

General Political

48. Foster the continuance of non-Communist governments in South Asia and strengthen their hands against Communist efforts to dominate them.

49. Seek to develop an understanding among the countries of the region, particularly India and Pakistan, that the threat to their security lies not from other South Asian countries but rather in the increasing menace of Sino-Soviet power.

50. Encourage the governments and peoples of South Asia to expand and strengthen their ties with the Free World.

51. Increase consultation with the governments of South Asian countries, particularly India and Pakistan, and encourage them to consult more frankly with us.

52. Seek through all appropriate means to reduce tensions and animosities between India and Pakistan. Continue to impress upon India and Pakistan that the Indus Waters issue should be settled on the basis of a solution mutually acceptable to India and Pakistan. Study and seek to determine now what steps would be desirable to take to settle other Indo-Pakistan disputes (e.g., Kashmir, boundaries, refugee property settlement) and to maximize the benefits of any Indus Waters settlement.

53. Maintain information, cultural and exchange of persons programs adequate to support U.S. objectives in the area.

54. Seek through strengthened and improved training programs in the United States, host countries and third countries, to multiply indigenous capabilities for self-government and economic growth. Adapt these programs to the needs of individual countries and seek to assure indigenous support for them, particularly in regard to the utilization of participants subsequent to the completion of training programs. To the extent feasible encourage U.S. private organizations to assist in achieving the objectives of these programs.

55. In the event of overt Communist aggression against Pakistan, or imminent or actual Communist attempts to seize control from within, fulfill U.S. obligations under the Southeast Asia Treaty and under the bilateral agreement of March 5, 1959 developed in support of the Baghdad Pact.

56. Should overt Communist aggression occur against a South Asian state, other than Pakistan, and should such state resist the aggression and make a timely appeal to the UN for assistance, support UN action to counter the aggression, including the use of force if a vital U.S. interest is involved: Provided, that the taking of any military action shall be subject to prior Congressional action.

57. If the UN fails to act in the contingency envisaged in the preceding paragraph, and provided a vital U.S. interest is involved, consider unilateral action.

58. In case of an imminent or actual Communist attempt to seize control from within a South Asian country other than Pakistan, and assuming some manifest local desire for U.S. assistance, strengthen U.S. support of its non-Communist elements, encourage other Free World nations to lend such support, and take all feasible measures to thwart the Communist attempt: Provided, that the taking of any military action shall be subject to prior Congressional action.

General Military

59. When and where politically feasible, seek to obtain (a) the use of required military and strategic facilities in South Asia, including communications, transit and base rights, and (b) the right to operate forces in the area upon the threat of and during hostilities in which the United States is involved.

60. Promote a better understanding in the South Asian countries of the aims of SEATO and the Baghdad Pact and, when feasible, encourage a wider cooperation in these or other Free World defense arrangements.

61. Recognizing that the reduction of tensions and arms limitation are inter-related and inter-acting factors, seek to persuade India and Pakistan to accept a limitation of their military capabilities to present levels (except for limited modernization).⁴ Subsequently, as friendly relations between the two countries are developed, seek to persuade them to participate in joint planning for defense of the subcontinent and to reduce their military establishments where this can be done without sacrificing their ability to resist Communist aggression and maintain internal security. Seek to persuade the United Kingdom to cooperate with us in achieving these objectives.

Economic Development and Trade

62. To assist in the development of sound expanding economies in South Asia:

a. Encourage South Asian countries to make the maximum contribution to their own economic development, and to take measures which will attract maximum amounts of external private capital.

b. Be prepared to extend sound development loans consistent with relevant U.S. loan policy considerations and with U.S. foreign policy objectives, and to continue defense support and technical and special assistance programs. Be prepared to consider sound projects which would make a significant contribution toward encouraging closer cooperation among the South Asian countries and between South Asia and the rest of the Free World.

c. Encourage other Free World countries to continue to provide development and technical assistance to South Asia.

d. Support loans to South Asia by international institutions when consistent with U.S. loan policies.

e. Encourage and be prepared to support with U.S. public capital, if appropriate, an acceptable settlement of the Indus Waters dispute.

f. Seek through diplomatic and other appropriate means to improve the climate for private investment and, where justified, encourage U.S. and other private investment in the area.

g. Stress the long-range benefits of multilateral trade as opposed to trade under bilateral and barter agreements.

h. Encourage South Asian states to expand their trade with each other and with other countries of the Free World.

i. Emphasize the importance of mutual benefits of existing trade relations between the United States and the South Asian states, and seek further to foster and promote such trade.

63. Render appropriate U.S. assistance to individual nations and to multi-nation associations for development of peaceful uses of atomic energy.

64. In providing technical and developmental assistance, do not give the impression that the United States will bid against or attempt to match in size and scope the credit and aid activities of the Communist bloc.

65. Alert South Asian nations to the probability that the Sino-Soviet bloc will attempt to utilize trade and assistance programs as a technique for political subversion, and discourage them from (a) accepting Sino-Soviet bloc aid in certain particularly sensitive fields of a kind or on terms which would be damaging to their security, and (b) engaging in trade with the Sino-Soviet bloc at levels sufficient to create undue economic dependence on the bloc or on terms or under conditions seriously prejudicial to U.S. interests.

66. Continue efforts to discourage and where possible prevent shipment of strategic materials to the Communist bloc.

67. When justified to alleviate acute food shortages or the effects of natural disasters, extend emergency aid to the South Asian countries as expeditiously as possible.

India (Courses of action supplemental to the general courses above.)

68. Support the continuation in power of elements which are non-Communist and basically oriented toward the Free World.

69. Be prepared, primarily through the extension of public loans, PL 480 arrangements and technical assistance, to make aid available in substantial amounts to assist India in its efforts to achieve economic development, including some projects which would be clearly identifiable to the Indian people as tangible evidence of U.S. assistance. When the Indian Third Five-Year Plan is formulated, review the plan to see whether the United States should contribute to the achievement of the broad aims of the plan by being prepared to consider financing specific projects in the plan. Avoid, however, giving the impression that the United States is guaranteeing or underwriting the achievement of specific rates of economic growth or the fulfillment of over-all economic targets in India. Encourage U.S. private investment in India which will contribute to that country’s economic development.

70. While respecting India’s choice of an “independent” foreign policy, seek to prevent its policy from serving Communist ends and, when in the U.S. interest, make use of Indian mediation or moderating influence in international disputes.

71. As practicable, discreetly exploit differences between India and the Communist bloc, especially the growing distrust in India of the Chinese Communist regime.

72. Strengthen the orientation of India’s armed forces toward the Free World and continue to facilitate India’s procurement of its military equipment from the West.

73. Continue to reassure India that by providing military aid to Pakistan and by supporting its participation in SEATO and the Baghdad Pact, the United States is in no way unfriendly to India and is acting solely in the interests of Free World security against the Communist bloc.

74. Continue to reassure India that the United States is not taking sides on the merits of the Goa dispute and would favor any mutually acceptable settlement reached through peaceful means.

Pakistan (Courses of action supplemental to the general courses above.)

75. In conjunction with efforts to strengthen Pakistan’s orientation toward the Free World and its support of collective security efforts, encourage the development of more representative government.

76. For the present continue to support, by providing U.S. military assistance, Pakistan forces capable of maintaining internal security, of offering limited resistance to external aggression, and of contributing to collective security by these means and by the provision of token forces for collective military operations outside Pakistan.

77. In view of the prospective fulfillment of the military aid program under the 1954 commitment, direct an increasing share of the over-all U.S. aid program to Pakistan along lines which would channel economic resources to developmental activities, provided that the military component of the program is at a level sufficient to maintain Pakistan’s MAP-supported forces and to permit limited modernization of these forces.⁵ In providing military aid to Pakistan:

a. Avoid becoming committed to assuming any fixed share of Pakistani military maintenance costs.

b. Attempt to reduce the support cost for the Pakistani military establishment by exerting its influence for a more efficient organization of Pakistani forces and improved logistics system and more austere standards of construction and support, to the end that necessary force goals can be met with a progressive declining reliance on U.S. aid.

c. Encourage improved relations among Pakistan and India and Afghanistan as a means of reducing demands for U.S. aid.

78. In recognition of Pakistan’s present need for security and defense forces in East Pakistan and the tribal areas of West Pakistan, the United States should not now press for the reduction of Pakistan’s non-MAP-supported armed forces. However, efforts should be continued at the national level to encourage Pakistan, whenever politically feasible, to concentrate available resources on the support of forces indicated in the strategic force objectives and to eliminate those forces which are in excess of U.S. strategic force goals.

79. Encourage Pakistan to continue and extend its moderating influence in the Middle East and the Muslim world.

80. Encourage Pakistan to follow policies toward Afghanistan which will promote Afghan ties with the Free World.

Afghanistan (Courses of action supplemental to the general courses above.)

81. Encourage the growth of closer economic and improved political relations between Afghanistan and Pakistan, thus creating conditions favorable to resolution of their differences and strengthening Afghanistan’s links with the Free World while reducing its dependence upon the USSR.

82. Encourage the settlement of disputes between Afghanistan and Iran, and the development of closer Afghan ties with Iran, Turkey and other nearby nations friendly to the West.

83. In providing technical and developmental assistance, give particular emphasis to programs tending to reduce Afghan economic dependence on the USSR, and to projects which will provide immediately visible evidence of U.S. friendship for [and?] an interest in Afghanistan.

84. Encourage Afghanistan to minimize its reliance upon the Communist bloc for military training and equipment, and to look to the United States and other Free World sources, particularly Turkey, for military training and assistance.

Ceylon (Courses of action supplemental to the general courses above.)

85. Use all appropriate means to strengthen non-Communist political elements able to contribute to political stability in Ceylon.

86. Seek to prevent Ceylonese neutralism from serving Communist ends and encourage Ceylon to identify its national interests more closely with the Free World.

87. At such time as it is determined that the United States has a vital interest in acquiring the right to utilize naval, air, and communication facilities in Ceylon, take all feasible steps to obtain this right. In the interim, continue to exert, to the extent practicable, U.S. influence to assure the availability of these facilities to the United States, the United Kingdom and other Free World countries when required, and employ all appropriate means to deny the availability of these facilities to unfriendly foreign powers.

Nepal (Courses of action supplemental to the general courses above.)

88. Encourage the Government of Nepal to resist Soviet and Chinese Communist inducements and pressures, but guard against its tendency to involve the United States against these powers for its own interest except when such involvement would also be in the interest of the United States.

89. Consult India and, as may be politically desirable, cooperate with India in regard to Free World interests in Nepal, while continuing to respect Nepal’s desire to be independent of India.

1. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5909 Series. Secret. Transmitted to the National Security Council on August 21, under cover of a brief note by Marion W. Boggs, Acting Executive Secretary of the NSC. Boggs’ note reads in part as follows: “The President has this date approved the statement of policy in NSC 5909, as amended and adopted by the Council and enclosed herewith as NSC 5909/1; directs its implementation by all appropriate Executive departments and agencies of the U.S. Government; and designated the Operations Coordinating Board as the coordinating agency.” A 20-page Financial Annex is not printed.
2. Includes: since 1955 approximately $2.1 billion in economic aid (including about $1 billion under PL 480) and $500 million in military aid from the United States, $700 million from other Free World Nations and $700 million from international institutions; since 1955 $520 million from the Bloc, all for economic projects, except for $32 million to Afghanistan for military purchases. It appears that something over $1 billion of this aid had not been disbursed as of June 30, 1959, although the bulk of this is either already committed or is expected to be committed in the not too distant future to specific development projects. [Footnote in the source text.]
3. It is understood that the $2.1 billion projection does not take account of scheduled repayments on existing external debt which amount to approximately $950 million over the five-year period. These repayments are known to be included in the $5 billion estimate. [Footnote in the source text.]
4. As used in this paragraph, the term “limited modernization” refers to normal replacement of obsolete or worn-out equipment. [Footnote in the source text.]
5. As used in this paragraph, the term “limited modernization” refers to normal replacement of obsolete or worn-out equipment. [Footnote in the source text.]