Nixon Presidential Materials

Washington, June 14, 1971.

SUBJECT: Aid to India

You asked what could be done to assist India with the refugee
problem, presumably as a means of helping to reduce mounting pressure on Mrs. Gandhi to take more direct action against Pakistan. The following attempts to answer that question within the context of what we have already done and the magnitude of the problem.

The Problem

From all indications the East Pakistani refugee problem in India is taking an enormous toll on the Indian economy and could seriously set back development.
Best estimates at this time of the total annual economic costs for supporting the refugees is upwards of $400 million—an amount beyond the Indian government’s means. This includes not only direct costs for food, medicine and shelter but also significant indirect costs such as increased inflation, increased Indian unemployment, diversion of health, transport and other services, and the spread of cholera.
High as it is, the economic cost could be dwarfed by the social and political costs to India. The Hindu-Muslem communal problem is potentially explosive in India and the law and order situation, already bad in some border areas, could deteriorate even more, especially in volatile West Bengal.
The issue therefore is what the US can do that might help Mrs.
Gandhi resist pressures to take direct action against Pakistan.

What the US Has Done

In addition to counseling restraint to both India and Pakistan and encouraging the Pakistanis to take measures to reverse the refugee flow, we have taken the following major concrete actions:
—Of the initial $2.5 million in relief assistance authorized by the President, $1.5 million has gone to feeding programs by US voluntary agencies and $500,000 was contributed directly to the UN High Commissioner for Refugees (UNHCR) to assist in meeting immediate needs for shelter, medical aid and other non-food supplies.
—Of the additional $15 million recently authorized by the President, $10 million is being devoted to satisfying the food requirements of about half the estimated food needs for 1.25 million refugees for about three months. This assistance is being coordinated through the UNHCR but administered by US voluntary agencies, international organizations, and Indian relief agencies. The remaining $5 million is being devoted to non-food aid and is being provided as direct grants to meet the specific needs of the refugees as they are being identified by UNHCR, including such items as shelter, transportation facilities, medicines, medical equipment and clothing. About $850,000 of this amount is being set aside to finance the airlift by 4 C–130s of refugees from Tripura.
—We have encouraged and supported U Thant and the UNHCR in setting up and internationalizing the refugee relief program. So far other countries have contributed about $32 million to the relief effort including about $12 million from the Soviets.
—All this is against a background of the normal FY 1971 AID program for India which has so far included $176 million in program and project loans and $150 million in PL–480 food aid.

What More Can the US Do?

There are several actions that the US could take to meet further India’s need for assistance in supporting the refugees.
1. Increased refugee aid. Our embassy in New Delhi has recommended that we meet about 40–50% of the screened total requirements for an estimated 4 million refugees for an average of 6 months. This would be broken down as follows:
Food $44–49.0 million
Cotton (for tents, camps, clothing, bandages) 1.7 million
Special items (such as further airlift, field hospitals, etc.) 5.0 million
Program Grant (to in part offset import requirements) 10.0 million
Total $65.7–$70.7 million
This would all be in addition to our normal aid programs for India but could probably be squeezed out of the normal budget for FY 1972.
2. Economic aid supplement now. An increase of $25 million in FY 1971 India loan program. State and AID will shortly be proposing such an increase using funds to be made available from the program originally planned for Pakistan. This would bring the Indian loan program up close to the original level we planned but were earlier unable to fund fully. It would ease some the strain on the economy and hopefully public pressure on Mrs. Gandhi.
The main argument against this move is what it would look like to the Pakistanis. The answer to that argument is that the Pakistani program has been disrupted and we have to pick it up where it is now, starting with the recommendations of the World Bank team at the end of this month. That means we will be dealing mainly with FY 1972 money—$90 million requested of Congress, plus some $35 million that would for the moment continue to be held for Pakistan, plus PL–480 at a level to be determined in response to need.
If this were done, it would have to be explained to the Pakistanis in terms of (a) our need to put our own resources to full use at the end of the fiscal year and (b) our determination to work with Pakistan in the consortium with FY 1972 money as soon as the World Bank/IMF and the Pakistanis can present a framework for new lending.
The AID point is that this will keep available all the truly development assistance Pakistan will be able to handle. Of course, it would be possible to give Pakistan more to pay its debts, for instance, but neither AID nor Congressional criteria are likely to make that kind of aid feasible. Therefore, AID would argue that all the aid that can be probably justified will be available.
You will receive a separate memo on this subject.
3. The commitment for at least part of next year’s program loan could be made earlier than normal in the fiscal year. AID is earmarking $220 for India in the pending legislation but realistically expects that they will have to cut this down to around $170 million by the time the money is actually appropriated by Congress. An early commitment would indicate our responsiveness to India’s special needs this year and would, at least temporarily, increase the flow of aid during the most critical period.
4. Our normal PL–480 program could be speeded up. During the current fiscal year we have provided about $150 million of PL–480 and another $150 million is under consideration now for the next fiscal year. Normally these agreements are signed late in the calendar year and, as with program lending, an earlier commitment would have the effect of increasing the flow in the pipeline temporarily during the critical period.
5. Congress could be asked to make a special appropriation for assistance to the East Pakistani refugees. There is considerable support already for such a move. Using contingency funds we might be able to get through the next six months with a special assistance program for India but beyond that we would probably have to go back to Congress. There might be some merit in doing this soon to demonstrate our seriousness to both the Indians and Administration critics.

Conclusions

Only 1, 2 and 5 above would amount to a net increase of aid, but they could be substantial.
What the Indians would really like is one of two political acts:
—They would prefer to have us press Yahya to release Mujib to set up a government in East Pakistan. They feel the mere release would have an electric effect in stopping the refugee flow.
—Failing that, they would like the refugee camps moved back into East Pakistan under international auspices.