891.03/4–1451
Memorandum of Conversation, by Mr. J. Robert Fluker of the Office of South Asian Affairs1
Subject: Food Grains for India
| Participants: | Madame V. L. Pandit, Indian Ambassador |
| Mr. B. K. Nehru, Financial Counselor, Embassy of India | |
| NEA—Mr. McGhee | |
| SOA—Mr. Mathews | |
| SOA—Mr. Fluker |
The Ambassador requested a meeting with Mr. McGhee to discuss certain provisions of the House bill to provide food assistance for India, and the bilateral agreement proposed in the event aid is granted.
Mme. Pandit said that she did not know the reason for the delay in her Government’s reaction to the proposed legislation and the bilateral agreement, but her Government had instructed her to raise several points to which it objected.
- 1.
- The provision that all grain be distributed without discrimination as to race, creed or political belief seemed to reflect on the Government of India’s method of distribution and policy.
- 2.
- An ECA mission in India would be an infringement upon India’s sovereignty.
- 3.
- The bill’s reference to discontinuance of assistance in the event it is no longer consistent with the foreign policy of the United States, might be interpreted as an attempt to influence the policy of the Government of India.
- 4.
- The bill’s provision for a United States voice in determining the use of counterpart funds might be construed as giving the United States a voice in all of India’s development plans.
- 5.
- The language of the agreement seemed to go beyond that of the bill in providing for observation of the distribution of all food grains rather than limiting observation to grains supplied by the United States aid.
Mr. McGhee said that the probable terms of an agreement had been discussed with the Embassy here before the bill was fully drawn. These terms had met with general acceptance and, prior to this meeting, had elicited no objection from the Embassy. Mr. McGhee went on to say that the bill, of course, had not been available until it had been prepared by the Congress. When it had been reported out, the bill had been made available to the Government of India through the Embassy here. Mr. McGhee noted that the Congress determined the language of the legislation and that the first three points raised were [Page 2145] standard provisions in almost all United States legislation and agreements for economic assistance. Mr. McGhee commented that the bill was friendly to India. Mr. Mathews added that the Congressmen who drafted the bill had inserted only those conditions necessary for a favorable reception in Congress.
Mr. McGhee remarked that the provision for non-discriminatory distribution was in almost all aid legislation and agreements. As a standard provision, it could not be regarded as a reflection on the Government of India.
In reference to the second point raised by the Ambassador, Mr. McGhee said that the provision for a mission to observe was also standard. The language of the bill did not call for supervision by the mission; it was only to observe and report back to the people of the United States. A large number of countries, including Southeast Asian countries which are extremely sensitive on matters relating to their independence, had not found this type of mission an infringement on their sovereignty.
Mr. McGhee remarked that aid given by the United States obviously must be consistent with its foreign policy. This did not mean that the United States was influencing Government of India policy. In this case United States policy was to assist India to feed its people and to maintain stability. Inasmuch as very few people ever read the detailed legal language, Mr. McGhee doubted that this provision would publicly embarrass the Government of India. Mr. Mathews noted that there were constitutional considerations which warranted the use of this approach.
Mr. McGhee assured the Ambassador that United States participation in determining the use of counterpart for development purposes did not extend to development financed by other funds. In the case of the counterpart funds, United States participation was one of consultation and cooperation with the Government of India to achieve the development desired by the Government of India.
Mr. McGhee thought that there must have been some misunderstanding as to the language relating to observation of the distribution. Mr. Nehru noted that once in the distribution system, United States grain could not be distinguished from the other grain. Mr. McGhee said that the Department would review the agreement language relating to observation of distribution. There appeared to be no reason why the agreement should go beyond the language of the bill on this point.
Mr. McGhee commented on the present sentiment in the Congress and noted that attempts now to change these provisions of the bill would raise many doubts and suspicions in the Congress. He asked whether the provisions of the bill created such difficulties that the Government of India would prefer a loan to a grant. In response to [Page 2146] Mr. Nehru’s question as to the conditions that might be attached to a loan, Mr. McGhee indicated that this aid in the form of a loan could hardly be considered a straight commercial loan and that in authorizing a special loan the Congress might insert conditions. In any event a straight loan by an international lending agency would require certain conditions relating to observation and participation in decisions.
Mr. McGhee asked if the Government of India thought that the situation warranted making an issue of these provisions at this late date.
The Ambassador said that she would cable her Government immediately for clarification of its wishes in the light of Mr. McGhee’s comment.
- The substance of this conversation was reported to the Embassy in New Delhi in telegram 1679, April 14, not printed (891.03/4–1351).↩