Foreign Relations of the United States, 1961–1963, Volume XIX, South Asia

8. Memorandum of Conversation⁰

Washington, March 7, 1961, 11-11:45 a.m.

SUBJECT

• Call of Pakistan Finance Minister on the President

PARTICIPANTS

• The President
• Mohamed Shoaib, Finance Minister of Pakistan
• His Excellency Aziz Ahmed, Ambassador of Pakistan
• G. Lewis Jones, Assistant Secretary of State for NEA

The President opened the conversation by expressing the opinion that finance ministers had the most difficult of all jobs in any government.

Shoaib said that he was honored to be received by the President and then handed the President a letter from Ayub Khan.¹ The President read this and then said it was a “fine letter.” So many communications between Heads of States consisted only of generalities. This letter had substance. He asked when Shoaib was departing Washington and when told that he would depart March 11 the President said that he would give Shoaib a reply to take back with him.

The remainder of the conversation consisted principally of the President very skillfully drawing out the views of Shoaib on a variety of subjects. The President twice made the point that Pakistan was the friend and ally of the United States in “good times and bad.” He said the U.S. valued Pakistan’s friendship and its stalwart posture in international problems.

Colonialism

The President remarked that it was curious that the United States, which had never held any territory in Africa, should be grouped with the colonial powers. Shoaib replied that he was afraid that this was the inevitable result of world leadership: it was the price the United States paid for its preeminent position. Shoaib said that the anti-colonialist theme had a deeper appeal to the people of Africa and the Middle East than did anti-communism. The truth was that in many of these countries the people had had no experience with communism but they had had experience with colonialism. He said in the Middle East the strongest appearance of communism had been in Syria but Nasser had stepped in and redressed the situation. The President said that there had been communism also in Iraq. Shoaib said that Iraq was tremendously isolated and did not have much influence but Nasser’s influence was all-pervading. There was a tendency in the Near East and in Africa to believe that Nasser is leading an anti-colonialist campaign: anti-colonialism becomes anti-West as a result of the French, Belgian and Portuguese presence in Africa. Because these countries are the allies of the U.S., the U.S. unfortunately is considered to be in the same category.

Afghanistan

The President asked about Pakistan’s relations with Afghanistan. Shoaib replied that the GOP felt that Prime Minister Daud had accepted too much aid of all kinds from the USSR to pull back. GOP feared that Afghanistan had “passed the point of return”. It did not believe that King Zahir wanted this: Daud was responsible. Shoaib said that relations between the RGA and the GOP were tense but “of course there is no military problem.” He told how a tribal army coming from Afghanistan had been routed by the tribesmen on the Pakistan side. (Note: he did not mention Khrushchev’s support for the Pushtunistan theory.)

Iran

The President said: “What about Iran?” Shoaib replied that Iran was the subject of constant concern on the part of the GOP. President Ayub stopped there whenever he travelled in order to talk to the Shah. He said that the GOP was convinced that the Shah was solidly pro-West. The country had, however, mismanaged its very considerable resources. The people had looked poorer to him the last time he had been there. The elections in Iran had not gone very well and the country was subjected to vitriolic radio attacks from the USSR. The Shah had a large body of ideas regarding his army and at one time had suggested he might become the Supreme Commander of CENTO. Shoaib repeated that he did not believe that Iran would turn neutralist.

Laos

The President asked whether Shoaib had any ideas with regard to Laos. Shoaib replied that he did not feel competent to talk on this complicated subject.

Aid Program

The President said that the administration was going to have difficulties with the Congress in getting through its aid program. It was difficult to go before the Congress year after year seeking money for foreign aid. The Congress had in mind “bad experiences” with foreign aid such as the $300,000,000 spent in Laos. However, the administration was going to fight hard.

Oil Prospecting Agreement with USSR

The President asked Shoaib about the $30,000,000 agreement recently reached between the GOP and the USSR for oil prospecting. He said he understood that American oil companies had prospected for oil in Pakistan but were thought not to have done a good job—not to have looked very hard. Shoaib said that this impression did not exist among Pakistanis who knew the real situation. Eight or nine foreign companies had spent between seventy and eighty million dollars prospecting for oil in Pakistan. Unfortunately, they had only found gas. Over three years ago the USSR had suggested that it could find oil in Pakistan and would like to try. The GOP considered long and carefully and finally decided to let the USSR work in the area not given as concessions to foreign companies. This was the result of a “change of attitude” towards the GOP on the part of the USSR: earlier the USSR had insisted that the GOP, if it wished to be helped by the Soviets, should withdraw from its alliances—now the USSR said keep your alliances, we will help you anyway. Shoaib said that in negotiating the agreement a very interesting fact had emerged. The Soviets had said that they had three rates of interest. For communist countries the interest was 2%; for neutralist countries the rate of interest was 2-1/2% and for Western committed countries the rate was 4%. The GOP replied that if the interest was to be 4% the deal was off whereupon the USSR quickly agreed to 2-1/2% interest on the $30,000,000 credit of which $25,000,000, approximately, would be in the form of drilling machinery and associated equipment. Only about $5,000,000 would be for technical assistance.

The President commented that if the Russians did find oil this would cause the American companies who had earlier looked for oil in Pakistan to lose face. Shoaib replied that the Soviet Ambassador had commented that if the USSR did not find oil the USSR would lose face.

Indian-Pakistan Relations

The President asked how relations with India were going. Shoaib replied that regrettably, since the Indus Waters Agreement, relations had not been improving. The outstanding question between the two countries was Kashmir. When Nehru had visited Karachi last fall Ayub had had a number of talks with him suggesting that a solution to the Kashmir problem should be found which would take account of the interests of the three parties: the Kashmiris, the Indians and the Pakistanis. Nehru had not followed up on this. Shoaib had spent two hours with him not long ago in Delhi and Nehru had not raised the subject. Every Pakistani in every walk of life felt very deeply about Kashmir. There could be no really close relations between the two countries until Kashmir was settled. (Note: Shoaib did not make the point that the United States should bring pressure on India to achieve a settlement.)

Relations with Communist China

The President asked whether Shoaib thought that the Russians would be able to restrain the Chinese Communists. Shoaib replied that he did not know. The ChiComs had recently made overtures to the GOP in connection with the delineation of Pakistan’s northern frontier. The GOP was not sure what the ChiComs had in mind but they gathered that they were prepared to reach a settlement, if only to bring pressure on India (he laughed). He said that the ChiComs would say that they were able to reach an agreement on their border with Burma, Nepal, and Pakistan and that the Indians were at fault in not agreeing also.

Pakistan’s Economic Development

The President gave Shoaib an opportunity to speak on the subject of Pakistan’s economic development. Shoaib said that all countries make mistakes in their economic plans and execution but he was pleased to say that he thought the GOP is now on the right track and that it is moving forward with its plans to benefit the people of Pakistan. He mentioned the GOP desire to have more PL 480² to increase the calorie intake. He said that Mr. Galbraith, shortly to be appointed United States Ambassador to India, had gone over the GOP plans and had found them good.

On the political side, Shoaib said that some progress was being made in connection with the Constitution but he did not dwell on this.

Communal Rioting

With regard to Indian-Pakistan relations Shoaib told the President that one reason why there had been a deterioration was the communal killings which had recently taken place in India. Resentment against this ran high in Pakistan and there had been some student rioting in Karachi. Shoaib said that according to “Dawn” about 1000 Moslems had died in India. Lewis Jones quoted the Embassy in Delhi as having estimated the actual number of deaths in the neighborhood of 100 or 200 to which Shoaib did not demur. Shoaib said that India and Pakistan both have approximately 11% minorities from the point of view of religion—Moslems in India and Hindus in Pakistan. However, the population of India being so much greater the actual number of Moslems is much greater and the concern felt for their welfare in Pakistan is understandable. Shoaib repeated that in a recent incident a whole family had been burned to death by the Hindus. He then told the story of his rescuing a Moslem family from a Hindu mob some years ago. (Note: It was interesting to see both Shoaib and Aziz Ahmed speaking on this subject with real emotion. Both of them are highly intelligent, Western-educated individuals but they were profoundly moved.)

The President accompanied his visitors to the door of the office and said goodbye. Shoaib and Ahmed asked Jones what might be said to the press waiting outside. Jones showed them a text of the Department’s 1469 to Karachi³ and Shoaib said he would use the points therein which he did to a fairly large group of reporters.

The Pakistanis took Jones back to the Department in their car. They were evidently greatly pleased by the reception they had received and Shoaib spoke of the President’s “genius for putting people at their ease.”

Comment:

The visit was a great success and the publicity regarding it in Pakistan will be useful. It is interesting that Shoaib did not mention to the President Pakistan’s hope for additional military equipment or the agreement in principle to prepare a four-year PL 480 program for Pakistan.

0. Source: Kennedy Library, National Security Files, Countries Series, Pakistan, General, 4/59-4/61. Confidential. Drafted by Jones. According to the President’s Appointment Book, the meeting was held in the White House. (Ibid.) Shoaib visited Washington February 24-March 11. Additional documentation on the Shoaib visit is in Department of State, Central Files 611.90D, 790D.00, and 890D.00.
1. See Document 6.
2. P.L. 480 was formally entitled the Agricultural Trade Development and Assistance Act, enacted on July 10, 1954. For text, see 68 Stat. 454.
3. Telegram 1469 to Karachi, March 6, transmitted the text of the press release that the White House planned to release following Shoaib’s meeting with the President. (Department of State, Central Files, 790D.00/3-261)