Foreign Relations of the United States, 1969–1976, Volume E–7, Documents on South Asia, 1969–1972

260. Telegram 5704 From the Embassy in India to the Department of State¹ ²

New Delhi, May 8, 1972, 1445Z

Subject:

• Meeting With DEA re Economic Aid

1. AID Director Houston was summoned to DEA May 8 for “urgent message”. Joint Secretary S. Krishnaswami advised that with I.G.W Patel in Montreal and M.G. Kaul in Santiago he had been instructed to deliver the following message which would also be given to State/AID by Ambassador Jha.

2. Holding a typewritten paper but scarcely glancing at it, Krishnaswami said the US “economic aid” had been discussed extensively by his Ministry since the calls here and in Washington to advise the GOI of no development loans in FY 72 and “provisional” development loans of dols 90 million for FY 73 in the congressional presentation.

3. Krishnaswami said the Ministry felt that the manner in which the GOI had been advised had been done to put special emphasis on the drastic cut in USAID. This, together with use of the word “provisional” led the Ministry to the conclusion that the “USG is no longer interested in the further economic development of india. Would USAID therefore remove all Americans working on economic aid at the earliest and hopefully within one month?” Houston commented that he did not believe USG disinterest was an accurate conclusion, but Krishnaswami repeated that he “was under instructions to give the message as stated”.

4. Proceeding to details, Krishnaswami said in reply to Houston’s question that “technical assistance personnel were not involved at present. We will make a decision on technical assistance later”. Houston explained that there are almost no people working exclusively on “economic aid” but that we would make a serious attempt to comply with the GOI request.

5. Krishnaswami was asked whether the GOI wished to have the executive and legislative branches of the USG advised widely of the GOI decision. He replied that no information would be released here, and he hoped not in Washington. Houston reminded him that Congress would be interested to know the situation as the AID bills are considered. Krishnaswami was then asked whether the GOI would accept dols 90 million if appropriated and offered. He answered he wanted it to be clear that the GOI was not rpt not rejecting today either dols 90 million or a possible resumption of the dols 87.6 million suspended loan. However, acceptance, if offered, would be considered when the GOI could see what “conditions” there might be. FYI: The GOI are still very sensitive about the unilateral suspension of what they consider to be a firm USG commitment. End FYI.

6. Comment: Joint Secretary Krishnaswami was an Eisenhower Fellow in the U.S. in early 1971. We consider him to be very sympathetic to the U.S., and there can be no doubt he was acting under instructions. Mission proceeding to careful evaluation of personnel involved, and will advise soonest. Exempt from decontrol.

Keating

1. Source: National Archives, RG 59, Central Files 1970–73, AID (US) INDIA. Confidential; Nodis. Eyes only for Sisco and Hannah.
2. In light of the qualified nature of proposed U.S. economic assistance for India, and the failure to restore the assistance embargoed during the crisis, the Indian Foreign Ministry concluded that the U.S. was no longer interested in the economic development of India and stipulated that “all Americans working on economic aid” should leave India within a month.