POLITICAL AND ECONOMIC CRISES/CRITICISM OF TCA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00423R000400490001-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: November 9, 2016
• Document Release Date: January 13, 1999
• Sequence Number: 1
• Content Type: IR

Approved For Release 1999/09/ Illt
~Tnl
Country : India/Pakistan
Subject
: Political and Economic Crises4Criticism of TCA
Place
Acquired
Date
Acquired
Date of
Information: 8 Apr 53
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1. "I thought you might be interested on the general
picture here in India and Pakistan, with a few specific comments on
our foreign aid as it is applied here.
Pakistan was
When. Great Britain and most of the other sterling area nations de-
valued their currency several years ago, Pakistan refused to follow
suit. This left a situation where it took three Indian rupees to
buy two Pakistan rupees. To this, the Indians took considerable ex-
ception, and strained economic trade relations were added to the po-
litical and religious strife between the countries.
3. "Then came the Korean war and the stockpiling that followed. Pakis-
tan,, with her high priced rupee and a producer of raw materials most
of which she did not consume herself--mainly jute and cotton--was
riding the crest.
11. "Now it happened that at Partition, most of the jute mills wound up
in India and practically all of the jute production was in East
Pakistan. Logically, India and Pakistan should trade on this item
but with the disparity in rupees, India refused to play and began
planting jute. So a year ago when the Korean stockpiling came to an
end, Pakistan was left with a surplus of cotton (a rather poor grade
is grown which is hard to move normally in world markets) and with a
vastly curtailed outlet for jute.
5.
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"Added to this was several dry years which cut the wheat crop in Pa-
kistan from a surplus to a deficiency. Also, there is considerable
evidence that this year [1953 7 much Pakistan Punjab wheat has
gone across the border illegally into Indian Punjab. This is the
This unevaluateJ information for US Officials
RETURN T n M M Only is sn pl a for the r.ossible interest. of
 Approved For Release 1999/09/
historical trade trend and the tendency is strong that it continue
even in the face of political barriers. This practice is said to
be condoned in high places and has, of course, accentuated the wheat
shortage which is producing near-famine conditions in Pakistan Pun-
jab.
6. "As you know, the founder of Pakistan, All Jinnah, only lived a few
years after partition. His next in line, Liaquat Ali Kahn, then be-
came Prime Minister and did a commendable job until his assassina-
tion last year. Now Pakistan has no steady hand on the tiller. Cor-
ruption is rampant, the country is in the throes of a serious eco-
nomic and political crises and the immediate outlook is not good.
7. "A very ambitious scoundrel named Mian Daulatana took over several
years ago as the Chief Minister of the Punjab, the most powerful
state in Pakistan. He kept the pot boiling in the Punjab and by
cleverly agitating the volatile Muslin mullahs (priests) against a
splinter Muslin minority known as the Ahmadiyas who contend that
someone other than Mohammad was the last Prophet, he stirred up a
real riot about a month ago [about March 1953 7. Daulatana hoped
to unseat the present Prime Minister, Khwaja Nazimuddin, and took
steps to bring this about during the height of the rioting. In the
nick of time, the governor of the Punjab called martial law--
supported by the Central Government--and the well disciplined Pak
army put down the riot, but not until they had killed about 3,400
of their brothers in Lahore and another 2,000 in one of the nearby
cities.
8. "The Pine Minister hurried to Lahore with his top military people and
forced Daulatana's resignation. They put in as Chief Minister a
Feroze Kahn Noon, who is reported to be relatively honest and a good
choice for the post.
"The basic unrest of the people over the corrupt government, both
state and central, and the food shortage, are still there and the
general consensus of the people who have lived in the Punjab for
some time is that the situation might very well become worse before
it gets better. From the little that I could see I would say that
things in Lahore, the capital city of the Punjab, are pretty grim.
10. "Into this moves a brand new TCA group who are located in the central
capital city of Karachi, down on the seacoast and in an almost dif-
ferent world from the troubles in the Punjab. TCA is beginning to
sign agreements and spend aid money and it is hoped that it will
have some effect in time. It is likely though that Pakistan's trou-
bles will come to a head this summer or fall f-1953 L7 and the die
is pretty well cast already for that period.
This enevaEu teJ infornati ce for US ftttieiats
only is sup ei for V e ~17possih?e interest of
our anal . it eev not 6-arrant tissemi-
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11. "So much for Pakistan. Here in India things are relatively better.
than they were two years ago [1951 7 as one notices them in New
Delhi although countrywide there is not too much change. The item
of most interest to me is our [US 7 aid program which is adminis-
tered under TCA. They have been here a little over a year and for
the fiscal year ending this coming June [1953_7, TCA has managed
to commit about US$88,000,000.
12. "One thing sticks out like the proverbial erroneous thumb, and that
is that the US taxpayer is not getting a run for his money here and
the Indians are not getting the technical assistance they should
for that money. Chester Bowles, the former [US 7 ambassador here
[in India 7, set the policy that we [the US _7 should give the In-
dians the equipment, supply a few 'experts' and 'let the Indians do
the work themselves.' Bowles dominated the local TCA group and
also sold someone in Washington on the idea so that India is the
only country in the TCA program where TCA does not retain a reason-
able control over the method for dispensing these funds.
13. "Now to most people not familiar with what is required to success-
fully pull off large undertakings like dams and, irrigation works,
Bowles's theory sounds plausible. But in practice it does not work
for the simple reason that management, the most important item of
US knowhow that we have, is missing.
14. "This is painfully evident in a large dam which the Indians are
building known as Kirakud over on the East Coast. We have, or will
have, poured'in 5 or 6 million dollars' worth of heavy construction
equipment and have supplied one or two experts. The result is what
any experienced person would expect. The Indians are thrashing
around with the equipment; there is no organization or management;
and the whole project is a farce by any acceptable standard.
15. "There are other examples of a similar nature. TCA now admits that
management is lacking but still takes the position that we can only
plead with the Indians and cannot force our methods on them. If
they will not accept the assistance in the way we think it should
properly be used, then we should give it to them anyway.
16. "The tragic fallacy here is that the Indians are completely inexperi-
enced in carrying out these tremendous schemes and not even quali-
fied to judge what is the proper approach. When the British were
here, they were the managers. Now that they have left, the Indians
should be trained to manage and properly organize these types of
projects. It certainly does not call for forcing any-thing on the
Indians but it does call for a selling job on TCA's part plus firm
insistance that to protect the US taxpayer, TCA must see that the
dollars are spent to the best advantage.
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17. "The Indian is a rather different fellow in many ways. He is primar-
ily a merchant, or, when educated, 'a lawyer. In other words, he
likes to dicker and argue. He is not usually a good farmer or a
good mechanic. He is not overly ambitious when it comes to ph sical
effort. One of our irrigation experts told me how last year 195? --7
during the wheat shortage (when the US shipped in wheat), he went
down through Bihar where conditions were pretty bad. He sai. it was
amazing to see peoplglying around starving on the most fert`le soil
you could want, and water only 15 feet under the surface.VIf people
like the Japanese had this country, it would be one of the most
flourishing agricultural countries in the world with plenty of food
for everybody and an excess to export.
18. "Whether we can make enough of a dent in this picture and still keep
our spending here within reasonable limits is debatable. Senator
Taft says that we cannot effect enough change to be significant and
he might be right. However, the possibilities are intriguing. But
,.if we cannot get US management into this aid-,pirogram, I am convinced
we should
... .~_____puilQUt_ex~ti oly.
19. "It is only fair reporting to say that there is almost-no expression
of appreciation for our aid, either in the press or in conversation
with individuals here. There is a continual yammering in the press
about the US's trying to dominate India with dollars. I can assure
the Indians that the way TCA is administering this program they are
not even masters over their own convictions, let alone dominating
the Indians.
20. "As far as India ever going Communist, all the .Indian people I talk
with assure me that it will never happen. They say that the Indian
(Hindu) religion and the Indian culture preclude such a thing even
under dire conditions such as famine.
21. "Ir/short, these people need help but I am certainly not convinced -
that the way we are going about it is right. Brother love is evi-
dent and it is the basic Christian desire to help one's less fortu-
nate fellow that brings most of us out here. The other two legs
of the tripod--widdom and economy--are completely inadequate and
the whole structure is weak; one strong leg is not enough.
22. "These are just some offhand thoughts that come to mind. It will be
interesting to see how it all comes out."
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