INDIA'S POSTWAR FOREIGN POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R002000110048-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 20, 2016
• Document Release Date: March 24, 2006
• Sequence Number: 48
• Publication Date: April 5, 1972
• Content Type: MEMO

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OFFICE OF
NATIONAL ESTIMATES
Secret
MEMORANDUM
India's Postwar Foreign Policy
GIA
BRANCH
DOGUMENT Fill SERV103
COPY
App
Secr&t
5 April 1972
Copy No. 8
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorised person is prohibited by law.
GROW I
E^cludad Isom culomalic
downgrading ind declat+ification
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
5 April 1972
MEMORANDUM
SUBJECT: India's Postwar Foreign Policy*
1. In recent months Prime Minister Indira Gandhi has
scored two stunning victories: the decisive defeat of Pakistani
forces on the battlefield in December and the rout of her domestic
opposition in state elections in March. Less publicized has been
her ruthlessly effective assumption of control over her party
and her replacement of veteran members with people responsive
to herself. The result of all this is that Mrs. Gandhi enjoys
a position of power within India probably surpassing that of her
father at his strongest, and she and her regime now stand unri-
valed as a power on the subcontinent. The question addressed
below is how she -- and the Indian government she so completely
dominates -- will use this position on the continent and in the
international arena.
* This memorandum was prepared by the Office of National Estimates
and discussed with other components of the CIA, who are in gen-
eral agreement with its judgment.
GROUP 1
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2. International affairs will not, of course, form the
principal concern of the Indian leadership. Mrs. Gandhi is
committed, as no Indian government has ever been, to an ex-
tensive -- and expensive -- program of social welfare and
equity reform measures at home. This program is both a cause
and a ccndition of her formidable political successes. This
endeavor was delayed by the war and the events that preceded
it. But now pressures at home are rising and we believe that
the fundamental issues of feeding the population and promoting
a better life for the mass of Indians will for some time be the
government's primary concern.
3. Nonetheless, Mrs. Gandhi and her colleagues have inter-
national aspirations which they feel have been brought within
reach by their triumph over Pakistan. The Indian leaders clearly
are seeking to use their new strength to settle the conflict with
Pakistani
Mrs. Gandhi no doubt expects that,. with Pakistan
cut down to size on the battlefield, the other smaller status of
the subcontinent will recognize India's paramount position; the
Indians are particularly determined that the new state of Bangla-
desh lie in their orbit. At the same time, Mrs. Gandhi evidently
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aspires to turn her domestic and regional successes into a
stronger position in dealing with the Great Powers. In short,
what we can see thus far suggests that New Delhi is embarking
on a more confident and somewhat more assertive foreign policy.
4. Despite India's strengthened international position,
New Delhi still faces significant constraints. While India today
seems to have achieved self-sufficiency in food production, it
remains a poor country with serious inadequacies in its resource
base. Indian foreign policy will also be affected by the actions
of the USSR, China, the US, and other important powers. But even
in the region of the subcontinent where it is now clearly the pre-
dcminant state, India will run into pitfalls and difficulties in
exerting influence. This paper assesses the nature of the prob-
lems New Delhi faces in carrying out its foreign policy.
I. RELATIONS WITH NEIGHBORING STATES
5. For India, the first order of business is to clear up
issues arising out of the war: principally to cement ties with
Bangladesh and to redefine relations with residual Pakistan.
These are not easy matters. They will be hammered out only
gradually and no doubt painfully over the next few years.
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6. Bangladesh. The Indian role in the creation of Bangla-
desh was intimate and intense. India dominated not only the
military phase of establishing the new state, but has supplied
much administrative and diplomatic support as well. Since the
Pakistani surrender, however, India has moved rapidly to reduce
its physical presence. New Delhi has withdrawn almost all of
its military personnel, leaving only a few engineers, a training
mission, and a small force recently returned to combat Indian
tribal dissidents in southeastern Bangladesh. At the same time,
the Indians are reducing their role in the overall support of
the Bangladesh administration, leaving the latter to establish
its cwn control over the country. Though considerable potential
for lawlessness and disorder remains, the Bengalis seem to have
sufficient administrative personnel to be able to carry out the
functions of government at a reasonable level.
7. But in important respects the Indian government clearly
does not intend to disengage from Banglado~:h. New Delhi is con-
cerned lest the regime of Mujibur Rahman fail, opening the way
for anarchy and chaos which might spread to West Bengal. And the
Indian leaders also do not want to see -- and indeed would react
strongly against -- efforts by any outside power to establish a
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commanding influence in the new state. These considerations are
reflected in the 25-year Treaty of Friendship and Cooperation just
concluded between )ndia and Bangladesh which specifies consultation
and coordination of major policies between the two governments.
8. Even with this agreement, it will be difficult to main-
tain the great wari,th that has thus far characterized relations
between New Delhi and Dacca. For the present, Mujib's regime is
content to look to Mrs. Gandhi for advice and assistance of all
sorts. Yet as time goes on, it would be surprising if Dacca did
not begin to desire more independence, especially as Bangladesh
becomes more deeply involved in international affairs on its own.
Disagreements over the size and shape of economic assistance may
also arise between these two states. But even with all the fore-
seeable strains, there is almost no chance that any other power
could displace Indian domination over Bangladesh. Despite reli-
gious differences, India's close transportation links and growing
economic ties, not to mention cultural and psychological bonds,
give it a decisive edge in Bangladesh.
9. The worse the Bangladesh government does in coping with
its problems, the more Indian help will be required. Nujib's
regime is in parlous economic straits. Even though the Indians
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have made progress in reopening the major routes of communication,
the transportation net is not back to its prewar state. Food
supply was hurt by the small harvest, which in turn reflected
wartime disruptions; transportation bottlenecks further impede
the distribution of relief shipments. Severe food shortages are
likely to continue in some areas for some time to come. East
Bengal's miniscule industrial capacity is still operating well
below prewar levels and unemployment is high. Nor has Mujib's
government displayed notable ingenuity in tackling these formid-
able difficulties. Yet, Bangladesh does not appear on the verge
of collapse; with a population used to great privations, its
afflictions, while very serious and debilitating, are not neces-
sarily fatal to the present regime.
10. Up to now, the Indians have supplied the bulk of the
foreign economic assistance to Bangladesh, The Indian govern-
ment has authorized loans and grants worth about $175 million
for Bangladesh, including foodgrains and other essential com-
modities, cash grants for returning refugees, and a loan of
about $13 million in hard currency to finance imports. This has
met short-run needs. And the new Indian budget for 1972-1973
provides for an additional $90 million in economic aid for
Bangladesh. But, facing pressures at home to move ahead with
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domestic programs delayed by the war, New Delhi is apt to find a
high level of aid increasingly burdensome. For its part, Mujib's
regime will no doubt press Mrs. Gandhi for increased aid, but with
a minimum of Indian control.
11. If the Bangladesh regime were to descend into chaos or
if radicals were to threaten to export violence to Indian Bengal,
New Delhi would react swiftly and forcefully. Mrs. Gandhi would
be likely to press the Bangladesh government strongly to curb
violence and she would probably step up assistance to the recently
formed security forces in Bangladesh.
12. Pakistan. While for tactical reasons New Delhi is
offering Islamabad negotiations without formally posed "pre-
conditions", Mrs. Gandhi clearly wants to exploit Pakistan's
crushing defeat to resolve problems far beyond those directly
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connected with the fighting. The Indian government believes
that the some 70,000 Pakistani prisoners of war and the 20,000
civilians it holds in India provide leverage to compel Boutto
to come to the bargaining table soon. With this trump in hand,
the Indians aim to secure Pakistani agreement on a Western
frontier. New Delhi even hopes to be able to force active ne-
gctiations of the status of Kashmir, a matter that has festered
in Indo-Pakistani relations since partition in 1947. Mrs. Gandhi's
government further hopes to impress on Pakistan the extent of
India's military supremacy with the aim of getting Islamabad to
refrain from resuming the arms race. While during the fighting
some in New Delhi probably wished to see West Pakistan broken in-
to its constituent ethnic elements, Mrs. Gandhi did not embrace
this policy. The Indian government does not appear to be seeking
to foster the emergence of such a congeries of states which could
form a dangerous precedent for ethnic minorities in India.
13. The Indian leaders are, however, plagued by doubts
both about Bhutto's intentions and his ability to conclude a
broad and "lasting" settlement. On the one hand, Mrs. Gandhi's
government finds it hard to ignore Bhutto's long-standing urging
of a policy of confrontation against India and his continuing
talk of swiftly rearming Pakistan. On the other hand, the Indians
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are encouraged by his evident realism and his expressed desire
to solve differences with India. And New Delhi clearly regards
Bhutto as easier to deal with than his military predecessors.
At the same time, the Indians are uncertain about Bhutto's
ability to maintain his position, fearing that he may be manip-
ulated or even shouldered aside by a military clique. Even his
moves to change the chiefs of the army and air force early in
March and the boost to his fortunes brought about by coming to
terms with the National Awami Party, which represents the aspi-
rations of northwest Pakistan, have not reassured New Delhi about
Bhutto's ability to last.*
14. Apprehensions about Bhutto's staying power have not
inclined Mrs. Gandhi to ease demands on Islamabad. India continues
to insist that representatives of Bangladesh be involved in
questions affecting the return of prisoners captured in the
east. This touches Bhutto on a most sensitive nerve, especially
in view of Mujib's insistence that no talks with Pakistan can take
place until Islamabad has recognized Bangladesh. Nor are the
Indians likely to be responsive to demarches -- from Pakistan or
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Western powers -- to return the prisoners without delay. In
fact, New Delhi seems determined to hold large numbers of
Pakistanis by way of keeping up pressure for a favorable settle-
ment, perhaps even until the negotiating process is over.
15. The urgency of the prisoner issue is underscored by
New Delhi's declaration that it will turn over to Bangladesh
for trial as war criminals perhaps as many as 2,000 Pakistani
military personnel -- including the former commander of the
Pakistani forces in East Ben~jal, General Niazi. Mujib's govern-
ment has demanded General Niazi's surrender for trial. If New
Delhi should deliver him to the Bangladesh authorities, this act
would inflame Islamabad and probably would delay peace talks for
some time.
16. Prospects for Negotiations. Though major hurdles
remain, both India and Pakistan at present are edging toward
negotiations. India's withdrawal of almost all of its military
forces from Bangladesh met one of Bhutto's stated requirements
for entering talks. India's public offers of negotiations with-
out "preconditions" ease the way for the Pakistanis -- although
Islamabad fears that the Indians in fact will insist on onerous
terms. Bhutto recognizes his military weakness and the need to
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secure the return of prisoners. And in this situation, dip-
lomatic feelers already give promise of bringing the parties
to the bargaining table, perhaps initially for low-level talks.
17. Even if negotiations begin soon, the road to a settle-
ment will no doubt be long and arduous. Mrs. Gandhi's self-
confidence will probably not incline her to magnanimity. Holding
all the high cards, she is not likely to settle for less than a
substantial share of her desires. But Bhutto, however much he
may be inclined to recognize the reality of Bangladesh and to
exchange prisoners, almost certainly believes he needs time to
prepare Pakistan for the deep emotional trauma
There are signs that Bhutto is begin-
ping to move along this path. Yet there are still formidable
obstacles to be overcome before any accord between India and
Pakistan would be possible,
18. The Peripheral State.. To the Indian leaders, the
smaller states on the periphery of the subcontinent are not now
a focus of attention. But New Delhi clearly regards them as a
special preserve and is sensitive to Great Power actions in any
of India's immediate neighbors. India has always bulked large
in the calculations of these countries, and the Indians have not
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been reluctant to apply pressure on them in the past. Particularly
with Indian self-confidence at a peak, New Delhi's expectations
that these states refrain from opposing Indian interests is apt
to produce increasing friction in relations with them.
19. Ceylon is a major case in point. New Delhi generally
approves of the non-aligned posture maintained by successive
governments in Colombo; and the main difference between the two
states was settled in principle by the agreement in 1964 to
repatriate just over half the large Tamil community on the island
over a 15-year period. But the image of a victorious India,
backed by the Soviets and flexing is muscles, has triggered con-
cern among Ceylonese leaders. Though Mrs. Gandhi's government
has not made any threatening gestures -- and indeed was quick to
send support to Mrs. Bandarariaike's regime during the insurrection
on Ceylon last spring -- Colombo has clearly become fearful that
India has designs on Ceylon. In response, the Ceylonese govern-
ment has made urgent efforts to woo the US, inviting frequent
visits by US naval vessels, including the carrier Enterprise.
And generally Mrs. Bandaranaike has given clear indication of
her suspicion of the USSR and of India, and that she wants at
least some public demonstration of US support.
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20. Up to now, the Indians have been too preoccupied with
the larger and more immediate concerns of Pakistan and Bangla-
desh to react to this shift in the Ceylonese practice of non-
alignment. But over the longer run, the Indian posture may
change. If the Colombo regime continues to give the appearance
of tilting toward the US, New Delhi would be likely to react in
some fashion, using tactics ranging from propaganda denunciations
to more drastic steps. This would certainly increase the alarm
felt by the Ceylonese leaders and, even if they fell in line,
would add a discordant note in relations between the countries.
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23. The Indian ocean. India's weight is also likely to be
felt more forcefully in the Indian Ocean. On the one hand, New
Delhi will continue to decry the presence of Great Power naval
vessels in the Indian Ocean. The Indian government has consistently
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opposed the granting of bases in the Indian Ocean to ships of
powers outside the region. At Mrs. Gandhi's initiative, Bangla-
desh endorsed this principle in the recent joint communique at
the conclusion of Mrs. Gandhi's visit. On the other hand, the
Indians are continuing to build up their own naval strength,
which already far outclasses that of the other states of the
region. Mrs. Gandhi's government probably views possession of
this force as useful in regional controversies. And it would
not be surprising if naval maneuvers figured increasingly in the
Indian style of dealing with smaller nearby littoral states.
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II. INDIA AND THE GREAT POWERS
24. The war and its aftermath have stimulated a change in
Indian attitudes toward the Great Powers. Mrs. Gandhi has long
chafed under India's dependence on the developed countries of
the world. She has always been sensitive about foreign economic
pressure. Even when aid is extended through such mechanisms as
the Consortium for Aid to India, the need to justify requests to
foreigners has never been easy on Indian price. In contrast to
Pakistan, which accepted foreign advice as an integral part of
its economic development effort India's successive governments
have regarded foreign economic assistance as basically onerous
in its obligations even though at times vital in its contributions.
25. Mrs. Gandhi's reading of the behavior of the Great Powers
during the war with Pakistan has reinforced her inclination to
seek greater independence. While New Delhi is appreciative that
Moscow strongly supported India before and during the conflict,
the Indians are suspicious of all Great Powers. In the last year
it has been American and Communist Chinese actions that New Delhi
found particularly objectionable. Peking made verbal attacks on
India during this period, though the Chinese did not take any ef-
fective actir,n to support these words. Mrs. Gandhi regarded the
dispatch of American naval units to the Indian Ocean as a hostile
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gesture. She complained in strong language against Washington's
military supply policies toward Pakistan and the Nixon adminis-
tration's refusal to break with the government in Islamabad; New
Delhi also strongly condemned Washington for placing the blame
on India for initiating the hostilities of last December.
26. Though Mrs. Gandhi has talked frequently during the
recent Indian election campaign about the determination to free
her country from the need for foreign aid, there are limits on
how far she can go. India does have considerable production
capacity to manufacture weapons up to and including tanks and
combat aircraft. Yet unquestionably the Indians will be de-
pendent on foreign supply for sophisticated military equipment
for the foreseeable future. The Soviets have in the past proved
a generally reliable source of these items and on reasonable
terms. They have licensed assembly plants in India to produce
MIG-21 fighters, And the Indians have no practical alternative
to continuing these arrangements.
27. In stressing India's self-reliance, Mrs. Gandhi was
speaking principally about dispensing with foreign economic
assistance. While Western sources have made available some
$16.5 billion in the past 25 years, the amount of aid authori-
zations to India has dropped from about $1.6 billion in
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1965 to about $600 million in 1971. Almost a third of the
decline resulted from the halt in food aid. Already India is
burdened with the need for substantial repayments for earlier
borrowings; in the past year some $500 million was paid to
Western creditors, bringing net aid inflow from the West down
to about $450 million. Thus the contribution of foreign assist-
ance to India's development is decreasing. While foreign aid is
still important, especially in providing foreign exchange com-
ponents of industrial projects, it has dropped sharply in its
relative contribution to the Indian economy.
28. Although India does not need foreign aid as much as
in the past, it still cannot afford to go it alone while re-
paying its outstanding indebtedness. Hence it seems likely
that Mrs. Gandhi's campaign rhetoric did not signal any early
Indian refusal to accept foreign aid. New Delhi'may be some-
what more hardheaded in negotiating terms of assistance, but
it probably recognizes the need to continue foreign aid,
particularly when the government is committed to rapid economic
development -- as Mrs. Gandhi's is.
29. There is, of course, the possibility that Mrs, Gandhi's
government might seek relief from some of its foreign debt
burden. No doubt, New Delhi carefully noted the experience of
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Islamabad in defaulting on its international repayment obligations
over the past year. The Indians will certainly watch with even
greater interest Bhutto's negotiations with his creditors over
the question of apportioning debt between Pakistan and Bangladesh.
If this process plus debt rescheduling should relieve Bhutto's
regime of responsibility for a substantial percentage of its
indebtedness, the pressures from New Delhi for a lightening of
the obligations on India would grow. And it is possible that
Mrs. Gandhi's regime would attempt a moratorium on interest and
debt repayments or even in effect default on all or part of India's
foreign debt as Pakistan has done.
30. The USSR. Indian relations with the USSR will continue
to be close. Mrs. Gandhi looks on Moscow as by far her most
valuable foreign ally. From the Indian point of view, the USSR
remains, at a minimum, an indispensable source of support against
the potential threat from China, as well as an actively helpful
friend in other respects. In this situation, Mrs. Gandhi is
happy to cooperate with the Kremlin where they share common
interests. Even when the Indians do not see potential benefit
for themselves, they are likely to go along with Moscow in actions
as long as India's vital interests are not involved. For their
part the Soviets believe that their material and diplomatic
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support for India entitles them to a considerable degree of
Indian endorsement for Soviet objectives.
31. This does not mean, however, that New Delhi will
accede to every demand from the Soviets. Mrs. Gandhi has bent
India's historic non-alignment policy by concluding a Treaty
of Friendship and Cooperation, but it would be something of
a different order for her to grant unrestricted access to
port and servicing facilities for Soviet Indian Ocean naval
units. The Indians have resisted the idea of giving any such
free hand even to the Soviets. Mrs. Gandhi recently reiterated
this position in a joint communique with Mujib which expressed
opposition to foreign powers using naval facilities in the
region. We cannot entirely rule out the possibility, but we
think that New Delhi would have to feel itself in serious trouble
as well as under very strong pressure from Moscow to agree.
If India ever should grant such rights, it would no doubt
predicate acceptance on Soviet agreement that use of facilities
be unobtrusive and avoid the appurtenances of formal bases.
32. Close as Indian and Soviet relations are likely to
remain, New Delhi probably does not consider that it has a
complete congruence of interest with Moscow. Mrs. Gandhi no
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doubt feels concern at the Kremlin's dealings with Islamabad.
Bhutto's trip to Moscow to mend fences was perhaps more suc-
cessful than New Delhi expected. Indeed, Mrs. Gandhi may
regard Soviet mention in the communique at the time of Bhutto's
recent visit to Moscow of the need to respect Pakistan's
territorial integrity as strengthening Bhutto's position.
Additionally, New Delhi may be nervous over the prospects
for President Nixon's trip to Moscow. The Indians are likely
to seek reassurance from the Soviets that Indian interests
will not be jeopardized during these talks.
33. Bangladesh may become a source of trouble between
India and the USSR. Already the Soviets have welcomed Mujib
in Moscow and are moving fast to improve their position with
Dacca. They have promised Mujib ever $50 million in aid and
seem interested in being his closest supporter outside the
subcontinent. We doubt that the USSR intends a major effort
to build a position of influence in Bangladesh irrespective
of India, but on the other hand it is probably not prepared
to take a back seat to India in all respects. Hence the
potential for mutual irritation is there. And the eagerness
of relatively inexperienced leaders in Bangladesh for Soviet
aid only increases the possibilities for miscalculation. In
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this situation, it would not be surprising if intimacy between
the USSR and Bangladesh eventually grew to bother Mrs. Gandhi.
This may not become a major bone of contention in the near
future, but will probably be at least an occasional irritant
between both parties.
34. China. The Indo-Pakistani war revived New Delhi's
fears of China and its deep suspicions that Peking is bent on
limiting Indian power in the subcontinent. Particularly since
the humiliating Indian defeat by the Chinese in 1962, Indian
leaders have sometimes exaggerated the potential for Chinese
military operations against India. In fact, logistical dif-
ficulties alone would prevent Peking from marshaling sufficient
forces to seize and hold substantial areas of India against
present defenses. Nor har) the Chinese made efforts to concen-
trate forces for a thrust into India. Nonetheless, though the
vulnerability of northeast India has been somewhat lessened
by the emergence of friendly Bangladesh, New Delhi continues
to be concerned at the possibility of attack by the Chinese.
35. The Indians regard Peking's ongoing support for Pak-
istan as evidence of China's hostile intent. Further, New Delhi
is afraid that Peking is colluding with Washington against
Indian interests. Indian leaders regard the US-Chinese detente
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as ominous. Mrs. Gandhi publicly criticized the communique
issued at the end of President Nixon's trip to Peking as an
attack against India. Finally, New Delhi must be apprehensive
that China will fish in the troubled waters of Bangladesh --
much as the Chinese have in eastern India.
36. Despite, or perhaps because of, this deep suspicion
of China, New Delhi would probably welcome some improvement in
relations with Peking. Mrs. Gandhi would like to draw China
and Pakistan apart. Hence she has been careful not to single
China out for particular opprobrium. But as long as Peking
maintains its intimate connections with Islamabad, continues
to supply arms, and refuses to mitigate its hostility toward
India, Mrs. Gandhi will be likely to see nefarious intent in
any sign of increased Chinese activity in the subcontinent,
particularly support for indigenous political groups.
37. The United States. The events surrounding the way
brought relations between India and the US to a low point.
Intensely suspicious of the warmth of American relations with
Pakistan, Indian leaders concluded that the aid suspension
imposed by the US before the fighting erupted was applied more
rigorously against India than against Pakistan. Further,
Indian leaders regard the appearance of the US 7th Fleet in
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the Bay of Bengal as a demonstration of solidarity with Pakistan
if not an aborted attempt to intervene militarily against
India. This suspicion was only inflamed by the publication of
US secret documents by Jack Anderson.
38. These grievances against the US are widely felt at
all levels of Indian society. Mrs. Gandhi and her colleagues
whipped up public opinion against the US. Few voices in India
have been raised on the other side. While a residue of good
will toward America remains in India notwithstanding, the myth
of US complicity with Pakistan is now generally accepted by
Indians. It will not be easy to change this widely prevalent
impression.
39. The Indians do not appear inclined to take the initiative
to improve relations with the US for some time to come. The Amer-
ican aid embargo is no doubt an irritant to New Delhi as is the
delay in US recognition of Bangladesh. And in general Mrs. Gandhi
thinks it is up to the US to make peace and not the other way
around.
Moreover, New Delhi
would for some time probably not be very responsive to American
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overtures to improve relations. Even an end to the US aid
embargo and the recognition of Bangladesh would be likely
to have little effect on Indian attitudes. Mrs. Gandhi,
however, does not want to destroy ties to the US completely.
She still has hopes that American policy toward the sub-
continent will one day shift openly in India's favor. More-
over, the Indian elections are over and there is no
imperative reason for New Delhi to lash out at the US. Hence,
Mrs. Gandhi's approach is likely to be one of watching and
waiting rather than one of seeking further excuses to belabor
Washington.
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