25x; ° 25X1 7 7 x +, Appro\ : PP aor TAG R Leenperrancosonrones * OCI No, 2385/65 CENTRAL INTELLIGENCE AGENCY office of Current Intelligence 28 September 1965 INTELLIGENCE MEMORANDUM Aid to Pakistan US Aid to Pakistan 1, Pakistani Finance Minister Shoaib’s eur- rent visit to the US underlines his government's verti interest in securing the restoration of Vistern military and economic aid in the 1ight of the costly Indo-Pakistani war. 2, Rawalpindi is apparently placing primary: emphasis on the rebuilding of its military machine, erPhough the Pakistanis have not abandoned their abon interest in the long postponed resumption of Keen orld Bank Consortium pledging process: The ihfef of the US military assistance group in Cnkistan has already been approached informa 1ty Pakithe replacenent of nine F-86s and two B-S7S yore during the conflict. Shoaib told the US MS airector in Karachi that military require” aie oiate likely to set the economic development program back two to three years, but that Rawal- Pindi feels it must recover from a position in Paich severe shortages of military equipment Wander Pakistan unacceptably vulnerable to a re~ newed Indian attack. USAID, OSD reviews completed : pracwte 25X1 2 2003/07/30 : CIA-RDP79T00472A000600010004-1 Approved For Relapprove Le a 25xi - proved of Relea! pP79196472A000600010004-1 3, Because of the war in the Punjab the US suspended military assistance program (MAP) deliveries to both India and Pakistan on 8 September, The US, in conjunction with other aid-giving countries, has also refrained from making its annual pledge of as~ sitance to Pakistan's economic development program. The World Bank Consortium, under the auspices of which the US and eight other nations channel their economic aid to Pakistan, has postponed indefinitely its an- nual pledging session at which the Pakistanis hoped to raise $500 million in assistance for the first year of Pakistan's Third Plan (1965 - 1970). Ship- ments of grain under the PL-480 agreement, which ex- pires at the end of this year are continuing, as are Commitments under existing economic development agree- ments. 4. Failure of the US to provide large-scale as— sistance to Pakistan would severely cripple Rawalpindi's economic and military efforts. The cut-off of MAP spares has already reduced the combat effectiveness of the armed forces, It is likely that a large share of the equipment inventory, particularly aircraft and tanks, are out of commission or able to operate only on an extremely limited scale because of a shortage of spares. 5. Pakistan's Third Plan for economic develop- ment, which may have to be considerably scaled ‘down because of the war, will probably collapse completely in the absence of Western--particularly US--aid Although the share of tota! development expenditures financed by foreign aid is to be reduced to 32 percent in the Third Plan (it was 38 percent in the Second Plan) the foreign exchange thus supplied is vital to the program. Pakistan hopes to receive about 1.5 billion from the US alone over the five years of the plan-~ in contrast to only $150 million expected from Commu nist countries. 25X1 A ean pair SypDe pproved For Rel }oT00472A000600010004-1 SECR25X1 25X1: x Approvedgor Ry 7 P79T0e472A000600010004-1 6. The effects of a cutoff of further us aid would be somewhat mitigated in the short run by vee Continued inflow of aid already committed. AS ere Suly 1965 about $300 miilioy yemained in the Gipeline and is not expected ro be fully delivered Pipe at least another year. PI-460 deliveries un- der the current agreement will carry the Pakistanis well into next year. 7. Nevertheless, Westerm aid has flowed into pakistan over the past ten years at a level that Paetot be matched from any other some’, and made possible Pakistan's impressive ‘economic develop- post record, US aid through 196% totals $2.9 bil- ment [n economic assistance and $732 ‘million in ititary aid, Last year's pledge wer $212 mil- ion in grants and loans plus over $150 million opi 4g) grain.* Pakistan is askt0g for $500 in tion in Western assistance for the first year milthe fourth plan, and hopes that the Us will pledge more than $200 million toward meeting this goal. 8, It is difficult to translate the effect of a threatened Western aid cutoff into politi- Cai terms. It 1s likely, however» internal po- Sitical pressures would force ‘Ayub to resist iikSngly such pressure. Failure to do so could strrously undermine his position within Paki- Stan and could even set the stage for his Suster at the hands of highly irrational ele- ousts who are already incensed at the US failure Tercontinue MAP deliveries during the war. e ae-also pledged some $428 million to the India-Pakistan Indus River ‘development program. Pakistan hopes to spend nearly $700 million on the project during the five years of the fhird vian. Approved For Releage 2003/07/30 1472000600010 1004-125X1 25X41 ~ ApprovédFor 77976472A000600010004-1 Soviet Aid to Pakistan 9. ‘The USSR has delivered to Pakistan about halt the $75 million in economic credits extended, but Mos- the Bis shown little interest in providing the large- cow Bae conomic and military assistance that the So- viets have given to India. 10, Aside from a few million worth of grain given to Pakistan in the mid-1950s, the Soviet economic aid program started in 1961 when the USS? extended $30 Pi vhion for petroleum exploration. Last year. the So- Biete gave Pakistan an $11 million credit tor agricul- viets Equipment. A further credit, for $30 million, fas given to the Pakistanis early this yeds In ad- wWitisn, press reports indicate that Pakistae recently Gave the Soviets a $200 million shopping list of projects for their up-coming Five-Year Plan. The So- projecire reportedly studying the situation Put are vot known to have made further commitments - The USsR has given Pakistan no military aid- 11, By way of comparison, the Soviets have ex: tended India over one billion dollars in economic aid fencover $430 million in military aid. | Noscor is and ovepable of providing large-scale economic and ase eary assistance to Pakistan--possibly as large mie aide-but in the past have put their money 08 a in. Tt appears unlikely that they would risk their large investment in hardware and goodwill in spSia by beefing up their economic aid or starting @ military aid program in Pakistan. Soviet Aid Capabilities 2. During the last three crop season& (1963 to 1965) when the USSR imported $1.5 billion worth of ‘heat, it has continued some grain exports to Eastern Furope and Cuba (worth $500 million) and filled Egypt's emergency needs by diverting Fo Cairo $20 Egypt jn worth purchased abroad when the US held up deliveries in June this year. n4- Approved For Rel r Rele: 'T00472A000600010004-125X41 25X1 f SECRET Approved FoReleas sTp0479000600010004-1 13. In order to achieve an important politi- cal objective the USSR probably could offer to pro- vide, by purchase abroad and re-export one million tons of wheat (worth about $70 million) without too drastic an effect on its gold reserve, which now totals about $1.5 billion, 14. The USSR currently is actually deliver- ing annually only $500 million in economic aid to the Free World. Moscow has demonstrated it is capable of fulfilling large military aid programs within one to two years of their conception. On an emergency basis, military aid has been supplied from Soviet operational units, later to be re- Placed by equipment produced under the plan for export. ATTACHMENTS: a. General description of US military aid program to Pakistan--the US "Military Assistance Manua b, Summary of military and economic assistance pledged to Pakistan. ¢. Sectoral allocations for Pakistan's second and third year plans. d. Previous commitments made to Pakistan un- der the auspices of the World Bank Consortium.od Approvebbr Release 2003/07/30 : CIA-RDP79T0#472A000600010004-1 SECRET ADDACHMENE A : Tiree tart Face : ~ MILITARY ASSISTANCE au MANUAL ween rer awe 4 omsecTives MAM Prunomittad i= 22 Ww SeerION GarTee Me Bakietan 1. U5, tdtary assdatance vill be designed to assiet in achieving the following objectives: (a) that Pekistan continues to maintain its re Western cvientation and to contribute to the sevurity of the tree world, 25X1 Span ST TEREST STITT THEFT vecurity, offer- see talter Palutencs to ternal atiack, contributing to area collectiy tegatty, ronding woken foreéa for colltetive security operations outside FEE i ieicing to exert 4 prowkentem influence within Fakatans (c) that er: evolve ultimately @ more friendly relationship between Pakis- (ee eae at melghtors to promote uruater stability aad cooper- ation ti South Asia; (at) that Communist preseure on and influence in Pakistan te limited te manageable proportions; (e) that Pakiotan continues to develop Le dum tet to 1eGs) ek ie proceed to nake the poLitieal progress necessary Sons othe utuongth and eohauion of the sation. 2. MiLitary asstutanco WALL be planned ail programmed in wccordunce with the foLiowiag gabdencet : fa. ineowage frequent meetings betwour tup 1.3. and PakLotand military nad defenne otticlals and encoumge cwtLauied elece contact between Ud. HUTitwy personnel and Pukictant officers. bs. Kaplore and netively prnote meatus to enlint thind country par- tietpstion in muintnining Pakistan's pro-Western orientation and security Eoopenatfeu ta eeaplomont i. efforts, with spelal emphasis upon the British, Geanceciation wit Uke Coumorveaith and, perhaps, West Genuany. ourge and stimiate defense production in Puktotan, inchut sg pfenne production equipuents ee Re the supply of) Ge Hanning, progrmming uel delivery of ney or prestige Ltens to : Iiklatin should cock ko mtutmize Indian incentive ~~ or oxeunes -~ for perillel aeqeiettlons far theie foreen. be jutona Paklsbui, dae alyanes oi Chisi wetion whenever possible, cn new pinnes of Tht. anw atakstmicr for Tutus wad give the Priktatants ap Triuit a pletace as pousile of jwit wet the Tinited States intends to de Pee bullet Lo wontele thelr uncertainty and exggereted Seven concerning aii HetenKe proyeate Approved For Release 200410930 : 1A-RDP79T00472A000600010004-1secret TiieTNe TAN] MAR OES \\ = MILITARY ASSISTANCE 17 165 22. MANUAL ToT Thoma far 1» OBsecTIVES Temata | 2 Teer 4. usc NC f, Denonotrate that, vhile still ready to asoist Pukderse Bibs, in the context of a ore independent Pakiotant foreiim Poltdys ‘the United States toe ettoLlarorate in-projects vaich are of direct und pienificant advantage to the Comuniat world. ge Make clear to Poktotand Leaters tnt, T:tetan’s moving into what anowgta to ulignnrnt with Comunist China, vinuever £8 such an weet ngenent miyht take, vould Jeopardlze the whole vee of present U.S.= Caktwant relationihips, ineluding U.S. assistance proesne+ hs Conptder offering credit sales fox milivuy ites, vith the otual wnouita nd typos of tema sold depending upon ti Judgment of {Skuatand defenve fovetan exchange expendi tue: awa he U.S. desire to path nore of the Pukiclin market, porotble harm te, Tie Huleiotan economy BAN ore Ton of eevee reaomeen, couraination rnd inbegratsoe with, Foor itary mewiatancs pinnd, potential reactLont from Theta and other Catntrien, and redwetion of Dukistan andeties 3. Uf, mLLttany anni etance vi11 be planned nud programmed 4n con- fhe following commento: a. Ty Aide Nomotre datha 21 October 195%, the Untued THEE agreed, abject to the emiiniiltty of funds ond eutnordty, gennken To ‘congress, to cadet tetometon in Dekiztan'e present (2,e., 1998) Amvy, Nova apd Air wee ap. follows (2) anmy: h tnbintay divietoas and 1 2/2 manor dtvbskonts Vessels, Frigate (PFs S (im); nd, 2 Minewweepers, (2) Mavy: 3 deetroyern; 2 Pat 2 hutrol Vessels, Guiboat (DR); 3 Mineoweey- Coastal. (2). (3) Air wore: ‘Duve Fighter Boater Gountrone (6 atreraft); one Piphter Weare tor sguwiron (16 aixeragt); one bigxt Lamber, Sauaze nirerafh); si, one Temeport quadron (20 aireratt). ne Ry Aide Benobre dntod § March 1960, the United States egreed: (1) te nsetnt Lp neuinteedidng the prosent beh standard of patatanta wililay foreen and to provide for orderly and gradual improve- fent an obsolete or vorn out cqnipment Le replaces Approved For Release 2003/07/31 1A-RDP79T00472A000600010004-15 enn J t Approvediifor Re yee 2003/07/30 : cxnsiorro or shooosnoo10044 J SECRET { i { wy | ma a MILITARY BSSISTANEE ist i965. MANUAL warince cane pant 1 = oBuectived aN Trangia} a “EeTION . TasTee 1. USCTNCHEASA (2) to complete the comitent contained sn Eve Adde Menoire of 21 Coteber 195 by providing qAreregt for & bomber squadrons (3) to provide SIDININIER miaviles os part of the FY 1960 Military Aid Programs (4) Be provide radar bosbolehte Sor B-57 barbers comencing with eight airematt in the FY 60 aid program; (5) Bo provide in the FY 61 program opproximetely ten_F-10h atreraft with sparea (6) subject to Congreastonal eppropriations, Yo, connider gurther, progronsive noderniaation of requbranente for $803 ana (1). sangeet to Congressional apnropriations, to eve sympathe- tic vongiderniion to provieion at an appropriate time of suitable replace- ments_for the Puiietaa ‘Ar Force transport: aquadrons. a c,h Alecunstons between the Vice Drasidont of the Wited Bets’ and the riotsent of Tukdotan on 15 July 1%,,confimed by 00 £208 Mme Gated b Aww: 2961, the Untted Staten, uniden (to the availability of funds ated bins 2 granted by the Congress of the U-S, and ¢ubjert to over” ont pilitary «nd budgetary requirenents (a) Ageood to the onterly moturtzntion of the forces an the ‘Adde Mengire of 1954 ad 1960- (2) ageeed to onyphy four four 6-170 wlrerafe to Paikowen early gn intss (3) didteatod a wiRLdagnesa tn furnteh continued a5seronte for ie Guys type AbrLEL on a reasoaaPhe bovis una Se four C-130 air- cyadt aF& dad iverrc: i (4) tovea unt 9 number oF MoM" awatum tanks vi be included dn the FY. 1962 procrum (5) Buvisuyed Lacluding in future programs ‘the rewainder of the total requireneat tor Heb(/Mel® tanks, « number of vedt preps ee 155 xm total reantrmimbunblal mmber of tuck, one Lets fice wing 7 ft, a La ee ee inonnenmation Relbeoptees and efx FAB RAMAN wasbine= powered heLtoopterss 7 | } Approved For Release 200316 f78 1A-RDP79T00472A000600010004-1Appro\ de \ vekieor Release 2003/07/30 : CIA-RDP79T¥0472A000600010004-1 Secret MAN Yrauomittal MILIT/ RY PSSISTANCE MANUAL, amt)» OBIECTIVES (6) Agreed to consider the request for equipping one battalion vith exored perronnel carrterss (7) hareed vo stay the soquest: fore replacenens oy epproxt- ately 50f of Bue miubea of 206m recoiilers wiles with the 88-11) 1 oy etudy the request for al&tticnal STIEWIDER (8) Agresd bo 86 inventory not 80 equippe: and, daunching er for the (o) Pawar? in prineiple the cotablishwent of & 30-day war regerve of adhuunttfon but believed thet force ‘requirenente for major equip- peverwe Glin met before Aurther consideration 46 9 Be given toe Dulla-up of reserve stocky. “Le tw Atnewstone Yetwean the thited Staten Gaeretary Ch Defense ana the Prvattont of tuiditan on 25 Beptembor 1962 confimed by an ide nde Helawnped: to Rdastan's Forwlen Mntstey 0° 1 ‘October 1962, the Male tee gereed, nuhgact to the wvailapiaty of Sane ‘and other east igmanten by Lin: Comrrens of the Uitte’ Sects ‘und subject to sano Ym iitary and badge «ry requirements, $0: (2) aeniver 130 tanks, the aagordty te be HEIB sy 38 ¥Y_19635 (2) tnetude (2.ggtsonn tows In the FY 1963 Progra tor aeagvery i PY LoGhs (3) aertver 2,200 yf-ton twueg and anoroxtanteny © general purpose and aupport vehicles in FY 19635 (i) tnetnte nin adastiom 2,500, veltetes tn the ¥K1963 (5) deniver [3 Hel13 eamored peisonnel oar7sere WF aune, 19635 (6) nappy eussiment ae) Uratnting for tue agaitional companies dn the Dadueb Bottallors (() ywovide parntrgop camietitty for Fime sampaciee of the Balnch Battalions (8) explore the stated Pukistant requiyennnt Zor agaitional parntnoep unl bss (0) eupply MeL riflen dn nasbons qdeauete 62 meet the require- mint, for MAPeipportent Zonven unfl provide for & "eowhe’ reserve” Approved For Release 2003/8//46: 1A-RDP79T00472A000600010004-1Anprovebsbr Release 2003/07/30 : cua-rop73bdr2A000600010004- SECRET TintetiVe DATE MILITARY ASSISTANCE MANUAL pant (= O° SECUIVES Ter eRENCE, MAM Tranenittal I-22 (20) owply FeO6F attrition alxerett to aaintain the F-86F Lrventory a a le el of 1083 (a1) det iver ning_addstional B-06F airern te during FX 19635 (aa) maswuttn end eayport the P-D6F airciaft es Long as necessary: (a3) untectake, in cooperation with the Takistan Mr Porees 2 dotiver ¢pere party sivquate to muntain 9 satisfactory “inecemorcen rate" for yotk. F-06 and Y-10' atrexaft (considered to be nine of the twelve F104 airemst); + required; Qh) sipoly Pek abtrition aleerake (a5) ackaowledge the posnfbility of Pakistan's atx traneper requirenents over ai‘ above the four C130 aircraft ty be delivered in the first half of 19635 (26) aimateh a eurvey team to Prjotan in Novenben 29 s98eee Feidatan'a over-all alr trangport requirerenta, in cooperation with the Pukdetan Ady Force; (2) wnat a ourvey toon to Puksoten te obudy Paklotan's Eround support requizenents Zor aby operations; (28) paves WY 19635 ant. in elghteen 11-13 and 64x H-Ngh helLeepters during ogy, 09) Ronco tte tn ¥x.1963 with delivery scheduled in. FY 16h. Approved For Release 2005/6750 : 1A-RDP79T00472A000600010004-1ApprovedFor Release 2003/07/30 : cin-nop79 bwd+72A000600010004-1 ATTACHMENT B 25X1 SUMMARY OF MILITARY AND ECONOMIC ASSISTANCE PLEDGED 10 PAKISTAN, 1948-1965 RRUTET IVE Total 1gh8. 1963 1964 1965 19h8-65 Economic Aid Free World a/ Us 2,982.6 Other agi 1,307.5 3,048.6 4,290.1, 33.2 0 a Total 33-2 Militery Aid 1962 Free World 2/ us, 50.5 62.2 56.5, Other ° ° ° veal 50.5 62.2 56.5 Communist Countries b/ USSR 0 ° ° ° ° Communist Chine 0 ° ° 0 0 Other 9 Q 8 9 2 Total ° ° 0 ° o a. Fiscal year ending 30 June following year. b. Calendar year 25X1 A | wrer-omscrme proved For Releasé '28000600010004-1‘ \, Approvedhor Release 2003/07/30 : CIA-RDP79T08472A000600010004-1 ATTACHMENT C SROTORAL ALLOCATIONS FOR PAKISTAN'S SECOND PLAN (1960/61 -1964/65) AND THIRD PLAN 1965/66 - 1: 10. a of rey Q) (2) Second Plan (Eet.) Third Flan (Proposal) Increase ‘mount Percent’ Amount 2/ Percent (2) over (1) Percent: Agriculture 135 13.3 1,879 15-4 155 Water and Power 2,025 18.6 ' 1,792 15.2 6 Industry 1,337 2h.2 Fuels & Minerals 188 Beh) 37098 Cm 203 ‘rensport and ‘Communi cations gh qa 2,125 17-9 125 Housing 1/ 818 14.8 1,508 wt ah Education 210 3.8 605 Sel 188 Health 83 Ls 279 23 236 Manpower and Social Welfare 1 03 59 045 258 Works Program 168 3.0 525 4B 212 Less Expected Shortfall 95 a 5,525 100.0 10,925 100.0 98 A vy ‘And physical (town) planning. Source: Estimated from Third Five-Year Flan, March 1965- Approved For Release 2003/07/30 : CIA-RDP79T00472A000600010004-1. + Approvetwwor Release 2003/07/30 : C1A-ROP79}472A000800010004-1 ATTACHMENT D PREVIOUS COMECTNENTS MADE 10 PAKISTAN VIUER TH AUSPICES OF THE WORLD BANK CONSORTIUM u.8. § milion equivalent Adatttona Contr! = y6i/ég 1963/64 sales «06ST Belgium - 10.0 | . 10.0 Canada 38.0 19.0 - 23.6 60.6 France 25.0 7-0 3.0 10.0 45.0 Germany 80.0 27.5 12.5 38.1 158.1 may 7 10.0 10.0 20.0 Japan 45.0 30.0 - 30.0 105.0 Netherlands - 6.6 2.2 wu 13.2 Uattea Kington 41.6 22. 7 22h oe. United States 500.0 212.5 212.5 925.0 World Bank and TDA 209-4 8.0 8.0 369.4 Total 95.0 125.0 apr 432.0 1,818.7 Approved For Release 2003/07/30 : CIA-RDP79T00472A000600010004-1Approved For Release 2003/07/30 : CIA-RDP79T00472A000600010004-1 _ Next 1 Page(s) In Document Exempt Approved For Release 2003/07/30 : CIA-RDP79T00472A000600010004-1