COMMODITY AID TO PAKISTAN UNDER PUBLIC LAW 4805 AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R003000070004-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 19, 2016
• Document Release Date: December 23, 2005
• Sequence Number: 4
• Publication Date: November 2, 1954
• Content Type: MF

Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
SECRET
OPERATIONS COORDINATING BOARD
Wash ngton 25, D. C.
Agricultural Trade Development and Assistance Act of 1954
SUBJECT: Commodity Aid to Pakistan Under Public Law 48'
MEMORANDUM FOR THE OPERATIONS COORDINATING BOARD
The attached staff paper prepared in the Department of State has
been circulated to the Board Assistants and is presented f'6r-c__o`nsldera-
tion by the Board. It is recor e I-ed in the attached paper that the
Board agree that the commodity; o be extended to Pakistan under
Public Law 480 be entirely on the basis f ant thatall o4, tY~e
local currency generated by ~such aid be made yjjLa t.,to the interne,
econo p a s an? Unlt e`( States economic aid plan ed far Pakistan
in this fiscal year will be slightly in excess of $IQS.million of which
about $20 million for economic development will-be on a loan basis and
about $38 million is planned as grant aid using Public:: Law 180.
The uest'on of whether commodity aid extended to Pakistan under
Public Lawshould be furnished under Title I or Title II was
referred by the Department of State to the Interagen Committee on
Agrieuu"rah uurplus Disposal on October 19. This committee w- 1e t e j- b
d2rairman hig of Mr, Clarence Francis, is_ e agency to advise the
esident wEe ier thewpiav s ons or"-Title I or Title II of Public Law
480 should be utilized in the providing of commodity aid to foreign
countries. There would be no difficulty in making the commodity aid
to Pakistan as a full grant if Title II were utilized.
If the recommendation as suggested in the staff paper is agreed
upon, two courses are open for the Board:
a. A request to Mr. Francis, Chairman of the Interagency
Committee on Agricultural Surplus Disposal, that his
committee consider, as a matter of urgency, the question
of providing commodity aid to Pakistan under Public
Law 480, and that in its study the committee take into
account the considerations set forth in the attached paper
and' the views of the OCB thereon;
.In the event that a decision is reached that Title I must
be utilized., the OCB member agencies could then explore
the possibility of obtaining grant aid funds from other
sources.
NSC review(s) completed.
Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
 Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
'Mr* Francis will be unable to meet with the Board either on
November 3 or November. 10.E Because of the urgency of this matter it
is being scheduled for consideration as an item of emergency business
at the ma eting of the Board 'on November 3, 19519
Amer B. Staats
Executive Officer
Attachment:
Staff Paper on Emergency
Commodity Aid to Pakistan.
-2-
Approved For Release 2006/03/17 : CIA-RDP80R01731 R00300M4-2
 Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
SECRET
STAFF PAPER ON EMERGENCY CON40DITY
AID TO PAKISTAN
Prepared in the Department of State
October 29p 1954
In its consideration of Pakistan's request for United States
emergency commodity aid to meet an acute shortage of consumers goods
and industrial raw materials, a special economic survey mission wider
the leadership of H, J. Heinz II was sent to Pakistan. The.Heinz
Mission Report, submitted to Governor Stassen in the third week of
S8p`C 'lffE "er; sMated among other things that there exists n Pakistan a
serious shortage of consumers' goods and n ustrial rawmateri.a (along
w"i`Talstan s ire*ofrerna'anyexternal financial difficulties)
which has grave political, psychological and economic portent in
Pakistan.
The Heinz Report strongly recommends $75#6 million of US rats cc
modity aid to Pas sari in this fiscal year, w further eommn~y.~
in each of the succeeding two years, perhaps in diminishing amounts.
In addition, the rate of investment in the Pakistan economy is
deemed barely adequate to keep pace with the population increase. The
Heinz Report laid great tress on the need for accelerated economic
c evelopmen' ~.n Pak stan 1) if basic economic strength and sta~a lity
o be u up in Pakistan, (2) if we are to have. reasonable hope
for non-recurrence of the present commodity crisis., and .(3) if Pakistar
is to begin to assume its part of an increaseddefpn , den in future
years.
The Heinz Report made pointed and repeated reference to Pakistan's
serious budgetary situation and the need. for aid.generated rupees in
Pakistan. The Report specifically states that all local currency
should be used to improve the rate _ e,~,onomic de velo~pmer anA 'i6*coven
rncre sew' iie Cots conrieeth US military end-item deliveries to
Pakistan.
As mentioned above, the Report also specifies rant aids The Mission
indicated that any real improvemen in the rate o economic development
is dependent upon the cumulative effects of early investment in enter-
prises which will produce added capital for reinvestment, The Heinz
Mission had in mind the psychological and political factors which dictate
provision of this emergency commodity aid on a grant basis.
On his recent visit to 'Jashington, the Pakistan Prime Minister was
informed that in addition to some 00 million in technical assistance
and certain other aid the United States will extend 175.6 million in
emergency commodity aid to Pakistan this year pursuant to the Heinz His?
sion recommendations,
Approved For Release 2006/03/17: CIA-RDP80R01731 R0030cTVV4-2
 Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
Si:CRET
ific list of commodities requested by
s
h
pec
e
r considering t
Afte Pakistanx the Heinz Mission incorporated in its recommended $75.6
million of such commodities, as many US surplus agricultural commodities
as possible. Careful consideration of the commodity composition in
Washington has indicated that some $35 to :37 million,'Hof the $75.6
million, can be met under PL 480 -- with the remainder to be covered by
additional a-1I06ations of Defense Support funds for Pakistan under ?L 6t
It has been generally agreed that 520 m llion of our $25 null on
Defense S 1 POX't program outside commodity aid will be on a loan ba,aisa
my - to
Mr-O
fl of T i
5
milli
'
.-
-
v7
l i1i I J o r i
be financed from Defense Support funds will be on a grant basis.
However, despite the Heinz recommendations that aid be in the form
of a grant, two questions have arisen within the Executive Branch with
respect to the local currency which will be generated by the sale of
PL 480 commodities to and in Pakistani
1, ?whether all or part of the local currency should be plowed back
into the Pakistan economy;
all of that local currency should be made available to
2 Whether
Pakistan as a grant for agreed purposes, or whether part should be on a
],Qrar'r b adsi s
Both questions resolve themselves into the question of using 'i't .I
or using Title II of PL 480 for part of the commodity aid. tinder PL ter.
surplus agricultural commodities may be gi j2 fok QC= f
l comma ea be so
t
ura
Title II of that Act; or surplus agricul
.r Title T-0
increase consumptiox
t
d
,
o
er
ncy in or
I
or local curre the A Act, ct, ' z Ye rupees so generated being used for< trios a .str t
t he w'
tive expenses, trade promotion, internationa exchange of persons, etc.;
and (on a loan basis) for economic development. There are a number of
problems connected with the use of Title I for ; ente rgenc;y commodity rel:i a3f
to Pakistan. In addition to the fact that thie.Title is not set up for
relief purposes, almost $5 million in rupees would be set aside for US
Government purposes, as a sort of prior claim, before considering use
of the remaining rupees for other ptixpsoses. - Pttrthermore, use oftk,
remaining rvpeee for economic development mui~t be on a loan eba ..unl s~
esd a~aver "is ven the Bureau o tie budget has ind: catec
a
t
,
ances.
that a waiver is not VIT"Sh the present circums
The OC$ ?orking Group on NSC (South Asia) concurs in the Heir,
b
,
a
al cnrrenc on a
h
l
ea
o
oc
e s
analysis on the neee for u_ sink a l
with. particular regard to-ER4 desirability of Fontributing
t strong
olitical objeo lit of fostering a
t
es p
t of the United Sa
meri pro-United States attitude in Pakistan wi.h the psychological benefit of
extending this emergency commodity aid *and eI rupees generated thereby`
on the basis of a full grant.
Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
 Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
Recommendation.
That the Board agree that as a matter of importance affecting
United States policy toward Pakistan the $75.6 million.in United States
commodity aid should be extended to Pakistan as a full'-grant,,. and that
all rupees resulting from such aid be plowed back into the. Pakistan.
economy for the purposes of direct forces support and. economic develop'
ment, as specified in the Heinz Report.
?3- SECRET
Approved For Release 2006/03/17 : CIA-RDP80R01731 R003000070004-2
 UNCLASSIFIED Approved For Release 2006/O91 EIOtMt!80RO1731R0030000.70004-2
ROUTING )AND RECORD SHEET
CRET
INSTRUCTIONS: Officer designations should be used in the "TO" column. Under each comment a hne I Fe >w' et
and each comment numbered to correspond with the number in the "TO" column. Each officer should in _i,, (che( rr,ar t r'1)
before further routing. This Routing and Recor I Sheet should be returned to Registry.
FORM N 1 APR O. 610 REPLACESP 2M TI-1d
WHICH MAY BE USED.
se- 200 /0311-7-:CIA- 3i.ROO3.0.00.07.00042 I
SECRET CONFIDENTIAL I) f p