Mr. GALLAGHER. But if we deal directly with them, would we not be doing the opposite of what you feel should happen in a political accommodation between both?

Mr. DORFMAN. I would not deal directly with them, no.

Mr. GALLAGHER. If there were a real separation, do you feel, with its limitations of resources that it would be economically possible for East Pakistan or Bangla Desh to survive economically?

Mr. DORFMAN. I am engaged in studies of the economic future of East Pakistan right now. You must understand that their affiliation. with West Pakistan has not helped make them a viable country in the past. On the contrary, they have been probably contributing capital to West Pakistan. So they would be better off than they are now. Whether they are viable or not is another matter.

In my testimony, I said they are a mistake, and in a sense they are. How that country can support so many people is very hard to conceive. But separation in the form of either an autonomous economy or a legal separation would do no harm.

Mr. GALLAGHER. If an accommodation were reached, would not this mean American assistance for both wings? What would your estimate be of the expense involved in aiding both wings of Pakistan? Mr. DORFMAN. I should hope that we would continue to contribute to Pakistan as a whole, at least on the level of the past, which I estimated as an ongoing level of about $250 million a year. But I would like to see the distribution changed and to give a larger share to East Pakistan than to West Pakistan.

Mr. GALLAGHER. Mr. Bingham?

Mr. BINGHAM. Thank you, Mr. Chairman. You have actually covered most of the questions I had in mind. But I do have one other question.

You mentioned that if the unity is to continue, a political settlement had to be arrived at between East and West Pakistan; that West Pakistan should discontinue an economic policy in East Pakistan that works in favor of West Pakistan and not in the interest of East Pakistan. Would you develop that a little further? What are the specific things that illustrate this point?

Mr. DORFMAN. One of the specific types of measure I mentioned in my prepared statement is the allocation of both public and private investiment in Pakistan, which up to the present has been controlled in West Pakistan by the central government. That certainly should be decentralized so that a reasonable allocation of foreign resources is made to East Pakistan and the administration is done by the Government of East Pakistan, either independently or as a component of the whole Pakistani Government.

The licensing procedures now are centralized 1,000 air miles and at the moment 3,000 air miles from East Pakistan. The structure of tariffs and subsidies which, again, is part of the central government program, has been very heavily slanted in the direction of protecting

manufacturing, nearly all of which is concentrated in West Pakistan, and has required the East Pakistanis, in effect, to purchase from West Pakistan rather than from the outside world, a policy that we encountered in our own history before the War of Independence, when we had similar ties with the manufacturing in Great Britain, and with many of the same results, both economic and as to our feelings.

East Pakistan should probably be permitted to import what it needs from the outside world under the most favorable terms, whether it comes from West Pakistan or from Hong Kong or elsewhere. That would relieve them of a substantial burden.

There are a number of other detailed economic policies. The result seems to be something that is very hard to pin down exactly, because the West Pakistani Government is discreet enough not to publish all the figures you want. But it does appear that about $90 million a year has been transferred from the dreadfully poor East Pakistanis to the not-so-poor West Pakistanis as a result of these policies, a substantial drain.

Mr. BINGHAM. That certainly is a very striking statement. Without that element, I am not totally impressed with the statement by itself, that public investment has been disproportionate in West Pakistan over East Pakistan. because that might have come from West Pakistan resources. If the investment comes from West Pakistan resources, then you can't criticize it too much if it is allocated in that proportion. But if it comes from the transfer of capital resources, that is a very different matter. What is the nature of those transfers? What resources are there in East Pakistan that are capable of being transferred? Is it tax moneys?

Mr. DORFMAN. Partly taxes, partly profits on this kind of trade that we have mentioned. Those are the two main machineries. And partly also some repatriation of profits from industries that are located in East Pakistan and owned in West Pakistan.

It is a very peculiar situation that most of the foreign exchange that Pakistan as a whole earns comes either from jute in raw form or jute in manufactured form. Both of those originate in East Pakistan rather than in West Pakistan, so that the poorer part of the country is also the larger foreign exchange earner. It is this transfer of funds that has put the jute earnings at the disposal of West Pakistan.

Mr. BINGHAM. These factors, then, would tend to explain why the Government of Pakistan is so determined to hold on to East Pakistan; is that right?

Mr. DORFMAN. Partly, yes. And partly also, I think, it is the natural obligation of all governments not to see part of their provinces taken away. You know what Churchill said, and every responsible government leader feels the same way, not wanting to see the country dismembered.

Mr. BINGHAM. Thank you.

Mr. GALLAGHER. Mr. Dorfman, in view of the long lines of supply and the large number of troops involved in the occupation in the key cities, based on your observations, how long do you think that the central government can continue to financially support their actions in East Pakistan?

Mr. DORFMAN. Well, a desperate government can keep going a long time, as we all know. I should expect that by any normal standards they will be bankrupt before the summer is over, as far as international dealings are concerned. They are already according to-I guess-reliable reports that I can't testify to firsthand, planning to renege on some debt payments next month, or effectively to do so to pay several tens of millions of dollars in blocked rupees instead of hard currency, because they just are running out of the money they need to pay for machinery, petroleum, and all their other imports. They are in a very serious state.

Mr. GALLAGHER. Is the resumption of U. S. economic aid, in your opinion, essential to the continuation of Pakistan's activities in the East?

Mr. DORFMAN. It is. They cannot continue unless they get the foreign exchange that they need in view of this impending exhaustion of all their reserves.

Mr. GALLAGHER. If they did not achieve that economic assistance, how long do you feel they would be in a position to continue their activity in the East?

Mr. DORFMAN. They have taken no extraordinary measures that I know of to economize on foreign reserves outside of expressing their intention of not paying debts in hard currency. If they continue at this rate, I cannot see that they will have any money left by the end of August. Then your conjecture is as good as mine as to how long a country like Pakistan can keep going when it has nothing but its credit to go on by way of buying petroleum, by way of buying spare parts, by way of buying ammunition, and all the other things that they must import.

Mr. GALLAGHER. Incidentally, my information is that there have been no deliveries of military assistance since March 25.

Mr. DORFMAN. I think actually as far as the United States goes, there were no other deliveries either, or just a very small leakage. On the whole, our policy up to now is much in line with what I recommended. What I am recommending is we keep on this course.

Mr. GALLAGHER. Assuming that President Yahya requested the United Nations to come in and give assistance, what do you think then should be the policy of the United States?

Mr. DORFMAN. The United Nations?

Mr. GALLAGHER. Yes.

Mr. DORFMAN. I think we should oppose it. Do you mean economic assistance to him?

Mr. GALLAGHER. Economic assistance in the matters of East Pakistan.

Mr. DORFMAN. There, I think we should cooperate. I would have all assistance continued that can not be diverted to military purposes, so that even the projects on the Indus River and elsewhere in West Pakistan, which require imports of specialized tools and equipment, and so on, that can be used on those projects and not elsewhere, I see no objection to continuing.

The only harm we can do is by providing aid that can be used to finance continued military activity.

Mr. GALLAGHER. Of course, if it were through the international organization, I am sure there would be observers to make certain that things like that did not in fact happen.

Mr. DORFMAN. That would be satisfactory.

Mr. GALLAGHER. Thank you very much, Professor Dorfman, for giving us the benefits of your broad experience and for being with us today.

The subcommittee stands adjourned subject to the call of the Chair. (Whereupon, at 4 o'clock p.m. the subcommittee adjourned, subject to call.)

APPENDIX

AN AMERICAN RESPONSE TO THE PAKISTAN CRISIS

BY HON. CORNELIUS E. GALLAGHER OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES, THURSDAY, JUNE 10, 1971

Mr. GALLAGHER. Mr. Speaker, I rise today to discuss the situation in East Pakistan generally and to report specifically on my recent trip to view the refugee camps in India.

Let me say that the situation is the worst I have seen abroad during my 12 years of service on the House Committee on Foreign Affairs. My Subcommittee on Asian and Pacific Affairs held 2 days of hearings into the situation during May and I must confess that I had felt the reports of genocide, brutality, and unparalleled human misery were overstated.

I can now report to my colleagues that, if anything, these reports were understated. I do not believe I could be called a "bleeding heart" or a "professional dogooder," and I share the reluctance of many of my fellow House Members to embrace eagerly every cause which promises "instant celebrity" for its leaders and "instant humanitarianism" for its adherents. I have learned to distrust sweeping generalizations and to discount inflated rhetoric.

The crisis in East Pakistan, as disastrous and as horrifying as it is, is not a matter solely for the Government of the United States to solve. But, neither is it solely an internal matter of Pakistan. It now threatens the peace of the Indian subcontinent, provides a rich and fertile breeding ground for communist inspired movements, challenges whatever is good in human nature, and poses a dreadful moral choice for mankind.

However, a simplistic search for heroes and villains in creating the torrent of tragedy sweeping over the 75 million inhabitants of East Pakistan is doomed to failure. Much of my speech today will be critical of the actions undertaken by the army of Pakistan after its initial actions on the evening of March 25, 1971. But it is true that supporters of the Awami League promoted work stoppages earlier; it cannot be denied that Bengalis themselves butchered members of other populations within East Pakistan; and the world community has not enobled itself by its response.

While I hesitate to repeat what I regard in other contests as a mind-numbing cliché, in a very real sense we are all guilty of promoting the climate of unconcern and in acquiescing in policies which, given the crystal clarity of the vision of hindsight, led inexorably to the truly appalling situation now confronting East Pakistan, West Pakistan, and India. And the United Nations, the United States, and virtually every other nation in the world is either an active or reluctant partner.

BACKGROUND

Let me try to briefly sketch the political background. East and West Pakistan are divided by some 1,100 miles of Indian territory and we now know that they are socially, intellectually, and spiritually worlds apart. The Awami League in East Pakistan was the clear winner in the elections held last December for a National Constituent Assembly to write the constitution which would provide for nonmilitary rule. The Awami League captured 167 seats of the 169 contested in East Pakistan and this gave them an absolute majority of the seats contested in both wings. Candidates of the Awami League won at least 80 percent of the popular vote in East Pakistan in an election which was run by the Military Government of Pakistan.

We must never forget that the leaders and supporters of the Awami League successfully worked within the system by gaining an absolute majority in both wings of Pakistan. Therefore, they should not now be regarded as secessionists or rebels in the usual sense of those terms.