Mr. WOLFF. Well, at some point in the testimony, two professors, Professor Wilcox and Professor Hinton, made statements relative to East Pakistan. The statement by Professor Wilcox.

In Pakistan, the most vigorous politician with foreign affairs experience is Ali Bhutto, and he has said in election campaigns that Pakistan's future hopes in foreign policy lie principally with closer ties with China.

This is especially true because the Soviet promises of military assistance to Pakistan have not been realized in any major degree. Moreover, Pakistan is a less stable political system and China might find opportunities in the domestic situation as well.

The statement made by Professor Hinton:

From the revolutionary viewpoint, Peking has long cherished the hope that luxuriant fissiparous tendencies in Southeast Asia would lead to Balkanization, and Communist seizures of powers in the resulting fragmenting. This hope probably is at least partly responsible for the fact that Peking has treated Pakistan with politeness and sometimes courtesy from the time of its emergence, which emergence certainly appeared to be a promising beginning of Balkanization.

Do you think the present situation is a result of some of the previous efforts that have been evidenced by these two statements on the position of mainland China that is responsible in some way for intervention in Pakistan?

Mr. GOTTLIEB. The question you raise, sir, is a most difficult one to answer. The role of the Peking Government in the events in the Indian subcontinent is an ambiguous and obscure one. There is evidence that both in the role that China took during the Kashmir crisis and in the role they took in the lengthy and bloody incidents with India, they clearly wished to see to it that nothing would exist south of the Himalaya border, that could be considered as a strong and cohesive hostile military force.

Balkanization of the subcontinent from the standpoint of balanceof-power politics might certainly be in the Chinese interest. On the other hand, it doesn't mean that because it is in the Chinese interest, it is therefore necessarily adverse to the United States own interests.

I would hate to draw that inference automatically, and this is why, again, in this matter, I feel that the U.S. interest in the Indian subcontinent, the political interest, may be one worth clarifying by the subcommittee. That is where I would be most enlightened by your debates.

Mr. WOLFF. Mr. Chairman, I would like to comment further. I support your idea, of international assistance, and the idea of international observation.

Thank you, Mr. Chairman.

Mr. GALLAGHER. Thank you very much, Professor Gottlieb, for your fine contribution in bringing a better understanding to this subcommittee of this terrible tragedy in Pakistan. Because of the vote, the subcommittee will now stand adjourned until 2 p.m. on Thursday, when there will be an executive session with the State Department and at 3 p.m. on Thursday, when there will be a further open session. The subcommittee stands adjourned.

(Whereupon, at 3:35 p.m., the subcommittee adjourned, to reconvene at 2 p.m., Thursday, May 13, 1971.)

CRISIS IN EAST PAKISTAN

TUESDAY, MAY 25, 1971

HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,

SUBCOMMITTEE ON ASIAN AND PACIFIC AFFAIRS,

Washington, D.C. The subcommittee met at 3:20 p.m., in room 2200, Rayburn House Office Building, Hon. Cornelius E. Gallagher (chairman of the subcommittee) presiding.

Mr. GALLAGHER. The subcommittee will come to order.

We are in the process of a vote about to be taken on the floor. Some of the members had to leave, and I believe they will return.

We apologize for the delay in starting the public hearings.

Our next witness is Dr. Robert Dorfman, professor of economics at Harvard University.

We are pleased to see you.

STATEMENT OF ROBERT DORFMAN, PROFESSOR OF ECONOMICS,

HARVARD UNIVERSITY

Mr. DORFMAN. Thank you for giving me an opportunity to come here. My remarks will concern a somewhat different matter from what I gather you have been hearing in the previous testimony, but there is a close and tragic connection.

Senator Kennedy and the others have already called your attention to the terrible problems of feeding and caring for the millions of refugees, both in Pakinstan and in West Bengal. I have nothing to add to that, except my personal sympathy and concern. But the distress of those millions of persons is just one aspect of the civil war that is now going on, and I want to devote my few minutes to America's role and attitude in that war.

Let me qualify myself. My name is Robert Dorfman. I am professor of economics at Harvard, a member of the Council of the American Economic Association, former president of the Institute of Management Sciences, and so forth. I have published a number of books, and I have all the usual academic credentials. I have been concerned professionally with the economics of the less developed countries, including Pakistan, for the last dozen years. My interest began in 1960 when I had the honor of serving as a member of a panel appointed by President Kennedy to advise the Government of Pakistan about the serious problems in the Indus Basin. I flatter myself that this Presidential panel made a substantial contribution to reversing the downward course of agriculture in that region. We proposed a sensible plan for increasing the yields of irrigated agriculture, while arresting the ominous progress of environmental decay, building on much excellent

work that the Pakistanis had already done. That plan, together with the introduction of high-yield Mexican wheat a few years later and with some essential economic reforms, laid the foundation for the so-called green revolution, which brought hope to communities where there had been only despair.

Subsequent to that work I retained my interest in Pakistan in various capacities, serving as a consultant for the Agency for International Development, the Development Advisory Service of Harvard University and most recently the World Bank.

In order to dispel any suspicion that I am biased in the current conflict between East and West Pakistan. I should mention that virtually my entire association with that country has been concentrated on the problems and development of West Pakistan. When I have occasion to criticize the policies that foster the economics of West Pakistan to the neglect of the problems of the East, I am criticizing myself among others. I was a party, a small party, to those policies. My attitude was typical of many others.

As an economist, I can speak to you really only about the economic aspects of the current crisis. But the economic aspects are peculiarly important, as is indicated by the fact that three of the six points in the program of the Awami League, which won a 10 to 1 majority in the recent elections in East Pakistan-half of their program, as I said, is devoted to economic and fiscal reforms. The current crisis, then, is largely economic in its genesis, economic in its objectives, and its resolution too will depend largely on economic factors. I should like to address my remarks first to the economic circumstances that lie behind the uprising and then to the economic factors that will determine its outcome. These latter factors are of a special concern to this subcommittee because, unfortunately, they imply that the attitude and actions of the United States will have a significant and perhaps decisive effect on the struggle. So our country has an inescapable though unwelcome responsibility in the matter. I believe also that our national interests are involved.

There are a few crucial facts I am anxious to put before you, mostly relating to the poverty of East Pakistan and to the problem of income disparity between East and West Pakistan. The poverty of East Pakistan is so appalling that I may sound facetious. From an economic point of view East Pakistan is simply a mistake. There are more than 70 million people trying to wrest a living from about 22 million acres and very little else by way of natural resources. That works out to about an acre and a half per farm family, which is approximately onehalf of 1 percent of the average size of an American farm. On top of that they have the cyclones, the floods, and the droughts.

Last year's cyclone which killed at least 300,000 people and devastated hundreds of thousands of acres was only an especially bad instance of a periodic catastrophe. The floods are not as lethal, but are more crippling economically. In each annual monsoon, approximately one-third of the land area of East Pakistan is inundated and its crops lost or severely damaged. Between the monsoons, in much of the land there is not enough rain to grow crops without irrigation, for which facilities are lacking. Farm yields and incomes are as low as this recital of difficulties would lead you to expect, and this is particularly grim in a country where about 60 percent of all income is derived from farming. The result is a per capita income of not much more than $45 a year which is a figure so far below our experience that it is meaningless.

West Pakistan is poor also. Per capita income there is about $75 a year, but low as that is, it is at least 60 percent higher than per capita income in the east. This great gap between the levels of income in the two parts of the country--or better, the degrees of poverty-is one of the main, longstanding economic problems of Pakistan as well as the principal underlying cause of the current crisis. The stated official policy of Pakistan has been to annihilate this gap and to achieve income equality, but absolutely no progress has been made in executing this policy. On the contrary, the discrepancy has been growing. Over the last decade, total national income in West Pakistan rose by about 6 percent per year while in East Pakistan income increased by only 4 percent a year, most of which was eaten up by population growth.

One of the most bitterly contended issues in Pakistan is whether the official policy of eliminating the income disparity has been implemented sincerely. No one contests that the policy has been completely frustrated. There are instances and shreds of evidence on both sides of the debate and I cannot resolve it in the few moments available to me. The best indication, in my view, is the allocation of investment between East and West Pakistan, because public investment is directly controlled by the Government while private investment is indirectly controlled by the systems of industrial licensing and foreign. exchange allocation. Public investment in East Pakistan has never been as great as in West Pakistan, though 55 percent of the people live in the East. In the past half-dozen years public investment in East Pakistan has climbed from about half of what it is in West Pakistan to approximately 90 percent of the amount in the West. Private investment is even more disproportionate; it is about three times as great in West Pakistan as in East Pakistan. So all together more than 60 percent of investment occurs in West Pakistan where only 45 percent of the people live.

This distribution of investment appeals to me as a strong indication that the day-to-day activities and programs of the Government have not implemented the announced policy of closing the income gap. There are other indications too, as well as some contrary ones. At any rate, the East Pakistanis find the results disheartening and are convinced that the great preponderance of Government programs favor the West and at their expense, almost as if they were an economic colony. I have to say that I personally agree with them.

It should be mentioned in extenuation of the foregoing data that the bulk of promising investment opportunities, both public and private, are located in West Pakistan. The United States and other donor nations have tended to allocate their funds in accordance with the normally sound principle of supporting the projects which promised to contribute most to economic development. So West Pakistan received a disproportionate share of foreign aid. We rarely asked whose economic development the projects contributed to. But that is a critical question in a bifurcated country such as Pakistan since projects in one part of the country make virtually no contribution to the advancement of the other part. By following this normally sound principle, we have contributed to the economic deprivation of East Pakistan. We can see now that that policy was a grievous mistake and bears some of the responsibility for the current crisis-so much for history.

I mentioned in my opening paragraph that we cannot avoid heavy responsibility for the course and outcome of the current struggle. In

principle, of course, this is an internal Pakistani affair and the United States ought to try to avoid intervening, however we may feel about the rights and wrongs. The problem is that we are so heavily involved already in the economy of Pakistan that whatever we do in our efforts to maintain neutrality will affect the balance of forces to a significant degree. To make this clear, I have to digress from economics for a moment to summarize the current state of military affairs.

The pitched battles are now over for awhile, and West Pakistan's tanks, planes, artillery and disciplined soldiers have won all of them. The troops now occupy Dacca, Chittagong and all the principal cities and towns, and all they now have to do is subjugate the rest of the countryside where most of the people live. But we know that can be quite a task. It requires them to maintain an expeditionary force of upwards of 50,000 troops at the end of a supply line 3,000 miles long and they are already a poor country in deep financial difficulties. In the past year, their foreign exchange reserves have been drawn down from over $300 million to less than $170 million. Their annual foreign trade deficit, even without the expenses and disruptions of warfare, is over $500 million, so that their current reserves are less than a third of their annual requirements or scarcely an adequate working balance. In fact, at the moment it appears that Pakistan is desperately seeking a moratorium on its debt installments that fall due this month. This means that if the war is to go on for more than a few months and essential imports are to be procured, outsiders are going to have to provide the resources, and the United States is the principal traditional source of external funds for Pakistan. By and large, American grants and loans have amounted to about $250 million a year, not counting our contributions to IDA and UNDP. This covers about half of Pakistan's adverse balance of trade. Therefore, the continued flow of American grant and loans is the most important immediate objective in West Pakistan's strategy, more important by far than any military operation.

So part of America's dilemma in this tragic moment is how to follow a neutral course, when continuing the flow of aid dispersements will provide indispensable support to the suppressive efforts of the Government of Pakistan, while discontinuing the flow will interrupt a traditional relationship on which the Government of Pakistan has come to rely. Since either policy is consequential we are involved inexorably no matter how earnestly we wish we could stand apart. Besides, our own national interests are engaged.

East Pakistan is in the corner of the Indian subcontinent and what goes on there is of vital concern to Pakistan, India, mainland China, and Burma at least. It affects political alinements and the balance of power throughout South Asia. Our national interest in South Asia is principally to maintain peace and tranquility. I don't say that out of high-minded or of humanitarian motives. A protracted_struggle in East Pakistan will engage the attentions of both India and Pakistan, will weaken both of them, will inflame their animosities to a dangerous degree, and will divert their energies from the peaceful solution of their political and economic problems. It will in short, endanger the stability of the whole subcontinent with consequences that cannot be foretold.

Second, the longer the struggle goes on the more likely it is that it will take a sinister as well as a tragic turn. At the moment, the movement toward autonomy in East Pakistan is led by a Western