Considering that the state of tension between India and Pakistan has recently increased, it has been thought advisable to review our policy on the export of arms to these two countries. We have obtained the views of those concerned here in Ottawa and have asked the United Kingdom and the United States if there has been, or if there is contemplated, any change in their policies.

2. Since the end of July, decisions on export permit applications submitted by both India and Pakistan have been deferred pending this review of policy. Up to that time all applications from either country were approved, if the material was available.

3. We have under consideration applications for the export to India and Pakistan of parts for tanks and military-type vehicles to a value of about $151,000 and $194,000, respectively. In addition the Canadian Commercial Corporation has received requests for quotations on the supply of various quantities of British-type ammunition to a value of 15 million dollars from India and 38 million dollars from Pakistan.

4. Before examining the practicability of using Canadian production facilities to manufacture these different types of ammunition, it is considered desirable that thought be given to whether or not export permits would be granted for the supplies requested. The quantities are estimated as reasonable for the requirements of the two countries, but their size is no doubt partly due to the serious deterioration that has taken place in their relations.

5. The tension which has existed in varying degrees since partition has reached a serious point and the possibility of open warfare can not be ruled out although both Governments consistently profess peaceful intentions. It is generally expected that the crisis will reach its most serious stage within the next two or three months.

6. The Joint Intelligence Bureau of the Department of National Defence has pro­vided the following appreciation on the advisability of providing arms to India and Pakistan:

"The requirements for arms and equipment by both India and Pakistan are not related solely to the state of tension between them. In both countries they are required to maintain internal security and to provide for defence, both currency against minor border incidents with Afghanistan and Burma, and potentially against major threats to both countries from the USSR and Red China through Afghanistan, Tibet and Burma.

Reducing the sale of arms and equipment to either country would be ineffective militarily unless all other exporting countries did likewise and furthermore India or Pakistan might turn to the Soviet Block or to illegal arms traffic to obtain arms and equipment. Such courses of action are highly undesirable and any action on our part which might precipitate them should be taken only if it is reasonably certain that the arms and equipment will be used by the one country against the other.

It is considered that the likelihood of war between India and Pakistan will not be altered significantly by the sale of small quantities of arms and equipment to both countries on request, as such sales will not significantly alter the balance of their military capabilities ..."

7. The United Kingdom authorities have informed us that no decision in princi-ple, based on the present situation, has been made or seems likely to be made to stop or reduce the export of arms to India or Pakistan. However, due to the many demands on United Kingdom supplies and competing claims for priorities, only small quantities of arms are being sold to the two countries.

8. The United States Government is temporarily holding up applications for the export of military equipment to either country pending further review of the situa­tion in about a month's time. A shortage of supply from commercial sources and a lack of priority for allocations through MDAP channels have limited the quantity of arms that these countries can obtain in the United States.

9. India and Pakistan, by virtue of their geographical position and political sym­pathies, are potentially the democratic world's best insurance against further Com­munist expansion in South or South East Asia. In view of this consideration, it would seem that Canada and other friendly nations which may be able to supply modern military equipment should attempt to make available to them the quantities of arms required to assist them in their defences against possible future Communist aggression. Although India has some limited capacity for the production of arms, Pakistan's production of war materials is almost negligible. A ban on the export of arms to both countries would, therefore, more seriously affect Pakistan and would unquestionably favour India. In my opinion it is important that there be no suspi­cion of discrimination in our dealings with either country.

10. In the light of the above I believe that it would be difficult, and inadvisable, to refuse reasonable orders for arms from India and Pakistan until such time as it is considered that hostilities are imminent or have actually broken out. Outstanding permits and orders would be cancelled at any time when it was considered advisa­ble to do so. The High Commissioners could be warned of this possibility.

11. I would recommend, therefore, that there be no change in our present policy on the export of arms to India and Pakistan and that the Canadian Commercial Corporation be informed that, when accepting orders from either of the two coun­tries, it should be governed by the possibility that the contracts may have to be cancelled. This should be taken into account particularly for orders involving can­cellation costs. I further recommend that the pending export permit applications be approved and that the Canadian Commercial Corporation be authorized to give quotations on the supply of the various types of ammunition requested, should it be considered advisable and practicable to do so after an examination of Canadian production facilities and our other commitments.⁴⁸

L.B. PEARSON

⁴⁸ Approuvé par le Cabinet, le 26 septembre 1951./Approved by Cabinet, September 26, 1951.