Richard Nixon sought to repair Indo-US ties after 1971 war
"We wish now to resume relations that were interrupted in mid-1971 on the basis of this new situation," Richard Nixon had said.

Accepting the "new situation" in South Asia — with Bangladesh as a sovereign nation — Nixon's letter was at pains to assure India that the US's military ties with Pakistan would not affect New Delhi. It's another matter that a few years down the line, the US reverted to arming Pakistan once again.
In his cable back to Washington, Moynihan said he clarified the US policy — "the President's decision to clear up the books also involved a conscious decision on his part not to open up a military supply line to Pakistan, but merely to clear up the books. There were no airplanes, no tanks, and no artillery involved. The remainder of the "one- time exception" of 1970 is regarded as having lapsed. Our policy henceforth will be not to supply lethal arms to any nation of the subcontinent. We believe we are the only major arms supplier in the world which has such a policy."
For the first time, the US also laid out a roadmap to spend over $5 billion in PL480 funds that were left with the US Embassy. "As a result of aid which the United States provided India ... the United States has accumulated a very large sum of so-called PL 480 funds. The US account presently amounts to some 685 crores of rupees ($914 million), and will rise to 4,200 crores ($ 5.603 billion)."
The US proposed that part of it should be used to finance the US Embassy in India for a fixed period of time, "agree to devote some further part of the resources to useful activities which would be carried out wholly under Indian direction, and then write the rest off."
Despite the fact that resumption of military aid to Pakistan fundamentally propped up Zulfikar Bhutto's regime in Pakistan, the US continued to insist that its decision had not altered the situation in south Asia.
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