The post-war diaries of Guy Liddell, who was deputy director general of MI5, reveal that the UK in January 1948 was worried that India would invade Pakistan to stop Pakistani infiltration into Kashmir. Liddell reveals that Lord Mountbatten, the then governor-general of independent India, had suggested that British Prime Minister Clement Atlee fly to India to personally speak to Nehru warning against any invasion of Pakistan.
“This, for various reason, was not considered desirable,” Liddell wrote, adding that the UK thought that Nehru militarily in a very weak position.
The Nizam of Hyderabad, Mir Osman Ali Khan, who in 1937 was described as the richest man in the world by Time magazine, was in January 1948 looking for ways to get his wealth out of newly-independent India as he was sure his reign would end shortly. The Indian government annexed the state in September 1948.
The wealth of the Nizam amounted to £400,000,000 in bullion and jewels, so the main problem was how to smuggle it out, Liddell recounts. The incident is recounted as part of information about the Nizam’s attempt to import arms from the UK on behalf of Pakistan. There is also a mention of an attempt by the Nizam to buy aircraft, which, however, “crashed on their way”.
It was suggested that the Nizam buy the Portuguese colony of Goa, which was annexed to India only in 1961, to transfer his wealth out of India.
“One suggestion, of which I did not entirely see the point, is that he should buy up the port of Goa from the Portuguese and ship from there. If he were to attempt to get his stuff out by air, he might be in trouble when he had to come down to refuel,” Liddell writes in his dairy which was part of the National Archives’ newly-released records.
The UK government seems to have blamed the politicians and the media in India and Pakistan for growing antagonism.
“In spite of the situation in Kashmir, relations between Army officers in Hindustan and Pakistan, and also between civil servants, appears to be reasonably good.”.