London, 20 September 1950
38. CONFIDENTIAL PRIORITY
United Kingdom, Canadian, Indian and Australian Delegations have privately discussed the concluding financial chapter of the Report.
2. Requirements of external aid to meet the balance can now be summarised as follows: (figures in £millions sterling)
| External Finance needed 6 years. | External Finance needed 1 st year. | ||
|---|---|---|---|
| India: | development | 608 | 128 |
| : | external deficit financed from sterling reserve | 190 | 35 |
| Pakistan: | development | 108 | 11 |
| Ceylon: | development | 4 | 6 |
| British Territories: | development | 53 | 9 |
| 1,000 | 189 |
3. United Kingdom say that their release of sterling reserves is the full contribution that they can make at least while these reserves last. They did not specify, however, the rate of permissible drawings. United Kingdom implied they might also agree to direction of funds through the International Bank. Canadians will limit their contribution to local currency subscriptions to the International Bank and to the stimulation of private investment. We said we were not in a position to indicate an Australian contribution. We reminded the meeting in passing, and without comment, of the changes since the programme was initiated as one for the whole of South and South East Asia. United Kingdom is expecting an indication of Australia’s contribution during the Ministerial meetings. It has been agreed that officials will not attempt to draft any passage for the report specifying the amount of aid until question has been discussed by Ministers.
4. Canadian officials seem satisfied that the report is drafted on the right lines. They particularly emphasize, and this is agreed among all officials, that the need for aid should be based primarily on the shortage of internal savings in the countries and should not be directly related to the cost of imports of capital goods for projects nor to a forward forecast of balance of payments deficits on basis of screened import programmes. It is also Canadian view strongly endorsed by United Kingdom that it would be a mistake to try to slant the report deliberately towards the Congressional or United States public opinion in view of unpredictable changes in United States public attitudes.
5. There was some discussion of possible system of administration of any aid forthcoming revolving around desirability of (a) bilateral arrangements; and (b) collective discussion for detailed screening or merely general review. Indian officials reserved their position and United Kingdom merely made the point that bilateral arrangements lead to large United States missions in Asian capitals. It was agreed that it would be premature to try to deal with question in report but it is one about which Commonwealth countries intending to give aid would have to make up their minds before the report is passed to the Americans.
6. Remainder of this week will be fully occupied in completing report and senior officials will meet Saturday morning to prepare draft agenda for Ministerial meetings commencing September 25th.
[ matter omitted ]
[NAA: A3320, 3/4/2/1 part 2]
1 Addressed to Spender in New York.