NOTES ON CONSULTATIVE COMMITTEE MEETING

Canberra, 2 March 1951

SECRET

Consultative Committee February 12th—20th

FOREWORD

The formal report¹ of the Consultative Committee includes only those matters on which agreement was reached. Although the minutes provide a more comprehensive picture, they are not entirely satisfactory. Secretarial arrangements were inadequate and the reporting of the meeting in the minutes is neither accurate nor comprehensive. Moreover, many of the most important discussions were held informally. These notes are therefore an attempt to overcome these deficiencies—to give an additional guide to the discussions and a frank review of the meeting. As such they are intended for limited departmental circulation and not for discussion with other Governments.

1. AUSTRALIAN DELEGATION

T.K. Critchley – Department of External Affairs

W.R. Carney – Department of Commerce & Agriculture

R.L. Gray – Department of the Treasury

Miss G. Hooker of the Australian High Commissioner’s Office, Colombo, also attended a number of meetings.

1. INTRODUCTION

The initiative in calling a meeting of the Consultative Committee at the official level in Colombo was taken by the United Kingdom. Some delegations, notably Ceylon, gave the impression that they would have favoured a ministerial meeting and a site closer to the United States than Colombo. Generally speaking the purpose was to maintain interest in the Colombo Plan and more especially to take advantage of the United States’ willingness to participate in the work of the Consultative Committee. It was hoped that the meeting would not only closely associate the United States with the Scheme, but would also open a way for an early approach by the United States’ administration to Congress for financial appropriations as a contribution to the Plan. At the same time it was also hoped that the progress achieved and American participation would encourage non-Commonwealth countries in the area to join in the Plan.

1. UNITED STATES’ ATTITUDE

In consequence the attitude of the United States was a vital consideration. In unofficial talks among Commonwealth representatives prior to the opening of the Conference, it was agreed that every opportunity should be given the United States representative, Kennedy, to make an optimistic statement. Accordingly the first item on the agenda was described as ‘Opening addresses by the Heads of Delegations and Statements of action taken in their respective countries since the last meeting of the Committee’. This, it was thought, would give more scope for the United States than an agenda item directed to progress since the last meeting. In accordance with this strategy the opening statements of most of the Commonwealth delegates prepared the way for an encouraging statement by the United States.

1. In the event, however, Kennedy proved most disappointing. He explained that the United States had followed the progress of the Colombo Plan with interest and sympathy and he was sure it would be a success. The United States hoped to co-ordinate their present and future efforts with other programmes of development of this character but as a newcomer he would like to adopt a listening role at the meeting. He referred to the Point 4 programme of technical assistance. In this respect he also referred at some length to delays due to investigations by the Federal Bureau of Investigation² — a reference quickly noted by some delegates as an explanation of his own caution. No mention was made of a United States contribution or of any prospect of active participation in the Colombo programme.

2. It did not take Kennedy long to convince the Committee that first impressions were correct and that he was determined to avoid any commitment. It also became clear that he intended to dissociate carefully and specifically the United States from any responsibility for the Council for Technical Co-operation. His legalistic argument was that as the United States was not a member of the Council for Technical Co-operation the Consultative Committee could take no decisions dealing with it. In the view of the United States, Technical Co-operation was something separate and distinct from the Consultative Committee.

3. At one stage there was a feeling among Commonwealth delegates that the Committee had been called together prematurely and a number of representatives (the United Kingdom, India, Ceylon and Australia) felt it necessary to point out to Kennedy that the United States’ attitude was having an unfortunate effect on the attitude of the representatives of non-Commonwealth countries who were attending as observers.

4. In informal discussions among Commonwealth representatives the United Kingdom representative criticised the United States for having prematurely suggested a meeting when its own attitude was so rigorously restricted. Later in the meeting, however, Kennedy privately showed the Australian and Canadian delegates a telegram from Acheson which disclaimed any responsibility for the calling of the Conference and which pointed out that the United States had informed the United Kingdom that the question of how and when a meeting was called was entirely a matter for the members of the Consultative Committee.

5. Nevertheless, in response to the requests of the Commonwealth delegates the United States representative agreed to be more encouraging. In his next statement he emphasised United States’ interest in the area and in the Plan. He explained that the United States was aware of the problem and was desirous of helping, but that no indication could be given of the size of American aid, when it would be available or how it would be divided, as these were matters for decision by Congress. Kennedy pointed out that despite the markedly changed circumstances, particularly in Korea since last September, and the general inflationary pressures in the United States, the budget for the Foreign Assistance Programme had increased from 4.7 billion dollars to 7.5 billion dollars for the 1952 fiscal year. However, he warned that in the new circumstances much aid previously designed for economic purposes would be redirected for defence expenditure. He also emphasised that aid for South-East Asia would be on a bilateral basis, and he gave no hint that it would be related to the Colombo Plan.

6. This statement marked a minor turning point in the atmosphere of the meeting. Although the United States representative remained adamant on the policy of no commitments and no responsibility for the Council for Technical Co-operation, the tone of his statements became more friendly and encouraging.

7. At the final meeting, for example, Kennedy clarified the position of the United States with a statement which in tone could have served usefully in his opening address. He emphasised the following points:—

(1) United States Participating fully in the discussions of the Committee as a member, not as an observer.

(2) Participation 1n the Consultative Committee did not involve participation in the Council for Technical Co-operation.

(3) His Government was not too happy about future meetings being held at a ministerial level; representation should be determined by the Government concerned in the light of discussions expected at the meeting.

(4) The basis of the United States’ membership was that the Committee was consultative and advisory and did not have a responsibility for taking action.

(5) Any United States aid would be bilateral.

(6) The United States intended to co-ordinate to the extent possible its present and future programmes and would take into account information obtained ‘through discussions in the Committee meetings.

(7) The meeting of the Committee should be located in Asia.

1. Kennedy went on to conclude that in his view the results of the Conference had been favourable and he referred in particular to:—

(a) the enthusiasm, interest and cordiality among representatives:

(b) the evidence of co-operative efforts and self-help that existed;

(c) the promise of considerable aid already made by the United Kingdom, Australia and Canada.

1. In analysing the United States’ attitude it was evident that the Americans had instructions to work closely to a detailed brief. But there were also indications that Kennedy’s own disposition and caution tended to exaggerate the limitations of the American point of view. This helps to explain why the United States’ attitude towards the Plan improved somewhat under pressure from other representatives as the meeting progressed.

2. Most delegates appeared to accept Kennedy’s own explanation that he could make no decisions which could later be interpreted by Congress as a financial commitment and which could justify Congress calling for an explanation. But in addition Kennedy also left an abiding impression that the United States, while ready to assist in the economic development of the area and to talk over problems with the countries participating in the Colombo Plan, was anxious to avoid the sharing of responsibility with other members of the Committee and to avoid any possibility of interference in its own policy and technique.

3. ATTITUDE OF THE UNITED KINGDOM

Apart from Australia the United Kingdom was the only Government in a position, when the meeting opened, to make a precise statement. on contributions. The delegate referred to an announcement by the Chancellor of the Exchequer to the effect that the United Kingdom contribution would be likely to exceed £. sterling 300 million. He explained that no breakdown of this figure was possible, but that it could be divided into three categories:–

(1) Release of sterling balances. (He referred to recent agreements with Ceylon and India providing for a release of £.230 million over the six-year period and stated that negotiations would soon begin with Pakistan).

(2) Assistance already being provided to British territories.

(3) Sympathetic consideration of the needs of non-Commonwealth countries in the area.

1. The United Kingdom delegate also emphasised that the development plans of the British territories were gathering momentum and would be continually revised and modified. He was able to state, however, that there appeared to be no financial impediment in the way of these countries carrying through their programmes. On technical assistance the United Kingdom had established special machinery, it would provide training facilities of all kinds and would welcome more applications for training.

2. In other respects too the United Kingdom delegate sounded a positive note throughout. The delegation had instructions to establish continuing machinery to demonstrate to the world that the Scheme was going into action, and to accelerate activities under the Colombo Plan. Similarly, proposals were made for the establishment of a Scientific Liaison Officer with the Council for Technical Co-operation and the calling of a Scientific Conference. While other delegations were inclined to regard most of the proposals as premature, they were none the less symptomatic of a desire by the United Kingdom to get things moving and as such were refreshingly welcome.

3. Only on the subject of participation by non-Commonwealth countries in the area could the United Kingdom be charged with lack of enthusiasm. For example, one prominent member of the delegation reiterated an old United Kingdom feeling when he put the private view that failure to join by the non-Commonwealth countries would mean a much better prepared and tidier Plan.

4. ATTITUDE OF CANADA

In the early stages the Canadian representatives were at a decided disadvantage and could hardly avoid creating an unfavourable impression. Unable to announce a contribution to the Plan or to refer to achievements in the field of technical co-operation, they had to limit themselves to statements of goodwill and to describe the governmental organisation that was being created in Ottawa for the Technical Co-operation Scheme.

1. Towards the end of the meeting the Canadian delegate³ was able to advise privately that his Government was considering a contribution of $.25 million, providing there were reasonable prospects of the general objectives of the Scheme being fulfilled. Requested to comment urgently on the prospects, he agreed with the Australian view that a Canadian announcement at the current meeting would make a considerable difference and he reported accordingly.

2. The wording of the eventual formal announcement of a Canadian contribution is of considerable interest. Presumably it was only decided upon after consultation with Washington. Nevertheless the United States representative on the Committee who was shown the statement in advance was not a little touchy and asked for one or two minor amendments which made the implications for the United States somewhat less direct.

3. In all other respects there was evidence of a close affinity between the Canadians and the United States which accorded uniquely with the careful and cautious disposition of their respective delegates. On the subject of a continuing organisation, for example, the Canadians were as cagey as the Americans. They saw no use for a central organisation and felt that machinery could be limited to committees functioning in the various capitals in the region.

4. The Canadian attitude was therefore positive only in the final announcement of a contribution and the way 1n which that announcement was worded. This in itself, however, contributed considerably to the success of the meeting.

5. ATTITUDE OF INDIA

In his early statements, the Indian delegate⁴ sought to draw out the United States. He informed the Committee that the Colombo Plan had been welcomed in India and had aroused expectations, but that early action was needed to keep public interest and Confidence in the Plan high. He explained that in the absence of any definite indication of the source of financial aid, many quarters were already suspicious that it was more a paper Plan than a real means of assistance.

1. When it became evident, however, that the United States delegate would not commit himself, India adopted ‘an understanding attitude’ and nothing was said that might embarrass the Americans. In this respect, the Indian delegation seemed well aware of the Suspicions in the United States and particularly in Congress, of their foreign policy, and were out to prevent any deepening of that suspicion. It was also clear that the Indians placed great store on the wheat allocation and took the realistic view that as only America was capable of providing the assistance India needed, that help had to be obtained on the best terms possible.

2. This does not mean, however, that India would in any circumstances agree to aid on Conditions that would imply interference in her internal policy. There was every indication that India would prefer no help at all to dictation from outside. On this score the Indian delegate was extremely cautious about continuing machinery and emphatically opposed any suggestion that local machinery should be created in the capitals of South and SouthEast Asia as Australia and Canada proposed.

3. On the subject of action taken since the last meeting of the Committee, the Indians reported that their development programme was under continual review and had been modified to some extent, although none of the modifications was substantial. They also reported that the Indian Government was proceeding to carry out its programme within the limits of the resources available.

4. Of all the delegations, India was the most sympathetic to our efforts to encourage participation by non-Commonwealth Governments in the area. On the other hand the Indian delegation was opposed to invitations being sent to the Netherlands or France. In informal discussions it stood firm behind the formula that it was premature to even consider this matter.

5. ATTITUDE OF PAKISTAN

The Pakistanis like the Indians emphasised the need for early demonstration of the practical effects of the Colombo Plan. They have not, however, revised their programme, although like India they are carrying it out when possible.

1. In contrast to the Indian delegation the Pakistanis, for emotional reasons, reacted sharply against the Americans. Their first reaction to the negativeness of the Americans was to say privately that it would be better for the Committee to continue without them rather than be ham-strung by their participation.

2. As the meeting proceeded they came to appreciate the danger that the session might end without any major accomplishment. At this stage they became strong advocates for the establishment of a Council for Economic Co-operation. They argued that the creation of a body which would be comparable to the Council for Technical Co-operation would provide evidence that the Scheme was taking form and would help to maintain interest in it.

3. ATTITUDE OF CEYLON

The Ceylon representatives were helpful without making any constructive suggestions beyond their proposals for a continuing organisation which was circulated by telegram prior to the meeting. The Ceylon Government was reported to be continually revising its development programme although there was no evidence that the programme itself had reached a more concrete form than in London. More important the ‘Government is going ahead with the implementation of the programme and is unlikely to need financial assistance in the first year.

1. Ceylon’s main concern was the establishment of a continuing organisation and special emphasis was placed on the desirability of combining the functions of any secretariat or organisation that might be established for work on economic development with the Bureau for Technical Co-operation. One consideration was undoubtedly the desire to ensure that any machinery established for economic development would, like the Technical Cooperation Scheme, have its headquarters at Colombo.

2. ATTITUDE OF Non-COMMONWEALTH COUNTRIES IN THE AREA

At the outset a warm welcome was extended by all members to the representatives of the non-Commonwealth countries who were invited to participate fully in the discussions. At the opening session the observers were non-committal and as the meeting progressed and it became clear that the United States was not prepared to make detailed commitments, there was a danger that their reaction would be unfavourable. However, their enthusiasm improved with the atmosphere and by the end of the meeting they were all showing considerable interest.

1. In particular a proposal by the Australian delegation to include as an additional item on the agenda ‘the attitude of non-Commonwealth countries’ proved most successful. It gave the observers an opportunity to express their doubts and fears and the members an opportunity to resolve these and demonstrate that participation in the Colombo Plan involved no damaging commitments. Observers were told, for example, that membership involved no obligation to submit comprehensive plans for long-term development or agreement to contribute to the working expenses of the Bureau for Technical Cooperation. While it was expected that all countries participating would wish to co-operate as far as possible, no pressure would be exerted on any Government to take decisions to which it was opposed. On the subject of planning, the general view was that non-Commonwealth countries in the area could obtain aid for specific projects on a bilateral basis under the terms of the Colombo Plan, providing a contributing country was satisfied the project would help in developing the economy of the receiving country.

2. A more difficult question was whether countries in the area which did not participate in the Plan were eligible for the benefits of external financial aid and technical assistance. The Australian delegation made no commitment but explained that whereas it was hoped that active participation would benefit all countries in South and South-East Asia there was nothing in the Plan to preclude aid going to any of the countries in the region respective of that participation. Most of the other delegations were inclined to suggest that their assistance would be directed to the active participants in the Plan.

3. At the end of the session none of the representatives of the non-Commonwealth Governments in the area which were not already members of the Committee was in a position to announce any decision by his Government, but all observers indicated clearly their interest, and left the firm impression that their individual reports would be favourable. The meeting could therefore be regarded as another step towards their full participation in the Colombo Plan. Individual attitudes are summarised below.

4. ASSOCIATED STATES OF INDO-CHINA

Although the three Associated States of Indo-China have agreed to participate as full members, Laos was not represented at the meeting. Both Vietnam and Cambodia brought their own interpreters but were somewhat uncertain as to what it was all about. The Cambodian representative stated that the development programme for the Kingdom was not yet complete and expressed concern lest Cambodia should be obliged to contribute working expenses to the Technical Co-operation Scheme before she was in a position to enjoy benefits.

1. The Vietnam representative said his Government supported the Colombo Plan as a humanitarian venture and urged regular and frequent meetings of the Committee. He explained that his Government had prepared for the meeting a development plan involving a total expenditure estimated at £. sterling 199 million for six years. It would have to be carried out whatever the means available, but external aid would help in its rapid realisation. No decision was made by the Committee for co-ordinating the Vietnam plan with other programmes for the area, but the hope was expressed informally that this might be possible if and when other non-Commonwealth countries in the area produced plans.

2. BURMA

The Burmese representative recognised the Colombo Plan as a serious effort to assist in the economic development of the area. His Government put forward three conditions for participation: —

(1) Because of the war and insurrection Burma had to concentrate on urgent ad hoc problems; it was unable to present a long-term plan or even to think of preparing one, and required assurances that this would not be necessary;

(2) It was essential that there should be no interference with Burma’s right to receive and administer aid from other sources:

(3) The Government was anxious to know what aid was likely to be available under the Plan and the possible allocation Burma might receive.

1. Although the representative could be reassured on the first two points, the members of the Committee explained that no answer could be given on the third point and that in fact such a request could only be based on a misunderstanding of the way in which the Scheme worked.

2. INDONESIA

The Indonesian representative said his Government was confident that the Plan would assist considerably in the economic development of South and South-East Asia in general and of Indonesia in particular. He stressed his country’s economic difficulties following the Japanese occupation and the need for financial help. The Government enthusiastically supported the objectives of the Plan but was reserving its decision on membership until there was time to consider fully the various aspects.

1. The representative emphasised the impracticability of preparing a long-term development plan and the need to concentrate on immediate needs. At a later stage, however, he explained privately that he had received a two-year development programme, but that it was only in outline and had been received too late to present to the meeting. He also mentioned privately that his Government would decide on participation when it had considered the report of the meeting and that he would be proceeding to Djakarta for personal discussions. He admitted confidentially that there were still suspicions of political tags among some Indonesians, but he appeared completely reassured when it was pointed out that:—

(1) India would not be participating wholeheartedly if there were political tags;

(2) Membership of the Committee in fact afforded protection against outside political pressure in the administration of financial aid.

1. Calling at Indonesia on his way to Colombo the New Zealand delegate gained the impression that although the Ministry of Foreign Affairs was prepared to recommend Indonesian participation, the decision by the Government was, for internal political reasons, still some six months off. Despite parliamentary difficulties in Indonesia there is at least hope that the observer’s report which will certainly be favourable may hasten the decision.

2. PHILIPPINES

The Philippines representative proved a useful and vigorous participant. He said his Government saw definite value in the Scheme and he hoped it would join before long. Privately he ‘sold’ the Scheme enthusiastically to his other non-Commonwealth colleagues. His main fear was that a contribution might be necessary before joining and that this might be delayed by budgetary considerations. He was reassured on this point.

1. THAILAND

The Thai representative who is attached to the mission at New Delhi was without instructions but was personally a strong supporter of the Scheme. He informed the Australian delegate privately that he had previously recommended Thailand’s participation in the Council for Technical Co-operation but that he had failed to overcome his Minister’s suspicions. He hoped to do so as a result of a visit to Bangkok which he had now requested. The Thai representative does not believe his Government will need financial assistance, but is personally impressed with the opportunities in the Plan for cooperation. He asked privately for advice on the procedure Thailand might follow if she were to join the Scheme.

1. FRANCE AND THE NETHERLANDS

Prior to the meeting it was evident that the desire of France and the Netherlands to participate in the Colombo Plan could create complications. The Netherlands Government had taken considerable trouble to supply appropriate Governments with a comprehensive statement of the technical assistance it could provide. And a fortnight before the meeting opened the French Minister to Ceylon had called upon the Permanent Secretary of the Department of External Affairs to report that France expected the United Kingdom to propose France as a full member of the Consultative Committee and to express the hope that Ceylon would support the proposal. The Minister had also stressed that France would be able to supply considerable technical assistance to the area.

1. In order to avoid embarrassing discussions in the Committee, Commonwealth delegates met informally to discuss the problem. After general discussion it was readily agreed that no invitations should be sent:—

(1) if this would jeopardise participation by non-Commonwealth Governments in the area,

(2) if any participating Governments were opposed.

1. Most delegates were ready to welcome the participation of France and the Netherlands, but as a number of the delegations were able to report that an invitation to the Netherlands would seriously affect Indonesia’s participation in the Scheme, and as India left no doubts about her opposition to an invitation to France being discussed, all agreed that further discussions would be premature and could easily prejudice any eventual participation by the two Governments. It was therefore decided that invitations to France and the Netherlands should not be considered at the meeting and that there should be no reference to them in the formal discussions of the Committee.

2. Of all the delegations, New Zealand which had specific instructions to propose and support the participation of the Netherlands was the most concerned. Their difficulty was resolved, however, when the United Kingdom reported that the Netherlands Government had taken a broad view and would not press their request for participation if Indonesian reactions were unfavourable.

3. ORGANISATION

When it became clear that the United States would not be in a position to indicate any major contribution towards the development programmes, the main hope of concrete results emerging from the meeting was centred in proposals for a continuing organisation. This then became the big issue of the conference.

1. Prior to the meeting, ideas had been exchanged by telegram between Governments and, in particular, the United Kingdom and the Ceylon Governments had taken an initiative in suggesting the outline of an organisation. A United Kingdom paper elaborating further their ideas was circulated early in the session. This paper is attached as Appendix ‘A’.⁵

2. Basically the United Kingdom proposals provided for continuation of meetings of the Consultative Committee at both the ministerial and official levels. The meeting of Ministers would be held in various capitals and the Chairman, who would be the representative of the host country, would retain his position until the following meeting. There would be a secretariat, which would maintain continuity, arrange meetings and provide a clearing house for ideas. It would not be a large body, and would have no powers of control.

3. Special emphasis was placed by the United Kingdom on the advantage of a comprehensive annual report compiled with the help of the secretariat. This report would review the work on economic development and outline proposals and programmes for the following year. Subscribed to by Governments the published report would be analogous to the Colombo Plan report of last November, although, of course, the contents would be quite different. The United Kingdom believes that such a report would provide useful publicity and would foster high level interest in the Plan.

4. From the outset, however, it was clear that there was a great divergence of opinions on the form of continuing organisation which would be appropriate and how far the Committee could go at the present stage in suggesting an appropriate outline or in considering the form of an annual report.

5. Canada, in contrast to the United Kingdom, was interested solely in setting up local committees in each of the capitals within the area to co-ordinate the bilateral arrangements for providing financial assistance. The Australian delegation, while agreeing that these committees could be useful, suggested that in the first instance they might be arranged informally.

6. The Indian delegate came out strongly against any reference to local committees which he felt might be misunderstood in India and prove embarrassing politically. He pointed out that India would oppose any suggestion of interference by the Consultative Committee in the internal affairs of India and that if the report contained so much as a reference to the fact that some delegations favoured local committees, he would have to insist on India’s objections being fully stated.

7. There was a large measure of agreement with the Australian view that it would be premature to try to decide on details of organisation and that any central secretariat should be kept small. But the real limitation on discussions was imposed by the United States whose representative was not prepared to recognise formally the need for any form of continuing machinery and made it clear that he would be adamant on this point.

8. On the subject of an annual report he was equally firm. He stated formally that he could not accept in advance the principle of a comprehensive report and that in his opinion the annual report might merely be a record of the meeting, such as usually followed an international conference.

9. After a lengthy and unsatisfactory debate, it was found necessary to appoint a sub-Committee consisting of Australia, Ceylon, India, Pakistan, United Kingdom and the United States to endeavour to find a measure of agreement for the Committee. The subcommittee discussions were as fruitless as the talks of the main Committee. The United States continued to oppose the Committee making any suggestions for a central secretariat and when it was suggested that perhaps the Bureau might act pro tem in a secretarial capacity, for the capital development side of the Colombo Plan, he adopted the legalistic view that as the United States was not a member of the Council for Technical Cooperation, no recommendation affecting the Council could be made by the Consultative Committee.

10. Eventually the sub-Committee found that the greatest measure of agreement was limited to the following general points:—

(1) That the Consultative Committee should meet whenever necessary by mutual agreement and at least once a year;

(2) That the Committee should publish an annual report and consider such other reports as may be necessary;

(3) That a small secretariat might be required to serve the Consultative Committee and facilitate the exchange and co-ordination of ideas and information on problems before it;

(4) That should the need for secretarial assistance arise before the next meeting of the Committee, special arrangements could be made by mutual agreement by the Governments concerned.

1. Privately the United States representative said he was not opposed to a secretariat as such or to the use of the Bureau for Technical Co-operation, but that he had to avoid any commitment that might involve explanations to Congress. He also pointed out that the general agreements reached could cover both these proposals. Since other delegations agreed that a secretariat was in fact desirable, the United States and Canadian delegations eventually obtained their Governments’ approval for the statement ‘a small secretariat will be required’.

2. When discussions were resumed in the full Committee it was agreed to recommend as a further constructive note ‘that a further meeting of the Committee should be convened as soon as practicable’. ‘As soon as practicable’ can only mean when Congress has taken decisions which will enable the American position to be clearly stated. According to Kennedy no fixed date can be anticipated at this stage, but it is unlikely to be before July and it could be as late as September.

3. Another proposal which made no headway was a Pakistan suggestion for a Council for Economic Development or Economic Co-operation. The Australian delegation supported the Proposal but pointed out that it was too early to consider a constitution and that it would be preferable not to have a Standing Council but a Council that would meet from time to time in various capitals with special representatives sent for the occasion. The United Kingdom, overlooking the Australian statement, opposed the Pakistan suggestion as implying a meeting of local representatives whom they considered would not be appropriate for meetings on economic development. The United Kingdom favoured instead meeting[s]⁶ of the Consultative Committee at the official level. The issue may be a matter of words, but it is worth noting that the United Kingdom intention to continue to hold meetings of the Consultative Committee at the official level may make it more difficult to hold ministerial meetings—a result which the United Kingdom certainly does not seem to intend.

4. The main conclusions which emerged from the discussions on organisation were:—

(a) that it was premature to consider any type of continuing machinery;

(b) that there was general support for a small secretariat;

(c) that there was support for a secretariat which would service both Technical CoOperation and Economic Development, but that the United States’ sensitivity about their relationship to the Technical Co-operation Scheme might preclude this at least as a formal arrangement.

1. These conclusions do not take plans for a continuing organisation much further. Nor do they help with the appointment of a Director and the staffing of the Bureau for Technical Co-operation ‘which were held over pending further decisions by the Consultative Committee. Despite the unfavourable American attitude the United Kingdom ls likely to oppose any developments which would prejudice their plans for:—

(i) the appointment of a high-ranking officer (possibly their own nomination) to take charge of both the Bureau and the Secretariat for Economic Development;

(ii) a detailed organisation in which the United States could participate.

Since a suitable officer could presumably only be available as Director of the Bureau, if there were some assurance that a top-ranking officer would not be placed over his head, the United Kingdom will probably seek to postpone the appointment of a Director. As the position may not be clarified for more than six months this delay could have a serious effect on the momentum of the Technical Co-operation Scheme.

1. The United Kingdom delegation proposed with considerable enthusiasm the appointment of a Scientific Liaison Officer and the holding of a Scientific Conference. In the case of the Liaison Officer it told the Australian delegation that the proposal was only put forward after a thorough working over by the top Scientific Committee in the United Kingdom under the chairmanship of Sir Henry Tizard.⁷ The United Kingdom was extremely disappointed when the Australian view that the appointment and conference would be premature influenced other delegations and led to the shelving of the proposals.

At the request of the United Kingdom the Committee agreed to the United Kingdom telegram on the subject being attached to the report of the Consultative Committee with a note to the effect that it was so attached at the request of the United Kingdom delegation and that the proposals it contained should be given further consideration by participating Governments through the normal diplomatic channels.

1. INTERNATIONAL BANK

The report sets out carefully the attitude to the Colombo Plan of the International Bank as expressed at the meeting by its representative Dr. Basch. He reported that the Bank had been studying the Plan alongside its own surveys of the area and was prepared to do what it could to help with its implementation. The exchange of correspondence between the President of the International Bank and the Chancellor of the Exchequer, which was circulated by the United Kingdom delegation is attached as Appendix ‘B’.⁸

1. All representatives agreed there should be close and continuous liaison between the Bank and the Consultative Committee, but there was some difficulty in deciding how an appropriate invitation to the Bank might be worded. In the first instance, it was agreed that the Bank should be invited to attend ‘appropriate meetings of the Committee’, but Basch pressed for clarification of the term ‘appropriate meetings’ which he claimed was too vague. There was a tendency among some of the delegates to leave it to the Bank to attend any or all of the meetings of the Consultative Committee, but others pointed out that it would hardly be appropriate for the Bank to be regarded as a full member and that some discretion should be left to the members of the Committee as to how and when the Bank should attend. In the final report, the problem has been glossed over; it is left to the United Kingdom to extend, after consultation with member Governments, an invitation in appropriate terms to the President of the International Bank.

2. The Australian delegation took advantage of the presence of the representative of the Bank to discuss informally the role of the Bank in more detail. The following are the main points which emerged:—

(1) Special assistance provided under the Colombo Plan will enable the Bank to increase its lending to the area, and consequently permit the Bank to make an additional contribution towards the development programmes set out in the Colombo Plan. The policy of the Bank permits general programme loans as well as the financing of particular projects.

(2) In the opinion of the Bank representative, neither Ceylon nor Thailand will need special assistance in the immediate future. Since British territories will be looked after by the United Kingdom and on the assumption that Australia is not contemplating financial assistance to the Philippines, there remains India, Pakistan, Burma and Indonesia which are likely to require financial help. The Bank has already investigated the credit-worthiness of India and Pakistan. Indonesia and Burma are expected to become members of the International Bank shortly, but there may be considerable difficulty in assessing their claims for financial assistance. In Burma, the case for an International Bank loan is complicated by the absence of dollar earning exports and the problem of servicing a dollar loan.

(3) Basch was interested in the prospect of Australia releasing part of its local currency contribution to facilitate loans to the area by the International Bank, but he stressed that a procedure which involved suggesting to the Bank the precise direction of the investment had not been adopted previously, and that there could be a question Whether the Bank would be happy about arrangements which might imply discrimination in the lending policy of the Bank. He suggested that if Australia wished to proceed with its proposals, the best course would be for the Government to announce generally that it wished to release part of its local currency contribution after consultation with the Bank. Informal discussions could be arranged at a high level at Washington to seek the understanding Australia desired.

(4) On the other hand, Basch was emphatic that Australia’s contribution to the Colombo Plan of £. sterling 25 million had been announced in such a way that it could hardly be proper for Australia to include any release of her local currency contribution ‘Which belonged to the Bank’ as part of this sum. He considered that the announcement should have been made differently if such procedure had been intended.

(5) Basch advised that the Bank would be ready to consult with Australia at any time on the possibility of a direct Australian loan to the area. He explained that there was a precedent for this type of consultation since E.C.A. and the Bank had conferred together over aid to Thailand.

1. ORGANISATION OF AID

Although a number of delegations brought officers who were qualified to discuss in detail the Organisation of financial assistance under the Plan, it was evident from the outset that Only very general ideas could be exchanged at the meeting.

1. The Canadians did not envisage any particular form of procedure. Countries would approach one another on an informal basis.

2. The Pakistan delegation also thought no specific procedure was necessary, but they pointed out the possibility of embarrassment if a country had to make a direct approach in order to have its requests known.

3. India emphasised the importance of most informal discussions at the outset.

4. New Zealand, conscious of the limitations imposed by the size of her contribution and the lack of representation in the area, urged that arrangements should be made to coordinate the different types of assistance so as to make contributions as effective as possible. The desirability of pooling aid was also mentioned.

5. The United Kingdom was prepared to hold informal discussions and to consider the question of joint aid. The delegation emphasised the need for a secretariat to obtain and coordinate information that might be necessary in the organisation of aid.

6. The United States were not in a position to give any indication of the procedure they would follow, beyond the emphatic statement that arrangements would be bilateral.

7. For Australia it was stated that although the Government had not yet reached any firm conclusions in the matters of procedures, consideration had been given to the possible forms of financial assistance. Part of her contribution might be made available in the form of loans and in this connection Australia was considering making some of its currency contribution to the International Bank available under certain conditions for lending by the Bank in the area. Australia would not necessarily insist on lending if circumstances were not appropriate. It would give consideration to the possibility of making grants and the extent to which any such grants, if in money form, would be convertible into other currencies. The Australian delegation also agreed there was need for some co-ordination by a central organisation as well as by local organisations and that there might be some advantage in the pooling of part of the contributions, especially where these were small.

8. Clearly the discussions with other delegates had not nearly such important implications for the organisation of Australian aid as the discussions with the representative of the International Bank reported in the previous section. The results of the latter suggest the following points for consideration:

(1) Australia’s plans for using the Bank may need to be reconsidered and it may prove unwise for Australia to include any release of local currency to the Bank as part of the £. sterling 25 million as promised under the Plan. The United Kingdom proposal to release sterling balances has not passed without criticism from Asian representatives, particularly in private talks, but the United Kingdom has been most careful in the wording of official statements and there would be more justification in the case of Australia for the accusation of bad faith.

(2) If Australia contemplates direct loans to the area, the Bank’s co-operation and assistance would be available although the Bank would certainly not be in a position to undertake the administration of an Australian loan.

(3) The more Australia contributes by way of grants as distinct from loans, the greater will be the credit-worthiness of the area and consequently the better will be the prospect of financial assistance from other sources such as the International Bank.

(4) If the Australian Government wishes to release some of its local currency contribution to the Bank, 1t may be worth-while directing this to South and South-East Asia by informal discussions and representing it as additional assistance arranged by Australia under the Colombo Plan.

1. TECHNICAL CO-OPERATION

The Committee considered a report from the President of the Council for Technical Cooperation. General satisfaction was expressed of the progress under the Scheme, although the United Kingdom representative expressed the hope that more requests would be received for making use of training facilities of all kinds available in the United Kingdom. Discussion was limited in the main to the terms and conditions on which technical assistance would be provided, with the Asian countries stressing once more the importance of liberal terms. It was reassuring to find that as a result of Australia’s lead last December both the United Kingdom and New Zealand were able to go much further towards meeting them than had been possible at the first meeting of the Council for Technical Co-operation.

1. COLOMBO PLAN EXHIBITION

Paragraph 20 of the official report details a proposal by Ceylon that there should be an exhibition early in 1952 to demonstrate the resources, products and cultures of the countries in the area. This exhibition would be timed to synchronise with the visit of the Royal Family on their way to Australia. Apart from publicising the Plan itself, such an exhibition would also give Australia an opportunity to capitalise on goodwill from the Colombo Plan by staging a well prepared exhibit showing our exports to Asian countries and the products likely to assist those countries in the future. If the Ceylon proposal is approved, there would be advantages in making early preparations in Australia to make the exhibition an unqualified success.

1. CONCLUSION

Although the Committee made few recommendations it concluded its session in a much more cordial and generally optimistic atmosphere than seemed possible in the early stages when only the United Kingdom and Australia appeared to be interested in giving the Colombo Plan impetus. In this respect the Canadian contribution and more enthusiastic Statements by Kennedy made a considerable difference. On the whole the Australian delegation was reasonably satisfied with the results and it was at Australia’s suggestion that a final optimistic paragraph was included in the report.

1. In summary the main achievements of the meeting were:—

(1) The United States is now committed as a full member of the Consultative Committee.

(2) The Philippines and the International Bank are now associated with the Plan.

(3) Countries in the area are proceeding with their development programmes.

(4) Considering that Ceylon and Thailand will not require immediate assistance and that the financial needs of British territories are being met, the financial aid so far Promised 1s a useful contribution towards meeting the needs of the area.

(5) Interest and enthusiasm in the Colombo Plan has been maintained.

(6) Further progress has been made towards the participation of non-Commonwealth Countries in the Scheme.

(7) Although on a much smaller scale than most delegations expected, a start has been made in organising continuing machinery for economic development under the Colombo Plan.

1. On the other hand, it would be a mistake to overlook the fact that United States participation has been on their own terms and that there are indications that these terms may mean no closely integrated plan but bilateral aid with loose arrangements for general consultation. It would seem desirable to encourage by informal consultation at high level the largest possible measure of American co-operation in the Colombo Plan as it was originally envisaged.

2. Vigilance may also be necessary to ensure that another meeting of the Committee is held as soon as practicable in accordance with the Committee’s recommendations. All delegations did not share the Australian view that frequent meetings are required to give impetus to the Scheme. Moreover, although United States objections to ministerial meetings need not be taken seriously in view of the different set-up in the United States, care may be necessary to ensure that the impetus given by top level discussions is maintained.

3. Some delegations appear to be thinking of a meeting at an official level in about July somewhere in South or South-East Asia, with a ministerial meeting in September, when a proposed meeting of Finance Ministers and possible movements of Foreign Ministers associated with the United Nations might make such a gathering practicable.

Appendix A

LETTER FROM GAITSKELL TO BLACK

4 December, 1950

Many thanks for your most heartening letter of the 13th November about the part which the International Bank would wish to play in the Colombo Plan, as we now call the Plan for Economic Development in South and South-East Asia. I am taking the liberty of sending a copy of it to my Commonwealth colleagues on the Commonwealth Consultative Committee who, I am sure, will share my pleasure at the whole-hearted co-operation on the part of the Bank which it foreshadows.

I am glad to see that the Bank intends to establish close liaison with the Consultative Committees as well as with each government participating in the Plan. I appreciate your difficulties in planning liaison with the Committee itself. As you will have gathered from the Report itself the general view taken at our meeting in September was that the form of a continuing organisation could not be determined precisely until we were clearer about the sources from which external finance would be forthcoming. We hope to get down to serious consideration of this question of a continuing organisation with the other members of the Consultative Committee in the immediate future and we will see to it that the Bank iS kept in close touch with the developments of our thoughts.

Appendix B

LETTER FROM BLACK TO GAITSKELL

November 13, 1950.

I was very gratified to learn from you about the progress made during the recent meeting of the Commonwealth Consultative Committee in London in the preparation of a plan for the economic development of South and South East Asia and hope that the work of the Committee will give a new impetus to the achievement of economic and social progress in this area.

We are keenly aware of the importance of economic development of South West Asia and of the need for a speedy improvement of the standard of living of its people. We therefore welcome the opportunity to co-operate with the Governments and with the Committee in the preparation of their development programs and in financing as large a part of those programs as each country’s creditworthiness will allow.

We hope to establish a close liaison with the Committee as well as with each Government. However, since we do not know as yet the manner in which the Committee will be organized and will function, I am not yet able to make concrete suggestions of how the liaison with the Committee could best be accomplished. This is a matter which we hope to explore as soon as possible. In the meantime, it would be best if those Governments which are well advanced in the preparation of their plans were to approach the Bank for discussions. The development projects of several countries are well known to us through our missions and studies both of loans made already and loans contemplated. Decisions as to whether the role the Bank plays already can be enhanced may, in many cases, take some time since it is not yet know whether grants will be made available to each country or in what amounts and in what currencies, and this is one of the factors which influence each country’s creditworthiness. Discussions could start, nonetheless, because a great deal of work and time is involved in building up a good development plan. It may also be that there are some projects which would have the same high priority whatever the scope of the program. A beginning might be made in such cases even before we know on what size of development program we can embark.

[NAA: A1838, 250/10/1/1/1 part 1]