MINUTE FROM DOIG TO SPENDER

Canberra, 9 March 1951

Colombo Plan

1. The following notes amplify those of the 6th March¹ and suggest further action which you might consider taking in order to get the Plan under way.

2. The Department’s appraisal of the results of the Consultative Committee’s ‘Tecent meeting is confirmed by the Australian Delegation’s report,² which has just been received. A copy of this report is attached.

3. The following are the main subjects which require attention:

(i) Policy towards the U.S.A. in coming months

There are three main items on which top-level discussions with the U.S.A. Administration could usefully be held:

(a) Total amount of U.S.A. appropriation for economic aid to South and Southrast Asia, and its distribution;

(b) Consultation among contributor and recipient Governments and coordination of economic aid;

(c) Political, as well as economic, objectives.

(ii) The size of the Australian contribution.

(iii) Suitable time (and level of representation) for a further meeting of governments interested in the Colombo Plan.

1. Policy towards the U.S.A.

Two of the objectives of the series of meetings of the Consultative Committee, of the preparation of detailed plans, and of estimates of financial assistance required, were to secure, firstly, the interest, support, and active participation of the U.S.A. Government and, secondly, substantial financial assistance from that Government.

The U.S.A. is now participating as a full member of the Consultative Committee; one of the objectives has therefore been attained. The next step is to persuade the U.S.A. Administration to appropriate for aid to South and South-East Asia a sum adequate to fill, or at least to cover substantially, the gap between the external financial requirements of the countries of this region and the contributions promised or expected to be made by other donor Governments participating in the Plan, i.e. the United Kingdom, Canada, New Zealand and Australia.

We have been informed by the Australian Embassy, Washington, that the United States Department of State 1s working on a figure of $250 m. for aid to South and South-East Asia, and $50 m. each for the Philippines and Formosa. We have no idea how these figures were arrived at, whether they cover only economic aid, or also include technical assistance, or if they are additional to the 2 m. tons of wheat (value about $190 m. or stg. £68 m.) which the U.S.A. is considering for India. In any case amounts of $50 each for the Philippines for Formosa seem greatly out of proportion to the $250 for the whole of the remainder of South and South-East Asia—India, Pakistan, Ceylon, Indonesia, Burma, Thailand and Indo-China.

In assessing whether or not the sum of $250 is likely to cover the gap, the following figures are relevant: external finance requirements for 1st year 1.e. July 51—June 52.

* Ceylon and Thailand are unlikely to require external financial assistance during the first year. This was stated by their delegates and confirmed by the I.B.R.D.

** This figure (stg. £45 m.) is a rough guess, but the Americans may be able to supply a reasonably accurate estimate. The I.B.R.D. state they expect to encounter considerable difficulty in assessing the claims of Burma and Indonesia for financial assistance.

*** Assumption is for the present that U.S.A. will meet the Philippines requirements though it might be considered desirable if other governments also contribute to the economic development of the Philippines to help avoid charge of ‘American imperialism’.

The above figures (apart from the rough estimate of stg. £45 m. for Burma, Indonesia and Indo-China) are from the Colombo Plan report, but it must be remembered that they are based on many assumptions, and are therefore flexible. They should be regarded as an approximate guide to needs and not necessarily as fixed and definite requirements.

If we keep in mind then a figure of about stg. £195 m. we can calculate whether contributions already promised or under consideration approximate this figure.

This leaves a deficiency of (£195 m. — £115) stg. £80 m.

This deficiency might be met as follows:—

(i) Further contributions by U.K., Canada, New Zealand and Australia by way of loan through local currency subscriptions to the International Bank—say

United Kingdom £10m.

Canada £8m.

Australia £6m.

New Zealand £1 m. = stg. £25 m.

(ii) Direct loans from International Bank stg. £30 m.

(iii) Further contribution from U.S.A. stg. £25 m.

Total stg. £50 m.

* Australia could in my opinion transfer about A£1½m. from technical assistance to economic development over the next 2 years.

It will be appreciated that the compiling of those figures had in it an element of arithmetical exercise, but they provide a fairly realistic approach, and a useful basis for discussion. As stated above the estimated deficiency is subject to revision according to the reasonableness or otherwise of the assumptions made in calculating requirements.

The conclusion 1s therefore that further detailed consideration should be given to the overall requirements of countries of the region, to the total amount from all external sources which must be provided to cover these requirements, and to the question of contributor Governments providing more than they have already undertaken, or have under consideration, should this appear necessary.

It is suggested that this particular problem be discussed in some detail with the U.S.A. Administration and with the International Bank.

It is further suggested that, as a bargaining point, the Australian Government be prepared to offer, if necessary, further assistance during the first year of up to £6 m. stg. (A£7½m.) by way of loan to Governments of the region through our local currency subscription (total A£16 m. at present unused) to the International Bank.

(b) Consultation among contributor and recipient countries and co-ordination of economic aid.

The U.S.A. has agreed that the Consultative Committee should continue, but has emphasised that its functions are ‘consultative and advisory’ with no ‘action responsibility’.

It is clear that the U.S.A. has the intention of following its past policy of making bilateral agreements with recipient countries, and of holding on to full control of policy and administration concerning its own economic aid (and technical assistance) programmes, The Americans will, however, co-ordinate their activities with other contributor countries ‘to the extent possible’.

It is natural, and understandable, that the Americans are sensitive about the pressure being put on them for assistance from various places; it is also understandable that they wish to keep full control of their own policy and administration. They would, at this stage, clearly be opposed to ‘pooling’ their contributions (the lion’s share) with those of lesser fry (financially speaking), and co-operating with them in joint administration, allocation and responsibility concerning an over-all economic aid programme.

However by adopting this somewhat rigid attitude the U.S.A. is³ moving towards a position which is feared by, and has already been openly criticised by, many thinking non-Communist Asians—viz., that of a new instrument of ‘economic imperialism’. It has already been suggested in several places, e.g. in articles by American correspondent Trumbull⁴ (New York Times) in Asia, and by Eugene Black in the present session of the Economic and Social Council that there is great advantage in extending aid through an international Agency (e.g. of the United Nations) or a regional organisation. (See attached press clipping.) ‘International organisations could not be charged with invading national sovereignty, with economic exploitation, or with political discrimination among different countries.’

Clearly this is a subject, particularly in view of anti-American feeling in South and South-East Asian countries, which could be tactfully discussed with the U.S.A. Administration.

It is felt that, though the U.S.A. will probably continue to make bilateral agreements and administer their own aid programmes completely in the various countries, a greater willingness and eagerness to co-operate in a regional body (i.e. the Consultative Committee) than was shown by Kennedy at the recent meeting would do a good deal to dispel doubts about United States motives in Asia. Furthermore the U.S.A. policies may well benefit from and be motivated by the experience, and different viewpoints of the other participating countries, and reduce the risk of developing anti-American feeling to the extent of widening the differences between East and West.

It should be our aim therefore to secure full and continuing participation by the U.S.A. in the Consultative Committee and in the Council for Technical Co-operation, and to obtain their agreement to take part in full discussion periodically among contributor and recipient Governments of the economic development and aid programmes, of problems and of results, progress and failures, and of any further necessary action or assistance required.

The U.S.A. should be prepared, without any need to lose good-will or political benefits resulting from its own large assistance programmes, to regard them as part of a regional co-operative plan, in which all Governments participate on a basis of equality and complete economic and political independence. Insistence by the U.S.A. on its present policy will produce charges of economic imperialism, interference with domestic policy and so on, whereas, while preserving their own administrative and policy rights, a more co-operative approach on their part will greatly help to remove the obvious suspicions of the Far East regarding the motives of the West.

For the sake of administrative efficiency it is suggested that informal co-ordination of technical and economic aid activities be arranged ‘on the spot’, ie. in the recipient country, among the representatives of contributor countries. (It should be noted that the Indians particularly, strongly oppose any form of local committee (formal) to administer aid, on the grounds of interference with domestic policies, etc.) [In Thailand however, there is a formal co-ordinating committee comprising representative of local Depts and of the U.S. administration.]⁵

(c) Political, as well as economic objectives

Considerable attention has been given to the economic and social objectives of the Colombo Plan, the Point-4 Programme, and the expanded programme of technical assistance of United Nations.

While the United Kingdom, for example, may have ideas about immediate, and narrow, financial objectives (dollar-earning), generally the economic and social objectives could probably be described briefly as increases in agricultural and industrial productivity and in general economic and social welfare. These might be regarded as desirable in themselves and sufficient to warrant the handing out of assistance by the rich to the poor, in order to enable them to increase their actual and potential levels of living.

The political objectives have not been so clearly defined or expressed, but so far have been, perhaps unfortunately, confined to references about ‘stemming the tide of communism’. The Asians generally, it is thought, are much less concerned about communism than we are. They certainly do not regard ‘Americanism’ as being better, though certainly most of them dislike both. Americans [appear to] have worked on the assumption that by hand-outs of dollars they can convert Asians to their viewpoint on most problems. They, and we, are inclined to forget the traditions of culture and the older civilisations which form part of the history of these countries. We understand them possibly as much as they understand us—only a little. The political objectives therefore of our policy should be not to secure complete and full understanding immediately or quickly; nor to expect in return for economic and technical aid, an identity of viewpoint with our own on all current international issues; rather it might be in the short run:—

(i) to secure active participation in a co-operative regional organisation, with full respect for equality and independence, the main purpose of which is the extending of assistance by the developed countries to the under-developed;

(ii) to provide a consultative organisation through which there will develop a greater understanding of attitude, prejudices, fears, motives, customs, etc. between East and West.

(iii) To convince the Asian countries that we also believe, and act on the understanding that, the days of ‘colonialism’—economic and political—are gone (or at least rapidly going).

(iv) To convince the Asian countries that for purely economic and social reasons the old imperialism and colonialism are being supplanted by non-profit making investment and by grants-in-aid by highly-developed countries, [and that such action is beneficial to both developed and under-developed countries].

(v) To convince the Asian countries that we do not expect them to adopt our systems, our way of life, our customs, or our religions, and that we are on their side against Soviet imperialism. This point I think is particularly important.

(vi) To convince the Asians also that we have no wish to bolster up corrupt, or reactionary regimes, but that we are on the side of progressive peoples and governments in their struggle for freedom—political, religious, cultural, individual.

(vii) To convince the Asians that the real threat of a new imperialism comes, not from U.S.A. or Western powers, but from the Soviet Union.

(ii) The size of the Australian contribution

It is suggested that the Australian Government consider the desirability of being prepared to offer stg.£ X from its local currency subscription to the I.B.R.D. as a loan to South and South-East Asian countries, in addition to the £25 m. stg. already agreed.

(iii) Suitable time, etc. for a further meeting

It is suggested that a further meeting be held as soon as convenient after the U.S.A. Government has decided on its appropriation for economic and technical aid to South and South-East Asia; that the meeting be in the first stage at the official level, and be followed immediately by a conference of Ministers. The meeting should be held in South and South-East Asia, perhaps at Bangkok.

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