Canberra, 19 February 1950
66. SECRET
Consultative Committee for South and South East Asia
1. We are despatching by bag copies of the agreed recommendations made by Foreign Ministers to Governments on the question of economic assistance to South and South East Asia1 together with a copy of the paper submitted by the Minister to the Colombo Conference.2
2. There was general agreement during the discussion in Colombo that the success of this enterprise would depend to a large extent upon participation of the United States Government and this is reflected in the recommendations. Accordingly the Minister has handed to the United States Ambassador3 in Canberra, in strict confidence, copies of the Australian paper and agreed recommendations.
3. We intend to keep the United States Embassy fully informed of the development of Australian policy in this field and on the progress of preparations for the first meeting of the consultative committee in Canberra. The following will give you the general attitude which we think you should express in any discussions which you may have with United States authorities in Washington.
4. We are taking the view that the most effective way of resisting the spread of Communism in the area is by selective economic measures designed to stabilise Governments and remove causes of unrest in the most critical areas. We are avoiding an implication that the Committee represents the inauguration of a comprehensive plan for a spectacular increase in living standards throughout the area as a whole. We are taking the view that Commonwealth Governments can offer valuable assistance and we shall continue to urge that they should do so and ourselves submit proposals to the Australian Government in the near future. But it is obvious that such assistance will not make any major impact on the essential needs of the area unless the United States as well as the Netherlands and France are associated. The consultative machinery will enable Commonwealth Governments to co-ordinate their efforts and arrive at some order of priority. But Australia would regard the machinery as empirical and subject to review if the United States decided that it wished firstly to expand the level of assistance in the area and secondly to be associated with Commonwealth Governments to arrive at a co-ordinated programme. We would wish to adjust the machinery with of course the agreement of all Commonwealth Governments, in a way which would best facilitate this association between the United States and Commonwealth countries.
5. We have told the United States Embassy informally that three months might elapse before it was practicable to have the first meeting of the Committee in Canberra on the assumption that we would wish to have some Government decision at least on the general level of aid which it was practicable for Australia to afford, before the committee met. The level of representation will be a matter for further Commonwealth discussion. We have said publicly that there is a possibility that the representation will be at the level of Ministers but this will be subject to review in the light of further events and it may prove desirable to strike a compromise between ministerial and technical representation, for example by having a meeting of High Commissioners and technical advisers. While anxious to maintain the impetus given by the recommendations made by Foreign Ministers we would wish to avoid creating expectations in the minds of the public and other Governments which ran beyond what is expected the consultative machinery will be able to achieve by way of tangible economic aid in the short run.
6. We have told the United States that Australia has a special interest in Indonesia and we have said that we are examining the availability of Australian supplies, technicians, and financial resources at the same time as endeavouring to get a clearer picture from the Indonesian Government of what their essential needs are. We do not propose to discuss with United States representatives the steps which we hope to take to encourage commercial trade between Australia and Indonesia and the interest of Australian businessmen and investors in that country.
7. So far as the definition of the area is concerned there was no precise definition arrived at Colombo but it would be generally accepted that it includes Pakistan, India, Burma, Thailand, British territories in South East Asia, Indonesia and Indo-China, excluding China, Japan and the Philippines.
8. One of the most important questions for decision will be the best way of persuading the United States to participate in economic aid to the area. The Embassy should keep this question under review and we should be glad to have whatever advice you can give us from time to time in the light of your appraisal of the American situation. You should not make any formal approach to the United States Government at present but report any reactions to the conversations we have had with their representatives in Canberra.
[NAA: A1838, 381/3/1/3 part lb]
1 See Document 19.
2 Document 16.
3 Pete B. Jarman.