Canberra, 26 July 1950
CONFIDENTIAL
Economic Development in South and South-East Asia
A. INTRODUCTION
1. On June 6th I described in the House of Representatives the broad nature of the recommendations of the Sydney meeting of the British Commonwealth Consultative Committee. The Report of the Committee is contained in Annex I and the recommendations are summarised on pages 17 to 20 of the Report.1 Cabinet is now being asked to approve the recommendation so that I may formally advise other Governments. The Governments of New Zealand, Pakistan, Ceylon and the United Kingdom have already approved the recommendations.
B. PREPARATION OF A DEVELOPMENT PROGRAMME
2. All the Governments represented at the Conference agreed that the economic development of South and South-East Asia was politically and economically a matter of prime importance, that it was urgent to make a start upon it as speedily as possible and that the scale of the problem was such that British Commonwealth Governments would not from their own resources alone be able effectively to carry out such development.
3. Accordingly, arrangements were approved for the immediate preparation of six-year development plans by countries in the area for joint discussions at a series of meetings in London in September. It is proposed that a total programme should be prepared which, after British Commonwealth countries have considered to what extent they can assist in its implementation, will be conveyed to the United States while the United States Administration has under consideration its total future foreign aid programme.
C. THE ROLE OF TECHNICAL ASSISTANCE
4. The Committee agreed that there was a serious lack of technicians and training facilities in South and South-East Asia. According, the Committee recommended that a Commonwealth Technical Assistance Programme should be established forthwith to train personnel of countries in the area, to provide equipment etc. for development purposes. The Programme should provide assistance up to a maximum value of £8 million sterling over the three years commencing 1st July, 1950. Details are to be considered further at meetings in Colombo which commenced on 24th July. Each participating Government was invited to indicate as soon as possible its contribution. At the Sydney meeting I said, in the light of the consultations which I had had with Ministers (referred to in the following paragraph), that I would recommend.to the Government that Australia bear up to 35% of the cost of the programme. The present position as regards the sharing of the programme is described in Annex II.2
D. PREVIOUS MINISTERIAL CONSIDERATION OF POLICY IN SOUTH AND SOUTH-EAST ASIA
5. Prior to the Sydney meeting I asked for consultation with a Committee of Cabinet and on March 22nd the Prime Minister, the Treasurer, the Minister for External Affairs, the Minister for Development and the Minister for Trade and Customs reviewed the question of assistance to South and South-East Asia. The minutes of this meeting are contained in Annex III.3 The Cabinet Committee gave me authority to negotiate within defined financial limits and agreed, inter alia, that Departments should give constructive thought to the implementation of the policy already enunciated in the House of Representatives, that is, deliberately increased commercial relations with each of the countries of South and South-East Asia, financial assistance in co-operation with the United States and other countries, and training and technical assistance, together with any other forms of assistance which would help to stabilize conditions in South and South-East Asia and promote Australian economic and security interests’.
6. The ad hoc Committee of Ministers decided that the overall limit of £13 million for assistance to South and South-East Asia (including credits), under which I was authorized to negotiate, should be subject to review after the meeting of the Consultative Committee. Actual commitments upon Australia, which have been made or are contemplated, include the following:
| £A.m.|
—|—|—
Grants| |
Contribution to technical assistance work of United
Nations organizations (in respect of 1950/51)| .120|
Proposed contribution to British Commonwealth
Technical Assistance Scheme (in respect of 1950/51)| 1.164|
| 1.284|
Credits| |
Loan to Burma| .625|
Limit on credit contemplated under trade
negotiations shortly to be opened with Indonesia| 5.0| (over two years as from
Jan. 1st, 1951)
The expenditure so far involved therefore has proved to be well below £13 million. Possible further financial commitments during this financial year should be contemplated
E. GENERAL COMMENT
7. It will be seen that the plan of action recommended by the Sydney meeting goes some way towards dealing with the problem recognized in the discussions of the Cabinet Committee, namely, that economic stagnation in South and South-East Asia exposes it to grave instability, and Communist penetration of which there is already ample evidence in some of the countries. Short of armed force, economic assistance and technical advice directed to improving the efficiency and administrations are the only methods open to us of maintaining stable democratic governments in the area.
8. Clearly the assistance which Commonwealth countries may afford, however, will not be enough to bring about a rapid improvement in South and South-East Asia. A prime objective is to induce the participation of the United States. The United States is now putting considerable resources into countries in the area but on the basis of ad hoc appropriations. What is necessary is a sustained long-term programme by the United States on an enlarged scale. Implementation of the plan of action adopted in Sydney, that is, the Development Programme and the Technical Assistance Scheme, will satisfy the requirement, repeatedly stated by the United States, that initiative must come from the area and from governments with political interests in it, and in this way it is hoped substantially to influence the United States towards expanding its interests and the scale of its assistance in South and South-East Asia in co-operation with the British Commonwealth.
9. This submission has been discussed by my Department with the Departments of the Treasury, Labour and National Service, Commerce & Agriculture, the Commonwealth Office of Education and the Public Service Board.
F. RECOMMENDATIONS
It is recommended that:
(a) The policy agreed by the Committee of Cabinet on 22nd March, 1950 for the supply of assistance to South and South-East Asia including the directive to Departments should be confirmed.
(b) The Report of the Sydney meeting of the British Commonwealth Consultative Committee should be approved and the recommendations o f the Committee accepted.
(c) Financial commitments in connection with this policy as set out in paragraphs 6 and (d) below should be confirmed.
(d) The Australian Government should indicate its willingness to spend up to 35% of the total programme under the Commonwealth Technical Assistance Scheme. On the assumption that the total contributions will be £Stg. 8 million over 3 years this would mean an annual Australian contribution for 3 years of £A1.164 million (35% of one-third of the 3-year programme). The Australian contribution should be paid into a Trust Account as required. Authority for expenditure should be exercised by the Minister for External Affairs.
(e) The implementation of the programme (and the similar programme of aid provided through United Nations Organizations) will be the responsibility of the Department of External Affairs, calling upon other departments or Commonwealth agencies where appropriate to assist in recruitment of experts to work in South and South-East Asia, in the arrangement of courses of training in Australia for approved personnel brought from other countries, in protection of their welfare, and in performing similar necessary functions.
(f) Pursuant to (e) above, the Department of External Affairs should organize interdepartmental consultation in the following forms:
(i) A standing committee representing the Departments of External Affairs, Labour and National Service, the Public Service Board, with other departments co-opted where necessary, to make recommendations to the Minister for External Affairs concerning the availability and the rate of recruitment of personnel, in various categories of skill, for service overseas;
(ii) A standing committee of External Affairs, Treasury and the Public Service Board to recommend to the Minister for External Affairs the terms and conditions of service of Australians employed by the Government for overseas service;
(iii) A more widely represented inter-departmental committee to review from time to time policy, in the field of international technical assistance generally, upon matters where departments other than the Department of External Affairs are concerned.
(g) The Department of External Affairs in its future public relations work should implement the recommendation of the meeting of the Consultative Committee regarding publicity for the Development Programme and the Technical Assistance Scheme and regarding the encouragement of public support for them.
[NAA: A 1209, 1957/5406]
1 See ‘Extract of Recommendations’ in Document 71.
2 Not published.
3 See Document 44.