6 September 1950
CONFIDENTIAL
Consultative Committee on South and South East Asia
Tange and I have discussed some of the problems which are likely to crop up during the London talks on economic assistance to South and South East Asia. We decided to seek an appointment with R.W.B. Clarke1 and Thompson2 of C.R.O. yesterday. The following is a summary of the points discussed.
2. Clarke believes that the only programmes which will be considered by the London Conference will be those submitted by Commonwealth countries. The British wish however to include in the report some reference to the major economic development needs of non-Commonwealth countries, in order that the report will not be simply a statement of sterling area requirements.
3. Clarke admitted that United States officials with whom he had discussed the long-term development programme had been sceptical about the prospects of co-operation by non-Commonwealth countries.
4. The synopsis of the report has been shown by Clarke to the E.C.A. Mission in London, and United Kingdom officials in Washington have discussed it with officials of the State Department. I gather that the Americans have approved the idea in principle but Clarke was in general very vague about the American reactions.
5. The British have accepted the Australian suggestion that the report should have more international flavour than was suggested in the first draft synopsis.
6. The British accept that E.C.A. is already in the field providing economic assistance to certain non-Commonwealth countries in the area. This assistance is mainly short-term and ad hoc, and Clarke sees no reason why this should conflict with a six year development programme. It must also be remembered E.C.A. is not operating in British Commonwealth countries in Asia.
7. Tange mentioned that the Australian Minister for External Affairs has been considering the advisability of the Commonwealth obtaining a clearer indication of the probable United States reaction in advance of the meeting of the Consultative Committee at ministerial level. He mentioned that Mr. Spender has written to the U.K. Foreign Secretary to suggest that they might make a joint approach to Dean Acheson immediately they arrive in Washington (i.e. about 13th September).3
8. Clarke admitted that Australia and the United Kingdom could take this action without further consultation with other members of the Commonwealth. He personally did not, however, favour a top level approach to the Americans at the present time. He mentioned first of all that Bevin was not the United Kingdom Minister most interested in South East Asia. He fears moreover that if the Americans were to refuse at present to promise assistance for long-term development, this would have most unfortunate effects on the London Conference and might well not be the final American decision. For instance, as soon as the North Koreans are driven north of the 38th parallel the United States will be faced with the necessity to carry out a huge economic rehabilitation programme in Korea. At this stage it would be difficult for the Americans to refuse long-term economic assistance to other South East Asian countries. Clarke is firm in his personal belief that United Nations’ success in Southern Korea would whip up United States interest in economic development in Asia.
9. Clarke now believes that the overall cost of the six year development programme will be much lower than many people expect. He was not yet in a position to indicate the total of external assistance required by the Commonwealth participants but expressed a belief that the problem would be more an internal than an external one.
10. The British believe that it is essential for the London Conference to include in its report some figure for the total size of the contribution which they, plus the International Bank, plus possibly also the French and the Dutch, might be called upon to make. The United Kingdom has already been faced with the problem of obtaining quick decisions from Commonwealth Governments on the size of the contributions they may be able to make. The United Kingdom has her own problem in this respect and the Canadians have also mentioned that it may take time before they can determine the size of their contribution. Clarke was not therefore surprised when Tange stated that Australia would probably not be able to enter into any definite commitment during the currency of the Conference.
11. It would appear also that the British have not yet made up their minds about the form in which Commonwealth contributions might be made, i.e. whether for example Australia might make her contribution in sterling or whether we would be required to supply additional goods. One point which Clarke did mention was that the recipient countries would require large amounts of aid in terms of their own currencies. Obviously much more consideration will have to be given to this problem.
12. Whilst the British accept that more emphasis should be given in the report to the part which is being played by international organisations in economic development, they pointed out that difficulties may arise in the Committee because Pakistan, for instance, is suspicious of E.C.A.F.E. It was rather interesting to hear Clarke speaking about the dangers of regional groups and issuing a warning that there were many dangers associated with the Western European pact.
13. The British wish to avoid discussion in Paris of the possible role to be played by the International Bank in assisting the long-term development scheme. The report will probably suggest that a collective approach should be made to the I B R D.
14. Clarke reaffirmed the British hope that the sterling area may obtain some free dollars under the scheme. I have doubts about this and find it difficult to reconcile the view that Commonwealth countries will indicate the maximum contribution they can make to the scheme, in terms of resources, with the United Kingdom view that any free dollars which the sterling are may be able to pick up should be regarded, not as an addition, but as part of the sterling area contribution to the development programme. The latter would obviously seem to underestimate the share of the United States contribution.
15. Clarke mentioned that the United States, taking into account the amount of foreign aid which she is providing, is not far off being in a dollar deficit position.
[NAA: A1838, 708/13/1 part 2]
1 Richard William Barnes Clarke, Under-Secretary of the UK Treasury.
2 The reference may be to James Thomson, Assistant Secretary, Commonwealth Relations Office.
3 See Document 90.