780.00/9–2250

Record of Informal United States–United Kingdom Discussions, London, Friday Afternoon, September 22, 19501
secret
[Page 213]
Participants: Foreign Office
R. H. Scott, Assistant Under-Secretary of State for South Asian Affairs
J. D. Murray, Head, South-East Asian Department
J. O. Lloyd, Assistant, South-East Asian Department
Roger Jackling, Assistant, Economic Relations Department
Treasury
R. W. B. Clarke, Under-Secretary
Commonwealth Relations Office
J. Thomson, Assistant Secretary
U.S.A.
Mr. McGhee, Mr. Mathews—Department of State
Mr. Ringwalt, Mr. Palmer, Mr. Moore—American Embassy, London

South Asia (Item 1):

Mr. Clarke opened the discussion by summarizing the status of Commonwealth consideration of the problems of development in South-East Asia. He emphasized that the tone of the Report2 which the Commonwealth countries hoped to publish would be to place the problem of development in this area in its world-wide setting and not to lead up to a bill to be placed on the plate of the US Congress. He pointed out that this problem is a long-range problem which will require a number of years to solve, and contributions from a number of countries and different sources will be necessary. It is the general view of the British representatives who are participating that the programs which have been tabled at this meeting by the Asiatic Commonwealth countries are sensible and realistic. The countries have scaled down the size of the development programs to a point considerably below what they would originally have desired to undertake. They have recognized that the limiting factor is the amount of external financial assistance likely to be available, and have tried to keep their requirements for this purpose within reasonable limits. It appears that the effect of the proposed programs in raising living standards will be limited, at least during the six-year period for which programs have been worked out.

In response to a question by Mr. McGhee, the British participants generally emphasized that failure to provide external assistance to enable programs of the general magnitude under discussion to be carried out would have very serious adverse political consequences.

Mr. Clarke pointed out that the total amount of external assistance required by all countries over six years would be approximately £1,000 million. There were a number of alternative sources of funds available to these countries to aid them in meeting this requirement. These included the International Bank, releases from sterling balances, and the long-term commercial money market of London, as well as private investment generally. Mr. McGhee asked what proportion of this total could be identified as the equipment and materials directly related [Page 214]to development projects. Mr. Clarke replied that it varied by country, depending upon the degree of industrialization already obtained. Approximately 20% of the Indian program represented capital goods, while for the others it might run as high as 40%. India needs primarily more imports of consumer goods in order to permit the undertaking of development without inflation.

The Report assumes, Mr. Clarke pointed out, that the value of private investment from overseas will be small, at least during this initial six-year period. He stated, however, that the Report would reflect an improvement in the attitude toward private investment on the part of the governments of the countries concerned. As a result of an increasing awareness of the difficulties of obtaining a large volume of funds through government finance, they have generally recognized that private investment is an essential feature of any large-scale development program which they may reasonably expect to undertake. They are ready to provide conditions more favorable to overseas private investors than those which have hitherto prevailed in these countries. Mr. McGhee asked what proportion of the development projects contemplated would be carried out under government auspices. Mr. Clarke replied that the bulk of them would be, because of the nature of the projects to be undertaken and the heavy emphasis which the projects placed on large development projects in the fields of agriculture, power, and transport.

Mr. Thomson discussed the technical assistance aspects of the South-East Asian development programs. He emphasized the need for technical assistance which would provide the “missing component” which limited development in all these countries, i.e., trained foremen. He pointed out that all the countries participating in the Conference were agreed on the establishment of a Council for Technical Cooperation, with headquarters at Colombo. The objectives of this Council would be to assist the countries of the area in developing their requests for technical assistance by eliminating over-lapping in the various agencies conducting technical aid programs. The Council should be able to assist countries in getting proper technicians and in extending technical training programs in Asia. It would maintain close liaison with the UN and the specialized agencies.

Mr. Thomson expressed the view that what was needed in the field of technical assistance was competent people who would be willing to go into undeveloped countries and stay several years, and hoped that Point IV would emphasize this objective and not place too much reliance upon surveys and missions. The Council for Technical Cooperation has a budget of £8 million, to be expended over a three-year period.

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Mr. Thomson expressed the hope that the US officials responsible for the Point IV program would also establish close liaison with the Colombo organization.

  1. Authorship not indicated in source text.
  2. Reference is to the Colombo Plan discussed in footnote 12, p. 204.