Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 1

890.00/8–453

Memorandum by the Assistant Director for Resources and Requirements, Mutual Security Agency (Johnson)¹

top secret

[Washington,] July 27, 1953.

Asian Development Plan In Nutshell

(See memos Johnson to Stassen June 11 & July 15)²

1. U.S. to propose a specific plan for cooperative Asian economic development and method of financing same. Plan to aim at viable regional economy in 10 years.

2. Regional Development Institution or Bank to be created to provide loan (and grant) financing of projects sponsored by Colombo, Ecafe, or other sponsors.

3. Management to be under contract with IBRD.

4. Institution to have $2 billion plus or minus in yen, dollars, sterling, guilders and francs, subscriptions payable over 10 years.

5. Yen to be derived from transfer of Japanese reparations credit to the Bank by Asian countries holding reparation claims. These countries to receive equivalent Bank credit not limited to yen.

6. Dollars to be derived (about $800-$900 million) from settlement of Garioa debt as follows. Instead of Japan paying U.S. 37½ over 35 years (German pattern), Japan to pay 37½ in 10 years ($80-$90 million per year) to Bank. Bank to give U.S. its notes payable over period of 50 years with 25 year waiting period.

7. Sterling, guilders, francs, Canadian dollars to be derived from U.K., Australia, New Zealand, Canada, Netherlands, France, etc. for same motives which prompted Colombo. Total subscription asked might be about one-half the dollar credit (say $500 million payable over 10 years). These countries should receive notes payable over say 10 years with 15 year waiting period.

8. Thus is provided for Asian & Pacific region cooperative financing institutions capital in the magnitude of $2 billion, nearly half in dollars, with no U.S. appropriation required, no write-off debt, simply longer terms on GARIOA collection.

Proposed Action

1. Stassen and Dulles to name small top staff group to refine the plan and make final recommendations to Dulles & Stassen.

2. Negotiating sequence might be: after preliminary discussion with Japanese and British separately, President to kick-off with public announcement of objectives and skeleton of plan, asking countries to agree in principle. Provide drama of Asian cooperation.

1. The source text is attached to a memorandum of Aug. 4 from Merrill Gay, Economic Adviser in the Bureau of Far Eastern Affairs, to Robert J. G. McClurkin, Deputy Director of the Office of Northeast Asian Affairs. Gay stated in part that Stassen had mentioned this proposal to the Secretary and that the two intended to discuss it further. However, additional documentation regarding consideration of the proposal at that level has not been found in Department of State files.
2. Neither found in Department of State files.