890.00/12–2254
Memorandum by the Assistant Secretary of State for
Economic Affairs (Waugh) to the Secretary of State
1
[
Washington
,] December 22, 1954.
Subject:
- British Aide-Mémoire on Aid to Asia.
[Page 1073]
Friday, December 17, Lord Harcourt2 left the
attached (Tab B)3
aide-mémoire containing the “preliminary and
tentative” views of the British respecting economic aid to Asian countries.
For your convenience, I had a brief summary of the aide-mémoire prepared; it is attached (Tab A).
Lord Harcourt, at the time of delivery of this paper, expressed the hope that
the Ambassador and he might meet with you to discuss the points raised.
Naturally, they will wish to know where we stand in our thinking on this
subject. When our own work on the subject of aid to Asia has proceeded
somewhat further, I believe it would be desirable to see the British on this
matter.
I have seen to it that all other principal officers of the Government have
received copies of the aide-mémoire.
[Tab A]
Summary of Aide-Mémoire From
U.K.
The aide-mémoire summarized below was prepared in
response to Mr. Stassen’s invitation to the U.K. Government to make available to the U.S.
Administration any ideas they may have on the planning of future
economic assistance to the countries of South East Asia and the Far
East.
- 1.
- The U.K. Government believes that
the countries of the area will need governmental economic and
technical aid from abroad for a long time to come. Private capital
cannot be expected to be attracted in anything like sufficient
volume. It is of far-reaching political as well as economic
importance that further aid be made available, and that the aid come
from the West rather than from the Communist world.
- 2.
- The U.K. Government believes that:
- (a)
- The proposals of the West must be generous enough and on a
sufficient scale to catch the imagination of the Asians and
convince them of our sincerity. They must cover a period of
years so that the Asian governments may have confidence in
the future and may plan ahead. However, hopes should not be
raised that cannot be fulfilled.
- (b)
- No steps must be taken that do not have the whole-hearted
support of the Asians themselves.
- (c)
- The arrangements proposed must provide for direct
bilateral negotiations between contributors and recipients
and the contributors should retain control over the time and
manner of the assistance they give.
- 3.
- The U.K. Government suggests that:
- (a)
- Proposals would be most likely to be successful if they
were backed by a substantial amount in dollars or sterling,
and available to be drawn on over a period of years. These
monies would not be paid over from the start, but would
represent the sum total of the commitments which the
contributory governments were prepared to enter into over a
period of say three or four years under a series of
coordinated bilateral credit arrangements.
- (b)
- The bulk of the aid would have to come from the U.S.
Government. The possibility of further contributions from
the U.K. would have to be
considered against the background of the U.K.’s already heavy liabilities
and commitments in the area.
- (c)
- The division of aid between short-term and long-term
purposes would be for consideration later. However, the
U.K. Government hopes
that contributing governments would not tie their contributions to purchases in their
own countries but would make them freely convertible into
other currencies as needed.
- (d)
- Drawing on the fund would be by direct approach from one
government to another, in bilateral negotiation. However, it
would be useful to have a common staff for technical
examination of applications, the staff to be drawn largely
from western countries but including Asian representatives
as well. Its functions would be advisory and its use by
governments would be optional.
- (e)
- Aid might be in the form of loans, including soft loans,
or even grants.
- (f)
- There is no scope for any mechanism on the lines of the
European Payments Union.
- (g)
- While surplus agricultural commodities can be of
assistance to the area, their use would have to be
supplemented by substantial aid in the form of free
dollars.
- 4.
- With regard to the Colombo Plan organization, there would be
advantage to grafting the new ideas and organization on to the
Colombo Plan framework. Nevertheless, the Colombo Plan has at the
present time a considerable political as well as economic
importance, as the only organization in which all the countries of
the area are joined with Western Powers as free and equal partners;
the British would not therefore wish to lend themselves to proposals
which might be taken by Asian opinion as departing from the Colombo
Plan ideas, or to do anything which would in any way endanger the
continued functioning of the Colombo Plan organization. On this
aspect of the matter, they would wish to be guided almost entirely
by the views of the Asian countries themselves, and hope that the
views of the U.S. Government will not be crystallized until these
are known.
