Colombo, 14 January 1950
32. EMERGENCY RESTRICTED
Yesterday's Conference session began with discussion on Vietnam...
4. Bevin outlined the United Kingdom proposals for a loan to Burma under which the United Kingdom would contribute three and three quarter million pounds towards the seven and a half million pounds proposed. It was explained that the purpose of the loan was to provide sterling cover for excess drawings by the Government on the Central Bank. The loan would be available for expenditure only in the United Kingdom; one of its effects would be to permit expenditure by Burma of an equivalent amount of unblocked sterling holdings which exceeds figure of 7� million pounds.
5. India, Pakistan and Ceylon agreed to provide 1,000,000 pounds, 500,000 pounds and 250,000 pounds respectively, these sums being drawn from their blocked accounts.
6. I said that Australia had taken the initiative in the meeting in proposing a constructive policy by the Commonwealth countries in association with the United States to strengthen economies in South East Asia particularly in those areas which were under threat from Communism. I pointed out that we would prefer concentration of our limited capacities for assistance on neighbouring territories such as Indonesia. Nevertheless we would show our real intention of supporting the principles that the Australian Government has advocated by recommending to the Governments a sterling loan of 500,0001 pounds. The nature of loan and the fact that it will be blocked in London for currency stabilisation, appears to me to make it a tolerably good risk.
8. Meeting then took up paper presented by Australia on Commonwealth cooperation in South and South East Asia (our No. 26).2 I, especially, urged that Commonwealth act realistically and that machinery which might be set up should not be over ambitious and that the whole approach be based on the necessity to attract United States interest in the area by showing willingness of countries themselves to undertake policies of mutual help. This was necessary because Ceylon circulated a paper providing a somewhat grandiose proposal for the establishment of a ten year plan and economic cooperation of administration for the area. Ceylonese were persuaded to accept the Australian view and various proposals including the establishment of a consultative committee for South and South East Asia were at once jointly sponsored by Australia, New Zealand and Ceylon. The proposals were generally supported. Canada and South Africa indicated not unexpectedly that they would be unlikely to participate very actively in the project and the United Kingdom made a point of stressing its commitments in other areas such as the Middle East.
9. Proposals were referred to Committee Officials to draft them in the form of recommendations to respective Governments and to consider the extent to which they would be referred in official communiqu� of Conference. I offered to take the responsibility for calling first meeting of Consultative Committee in Australia.
[NAA: A1838, 532/7 part I]