Washington, 30 August 1951
British Embassy advise us they have received note from State Department stating—
(a) If it is wish of all countries concerned to hold meeting at Ministerial level next January, United States will be pleased to attend.
(b) Readiness to attend prior meeting of officials to give final shape to draft report, if other countries would find meeting useful.
(c) Desirable to inform International Bank when meeting finally decided on.
2. In informal discussion, Malenbaum and Turnage of Investment and Economic Development Staff, Department of State, expressed view that they would prefer meeting not to be held in London unless for over-riding administration reasons. They felt that meeting should by preference, be held somewhere in the Colombo Plan area. This would be particularly desirable if it were desired to interest non-Commonwealth countries of the area, such as Indonesia, Thailand and Burma. Meeting in the Colombo Plan area would also increase value of Consultative Committee as forum where contributors and recipients might discuss their problems on basis of full equality. Turnage suggests Singapore as a possibility.
3. State Department Officials said that they would be interested in any Australian view on nature of report to be issued by Consultative Committee.
4. We have also discussed points raised in your telegram 10132 with Malenbaum and Turnage. They expressed the hope that we would keep the question of conditions and possible use of counterpart funds under review. They said they understood the difficulties facing Australia and were glad to see that we were requesting undertakings from the Governments that local currency proceeds should be used in a manner contributing to the objectives of the Colombo Plan and that we were asking for reports on the use to which our aid was put.
5. State Department Officials again stressed that they had no choice but to impose conditions as required by United States Legislation. If such conditions were unacceptable to recipient Governments aid could not be granted. They thought however, that India and Pakistan and Ceylon would be prepared to accept the counterpart principle remarking that this condition would not involve any political strings.
6. Turnage observed that the Indian Government was paying the proceeds of the sale of food grain shipments into general revenue and was not setting up any special fund. The United States could not of course question their right to do this.
7. State Department Officials would appreciate copies of the notes exchanged in connection with Australian grants of aid to India, Pakistan and Ceylon.
[NAA: A9879, 2202/El part 4]