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263 Paper by Department of External Affairs

Canberra, 10 October 1953

Notes for the Minister on the Operation of the Colombo Plan in Pakistan

Since the last report on the operation of the Colombo Plan in Pakistan was furnished in March, 1952, the Economic Development Programme of the Plan, as well as the program of Technical Assistance, has been more fully launched. As a consequence the problems of administering the programme of economic aid in Pakistan have been better appreciated than in the past.

2. Two principal problems have arisen:

a) How far the High Commission should seek to discover whether projects for which the Pakistan Government requests assistance are likely to be sound from the point of view of Pakistan economic development, and appropriate from the point of view of the provision of Australian equipment.

b) To what extent the High Commission should be concerned that equipment which has been supplied by Australia is used for the purpose for which it is intended and that it is reasonably maintained.

Problem (a) above has arisen principally in relation to Pakistan's requests for equipment for the tube-well project in the Punjab and for pontoon pumps to be used in East Bengal. It has become evident that complete reliance should not always be placed on the Government of Pakistan's statements in support of its requests for assistance; these are often over-optimistic, and are sometimes based on inadequate consideration or understanding of the problems involved. It has been possible to gather some, though not enough, information in Karachi about individual projects but it is difficult to express a sound judgement on the practicability of one project or another without possessing the relevant technical knowledge. Problem (b) has arisen especially with regard to the fifteen tractors supplied in October, 1952, for the Warsak and Mianwali Projects. From reliable information we have received it is clear that some at least of these tractors were used away from the Mianwali and Warsak Projects for purposes for which they were ill-suited. The tractors were also in very bad condition when they arrived in Lahore owing to the fact that when placed in the railway trucks they ware not tied down and the brakes were not put on. It is probable that, with the arrival of more equipment from Australia in Pakistan, it will become increasingly difficult to ascertain to what use it has been put.

It is apparent from our observations that the importance of the proper maintenance of valuable equipment is not by any means adequately appreciated in Pakistan, either at the higher administrative levels or at the working level. It has also been ascertained from donor agencies and the International Bank that a number of instances have occurred of serious neglect of equipment donated or purchased under loans.

3. The fact that detailed consideration of these problems has arisen implies that the donor countries of the Colombo Plan are concerned with the end-use of the equipment supplied. There have been indications, however, that this view is not altogether shared by the Department. It would not, however, appear to be sound policy to supply equipment on Pakistan's request without as thorough an enquiry as possible into the purposes for which the equipment is needed and without ascertaining that it will be properly maintained. Such a policy would be at variance with that followed by others giving economic and technical assistance to Pakistan and possibly, though to a relatively small degree, could complicate Australia's good relations with Canada and the United States of America and with International Organisations such as F.A.O. There are already signs that, where other governments or organisations, after investigation, have declined to supply equipment to Pakistan, on the grounds that it could be neither profitably used nor properly maintained, the Pakistan authorities are inclined to believe that nevertheless the equipment may be had from Australia. Such an attitude on the part of the Pakistan authorities is not welcomed by other governments and organisations concerned in providing economic aid to Pakistan, nor does it appear to be a policy satisfactory to Australia.

4. To follow such a policy would not be beneficial to the Australian effort under the Colombo Plan in Pakistan. The danger is that the equipment supplied would, through poor maintenance or because of the projects on which it is to be used are not soundly based, cease after a few years to have any useful effect on Pakistan's economic development. There could, moreover, be few worse advertisements for Australia than the presence in Pakistan of equipment supplied as a gift from the Australian people lying idle or even derelict. The political implications within Australia if publicity were given to wasteful use of Colombo Plan monies cannot be disregarded. The presence of Australian equipment in Pakistan will not help of itself to promote trade with Australia unless it is properly maintained, though it is realised that trade promotion is only a minor consideration.

5. It is, therefore, considered that before consideration is given to the supply of equipment, a thorough investigation should be made in Pakistan, in appropriate cases, of requests for equipment made by the Pakistan Government. The investigation should, wherever possible, be made by persons who have sufficient technical qualifications in the appropriate field and who do not have, by their connections with manufacturing firms, a financial or other personal interest in recommending that equipment of one sort or another should be supplied.

6. In addition it would be of assistance if the procedure by which the Pakistan authorities submit their requests for equipment was altered so that the initial approaches were made through this Office and not direct from the Pakistan High Commissioner in Australia to the Department of External Affairs. Under the procedure at present followed we sometimes lack information of the Pakistan Government's requests for equipment (e.g. the recent request for 200 tractors). The Canadian authorities, it might be noted, have found that the more effective procedure is for all Pakistan's requests, both for economic end technical assistance, from Canada to be passed through the Canadian High Commissioner's Office at Karachi.

7. There are other alterations in procedure which could be recommended with regard to the supply of Australian Colombo Plan equipment to Pakistan. Like the other recommendations made above action in accordance with them would require technically competent personnel to be present in Pakistan, with the time to travel if necessary. For instance, the arrangements for the reception and delivery in Pakistan of Australian supplies need improvement. Thus, as has been mentioned, the fifteen tractors for the Mianwali and Warsak projects were consigned by rail from Karachi without the brakes on each machine being properly applied or the machines tied down and as a result they arrived damaged at their destination, before being used at all. While it would be difficult in some cases to supervise the transportation of equipment after it has been handed over, the pretext of sending experts from the manufacturer's firm to deliver and assist with the preliminary installation and maintenance might be used to overcome this difficulty. It has not been practicable to check that the Australian wheat was properly stored. There is,perhaps, less reason for supervision in the case of the wheat in view of the professed intention to use it promptly. Furthermore, it has been possible to keep in touch with the United States officials supervising the distribution of their gift wheat and to be reassured by the information that the steps taken by the Pakistan Government in relation to the United States wheat have been adequate.

8. With regard to counterpart funds, the available information would indicate that the Pakistan Government may well be so short of Rupee funds that it will find difficulty in establishing all the counterpart funds which may be required as the result of the sale of wheat and equipment given to it under the Colombo Plan and by the United States. It is likely that it will be inclined to procrastinate unless the Australian Government indicates an interest in the establishment of the funds. This could, of course, be done tactfully and without any indication of pressure. It is important from the Australian point of view that the counterpart funds should be set up and devoted to developmental work as there is not the continuing publicity for the Colombo Plan to be obtained from the provision of equipment which it [is]1 to be sold to the user. There is also a possibility, if we do not indicate some preference with regard to the use of the funds, that we will subsequently be informed that the funds have been used to provide the rupee costs of a project which may be, for example:—

a) predominantly an American project; or

b) an unsuccessful project, which would not contribute to the overall success of the Colombo Plan.

The Canadian Government has adopted the policy of coming to an agreement with the Pakistan Government as to which particular project for which the counterpart funds should be used, e.g. wheat counterpart funds are to be used for Warsak Hydro Electric Project.

9. The alterations in procedure recommended above would, if effected, lead to the more efficient operation of the Economic Development Programme in Pakistan. They would not, however, of themselves assist in the determination of the priorities which should be given to the various worthwhile requests for assistance from the Government of Pakistan. It may be felt that the priorities are properly a subject for discussion by that Government. But there are indications that the priorities awarded by the Government of Pakistan may not be those best designed to promote the economic development of the country. There is hence a possibility that equipment supplied for schemes which are in themselves soundly based could be used to even better effect elsewhere in the economy. The problem of deciding which are the best places for assistance to be applied has not been squarely faced by the Government of Pakistan though it may well be by the new Planning Commission. To be as effective as possible even a small amount of economic aid requires a minimum level of technical skill and a certain maturity of mental outlook. It seems, therefore, that there is need on Australia's part to have a knowledge of the places in the economy of Pakistan where its assistance can be given with the best chance of conspicuous and permanent success, and to keep in touch with the practical realities regarding the availability of trained manpower to make good use of and take proper care of equipment provided.

10. With regard to the working of the Technical Co-operation Scheme serious problems have arisen in relation to the personnel serving in Pakistan. One expert was found to be completely unsuitable and was withdrawn at the request of the Pakistan authorities. Some doubts have existed as to the suitability of at least one other expert, although these have been largely as a consequence of this expert having to work under extremely difficult conditions. The necessity for a careful choice of experts to serve in Pakistan cannot be over-emphasized. It is even more important when they will be engaged in projects, such as the Thai Farm, in which other countries besides Pakistan and Australia are concerned. It appears also that the allowances and conditions for experts should be reassessed. If this is not done, it should at least be made quite clear to the experts, before they leave Australia, that their money will not go very far here in terms of purchasing power and that their living conditions may be primitive by Australian standards. Neglect to do this, in order to secure the services of experts, [would be]2 to say the least of it, unfair and could only reflect on the efficiency of our administration.

11. It has also been found to be important that a close interest should be taken in the selection of persons for training in Australia. In practice it has not been possible up to the present to check that the persons selected have been suitable. Nevertheless, it is important to do so, especially as there are undesirable pressures exerted either on the central authorities or on the provincial authorities in their selections. Of late, however, nomination papers have been available in better time to permit the assessment of the suitability of candidates. Only one or two instances have been noted where trainees returning from Australia have not been employed where they could make appropriate use of their increased knowledge.

12. The Ministry of Economic Affairs has on several occasions recently raised the question of how best to spend the Technical Assistance funds available for the purchase of training equipment. It is finding difficulty in making an appropriate suggestion and has sought information on availabilities of equipment in Australia or any suggestions which might be forthcoming from Australia. The establishment of training institutes of one sort or another (e.g. technical high schools or the Wireless Training Institute) seems to be one of the best forms that Australia's technical assistance to Pakistan could take. If Pakistanis can obtain the training they need in Pakistan the difficulties of adjustment would be avoided which trainees experience on their arrival in Australia and, more particularly, when they return to Pakistan to apply their knowledge in new circumstances. Training institutions could play a valuable role in developing in Pakistan those basic technical skills necessary for economic development. The absence of, and even contempt for, these skills is most apparent at the moment in some circles. The establishment of such institutions in Pakistan would help to give a wider spread to technical knowledge at a smaller cost than is the case where individuals are sent to Australia.

13. The progress of the Thai Farm has been disappointing. In fact Mr. Geoffrey Wilson, during a visit early in 1953 to Pakistan, expressed the opinion that the Thai Farm project was in danger of 'getting bogged down completely'. Lack of progress has in part been due to the personality, and shortcomings in administrative ability or conduct, of the former Director of the Farm, Dr. Sarwar, on whom further comment is unnecessary except that the ill effects of his direction might have been decreased had it been possible to achieve better relations between him and the Australian experts appointed in connection with the Thai Farm. The apparent success, with which Dr. Sarwar was able to spread a false feeling of optimism with regard to the Farm during his visit to Australia shows how misleading are the statements of many Pakistanis, especially on technical matters. One of the major impediments to progress on the Farm has been the difficulty of getting definite answers to precise questions and of maintaining a timetable, particularly with regard to the building of living quarters and housing for stock and equipment. The most recent reports from Mr. Curteis indicate a slightly increased tempo in the work of the Farm and the erection of buildings.

14. It is appreciated that the policy of the Australian Government in relation to Colombo Plan aid is to ensure that the impression is clearly conveyed to the recipient countries that there are no 'strings' attached to the gifts. It seems important, however, to keep clearly in mind what is intended by the word 'strings'. It presumably relates to political influence or commercial ties. It would not seem to exclude a continuing interest on the part of the Australian Government in the soundness of projects for which assistance is sought and in the end-use of equipment provided. Unless this is done there would appear to be a serious risk that at some later date on a review of the success or otherwise of the Plan it will be found that at least some portion of the funds allocated to the development of Pakistan will have served.no useful purpose.

[NAA: A10299, C14]

1 Editorial insert.

2 Words in square brackets inserted by hand.

Last Updated: 10 January 2017

Category: International relations

Topic: History