I am enclosing 4 documents relating to the Colombo Conference, all of which will, I think, be of interest to you:
1. Papers submitted to the Conference by the Minister;1
2. The Agreed Recommendations by the Ministers to their Governments;2
3. My own report on the discussions;3
4. The public communiqu�.4
The first three documents are secret.
In the discussions in Colombo the Minister made a point of stressing that Australia's part in this proposed arrangement would not be to spread aid throughout South East Asia and it would be logical for us to confine our attention largely to Indonesia, apart from our share in a small stabilisation loan to Burma. The proposals were well received and I believe we have taken a worthwhile initiative. It may result in some added assistance from the United Kingdom, and a little bit from New Zealand. The Consultative Committee will be a useful way of concentrating attention on needs that are essential, and of sorting out the priorities among the countries of the area. It is going to be difficult to satisfy Pakistan, India and Ceylon that there will not be a great deal in it for them, and we shall no doubt hear a lot about their rights to draw on their sterling, balances. The United Kingdom expect this but do not think it will do any harm. I think the initiative is valuable also for the Commonwealth as a political entity.
We must now prepare vigorously for a meeting of the Consultative Committee in 3 or 4 months' time and, prior to that, take proposals to Cabinet concerning the Australian Government's share in this programme. No less important than this will be continuing study of the best means of approaching the United States Government and providing the maximum incentive for them to give aid to this area in association with the Commonwealth. We are taking what I believe to be a very 'realistic' view in the Department, namely, that whatever the Commonwealth does in South East Asia will be only marginal in relation to even the most essential needs of the area, and United States participation is all important. Nevertheless, we believe that a tangible start by the Commonwealth would be a most important contribution towards bringing in the United States.
For your own confidential background, we are being most frank with United States representatives and have given them in strict confidence, a copy of the Australian paper and the agreed resolutions. We have given the Dutch a less detailed picture of what recommendations were made but have told them sufficient for them to know the general lines of action which are being recommended to Governments, and the flexible way in which we expect the consultative committee to work. We have told both Governments that it is our desire to avoid any impression in the minds of the public or other Governments that this is a grandiose scheme designed to raise living standards in the area in the short run. We have told both Governments that Australia's main interest might be in Indonesia, but do not propose to discuss with either (and particularly not with the Dutch) any activities which develop so far as promotion of Australian business interests and investment in Indonesia are concerned.
Turning to the questions raised in your letter of January 21st to the Secretary,5 we have little to tell you which would be of value at this stage. Your letter was most useful and will help us in our inter-departmental discussions. So far we have taken no initiative at all since I returned three weeks ago. There has been a tremendous pressure of work in preparation for the first business meetings of Cabinet, and of the Cabinet committees of which the Minister is a member. This has involved a great deal of work on G.A.T.T. and I.T.O. and related questions. Moreover, I have to assemble some staff. As soon as this can be done I hope to get things moving on our Indonesian economic policy.
I have had a preliminary talk with Hartnell,6 who is head of the Division of Industrial Development. He says they have had many indications of the interest of businessmen in Indonesia, primarily in selling in Indonesia, but to some extent in investment. He would be interested to attach one of his people to any economic mission which we might later send up. I suggested to him that, in the peculiar political and economic circumstances at present, business interests might do much better when they go to Indonesia if they went under some sort of Government sponsorship so that informal representations on their behalf could be made to the Indonesian Government by our people on the spot. I said also that I thought we should try, when we are better informed ourselves, to supply Australian manufacturers and traders with some information about the exact political and economic position there, insofar as this can be done without making any speculative judgements.
I think we are agreed that as soon as possible we should get a decision on the granting of a credit. In order to put a reasonable case to the Treasury I think we need to know more about the following two questions:
(a) The sterling position and over-all balance of payments position of Indonesia; and
(b) The extent to which Australia could make available supplies to exhaust such a credit.
We can probably only speculate on the latter: Indonesia's own priorities for imports would be different according as to whether we granted a credit. I think we can probably make some rough judgements here as a result of inter-departmental discussion on availabilities.
I think you can be of the greatest help in answering the first question, particularly trying to get hold of a copy of the case which Djuanda7 will present to the Export-Import Bank.
[NAA: A1838, TS708/9/2 part 1]