Washington, 11 August 1950
Economic Development of South East Asia
We have discussed some of the problems of economic development in South East Asia with Mr. Harlan Cleveland, who is a senior officer in E.C.A. concerned with planning and policy. He is a strong believer in close cooperation between the U.S.A. and the British Commonwealth in their planning and operations in the region.
2. Cleveland thinks that coordination can best be done in the field. In his opinion the best course would be for the U.S.A., the British Commonwealth, and the United Nations (or individual specialised agencies), each to have a representative in the major recipient countries, and they would act as a team to coordinate the work. He has no faith in questionnaires, because he believes that most under-developed countries are unfitted to estimate their needs accurately or sensibly. He considers that the representatives on the spot, if they were sound and senior men and knew the total amount of assistance which could be given to a country, would be able to indicate much better what form aid should take. Cleveland felt that the U.S.A. and Commonwealth might each decide in advance on the total amount of assistance each would provide to a particular country, and leave it to their representatives on the spot to determine, in association with the government of that country and local representatives of international agencies, the nature of that assistance and its sharing among existing governments and agencies. This would not obviate the need for co-ordination at home or between programmes at a higher level, but he was anxious to avoid cumbersome co-ordinating machinery at the top. Cleveland's views are his personal opinion although they can be taken as representing probably the dominant view in B.C.A.
3. Cleveland said that in Indo-China a committee had been set up under the chairmanship of the local Minister of Health, containing representatives of the governments of France and the United States and representatives of WHO and UNICEF. This arrangement seemed to be working very well, and he thought that it might be done in some cases in other countries.
4. Cleveland said that the United States was at present negotiating E.C.A. agreements with Indo-China, Thailand, Burma, and Indonesia. The text of these agreements will be made public when they are concluded. He confirmed that they would include provision for counterpart funds (as reported in our memorandum No. 1549/50),2 which would apply only to the sale of goods supplied by the U.S.A. Their size and significance would vary from country to country, but the U.S.A. hoped that they would be sufficient to pay all local costs of technical assistance programmes. If necessary the United States might increase shipments o f supplies in order that the counterpart funds would be high enough. But counterpart funds would not be used to the same extent as in Europe and care would be taken to see that they did not prove a source of inflation by being financed out of central bank credit rather than by sales. The supplies in question would be chiefly 'incentive goods', such as textiles.
5. As part of the general discussion we sounded him on the point raised in paragraph 3 of your telegram No. 387.3 Cleveland said he had received a report from the United States Ambassador to Colombo to the effect that the Commonwealth meeting in London would produce a programme of economic development for South East Asia, and that it would decide what part of it the Commonwealth could undertake and would drop the rest in the United States lap. Cleveland did not seem to take this procedure very seriously. It was clear from his remarks that the United States Government does not propose to submit any fresh proposals to Congress in the light of any submission by the British Commonwealth but that it would take account of Commonwealth activity in making allocations from United States resources already authorised. Both E.C.A. and the State Department acting through Point Four, will have allocated some of their resources to specific projects in South East Asia before the middle of October. The State Department has indicated to us that it will provide the Commonwealth with details of these specific projects.