On February 12th, 1951, the Cabinet agreed that the Canadian Delegate at the Consultative Committee be authorized to state that the Canadian Government was willing to provide $25 million to the Colombo Plan in the fiscal year 195152, but that this amount would be made available only if other contributing countries were providing enough to give reasonable hope that the broad objectives of the Plan would be achieved.

2. Other contributing countries have made commitments as follows:

The United Kingdom has agreed to assist over a six-year period to the extent of approximately $900 million; this assistance to be given chiefly in release of sterling balances held in the U.K. by certain Commonwealth countries in the Colombo Plan area, and partly in the form of direct economic aid.

Australia is contributing the equivalent of $21 million in the first year and will contribute the equivalent of $75 million over a six-year period.

New Zealand will contribute the equivalent of $9 million over the next three years.

The United States is engaged in a very extensive foreign aid programme for which a total of $1,440 million has been appropriated by Congress for the fiscal year ending June 30, 1952. Of this total, $418 million has been allocated for economic assistance in the underdeveloped countries of the Near East, the Far East and Latin America. The appropriation for the Far East, including the Colombo Plan area, amounts to $237 million. In addition, the United States bas provided India with wheat to the value of $190 million, on a low interest loan basis. The U.S. is now a full member of the Consultative Committee and has agreed to provide a chapter on its contribution to the economic development of the Colombo Plan area, for inclusion in the next Colombo Plan report.

3. The $25 million Canadian contribution to the first year of the Colombo Plan was allocated, on the authority of the Cabinet, to India and Pakistan, with $15 million being earmarked for economic assistance to India and $10 million to Pakistan. Both these programmes are well under way, and it is expected that most if not all of the $25 million vote will be committed before the end of the fiscal year. The greater part of these commitments would be for projects already approved by Cabinet; some other projects, now tentatively approved by Ministers directly concerned, but still under discussion with the Indians and Pakistanis, will be submitted to the Cabinet for final approval in the near future.

4. It is suggested that the time has now come to consider the question of a Canadian contribution for the second year of the Colombo Plan. The Consultative Committee is to meet in Karachi in late March and the extent of Canadian participation in 195253 should be decided before then.

5. The arguments for helping to promote political and economic stability in South and South-East Asia are as strong now as they were a year ago when the Cabinet approved a Canadian contribution of $25 million for the first year of the Colombo Plan. Moreover, we can already see the first practical results of the Colombo Plan in the efforts being made by receiving countries to come to grips with their economic problems and to face up to their own responsibilities. The economic development programmes which have been worked out, particularly in India and Pakistan, show a serious attempt to assess primary needs and potential resources, and to approach the problem of economic development in a sound, realistic manner with emphasis being placed on agricultural and other fundamental projects. These countries have begun to implement their programmes and, from the reports we have received, both from Canadian officials in India and Pakistan, and from an International Bank Mission which recently visited India, real progress is being made. Officials from Ottawa have recently discussed Colombo Plan matters in Washington with officials of the International Bank and the State Department, both of whom are carrying out large-scale economic development operations in that area. There has been and will continue to be close cooperation with them to ensure coordination of all our efforts so that available resources for assistance will be put to the best use. Thus the Colombo Plan has made encouraging progress to date; other donor countries are committed to continued support, and the United States has become a full partner. In these circumstances, failure by Canada to remain in the Plan would, I believe, have most unfortunate results both in Canada where there is very widespread support for the Plan, and abroad where Canada's participation so far has been much appreciated.

6. If we are to continue participation, the question arises how much should we contribute for 1952Any smaller contribution than last year's might well be taken to indicate either dissatisfaction with progress to date, or lack of confidence in the ultimate benefits of the Plan. On the other hand, the continuing heavy burden of defence expenditure militates against increasing our contribution. Taking these considerations into account, it would seem reasonable and appropriate that the Canadian contribution for the second year of the Plan be in the same amount as the first contribution.

Recommendation

It is recommended that Cabinet authorization be given, subject to Parliamentary approval, to a contribution of $25 million for 1952for economic assistance under the Colombo Plan.

L.B. PEARSON