Volume #22 - 682.|
RELATIONS AVEC LE COMMONWEALTH
PLAN DE COLOMBO
Note du sous-ministre adjoint du ministère des Finances|
Memorandum by Assistant Deputy Minister, Department of Finance
le 18 juin 1956|
COLOMBO PLAN - WARSAK - RECENT DEVELOPMENTS|
1. On June 13 there was a meeting of the Colombo Group to hear a report from Mr. Hewer, the Canadian Government Engineer (from Defence Construction Ltd.) who is acting as a liaison officer in respect of Warsak and certain other Colombo Plan projects in Pakistan. In Mr. Ritchie's absence, I took charge of the meeting.
2. Mr. Hewer reported that there were eight "limiting factors" on the work at the site:
(i) The Pakistanis had persistently failed to supply about 120 men of the foreman type who had been requested as early as five or six months ago.
(ii) Interminable delays were encountered in getting the Pakistanis to provide the local supplies for which they were responsible, under the agreement; indeed substantial quantities of these supplies (e.g. lumber) had had to be moved from Canada.
(iii) Power had not been provided in the quantities agreed, or at the time agreed, and recently there had been an almost complete breakdown.
(iv) The Pakistanis complained about non-cooperation, (e.g. in submission of plans to them) but actually they were non-cooperative themselves and were not shouldering their responsibilities (e.g. Azam, the chief engineer, had only visited the site a couple of times. Hewer had told him what a chief engineer was expected to do but Azam did not change his practices.)
(v) Damage to construction equipment used by Pakistanis was very high and seemed to outrun even what could be expected from relatively incompetent operators; it seemed possible that there was minor sabotage.
(vi) Similarly, pilferage seemed to be unduly high and condoned at high levels on the Pakistani side.
(vii) Housing for Canadian personnel was now adequate (in some cases more than adequate) but had been provided by the Pakistanis only after great delays. Incidentally the Pakistani doctor, that they were providing, was unlikely to stay due to his bad living conditions.
(viii) In some cases the project manager (Morgan of Acres) was not firm enough in making his decisions stick with the contractor (Angus-Robertson); if anything he was too easy rather than too firm with the Pakistanis, despite rumours to the contrary.
3. There was considerable discussion of all these points. In regard to the failure of the Pakistanis to fill foreman-type vacancies, Mr. Hewer said that many of the 100 Canadians in "the colony" had had to turn their hands to types of work that should be done by Pakistanis. The Pakistan authorities had, nevertheless, vigorously objected to having so many Canadians on the site; they had been told that, for every Pakistani who could be supplied for the specified jobs, a Canadian would be released for return to Canada. As for the power failure, new generators had been brought from England and the first would be in operation soon.
4. Mr. Hewer suggested that one of the main reasons behind all the difficulty was that, while top people in Karachi wanted the project to be completed as soon as possible, which had led Canada to press forward and minimize formalities and delays, local labour wanted to spin it out as long as possible.
5. Representatives of External Affairs, including Mr. Cleveland who until recently had been second in command to our High Commissioner in Pakistan, emphasized the general sensitivity of the Pakistanis, and their sense of political isolation at the moment. In regard to Colombo Plan arrangements covering Warsak, it was to be recalled that we had not consulted them (as promised) before appointing the Canadian contractor. ( Mr. Howe had chosen Angus-Robertson as the only competent one available.) We had not employed the type of contract they had urged (one with a target date), and we had consulted them rather perfunctorily about the detailed provisions of the contract. In the light of all this, it was more than likely that the Pakistanis considered that the choice of the contractor and the form of the contract were dictated by political interests in Canada. This impression was probably strengthened by reason of the fact that the costs of this project, under the Canadian contractor, appeared likely to be far higher than they would have been if we had agreed to the Pakistani suggestion, at the time Canada undertook to construct the civil works (in addition to supplying machinery and equipment) that the contract should be put out to international tender.
6. I said there were now three possible lines of action. In descending order of unpleasantness they were:
(a) Canada might withdraw completely;
(b) we might withdraw partially, allow the project to go to tender, but provide some equipment and materials;
(c) we might try to patch up the existing arrangements.
I also said that, in view of the history of Warsak, I would not be willing to recommend to Mr. Harris any further increase in the Canadian contribution beyond the present already over-large amount of $36 million. Mr. Finlay Sim, speaking for Trade and Commerce, said he would take a similar position with Mr. Howe.
7. McInnis (External) pointed out that if we followed (a), the project would probably be taken over by Russia; it was conveniently located near the restive border of Afghanistan. It was generally agreed that, subject to Ministerial approval, we should make an attempt to follow course (c) - i.e. to patch up the existing arrangements.
8. At the end of the meeting Mr. Cavell said that he and Defence Construction Ltd. had arranged to meet representatives of Acres, and later Angus-Robertson, during the next two days. It was agreed that our Group should meet again on June 15. It would be necessary to develop a common Canadian view before the Pakistanis (Khaleeli from Karachi and their two senior men from Warsak) arrived in Ottawa next week.
9. On June 14 I outlined the foregoing developments to Mr. Harris, together with a brief sketch of the history of the Warsak Project and how the Canadian contribution had risen, step by step over 2 1/2 years, from $13 million to $36 million. I emphasized that Warsak was technically and economically a very good project but that I was not going to recommend any further increase in the Canadian allocation. I said I would keep him in touch with developments but would appreciate preliminary guidance. Mr. Harris expressed the opinion that, between the lines of action listed in paragraph 6 above, (b) seemed the worst from his point of view. (I remarked that Mr. Pearson would probably consider (a) the worst.) He agreed that officials should pursue line (c) as far as possible.
10. Mr. Sharp told me that, when he had reported to Mr. Howe on the meeting of June 13, Mr. Howe had remarked that, in dealing with people like the Pakistanis, the important thing was to let them feel they were doing everything but in fact to do everything yourself.
11. On June 15, there was another meeting of the Colombo Group. Mr. Johnson, President of Defence Construction Ltd., reported on the situation with particular reference to the discussions that had been held with Acres and Angus-Robertson the previous day. He began by reviewing the difficulties faced by the Contractor and Consulting Engineer on the site, with particular emphasis on the failure of the Pakistanis to supply foremen, etc. - see para 2 above, especially section (a). Unfortunately different members of his staff produced different figures on this point, which in turn apparently differed (as pointed out by Mr. Finlay Sim) from those used by Mr. Hewer three days before; indeed the most recent figures supplied the previous day by the Contractor suggested that many of the vacancies had in fact been filled. Further, in relation to the other main complaint ( Pakistani failure to provide local supplies) I was unable to get any specific answer to the question what, in fact, they had supplied.
12. Mr. Johnson then proceeded to make some "recommendations" on behalf of himself, the Supervising Engineer and the Contractor, as follows:
(a) It should be accepted that the Pakistanis were unlikely to supply the 120-odd foreman-type men, and accordingly additional Canadians as required up to this number should be sent over to do the work.
(b) At the same time, a two-year extension of the target date should be accepted. Already, due to the recent non-cooperation of the Pakistanis, a year had been lost, so that the completion date had been automatically extended from 1958 to 1959; and now, on sober reflection, the Contractor considered it virtually certain that a further year would be involved, bringing the target to mid-1960.
(c) The cost to Canada involved in (a) and (b) would approximate $7 million additional. (If the extra Canadians were not sent over, and an attempt were made to worry along under the present exasperating conditions, the target date would have to extend to 1962 and the extra cost would run upwards of $9 million.)
(d) Arrangements should be made with the Pakistanis that the Contractor should be given freedom to buy materials and supplies locally, as required, thus avoiding the interminable delays of Pakistani purchasing procedures. The total amount would be only a quarter of a million dollars (included in (c) above) and the Pakistanis, who feared the impact of Canadian purchasing on their already short supplies of construction material, would get dollars which would ease their exchange position and permit them to replace the supplies used up.
(e) There should be no attempt to renegotiate the covering Agreement with the Pakistanis, which had been signed by Mr. Pearson in Karachi last November. It might not be perfect, but was good enough and should be made to work. (Here I pointed out that at some of the crucial points, e.g. in relation to purchasing of supplies, the Agreement was vague and had become highly contentious; indeed the purchasing practices both of the Pakistanis and of the Canadians seemed to bear little relationship to it. In the interests of amity and cooperation such points should surely be elucidated and agreed upon.)
(b) Finally, expressing a purely personal view, Mr. Johnson stated that neither his Corporation, nor the Consulting Engineer, nor the Contractor were "diplomats". While they were glad to be participating in a constructive programme like the Colombo Plan, basically they simply wanted to get on with their jobs. It seemed desirable that there should be other Government officers, perhaps in Mr. Cavell's organization, who could make improved contacts with the local people.
13. In bringing the meeting to a close, I thanked Mr. Johnson for his review and recommendations, but pointed out that they could scarcely be considered encouraging. The main ones involved substantially more Canadians on the site, a substantially longer period for construction, and substantially more money from the Canadian Treasury. We knew that the Pakistanis were already objecting to the large number of Canadians, whose presence was extremely costly; and that they were already very upset by the loss of a year in the construction time-table; further, I found it difficult to believe that, in the light of the history and present position of this project, Canadian Ministers would be willing to devote more money to it. I noted that, in his report and recommendations, there was no suggestion of any need for remedial action or changed attitudes on the Canadian side. Naturally I did not want to find faults in Canadian engineers or contractors, but it would have helped, in meeting the Pakistanis, if we could have shown some willingness to make adjustments and a disposition to take a bit of whatever blame there might be. No doubt all present would want to think over these points in the few days remaining before the Pakistanis arrived.