The Consultative Committee of the Colombo Plan, which will be meeting in Jogjakarta, Indonesia at the end of October, will have to take a decision on the future of the Colombo Plan. In 1955 it was agreed to continue the Plan to 1961 and to reconsider its future in 1959.

Attached is a memorandum on this subject which, if approved, will form part of the instructions to the Canadian Delegation to the Jogjakarta meeting. In summary, the Delegation is instructed:

(a) To seek agreement on continuation of the Colombo Plan for five years beyond 1961 with the proviso that at the Consultative Committee meeting in 1964 the question of a further five years renewal will be considered.

(b) To make clear that in supporting a continuation of the Plan the Canadian Government is unable to commit itself to any particular level of assistance over any specified period, apart from the present commitments which were announced at Montreal, in 1958.

I recommend that these instructions be approved.

H.C. G[REEN]

[PIÈCE JOINTE/ENCLOSURE]

Note des instructions à la delegation
à la réunion du Comité consultatif du Plan de Colombo

Memorandum of Instructions to Delegation
to the Colombo Plan Consultative Committee Meeting

CONFIDENTIAL

[Ottawa], October 15, 1959

THE FUTURE OF THE COLOMBO PLAN

When the Colombo Plan was brought into being in 1950 it was envisaged that it should continue until June 30, 1957. In 1955 the future of the Plan was considered at a meeting of the Consultative Committee in Singapore. It was decided then to continue the Plan until June 30, 1961 and to reconsider its future at the meeting of the Consultative Committee in 1959.

An important decision on the future of the Plan must therefore be taken at the meeting of the Consultative Committee in Jogjakarta. There is no apparent desire on the part of any member to see the Plan come to a halt in 1961. It is making a very important contribution to economic development and an end to the need for this contribution is not yet in sight. If we accept the desirability of continuing the Plan, the first point for decision is whether a renewal should be indefinite or for a specific term of years.

The members of the Plan did not favour an indefinite extension in 1955 and the evidence we have so far of the thinking of other countries does not suggest that they now favour an indefinite extension, except for Australia. The Australians are not inclined to set a terminal date. In our view, however, it would be useful to fix some term of years as an indication that we do not contemplate extending this form of assistance forever. The United Kingdom also opposes an indefinite extension of the Plan. The recipient countries all aspire to be in a position to stand on their own feet some day and they appear to be no more anxious than the donor countries to look upon the Colombo Plan as a permanent operation.

The argument has been put forward by the United Kingdom that periodic renewals provide an opportunity for reviewing progress and also serve to refresh public awareness of the aims and objectives of the Plan in the publicity attendant upon an extension. The Plan is reviewed annually at the meetings of the Consultative Committee but there appears to be merit in reviewing the operation from the longer perspective of at least five years.

If the advisability of setting a fixed term of years for renewal of the Plan appeals to the majority of the member countries, as we expect it will, there remains the question of the length of time of the renewal. Some arguments for a reasonably long period of renewal are as follows:

(a) A realistic appraisal of the situation in South and South-east Asia makes it clear that in spite of some impressive gains, the need for external aid is not likely to terminate quickly. No Asian member country of the Plan is likely to attain in the near future the point where it can generate enough internal capital for a satisfactory rate of development.

(b) The Communist Bloc has been increasing its assistance to countries in the Colombo Plan area. The Communists have set no term of years to their efforts, although Chairman Khrushchev's statement that the Seven Year Plan would enable the Soviet Union to increase its assistance carries the implication that Soviet aid will go on for at least that period. While it would be unwise to allow ourselves to be manoeuvered into the position of trying to top each Soviet offer we should at least give a general assurance to our Asian partners that our aid will continue for a reasonable length of time.

(c) There is a strong desire on the part of the Asian members to be able to count on our aid for a reasonably long period because this is important to them in planning their development programmes.

While some of these arguments would seem to weigh in favour of continuing the Plan for perhaps another ten years, we prefer to see the question reviewed again in a somewhat shorter period than that. We favour extending the Plan for another five years from 1961, with the proviso that at the Consultative Committee meeting in 1964 the question of a further five years extension will be considered. Renewals of five years are more adaptable to the development plans under which a number of Colombo Plan countries are operating. It is necessary to ensure that the possibility of another extension is discussed at least a year before the expiry date of any existing mandate so that member countries may plan their budgets accordingly. The advantage of this scheme is that the possibility of a continuation for ten years is left open but we do not make a definite commitment beyond five years, and the practice which has grown up of review at five - yearly intervals is maintained. There are indications that the United Kingdom, the United States and India will be agreeable to this solution.

The Canadian Delegation should seek agreement of other members of the Plan to a formula on the lines described above. In any statement that is made on this subject the Delegation should make clear that in supporting a continuation of the Colombo Plan the Canadian Government is unable to commit itself to any particular level of assistance over any specified period, apart from the present commitments which were announced at Montreal.