PAY CLAIMS OF THE EAST
By NICHOLAS DAVENPORT
WHILE feverish last-minute can- vassing and intrigue over the appointment of a new Chan- cellor stir the senior common- rooms of Oxford, one of the contestants for that dignity—Sir Oliver Franks—is quietly assist- ing on the other side of the world at a banker's inquiry into aid for India and Pakistan.* Pace Sir Maurice Bowra, Sir Oliver would be far better employed in getting finance for those two capital-starved countries than in coddling the university chest. Aid in particular for India is the key to the neutralism of the uncommitted East, for if the democratic mixed economy of India fails, Com- munism sweeps in. Sooner or later the British Government will have to decide what extra grants and loans it can make to help India's huge third five-year plan. Our balance of payments is not so robust—running now perhaps at a surplus of only £200 million to £220 million a year—that Mr. Amory can afford to let a domestic boom in consumer durables grow at the expense of aid for the under-developed nations of Asia, whose national income per head is less than one-tenth ours (which is £400 per head).
This problem has become all the more urgent because the American Government is seeking to hand over to its allies some of the huge burdens of foreign aid which it has been carrying. Taking aid for the Colombo Plan countries as a whole, it will be found that over the six-year period up to mid-1959 the US has undertaken eco- nomic and technical assistance worth £2,022 million—an average of £337 million a year. In the same period the British Government provided only £150 million, apart from supplying some hundreds of experts and taking 300 students here for training. True, our contributions have recently increased—£30 million being provided in 1958-59 against an average of only £13 million in previous years—but over this period our actual disbursements out of the meagre total of £150 million have amounted to only £100 million.
We must, of course, add our modest contribu- tions through the World Bank, of whose capital we are responsible for 14 per cent. (against America's 33 per cent.). From 1947 to June, 1959, the World Bank has loaned the Colombo Plan countries $1,117 million (nearly £400 million or £33 million a year). Its offshoot, the new Inter- national Development Association, has now been launched with a capital of $1,000 million, of which we have contributed the equivalent of £50 million. But set against American aid, even allow- ing for our different national sizes, the British contribution from public sources to the under- developed East has been pitifully low. The help derived from private capital has been far greater. In India at least 75 per cent. of all private-enter- prise investment is British. (It is estimated that at the end of 1957 British private investment in the Colombo Plan countries as a whole amounted to £309 million.) If it had not been for help from private capital resources of the big contracting firms and the Indian Government's drawing upon its old sterling balances held in London— which have been run down from £561 million to £155 million since April, 1956—the sterling con-
* The bankers' mission consists of Sir Oliver Franks, chairman of Lloyds Bank, Dr. Herman Abs, chairman of the Deutsche Bank, and Mr. Allan Sproul, a former president of the New York Federal Reserve Bank. tribution to the development plans of 'Colombo' group of countries would have counted to our shame. Yet when Lord Pake raised this matter in the House of Lords months ago, Lord Lansdowne confused the 1 by quoting so many irrelevant statistics that ignorant noble lords went home imagining the British Government had done a wonderful I hope that Mr. Amory will now decide much more will have to be provided by gov ment guarantees of loans or credits for the Asian live-year plans. Those of Pakistan India call for quick joint action; yet no Pet nent body representing the capital-exporting, dustrial powers exists apart from the World B to whom Sir Oliver Franks and his han colleagues are reporting. Pakistan is planninl development outlay of about £1,400 million e' five years and India £7,500 million for the t years beginning April, 1961. Two years ago /0 found herself short of foreign exchange (by 2, million) and had to cut down her second five-Y plan. For the next one she will need over LP million in foreign exchange a year. It is ingl, tive that this should be provided, for this th'. plan will make India self-sufficient in steel an output of ten million tons by 1966) and caP3 of balancing her international account. Shed already developing adequate consumer goods ty'' dustries through local decentralisation and .4 only hard-core economic problem that rent is agriculture. Here is a race between the Ovrot of population and the growth of food producti.14 which could end the wrong way, but the administration has such able men—Sir 0911`r Franks will find that most of their economists ,a: Oxford graduates—that I am convinced hi' given the foreign aid they need their third V' year plan will be a brilliant success.
Fortunately, President Eisenhower, after 1. recent visit to India and Pakistan, seems to be t,, impressed by their economic planning as I ,, as a mere student of economic affairs. He is see''' ing to step up American aid to these two coin• tries---within the limit of the over-all foreign 3°, programme—and is asking Congress to sanch° immediately $700 million for the Developnieri Fund Loan through which this aid is to w channelled. ,If Russian aid does not extend vg, yond 15 per cent. or so of the total, it means tha; India will want the Western Powers to proviu,f nearly $850 million (over £300 million) a year t, foreign exchange. As a result of the recent talw, in Paris, the representatives of the eight Wester' credit-providers are meeting in Washington in few weeks' time to discuss this problem, and ' hope that India's sound and just claims will he met. Unlike the NUR, she is not in the positini to strike to get them settled.
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