OIL FOR THE LAMPS OF ASIA
LAST week's announcement of a Russian loan to India of some forty-five million pounds to- gether with the quest for credit in London and Washington of the Indian Finance Minister, Mr. Krishnamachari, raises the question of aid to underdeveloped countries in what is inevitably a cold war context. Small as the Russian loan is, the effect of the contrast will not be lost on Asian public opinion and the consequences of any de- cided swing towards the Soviet Union on the part of the 'uncommitted' countries would be suffi- ciently serious to make the West think carefully about the best way to counter this impression.
The problem of economic aid to underdevel- oped countries is not a simple one. The Labour Party proposal to devote 1 per cent. of the national income to this purpose is deceptive in that it avoids all discussion of the very real snags. To begin with, assistance from this country to underdeveloped territories is bound to mean some sacrifice on the part of the average Briton. The resources that might have been used for his own comfort will be devoted to building factories and roads elsewhere. Now such a policy may be both morally right and politically wise—altruism fre- quently turns out to be enlightened self-interest —but the Labour Party should realise from the very start what it involves and the resistance to it that they are likely to meet among their elec- toral clientele. Moreover, this is assuming that Britain will have capital to spare for such invest- ment—a large assumption.
Then some thought should be given to the way in which 1 per cent. of the national income is to be made available. Is it to be a Government loan or ordinary commercial investment? If the latter, it will presumably expect an ordinary commercial return, and capital will only be attracted when conditions of stability arc present and some con- crete advantages offered to foreign investment by the governments concerned. For example, it is not easy to sec what inducement there could possibly be for anyone to invest in the present Indonesian anarchy, while, as the President of the World Bank pointed out a year ago, even in India high taxation and Government regulations have dis- couraged the flow of capital from abroad. What is wanted is a policy whereby companies willing to set up concerns in underdeveloped countries are given assurances that their enterprises will not be nationalised for a specific number of years as well as some tax relief and co-operation from local officials. Such suggestions, when put for- ward, are frequently rejected as 'attaching strings' to credits, yet the alternative is a Government loan advanced for what are ultimately political ends.
All this is not to say that the West has done enough in the way of aid to underdeveloped coun- tries. In fact, it has done remarkably little— though more than the Soviet Union, if we leave China out of the account. Britain has gone ahead with the Colombo Plan—and the shortage of trained technicians even at home sets fairly well- defined limits to what can be made available under it—while the US has reduced its credits for aid from five hundred to three hundred milliOn dollars after turning its thumbs decisively down on the Special UN fund for economic development. Most of American aid in Asia has been to countries in the front line of the fight against Communism and therefore more in the nature of a military operation than pure economic aid.
In the present world situation with so many underdeveloped countries competing for capital Britain and America are certainly not in a position to satisfy all the demands made on them. A system of priorities must be established. Private capital will be influenced by conditions in the countries in question; Western governments pre- sumably by the political advantages they hope to gain from an increase of economic stability and of good feeling towards the West in Asia or Africa. On the other hand, neither Britain nor America can afford to throw money away. The tendency of some underdeveloped countries to plump for large-scale prestige schemes in defiance of economic common sense has meant that there is sometimes little point in pouring good money after bad. It is significant that Russia has appar- ently followed the American example in refusing to have anything to do with the Aswan dam. Rivalry with the Soviet Union should not lead us into supporting any development on the grounds that; if we do not, Russia will. In fact, the re- sources of the USSR must already be taxed to their uttermost by the combination of aid to China and interior pressure for a higher standard of living. The idea of the Soviet Union stepping in ahead of the West to finance the whole of Asian and African development is a bogey.
The real difficulty of the West in competing with Russia's overtures to Asian and African countries is not an economic one at all. The harsh fact is that, for psychological and historical reasons, quite a little Soviet aid makes far more impressioti than a good deal of assistance from the West. America has gained precious little gratitude for the help it has given. In fact, some countries have reacted as if it were they who were doing the US a favour by accepting its money. The moral of this would seem to be the old one: the necessity for the display of greater skill by the West in propaganda and political warfare. It should not be asking too much of American sena- tors and some sections of the British press to exercise a little tact towards the notoriously prickly sensibilities of newly independent coun- tries. However silly African or Asian nationalism may appear in some of its manifestations, sharp rebukes from the latitude of London or Washing- ton can do no good and usually do harm. The battle between Western democracy and Soviet Communism for the minds of millions of Asians and Africans will not be decided only by the sheer quantity of new power stations and atomic reactors each side can offer. The peoples of the underdeveloped countries have often shown that they suspect the West even when bearing gifts. We must convince them that their fears are unfounded.
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