By HIS EXCELLENCY B. R. SEN, Ambassador of India to Italy and Yugoslavia
It is now nearly two years since President Truman spoke of the need of a "bold new program" for the improvement and growth of underdeveloped countries. During these two years no problem in the international economic field has engaged so much public attention and interest as this problem of underdeveloped areas. As India's delegate to the Eighth Session of the Economic and Social Council, when the Point Four of President Truman's speech came up for the first time before the United Nations, I was privileged to analyze the problem and the actions proposed. It is interesting for me to have this opportunity to see the problem once again in the light of the discussions which have since taken place.
It is well known that throughout history there has been no greater source of international rivalry than the lure of economic domination of underdeveloped countries. One need refer only to the history of the rivalries of the European powers for colonial possessions since the sixteenth century to realize this historical fact. The origin of the two world wars can also be traced to this same motive, though people have sought to clothe it with other unrecognizable names. This fact found international recognition, though in a rather indirect way, in the Covenant of the League of Nations, in Articles 22 and 23 relating to the mandated territories. It found full and unequivocal recognition in Chapters IX and X of the Charter of the United Nations.
It will be noticed that both in the United Nations Charter and President Truman's address the need of international co-operation to develop underdeveloped areas is firmly represented as a means to insure international peace. The objective of the scheme of international economic and social co-operation is thus set out in Article 55 of the United Nations Charter: "With a view to creation of conditions of stability and well-being necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, the United Nations shall promote...." President Truman's Point Four is stated by him as one of the "four major courses of action in our program for peace and freedom in the coming years," the other three major courses of action being: (1) unfaltering support to the United Nations and related agencies. (2) continuance of the program for world economic recovery, and (3) the strengthening of freedom-loving nations against the dangers of aggression.
The importance of President Truman's declaration lies not in the originality of his concept, but in the forthrightness of his approach which, as the head of a country which more than any other is in a position today to implement such a policy on a wide scale, gave the matter an urgency and practical direction hitherto lacking in normal international discussion implementing the provisions of the UN Charter. President Truman placed the essentials of the problem in a truer perspective than had ever been done before. He pointed out that the problem had two integral parts: (a) international flow of technical knowledge and (b) international flow of capital investment.
Problems Confronting the Program
Since President Truman made his declaration, two tendencies have been noticeable - one to minimize the importance of capital investment as an integral part of the scheme; the other to depart from the context of international peace as set out both in the UN Charter and by President Truman. There has been a third tendency, viz., to advocate technical assistance for primary production only so as not to encourage any substantial deviation from the present pattern of national economy in different countries, and to exclude assistance for other developments, however necessary or desirable the country concerned may consider them to an over-all improvement of its economy.
The tendency on the part of some of the important countries to soft-pedal the question of international capital has been noticeable from the very beginning. There are of course various practical difficulties. Though some of the foreign capital needed can be found through loans and grants from the more fortunately placed governments, the bulk of it must come from private investment. But the present unstable political conditions, balance-of-payments difficulties leading to limitations of the right to transfer earnings and capital, fear of loss of ownership without compensation, and restrictions imposed by governments on the operations of foreign enterprise act as serious deterrents to the flow of private capital.
The difficulties, however, are not insuperable and in any case must be faced. The stake - maintenance of world peace and freedom - is high. We need men of vision and idealism to handle this problem - men who would not easily be thwarted by-practical difficulties. Lately there has been a hopeful development. In May this year a meeting of the Consultative Committee of the Commonwealth countries (except South Africa)was held at Sydney, Australia, to plan the economic development of South and Southeast Asia where poor living conditions are an increasing threat to the peace and freedom not only of Asia but of the world. The main recommendations of the Commonwealth Committee were: (1) preparation of a six-year development plan for the region, and (2) inauguration of a Commonwealth Technical Assistance Scheme involving an investment of £8 million over a period of three years. The committee is now meeting again in London to carry the recommendations to the stage of execution. The non-Commonwealth countries in the region have also been invited to participate in the discussions.
The Commonwealth Consultative Committee appears to be proceeding on the following lines: (a) for the encouragement of international investment, the first thing necessary is to prepare a comprehensive development scheme covering the entire economy of the countries concerned; (b) as the major part of the capital investment for such a scheme must come from sources within the country itself, the scheme should attempt to assess those resources as closely as possible; (c) having screened the plans put forward under (a) and (b) the Consultative Committee will decide to what extent assistance can come from the Commonwealth countries and what assistance should be sought from other countries, particularly the United States of America; (d) the Consultative Committee will also discuss measures which must be taken by the countries concerned to build up confidence and create conditions to attract foreign capital. This appears to be the most positive and practical step forward in this field since President Truman announced Point Four. The seal of approval to the development schemes of a country by such a highly authoritative body as the Commonwealth Committee should be a help in creating confidence in foreign investors, which is now somewhat lacking.
Industrial Development
That international capital under Point Four should be made available only for developing primary production is another of those suggestions which emanate from men who are too preoccupied with immediate practical difficulties. There are several countries in Asia and Latin America where industrial development fostered by foreign investment may bring about such a revolution in the methods of production that not only manufacturing industries but also primary industries like agriculture, mining, etc., may benefit. The essential point is that by the adoption of scientific methods of production, which go hand in hand with the process of industrialization, the period of apprenticeship which a pioneer industrial country like the United Kingdom had to undergo can be substantially reduced. What is needed is a progressive attitude towards industrialization and a general advance on all fronts. It is hoped that the Commonwealth Conference will approach the development of the Southeast Asian countries from this basis.
The tendency to get away from the context of international peace has been particularly noticeable not only in the general discussions of the specialized agencies of the United Nations but also in the discussions which are being held to deal with the problems of certain regions like Europe. The specialized agencies have tended to regard the activities under Point Four as merely an extension of their normal program. The need to develop certain areas with a view to providing certain essential needs of highly industrialized countries has tended to be merged in the Point Four program. Considerations of international peace appear to have been pushed into the background. Since it is clear that the resources available to Point Four assistance are not going to be large, it is necessary that in their distribution those areas which are likely to yield the greatest and most effective results in maintaining and developing international peace should have prior consideration.
In other words, we must devise a system of regional priority with special reference to the fundamental objective of ensuring international peace. I may illustrate this point by referring to Southeast Asia, where new nations after centuries of subjection have emerged into independence, and where, without immediate measures to improve standards of living, present conditions will be an increasing source of danger to international peace.
One of the most encouraging signs of these times has been the growing recognition of the truth which has inspired Point Four. It will be a tragedy if we allow ourselves to be disheartened by immediate practical difficulties or be led away by political slogans which can only end in fresh disaster.
