Partners in Freedom
What can we do to help the underdeveloped and uncommitted countries in Asia, Africa, and South America? Military power is not enough, says CHESTER BOWLES,who, as our former Ambassador to India and Nepal, had the opportunity to study Asia at first hand, and who was shocked to discover that the Russians are starting to adopt ideas which we originated and then backed away from. Mr. Bowles, who was Governor of Connecticut from 1949 to 1951, entered public service after a highly successful career in business.
by CHESTER BOWLES
1
TODAY America is spending $34 billion on military defense. No thoughtful person believes that this sum, or indeed twice this sum, is too high, if that is what it takes to avoid the devastation of an atomic war.
But the threat which faces America today goes far beyond the growing nuclear power of Russia, superimposed on the greatest orthodox military establishment in history. There is also the danger that shrewd Soviet tactics, taking advantage of our almost total concentration on military matters, will gradually cut us off from our friends and potential friends, isolate us, and eventually throttle us into ineffectiveness.
Since Stalin’s death in 1953, the Soviet Union has moved steadily to capture the diplomatic offensive and to divide the free world. Day by day it is striving to convince millions of people in Europe, Asia, and South America that the Communist nations are the true advocates of peace, and that America, towards whom the world looked with such fervent hopes in 1945, is a power-hungry aggressor.
That this incredibly distorted picture is now widely accepted is a measure of the problem which we face. If we are to change this picture while there is still time, we must develop a fresh concept, of our relations with other free nations, a broader understanding of the nature of power in a revolutionary world, and a bold new approach to match that understanding.
What we do or fail to do in Europe is of crucial importance. But what we do in Asia, Africa, and South America is of at least equal importance. In these underdeveloped areas our concentration on military answers and our indifference to economic and political factors have been particularly damaging.
Instead of drawing on the strength of our democratic traditions and forming a partnership with these billion or more people, we have remained timid and uncertain. We have appeared to turn our backs on the anti-colonial revolution. We have failed to grasp the dynamic possibilities of Point Four, the Colombo Plan, the World Bank, and the specialized agencies of the United Nations. Now, to compound our failure, there are signs that the Soviet Union may use some of our own ideas further to cut us off from those who should be our friends.
If the world Communist movement closed up shop tomorrow, the underdeveloped areas would still be of profound importance to every American. Although we produce 40 per cent of all the industrial goods in the world, we have only 6 per cent of the world’s population. As our own resources dwindle in relation to the demands of our economy, we have become more and more dependent on trade with Asia, Africa, and South America — which now amounts to 50 per cent of our world-wide total.
Today, these underdeveloped nations are going through a revolutionary period which would affect our lives regardless of the cold war. In Asia, Africa, and South America the people, confident that science can quickly erase their poverty and misery, are determinedly seeking a better life.
The Communists did not create this turmoil and ferment. If Marx, Lenin, Stalin, and Mao had never existed we would still be contending with it. What the Communists do is to ride the revolutionary wave like surf riders, and to work with all their skill and ideological fervor to speed the destruction of the old order and fill the resulting vacuums.
Since 1945, America has done much to bolster the war-torn economies of Europe and to contribute to the development of new countries in Asia and also Africa and South America. However, the measure of the world’s need is not what we have tried to do, but the gap that remains to be filled. Today this gap is substantial.
The government of every underdeveloped nation is now on trial. In the next few years these governments must demonstrate to their people that democracy can provide not only political freedom for each individual but also steady and even spectacular economic growth.
Demands for higher living standards, for more food, for freedom from disease, for schools and roads, for the damming of rivers to provide irrigation and hydroelectric power, for the expansion of railroads and communications, are growing steadily more insistent. Any government which consistently fails to meet these demands, however honest, democratic, and well-meaning, will eventually go under.
The obstacles in the way of rapid progress are great, and one of the most stubborn is lack of capital resources.
Whether the country is rich or poor; whether the economy is capitalist, communist, or socialist, capital accumulated through savings is the essential dynamic motive force which determines the speed with which industry can be expanded and living standards raised. Today every underdeveloped nation is struggling with the question: Where can the savings be found to push forward development at a pace that will satisfy the impatient people? If a democratic government piles the taxes too high it will face defeat at the polls. Yet if it fails to match the progress of the Communist nations such as China, it will be swept aside in revolutionary upheaval.
In India, the tax load has been pushed to the limit which a democratic people will accept. Yet, each year, total savings — public and private — amount to only 5 per cent of the gross national income. In Indonesia, the percentage is only 3.8 per cent. These figures are in sharp contrast with the ruthlessly forced savings of the Communist police states. In Russia, the proportion has reached 20 per cent. Communist China claims to have matched this figure. Although this is surely an exaggeration, the actual figure is probably in excess of 10 per cent. The economic and political implications of these comparisons for the long haul are obvious.
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THE challenge to those of us who believe in free institutions is compounded by the steady growth of the Soviet economy. A few years ago many Americans comforted themselves with the belief that the Russians were clumsy, backward people, incapable of modern industrial development. This picture is obviously a long way from the truth.
In the last few years the Russian economy has been expanding rapidly. Russian steel production is now almost half that of the United States and electric power is about one-third.
This means that three years from now the Soviet Union may be producing some $30 billion more goods each year than at present. If this figure is actually reached, how will the Kremlin distribute the additional $30 billion worth of new production?
Some of these added billions may flow into increased military preparation, some into the expanding use of atomic energy. Some will surely go into additional heavy capital investment. A large share must be earmarked for the increased consumer goods and higher living standards which have been repeatedly promised to Russian families. But it would be surprising indeed if a billion or two or three of this additional production is not invested in economic-political development programs, particularly in Asia, which will have a simple clear objective: the expansion of Soviet political influence and power and the disruption of the free world.
Many American observers who minimize the likelihood of such a program point out that in foreign trade the Russians have been notorious for their big promises, small deliveries, and impossibly harsh terms. This comfortable reaction fails to take into account the fundamental change in Soviet tactics which has been taking shape since the death of Stalin. If the increase in Soviet production even approximates the estimates of American government experts, it is inconceivable that Malenkov and his associates will not use a formidable fraction of that production to bolster Soviet prestige abroad and further divide us from our friends and potential friends. Indeed there is ample evidence that this program is already moving forward.
Persuasive Russian trade representatives are already peddling their wares throughout Europe and Asia. A sizable Soviet Point Four program is under way in Afghanistan. There are reports that the Soviet Union will soon be given the order for an ultramodern steel mill in India with a capacity of 500,000 tons. It is said that the Russians have agreed to build this mill in less than two years, and loan the Indian government the money to pay for it on a fifty-year basis at 2½ per cent interest.
It is also reported that contracts will be let for medium-sized Russian tractors at prices well below those charged in the West. The fact that such prices are set on a political rather than an economic basis makes such competition difficult to meet.
The implications of this developing phase of Soviet policy are of profound importance. For 180 years the people of Asia, Africa, and South America have looked at America not only as the stronghold of democratic freedom and individual opportunity but as a dynamic example of the power of free institutions to soften economic injustice and to create an expanding society.
In the coming years we must assume that the Soviet will offer persuasive proof to the underdeveloped, uncommitted world that under Communism the economic pace, at least, can also be spectacular, and that Russia stands ready to help those nations which will accept her help. Although the political price of Soviet beneficence will be high, it would be folly to discount its attraction for hungry people desperate for progress.
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OBVIOUSLY we cannot cope with this challenge by simply adding more atomic bombs to our already massive supply. Indochina should have taught us that Western military power in revolutionary Asia has its limits. Nor can America “save" Asia from Communism by lectures and threats. If Asia decides finally to reject the Communist doctrine, it will be because Asians have become convinced by their own experience that steady economic progress and individual freedom can both be attained under democratic governments, and that the bloody totalitarian road is a political and economic dead end.
The situation calls, among other things, for a fresh new approach to foreign economic assistance that is practical, acceptable, and within our capacity. In developing this new approach it is essential that we put political expediency and partisanship behind us. The mistakes which have been made are neither Republican nor Democratic. They reflect the complex world with which we are contending, and they belong to all of us. The election is over, and it is time for a fresh start.
If a fresh start is to be meaningful, the leaders of both parties must agree on some basic principles. Precisely what, for instance, is the purpose of our aid?
If we are concerned solely with stopping Communism, our effort will start under a grave handicap. We will tend to concentrate our efforts solely in those areas where Communism already exists as an active threat, and this will hang a political label on everything that we do.
If, for instance, a new American assistance program is concentrated in Communist-threatened South Asia, while Africa and South America remain largely neglected, Asians will promptly assume that we are interested, not in their welfare, but purely in thwarting the Communists. We will be charged with attempting to buy their loyalties and to draw them into the “ Western camp.” Many free Asian leaders, although desperately anxious for assistance, will accept our aid only with reluctance or not at all.
Why indeed should it always take the cold war to goad us into doing what we should do for its own sake? To reach out a helping hand to others less fortunate than we was basic to our religious beliefs and our traditions long before the MoscowPeking Axis came into existence.
The political objective of our aid programs is clear, urgent, and profoundly worth while: to develop indigenous political and economic strength among the nations of the free world so that they can survive as free people — not to serve America’s interest but their own. As they succeed in meeting the needs of their people, their confidence in democratic methods will grow, and with it their determination to defend their achievements against all adversaries, either from within or without. With such nations, America can form a free and dynamic partnership which over the years will case the threat of Communist aggression and gradually establish the foundations for a lasting peace.
For this reason the purpose of any effective program must be broader than the easing of poverty. Misinformed people tell us that “a man with a full stomach will never become a Communist.” History does not bear them out. Revolutions are led, not by hungry peasants, but by middle-class, frustrated, and normally well-fed intellectuals.
It is urgent that people throughout the world have more food, better health, and opportunities for good schooling, as soon as possible. It is equally essential that their gains be achieved in such a way that the people themselves develop a sense of self-respect and common purpose through their own active participation in the building of their villages, their state, and their nation. A dynamic movement of this kind can never develop if it be dominated by outsiders. Asia, Africa, and South America must grow and develop largely through their own efforts, and from the villages up.
Furthermore, the freely given labor of the people themselves is a major source of capital savings that is essential to rapid progress in the underdeveloped countries. Each year, the peasants have weeks and months of leisure after the crops are in. If this idle time can be used to build roads, schools, and health clinics, to create new irrigation ditches, and thus to strengthen the community itself, the people of Asia, Africa, and South America can greatly speed their progress.
Our aid programs to non-Communist nations must be free of political strings. But it is essential that workable requirements be established for longrange economic planning, land reform, tax reform, and a ban on the use of foreign exchange for the purchase of luxuries for the wealthy. Today, in several underdeveloped countries the effect of American aid is not to speed such reforms but to postpone them. If we dodge this issue, a large proportion of our aid money will be wasted, and we will be charged with subsidizing feudal economies which serve the few and not the many.
The underdeveloped nations cannot be transformed over night. We must not delude ourselves into thinking that our American assistance program is a temporary expedient. Our help will be required for many years. Unless our commitments are placed on at least a five-year basis, efficient planning will be impossible.
Finally, we must forgo our search for a simple, glib, all-inclusive formula. The problems of economic development are infinitely complex, and the solutions which we bring to bear must reflect their complexity.
For instance, lower tariffs and increased trade will help greatly to reduce the amount of aid that is needed. The underdeveloped nations are willing and anxious to pay for their own progress as far as that is possible. But there are only two ways that they can get dollars: they can earn them by selling us things which we need, or they can get them through American grants or loans. The easier we make it for these nations to sell part of their production to the United States, the less assistance they will require from us. Moreover, the higher their living standards rise, the more goods they will be able to buy from American manufacturers.
The present Administration has stated that it fully supports the lowering of trade barriers. With the election behind us and with bipartisan support, let us hope that it will live up to the promises which have so frequently been made to the American people and to the world.
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ANOTHER factor is the health of our own economy. When business slows down in America, the results are felt in every remote corner of the globe. As one European expressed it: “When America sneezes, the rest of the free world gets pneumonia.” A serious economic depression in America would be the best news which has reached Moscow in many years, for it would appear to bear out the Marxist claim that capitalism is bound eventually to collapse of its own weight. Our economy must continue to expand to its full dynamic capacity.
We should also take steps to bring a greater element of stability into the prices of raw materials which we buy in the underdeveloped areas. The incomes of three fourths of all the families in Malaya are tied to the price of rubber in America. In many of the tea, coffee, cocoa, tin, and oil producing nations, the link is almost equally close.
Surely we are ingenious enough to develop some system of minimum and maximum prices that will avoid the violent swings of the market which cause such suffering and bitterness and which benefit only the speculators. A price band might be set up for normal fluctuations, which could ordinarily be controlled through stockpiling. If production remains beyond the capacity of the market to absorb it, an orderly planned movement into other fields of production could be set in motion. No responsible person would suggest that such a program could easily be put together or agreement quickly reached. But the time to make the attempt is now, while there is latitude to give it considered attention.
Freer trade and assured markets for raw materials at stable prices will strengthen the economies of the underdeveloped nations and enable them better to help themselves. But a substantial program of direct assistance is also urgently needed. Such a program must be as bold and imaginative as the Marshall Plan, which helped put the economies of Western Europe on their feet between 1947 and 1951.
What should this program include? There is immediate need for more engineers, public health experts, agriculturalists, educators, and other technicians. The present programs of American, Colombo Plan, and United Nations technical assistance should be reorganized and expanded. Several improvements should also be considered. When this program was launched there was pressure to send Americans everywhere throughout the world, in the belief that they were most competent to work out technical problems. This Americanized approach may have been carried too far. The Japanese, for instance, know far more about increasing rice production on a two or three acre irrigated plot than do most American farm experts who are accustomed to work large acreage with machinery. Indians are as experienced as we in the control of malaria on a mass scale. Indonesians have made tremendous strides in the development of fish farms.
This program of technical assistance is fundamental to the economic growth of the underdeveloped nations, and it should be pressed forward vigorously with the help of American funds. By handling all of it, or as much of it as politically possible, through the Colombo Plan and the specialized agencies of the United Nations we will help eliminate the Communist propaganda charge that the Point Four program is a cover for American intrigue and subversion.
But technical assistance without major capital investment will only scratch the surface, and only to a limited extent can these capital needs be met by private investment from America and other Western nations. Since the war, private investment in the United States has averaged $46 billion annually. In this same period our total overseas investments were only $10 billion. Most of this was in Europe and Canada, and it came largely from profits earned in those countries by American corporations. If we eliminate American oil expansion in South America, American private investment in the underdeveloped nations since the war totals scarcely $1 billion. In India, during this period, it has been less than $100 million.
There are valid and understandable reasons for this meager flow. Conditions in most underdeveloped nations are uncertain. Often there has been unreasoning prejudice against foreign investors based on colonial experience. In some cases tax laws make it difficult to take out a reasonable share of the profits once they are made. There are often nagging bureaucratic difficulties on operations.
But even under ideal conditions it is folly to expect that the essential foundations for economic growth in the underdeveloped nations can be built through private capital. The investment that is required is too great and the profit opportunities too limited and uncertain. Such basic primary needs as increased electric power, adequate port facilities, more efficient railroads, and improved communications must largely be created with government funds. Only after these foundations have been built and colonial fears have receded can we expect broad opportunities for private investment to be opened up. Hence, in most underdeveloped nations, direct government loans and grants on a substantial scale are essential to adequate progress. America is now giving modest grants to India and a few other countries. Malaria control, for instance, is basic to the economic development of India; yet India lacks the dollars with which to buy the DDT, spray guns, and jeeps which are required. Twenty million-odd dollars has been provided by the American government to purchase these essentials.
Equipment for road building, locust control, flood control, health centers, schools, and community development projects are other examples of projects which, although urgently needed, produce no direct, revenue, and where outright grants are essential to rapid progress.
As in so many other fields, the first proposal to meet such needs on an adequate scale came from America. In 1950, the United States International Development Advisory Board, under the capable chairmanship of Nelson Rockefeller, recommended “the prompt creation of a new International Development Authority in which all free nations will be invited to participate.”
But, as has been the case on so many other occasions, our early imaginative proposals soon ran into a political dead end. When the underdeveloped nations seized enthusiastically on these proposals, we promptly backed away. It is deeply disturbing that America, under both Republican and Democratic administrations, has refused to support its own program. It is particularly disturbing because we have refused on the grounds that we cannot afford both economic development and defense at the same time.
The poverty which exists throughout much of Asia, Africa, and South America provides the soil in which Communism is most likely to grow. When we condition our willingness to assist the underdeveloped nations on the willingness of the Russians to agree to a reduction in armaments, we simply offer the Russians one more reason to maintain the present arms race. Why cannot we break loose from our obsession with the Russians? Why cannot we take those measures which are clearly in line with our own American heritage and which will begin to meet some of the most impelling demands of our fellow men?
Another essential but quite different type of capital investment is provided by the World Bank which was created at Bretton Woods in July, 1944. The Bank grants loans to other governments throughout the world for government or government-guaranteed projects which seem likely to provide an income out of which the loan can be repaid. Today, most of the capital which the World Bank loans to other governments throughout the world comes from American private investors. The World Bank, under the competent direction of Eugene Black, has filled a vitally important role and deserves continuing support and expansion.
But under its charter the World Bank cannot grant direct loans to privately owned companies unless they are guaranteed by their governments. This led the Development Advisory Board, under Nelson Rockefeller’s leadership, to propose an International Finance Corporation which would be affiliated with the World Bank and which would grant loans not only to governments but to private corporations for new equipment and for expansion. These loans would be granted where there is a reasonable expectancy that the loan can be repaid out of profits over a period of years. Such a corporation, backed by ample capital, could make a major continuing contribution not only to economic progress in the underdeveloped nations but to the vitality of the private ownership system here and abroad.
Although the bulk of such loans will be repaid, the standards should be much less rigid than those required by the World Bank. The interest rates should be low and the loans placed on a long-term basis. Under some circumstances, the loan authority might agree to accept repayment in rupees, yen, rupiahs, or other currencies, which in turn could be reloaned to other nations in the area, thereby distributing and encouraging trade.
This proposal for a loan agency was also supported wholeheartedly by the Asian and South American nations, which suggested that it be combined with the proposed International Development Authority. But again our government refused to follow the recommendations of its own committee. Let us hope that this decision will be reconsidered. Perhaps, instead of setting up a new organization, the program could be handled through an expanded Colombo Plan.
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A COMPREHENSIVE aid program of this kind, keyed to the economic and political realities of Asia, Africa, and South America, requires substantial longrange commitments for a period of at least, five years. However, the bulk of the money required would be in loans which would be largely repaid. Exclusive of the World Bank loans, the total amount which could be effectively put to work each year would be no more than 7 per cent of our annual military budget.
Although money and legislation are the first essentials, much would also depend on the manner in which our assistance is offered. The underdeveloped nations, regardless of their poverty, want no charity from anyone. Their allegiance and loyalty are not for sale.
A good starting-point would be to remind ourselves of what the West owes Asia. In the eighteenth, nineteenth, and early twentieth centuries much of the capital which made rapid progress possible in the colony-owning nations of Europe came from the exploitation of colonial people overseas. Low “native” wages on the one hand, and high taxes, meager improvements, and big profits on the other, enabled Britain, France, the Netherlands, Portugal, and Belgium to drain tens of millions of dollars from Asia and Africa every year.
Even America, which has always disliked colonialism, benefited indirectly from the European colonial system. Much of the capital which built our industries and our railroads in the last century came from loans advanced by European banks which were based on profits made in India, Pakistan, Burma, Indonesia, Indochina, and Ceylon. Yale University was named after Elihu Yale, who, as Governor of Madras, sent three shiploads of “Indian goods" to New Haven as Yale’s first major endowment.
If President Eisenhower, against this background, and with bipartisan support, should speak to the underdeveloped nations in the following terms, the effect would be electric: —
“For generations the West took from the colonial areas vast wealth to develop its own high living standards. This flow of wealth from East to West came at a time when the moral standards of the world were different from those of today.
“Recognizing this change and recognizing also the great needs of the new underdeveloped nations of the world, we now propose to make available to you loans, grants, and technical assistance, as part of a major five-year plan to speed your development. We ask nothing in return except your dedicated efforts in behalf of your own people to create rising living standards and expanding opportunities under free governments.”
Can America summon the imagination and understanding to talk in such terms? It is not too much to say that the survival of the free world during our generation may depend on the answer. The struggle for a democratic Asia, Africa, and South America will be won or lost, not on the battlefields, but in the rice fields and malaria swamps, the assembly lines and the river valleys. In this fight America must soon stand up and be counted, or repudiate the very truths which she once held to be selfevident.
The time has come for members of both political parties to set a new measure of action for the future. Let America put her hesitations behind her and boldly offer the free, underdeveloped, and uncommitted people of Asia, Africa, and South America a partnership to quicken their economic progress.
Then the world will know that America, drawing on her great traditions, has responded dynamically and effectively to the exciting and dangerous world in which we live. And at long last free people everywhere can begin to face the future — unafraid.