STERLING WAR DEBTS

Otago Daily Times, Issue 27390, 16 May 1950, Page 5

STERLING WAR DEBTS

Danger Seen In Scaling Down ADEQUATE SUBSTITUTE NEEDED NZPA—Copyright Rec. 8.10 p.m. WASHINGTON, May 14. The Foreign Policy Association today forecast increased Communist pressure on India, Pakistan and Southeast Asia generally if Britain scaled down her sterling war debts without providing adequate compensation. The association, which is a private organisation of foreign policy experts, also' examined American hopes that Britain would give up its “ privileged trading position ” in the sterling area. It concluded that this would not be possible unless the United States changed its foreign economic policy. The association’s report said that when Britain negotiated a dollar loan in Washington in 1945 it was suggested that Britain’s sterling creditors should be willing to write off part of Britain’s debts to them just as the United States wrote off part of the lend-lease debt. “ While this plan of action sounded reasonable in Washington, it was not so regarded in Cairo and New Delhi. The 500,000,000 people in India, Pakistan, Ceylon and South-east Asia who have attained political independence are under Communist pressure from within or without. Any lessening of financial aid represented by sterling balance releases without the assurance of an adequate substitute would certainly increase rather than decrease this pressure,” the report declared.

It said the United States could not reconcile its present foreign economic policy, which should be changed, with its objections to Britain’s policies n the sterlng area.