Was There a Seaway Sellout?

BLAIR FRASER October 1 1954

Was There a Seaway Sellout?

BLAIR FRASER October 1 1954

Was There a Seaway Sellout?


at ottawa


ST. LAWRENCE Seaway negotiators are still keeping their fingers crossed. Until the United States Supreme Court is two weeks past the opening of its autumn term, it will not be absolutely and finally certain that the last legal obstacle has been removed from the international power project.

Most Canadians, including government officials, had supposed that the last appeal by private power interests was thrown out by the U. S. Supreme Court last June. It turns out this wasn’t quite correct. Theoretically at least, U. S. law still permits a request for review of this decision.

It’s not considered likely that any further obstruction will be attempted, j and still less likely that the U. S.

! Supreme Court would change its mind even if another request were made. The work begun will not he interrupted. However, officials in both countries will have easier minds when the U. S. Supreme Court completes its first fortnight.

To Canadian officials, this faint remote threat gives an ironic twist to the charge that Canada “sold out” to the United States in setting up plans for the joint seaway scheme. They say Canada hasn’t sold out, for the excellent reason that no concessions at all have been necessary — Canada still has the right to build a canal of her own on the Canadian side, will do so when or if seaway traffic justifies it, and would certainly do so if any trouble arose about the use of the canal in U. S. territory. This, they say, is the answer to those who fear that the McCarran Act might liar the passage of Canadian I seamen on Canadian ships, or that

future trade with Communist or Communist - dominated countries might be blocked by solely American rules and regulations.

But, they add, although the United States’ participation is not in fact limiting Canadian sovereignty, United States co-operation is still essential to the whole scheme. If the U. S. were suddenly, even now, to decide it didn’t want the St. Lawrence Seaway developed, all it need do is cancel the Federal Power Commission’s license to the New York State Power Authority. That would kill the whole scheme.

Ontario could no more build a power development of her own than build one half of an international bridge al Niagara. No one in either country has ever suggested that the seaway alone, without the power development, would make economic sense. Therefore the U. S. still has an unexercised veto power over this Canadian scheme.

Canada, of course, has the same veto power over any U. S. scheme on the St. Lawrence, hut Canada is far more anxious than is the United States to have the seaway built. Only after 20 years of trying has the U. S. plan been pushed t hrough Congress. It isn’t the plan we started out with -—from Canada’s point of view it isn’t as good but it is a co-operative project that Congress has finally decreed. Nat urally the congressional decree applies only to U. S. territory; Canada on her side can do anything she likes in her own territory too. But meanwhile, since we want the seaway far more urgently than the Americans, Canadian officials are being careful not to he too intransi-

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points that may be important, but that they feel are a lot less important than having the seaway built.

WHEN THE COLOMBO Plan Consultative Committee ends its annual meeting here Oct. 9 after three weeks’ work by officials and ministers, its biggest single job will have been to produce the Colombo Plan Report for 1954.

Canada as host country will have the initial printing and hopes to make this report the handsomest since the Colombo Plan went into actual operation three years ago. Graphs and pictures will brighten its pages—hitherto solid masses of rather small type.

Facts and figures in the report will be cheerful, too. This great international scheme for the capital development of Southeast Asia has now been operating long enough to show positive and visible results. When the Consultative Committee finishes adding up its figures, it will certainly show thousands of horsepower developed in new hydro-electric projects, thousands of new acres irrigated, thousands of people therefore getting a little more to eat.

There are some other facts equally pertinent, though, which the report will not contain.

It will not, for example, bring out the fact that contributions from the western countries are almost certain to fall far short of the original target, probably by hundreds of millions of dollars. The target set at the conferences of 1950 was $5 billions over six years. About half of it was to be raised by the Asian countries themselves. The rest, in unspecified shares, was to be contributed by Britain, Canada, Australia, New Zealand and the United States.

Precise totals are hard to get, because no country wishes to stress the difference between promise and performance in the Colombo Plan. However, we are now past the half-way mark of the six-year plan. Considerably less than half their intended share has been contributed by the western nations. There is no indication, either, that any of them proposes to increase its rate of contribution.

Asian countries are facing this deficit realistically. India, for one, hopes to be able to find more capital from her own resources, and thus keep the total dimensions of the plan somewhere near the original target. In any case, half a loaf is better than no bread. The Colombo Plan is bringing tremendous benefit to Southeast Asia, and nobody is shedding idle tears because it’s doing less than had been hoped for at the start.

But the $5 billion target set in 1950 was the best guess t hat could be made, at the time, of the minimum required to make an effective improvement in the Asian standard of living. So far, our contributions have not attained that estimated minimum.

In the background notes handed out to the press by the External Affairs Department when the Colombo Plan Conference in Ottawa was announced, there is no mention of any target figure having been set at Colombo. It will be interesting to see whether this omission is repeated in the 1954 annual report produced by the Consultative Committee.

ANOTHER FACT which will certainly not appear in the Colombo Plan Report for 1954:

Canada’s much-vaunted contribu-

tion of $25 millions each year does not, in fact, give the Asian countries a real $25 millions worth of capital goods. In some cases the real value of the goods, quoted in world market prices, has been only about half the nominal dollar value.

A good example is locomotives, of which Canada is donating 120 to India over a period of several years. Nominally this amounts to a gift of $21 millions. Actually it is less than $12 millions. Canadian locomotives cost about $ 167,000 each. India could buy locomotives in Britain for less than $100,000, and in Germany for about $85,000.

Of course India doesn’t complain about this. The locomotives are still a gift. India needs them badly, and asked for them. Besides, the proud and sensitive countries of Asia are delighted, not offended, to know that Colombo Plan contributions benefit the

donor countries as well, by providing employment in plants that might otherwise have to close. They like to think of the Colombo Plan not as an alms-giving operation, but as a cooperative scheme for mutual advantage

which in fact it is.

Not all Canadian officials seem to think so, however. Administration of our share in the Colombo Plan is niggardly in several small ways. For instance, Canada refuses to pay the freight on these valuable locomotives of ours. Since the Finance Department took the view that India ought to have a financial stake in the operation, India must move the locomotives from Kingston, Ont., to their destination at her own expense. Since India has no ships of her own, the freight charges are a drain on those scanty Indian reserves of foreign exchange which the Colombo Plan is designed to build up.

Canada also refuses to pay the insurance on this costly freight, though Canada tried to insist that insurance should be taken out. India drew the line at this, replying politely that if any locomotives should be lost in transit the Indian Government would replace them, but reserving the right to buy such replacement in the world market.

These charges of course are only a small fraction of what the capital equipment is worth, even at German prices. India is receiving help from the donations. But the penny-pinching administration does tend to produce the same mixed feelings that would be aroused by a Christmas gift sent by express, collect.

FAR FROM REALIZING this, some Canadians seem to expect what Edgar Mclnnis, president of the Canadian Institute of International Affairs, once

called “an abasement of gratitude” for this gift of $1.66 a year from each Canadian. One Canadian envoy in an Asian country recently complained that Canada wasn’t getting enough publicity out of her contributions to the Colombo Plan. He thought Canadian flour ought to be sent out in sacks marked “Gift of the Canadian People. Similar inscriptions could be stenciled on the locomotives and stamped on the ingots of copper and aluminum that this country is sending to Asia.

In fairness to the man who dreamed up this publicity stunt (which will not be done, anyway) it’s probable that he was merely trying to make sure the Colombo Plan continues to get Canadian Government support. In spite of the endorsements it has received from all Opposition parties and from Canadians generally, the Colombo Plan has never had more than lukewarm acquiescence from the Government of Canada.

L. B. Pearson, Minister of External Affairs, and his officials have been wholeheartedly in favor of it, but they’re uncomfortably aware of being alone in this view. The Department of Finance has always been grudging as Hon. Douglas Abbott once remarked, “pouring $25 or $50 or $100 million into the Colombo Plan won’t really make a significant difference”—and the Finance Department would rather not have to collect the money.

C. D. Howe, Minister of Trade and Commerce, whose opinion probably has more weight in this field than any except those of the Prime Minister himself, is interested in the Colombo Plan solely as a means of helping Canadian industry. Far from apologizing for the $167,000 locomotives, he would regard these as the greatest justification the Colombo Plan could have. It’s keeping in operation an otherwise inoperable plant which is, nevertheless, a useful part of Canada’s defense establishment.

Walter Harris, the new Minister of Finance, is said to be even more suspicious of the Colombo Plan than was his predecessor. It has to be sold to Harris all over again, and it can be sold to him only as a scheme that will bring direct incontrovertible benefit to the Canadian people. This can be and is being done. There seems to be no serious danger of any interruption in Canada’s participation in the Colombo Plan for the three years it still has to run.

On the other hand, there seems to be even less probability of any increase in a Canadian contribution which was originally based on an estimate of the very least and most urgent requirement. Since then, inflation has increased even world market prices, so that $5 billions today will buy much less than $5 billions would have bought then. Moreover the western countries are putting in less than their intended share even of the original $5 billions. And to cap all, Canada is padding the figures of her own donations by sending Canadian goods which cost two-thirds as much again as the same goods would cost in other Colombo Plan countries.

It’s still a good thing for Canada and a good thing for Southeast Asia that we are doing this. But it does seem something less than pure altruism. ★


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