RE Radford Esq
Foreign and Commonwealth Office
Overseas Development Administration
Eland House
Stag Placo
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14/12
8 November 197 F.A.
SW1
TERMS OF AID TO DEPENDENCIES AND ASSOCIATED STATES
(53) 1.
I am sorry for the delay in replying to your letter of 7 August about the terms of aid to Dependencies andAssociated States, in which you ask for agreement to your proposals on timing and mactual terma for individual torritories. We are content with these proposals including timing, subject to the comments below.
2. In the case of Gibraltar it is worth noting that your proposals, though rather gonorous, are no doubt dictated by political circumstances. For the Cayman Islands, however, the torms you propose aro quite different from those which were suggested in your lotter of 7 July 1971. Our torritorial division is not avaro of any significant change in the cir- cumstances of the territory over the last year which would justify such a change. Although I realise there may be special political/security factors, I think I must ask you to consult with F(DT) here to determine the appropriate terms.
3. I hope that this will give you the response that you hoped for without our endorsing the suggestion in your paragraph 7 that we should generally be looking for greater liberality in our termo policies. Certainly wo must try to achieve the now DAC total grant element targets, though this should not be difficult once we implement the softer target for the least developod. But we would not regard our general performance as in itself nodding to be further jacked up because of the EEC comparisons. We col that the enphasis should ratha bo on selectivity (as in our EEC Summit proposals) and that our concern over indebtedness would best be pursued by, inter alia, seeking greater harmonisation of terns for the roo1OF countries with dobt problems, closor to our own relatively soft torms. DAC(72)52 shows (pago 28) that the terms for loans (which in the present context are more relevant than grants) most frequently used by Delgium involve a 67 grant element; in the case of Germany and Ketherlands the figure is 61 (with an indication that the Germans are going up to 675). The French, wo know, givo a high proportion of grants to their Francophone favourites and relatively hard torns elsewhere; and the Italians are poor performers all round. If some of these donors can be persuaded to movo closer to our 77% grant element in the countries which qualified under our EEC Sumit proposals, this should help our objectives. This seens
/proforable
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