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CONFIDENTIAL
of some territories is restricted and this constraint might well
mit the additional expenditure to about £15 million. If we remain in the EEC a proportion of the cost of aid to our dependencies will after 1975 be met from the European Development Fund, so long as they are dependencies. This flow might be substantial, particularly if a special and favourable allocation for dependent territories is retained in the new Fund to be established in 1975.
INDIVIDUAL STUDIES TERRITORY BY TERRITORY
5. We agree with the Revie. that our Economic Aid policies must be consistent with our political objectives, and that we should specify our political objectives as clearly as possible, territory by territory, so that the appropriate economic aid policy can be adopted. Our objectives must, of course, be defined not only in the light of the future constitutional status of each territory, but also of the political considerations arising from the nature and extent of future British interest in the territory and our concern for its social and economic conditions. Generally, this will mean that, where our objective is constitutional independence, aid policy should be directed towards achieving economic independence at tolerable standards of living which a territory can sustain. There may however be territories in which it would be justifiable to raise standards higher than they can sustain unaided; this would usually mean pro- longing their dependence on development aid and perhaps even budgetary aid. The studies of individual territories, which the Report recommends, would identify these cases. The Treasury, we know, have doubts about the desirability of a substantial increase in aid to the dependencies, given the other pressures on the aid programme. We recognise the competition for resources but it would take some years before new aid policies for particular territories were translated into additional expenditure on the scales indicated,
CONFIDENTIAL
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