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VOLTA RIVER PROJECT: a CASE STUDY J of U MASTER’S THESIS M-1687 | TREADWELL, Brian William j THE VOLTA RIVER PROJECT: A CASE STUDY j OF U. S. FOREIGN POLICY. 1 The American University, M.A., 1967 Political Science, International law and relations University Microfilms, Inc., Ann Arbor, Michigan THE VOLTA RIVER PROJECT» A CASE STUDY QF ÜQÎsîSK By Brian William Treadwell Submitted to the Faculty of the School of International Service of The American University in Partial Fulfillment of The Requirements for the Degree of MASTER OF ARTS Signatures of Committee: Chairman: Date: / j f y ^ Ÿ . é ^ Dean of the School Date: y AMERICAN UNIVERSITY LIÜUAUY Wftï » 9 1967 3S1X TABLE OP OONTENTS CHAPTER PAGE IHTRODHOTIOE I. THE HISTORY OF THE VOLTA RIVER PROJECT ........ L The Purpose of the Volta River Project......... 2 The History of the Volta River Project.• 3 Phase I: 1915-1952............................. 3 Early origins................................ 3 Post-war surveys......................... 6 Gold Coast White Paper, 1952........ 8 Establishment of the P^^eparatory Commission. 9 Phase Ils 1953-1956.............................. 10 Political developments ..... 10 Composition and function of the Preparatory Commission.......... 11 Areas surveyed.......... 12 Report of the Preparatory Commission........ 15 Reasons for failure to implement Project.... 17 Phase III: 1957-1961........................... 19 Political independence for Ghana........... 20 Fraser Leith as a catalyst to U, S. partic­ ipation.................. 21 Gbedemah meets Eisenhower.................. 22 Carl Fbesher's proposal................ 23 Nkrumah's meeting with Kaiser, Calhoun, Eisenhower . ..... 24 Kaiser Reassessment Bpport....... .... 27 Kaiser's deepening committment to the Pro- ill/ I T CHAPTER PAGE ject................ ................. 30 Kaiser tÉies to form a consortium...... 32 ïlkrumah's Decision to start the Pro­ ject............................... 35 Distribution of the contracts...... 35 The Impreglio consortium. .... 37 Advantages of an early start .... 38 Negotiations on the cost of power. 38 Ghana seeks public finance............. 40 Ghana-Valoo Agreement, I960........... 40 Nkrumah and Kennedy.................... 42 Establishment of the Volta River Authority............................. 43 Functions of the Volta River Authority. 43 Phase IV; 1962-1966...................... 45 Key construction dates............ 45 Description of the Akosombo Dam........ 48 The Volta River Project as an example of peaceful international cooperation. 49 II. U. S. FOREIGN POLICY TOWARDS AFRlUA.......... 52 U. S. Foreign Policy Towards Africa Since 1957...................................... 53 U. S. Goals and Interests under the Eisen­ hower hower Administration ....... 53 New priorities for the Kennedy Admin­ istration......................... 57 ▼ CHAPTER p a g e Statements of foreign policy goals. ...... 57 Identification of U. S. Policy with African aspirations ..... 59 U. S. interests in Africa 61 U. S. policy in Africa as a check on Communist subversion 62 U. S. foreign economic assistance policy... 64 New aid emphasis since 1961............... 64 Goals of the policy ....... 65 Relation of foreign assistance to the ÏÏ. S. domestic economy............. 66 U. S. policy on trade and private invest­ ment • • ...... 67 Benefits of trade and Investment......... 67 U. S. position on private investment 68 Warning against exploitation. ......... 69 Advantages of investment in Africa...,. 70 Disadvantages of investment in Africa.. 70 U. S. policies and programs............ 71 U. S. policy of encouraging regional co­ operation in Africa.... ........ 72 The role of private investment in Africa as a supplement to public assistance... 73 Statements by public and private officials ......................... 73 vl OHlA P T E R p a g e The role of the business diplomat., 74 Oonclusion................ * 76 III. GHANA'S FOREIGN POLIOT............... 77 Factors which inluenced Nkrumah's ideology.... 78 Nkrumah's academic background in the U. S... 78 Nkrumahfs activist days in London........... 79 Nkrumahts return to the Gold Coast......... 80 Agitation for independence................ 80 Formation of the Convention Prople's Party....................... 81 The drive to independence................. 81 Ghana ' s Foreign Policy : 1957-1960 ........ 82 1957-1960..................................... 82 Events of I960........... 83 Republican Constitution............. 83 Independence of numerous African states..... 84 Ghana's foreign policy as an effort to im- 85 plement Nkrumah's ideology...... 85 The foreign policy goals of Nkrumaism 85 Antipathy to colonialism and African independence ..................... 86 Non-alignment and positive neutrality in world affairs..... ....... A union of African states ..... 93 Ghana ' s Foreign Economic Policy ........ 96 vil CHAPTER PAGE Policy towards foreign aid. ........... 96 Policy towards foreign trade ..... 97 Policy towards private foreign investment.. 98 African socialism.. .......... 98 The role of the private sector in Ghana's economy. ........ ............. 99 The need for a pan-African union in which Africaiican realize its full potential.... 101 IV. U. S,-GHANAIAN RELATIONS: 1957-1967............ 103 1957-1962...................................... 103 Early U . S . aid committments................ 105 U. S. interest in Volta Project as a result of Gbedemah' 8 embarrassment .... 106 Nkrumah's 1958 visit to U. S. A. ........... 107 Bases for Eisenhower's decision 109 Aswan Dam ..... 109 Nkrumah's radical policies worry Ü. S. leaders............... ............. ....... Eisenhower Administration fails to carry out Volta Sroject....................... I D Nkrumah's radical policies worry new Kennedy Administration................ 115 Analysis of Kennedy's decision for U. S. participation in Project.................. 120 Till CHAPTER p a g e Barbara Ward and Sir Robert Jaokson 121 Edgar Kaiser and Chad Calhoun....... 122 The legacy of the Aswan Dam............... 124 President Kennedy's own convictions...... 125 The final agreements.......................... 126 1962-1966....................................... 130 Deterioration of relations.... 130 Senator Dodd's criticisms.................... I32 Overall U. S. assistance to Ghana........... 133 Ghana's evolution towards a socialist dictatorship................. 137 U. S.-Ghanaian relations continue at a low ebb.. ....... 140 Nkrumah criticizes U. S. in book on neo­ colonialism....... I4l Nkrumah takes conciliatory attitude towards TJ. S. at Volta Dam inauguration........... 144 The Military Coup of 1966...... 146 The National Liberation Council's assumption of power ............. 146 Policies favorable to the West............ 147 Ouster of Communist bloc teachers and technicians.................. 148 Diplomatic recognition of the new regime.. 148 Increase of Western aid.......... 150 ix CHAPTER p a g e Analysis of the coup.......... 1^1 New political and economic policies.#....... 151 Improvement of relations with West. 152 V. THE ECONOMIC ASPECTS OF THE VOLTA RIVER PROJECT.. 155 A Brief Description of Ghana's Economy......... 157 Commodity exports .............. ^59 Three main commodities in the economy........ 1^0 Cocoa....................... l8^ Fisheries.............. ^^2 Bauxite ................ ^^5 Foreign trade and the balance of payments.... 1^6 Austerity measures to improve the trade balance. ................... ^^7 Depletion of foreign exchange reserves on prestige projects........................ ^72 Post-Nkrumah austerity measures............ 17A Efforts to Restructure the Economy............. ^^8 Development plans ........... .... Tema Harbour ............. ...... .............. Tema's new industrial park. ..... 179 Administration of the harbor ......... 180 Industries locating at Tema ........ 182 The Akosombo dam............... .. 183 Need to expand Ghana's electrical output... 183 X OHAPXBR p a g e The power grid 183 Oonunercial operations of the dam.......... 184 Beneficial economic effeots of the dam...... 185 The Tema smelter......... 191 Construction of the smelter. ....... 191 Proposed commercial operation of the smelter 192 Explanation of the smelting process......... 193 Relation of the smelter to the Akosoitfco d a m ............. 194 VI. THE LEGAL ASPECTS OP THE VOLTA RIVER PROJECT....... 197 The Hew Concept of International Economic Development Law. .............. 197 Opinion of Wolfgang Friedmann................. 198 Opinion of Karl Lachmann...... 200 The Volta River Project as an Example of Inter­ national Economic Development Law in Practice. 201 Priciples of Agreement, 1959.......... 201 Ghana Government White Paper, 1961............ 203 Speech by Hkrumah in defense of White Ppper. 203 Parliamentary debate on White Paper.... 206 Resolution of the Assembly on the Master Agreement.................................... 208 Master Agreement, 1962.............. 208 Financial arrangements of the Volta River Project............................ 208 xl CHAPTER p a g e Major legal provisions of the Master Agreement......... 210 Financial arrangements for the Tema smel- ter 214 Related legal provisions.......................216 Ghana Pioneer Industries and Companies Act. 216 U . S. Investment Guarantee............ 217 TJ. S.-Ghanaian agrrement on taxation....... 218 VII. THE SOCIOLOGICAL ASPECTS OF THE VOLTA RIVER PROJECT ..................................... 219 The Effects of the Volta River Project. ..... 220 Characteristics of the West African City 220 Development of Tema ........ 222 The community development
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