Current Economic Developments, Lot 70 D 467

Current Economic Developments2

[Extract] secret

No. 183

Continued US Support of ECE Is Desirable

State and ECA, after consultations with our ECE representatives in Geneva and Harriman’s3 staff in Paris, have agreed it is in our interest to continue support of the Economic Commission for Europe. While eastern European countries will undoubtedly continue to use ECE as a sounding board for attacks on the recovery program and US export policy, we believe there are a number of important reasons which outweigh these disadvantages and warrant continued US support for ECE.

Since the long-term objective of the US and western European countries is to force Russia to withdraw to her own frontiers and to encourage a free eastern Europe to establish close political, economic and social ties with a strengthened and unified western Europe, it is desirable even at the present time to maintain such links with eastern Europe as will contribute to this objective. The ECE has shown that it can provide a useful link at the technical level with the Poles and Czechs and to a lesser extent with the Yugoslavs.

It is also important for us to operate wherever possible within the United Nations framework. We are publicly committed to this principle and other OEEC countries are anxious to demonstrate that they are not by-passing the UN in their ERP participation.

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We believe that OEEC and ECE need not and should not be competitive organizations. OEEC must assume the major responsibility for strengthening the economies of western Europe and for bringing about closer economic integration among these countries. As the organization which recommends to ECA the division of US assistance among the participating countries, it is obviously in a strong position to bring about real measures of economic cooperation among its member countries. We believe that the ECE, although its powers are merely recommendatory and its membership includes six countries of eastern Europe who have openly stated their opposition to the recovery program, can serve to complement OEEC in a number of important fields. The OEEC can probably utilize its resources most effectively if it concentrates on those problems which only it can handle or which it can deal with much more effectively than other organizations. A number of other functions which contribute directly to the success of the recovery program by strengthening and rationalizing the economies of the participating countries can be performed by the ECE and perhaps other UN bodies. For example, agreements on reduction in frontier regulations, and standardization of railroad cars and equipment are types of measures which are highly desirable and can be performed without disadvantage in a forum which includes eastern European countries. If functions such as these were transferred to OEEC, there is real danger that it might result in a curtailment of other more fundamental OEEC work.

The ECE is also useful in obtaining information on eastern European availabilities and requirements and can facilitate exchanges between eastern and western Europe which are of benefit to the EBP, e.g. the provision of timber in return for timber equipment, foodstuffs for fertilizer and agricultural machinery, and coal for mining machinery. In addition, ECE is in a better position to recommend coal allocations than OEEC because of the necessary cooperation of the Poles.

We do not regard it as necessary or desirable to lay down for the future a hard and fast division of functions between ECE and OEEC. Each case will have to be decided on its own merits in the light of changing circumstances. As a general rule, work now being satisfactorily performed by ECE, such as that of the coal and transport committees, should continue to be performed by the Commission. Normally, new work should be undertaken in ECE only if the US and the OEEC countries are convinced that participation by eastern European countries would be of real benefit, or if the work could not be undertaken by OEEC without impeding other more important work. The US and ERP participants should have a common approach to [Page 63] important questions coming before ECE and should be on the alert to avoid ECE undertakings which might weaken OEEC.

Our policy toward ECE will have to be kept under constant review and reconsidered if it appears the Commission is no longer able to play a useful part in the economic reconstruction of Europe.

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  1. A weekly classified publication, prepared by the Policy Information Committee of the Department of State, designed to highlight developments in the economic divisions of the Department and to indicate the economic problems which were currently receiving attention in the Department. It was circulated within the Department and to missions abroad.
  2. W. Averell Harriman, Special Representative in Europe for the Economic Cooperation Administration, with the rank of Ambassador.