Foreign Relations of the United States, 1950, Western Europe, Volume III

840.00R/12–2150: Telegram

The Administrator of the Economic Cooperation Administration (Foster) to the United States Special Representative in Europe (Katz), at Paris

confidential

Washington, December 21, 1950—8 p. m.

Torep 10677. For Katz. OEEC policy group leaving Washington today after final roundup of meeting yesterday.¹ Following is summary of main items discussed and US opinions expressed:

1. The main question which has been under discussion is possible relationship between OEEC and proposed new global raw materials board. (This whole question was thrown into further confusion by news from Brussels that NAT Council had referred question to NAT Deputies.)² Main point OEEC representatives have made repeatedly is that decisions on raw materials in global organization should somehow take into account discussions and agreements on general economic policies which will take place among members of North Atlantic community. Believe we have established clearly in minds of OEEC reps that:

• a) No one contemplates that global raw materials organization will concern itself with general economic problems.
• b) In practice, countries which feel that their problems not adequately taken into account in commodity discussions should have recourse to an effective North Atlantic economic organization. This implies solution to problem of establishing and staffing an effective economic organization for North Atlantic group, and thus a solution to whole NATO–OEEC problem.

2. We told OEEC reps that US Government was urgently attempting to work out proposed solution to OEEC–NATO problem, and hoped other governments were doing the same. We described our thinking in terms of need for consolidation, in practice, of OEEC–NATO economic work, so that same group of national delegations and international secretariat will be able work on economic problems connection with North Atlantic treaty responsibilities of 12 nations, and work as wider group, including non-NATO members of OEEC, on other matters. We did not lay on table at this stage suggestion for the two organizations in the same city, pending adoption firm US position this regard.

3. We emphasized, as we have throughout visit, importance of OEEC getting on with tasks which obviously need to be done, and which do not raise difficult problems of relationship between OEEC and new raw materials board or between OEEC and NATO. For example:

• a) There is general agreement that “regional” commodities (e. g., European coal and coke) should be primary concern of a regional economic organization, not of a global body.³ OEEC should assume that one immediate task is of organization of most effective use of European raw material and fuel resources.
• b) OEEC can assist in allocation of materials primarily controlled by US and Canada, by pulling together requirements, making recommendations on equitable division of supplies among countries, and try to make sure conservation measures are taken by each country.
• c) Next few months will presumably see direct controls coming back into European picture. OEEC should try to work out standards for reimposition direct controls, and guard against tendency use raw material shortages as excuse for general reimposition protectionist QR’s.
• d) OEEC should take on task of organizing flow of parallel information on scarce raw materials, since that is going to be necessary anyway.

In addition to above points relating to raw materials, OEEC reps believed and we emphatically agreed that OEEC should undertake a fundamental review of whole field of harmonization of national financial monetary policies, and effect of new situation on trade liberalization program. Seems clear that need for renewed fight against inflation and growing raw material shortages present organization with fundamentally different set of circumstances. This type of review is not being done anywhere else and is not likely to be, so there is no danger duplication in this field. Result of this review should be action recommendations. (In all discussion of OEEC Third Report, we have emphasized initiation of action flowing from work on report as being much more important than the final report.)

4. OEEC reps had raised question whether US will be prepared participate fully in work of OEEC. We emphasized US will participate very fully, and that it was now settled US policy to approach multilaterally the big problems involving sharing of resources, i. e., that we wanted to see international control in a number of raw materials, and that we wished multilateral recommendations to be basis for US decisions about aid. We made clear, of course, that US participation in OEEC could never be fully symmetrical with relationship of other members (for example, US would not be a “member” of EPU in any meaningful sense). OEEC reps have emphasized throughout visit importance of US participation and the exercise of US leadership from within Atlantic community, not only on matters that can best be handled on Atlantic community basis, but as framework within which further steps toward integration can be taken by groups of countries, for example on the continent.

5. Marjolin asked whether we believed under present circumstances, he should follow Council decision to consult consuming and producing countries, with a view to calling of commodity conferences. We said we doubted advisability such consultation in view of important events that had intervened since Council decision, but suggested he consult Stikker, who we understood was a key participant in discussions on raw materials question in Brussels.

6. Marjolin asked whether we had any objection to circulation of memorandum of questions which OEEC gave us some days ago. It was agreed that with a covering note trying to make clear present status of global raw materials proposal, there was no objection to such circulation. OEEC memo forwarded to you by air mail.

7. Hall-Patch suggested that NATO–OEEC relationship might be clarified if OEEC Council were to ask Stikker, since he has foot in both camps, to consult with anybody he thought useful and come back to both organizations with concrete proposal for solution problem. We said this sounded offhand like good idea, and secured confirmation that this step would not interfere with OEEC getting on types of immediate jobs outlined para 3. Ed Martin made personal suggestion NATO Council Deputies might simultaneously designate Spofford as Chairman, NATO Deputies, to work with Stikker on the matter. Would appreciate your views.⁴

8. Malagodi and Prack⁵ re-emphasized importance making clear in any announcement re raw materials board that smaller countries will be protected and will have some appeal court, if they don’t feel their interests adequately taken into account.

9. Hall-Patch said whole group was struck with difference between sense of urgency in Washington and in Europe, and probability that there would be discrepancy also in administrative machinery to deal with upcoming problems. He thought one way of increasing European sense of urgency would be to have a meeting of OEEC Council soon in Washington. We reacted unfavorably.

10. In general, the visit was useful in conveying to OEEC reps a sense of urgency, a sense of enormous difficulties ahead, and a sense of great willingness in US to dedicate itself to whole hearted effort to meet new situation with which free world is faced. Wood participated in most meetings policy group, including final meeting summarized this cable.

London pass Spofford for info. Sent Paris Torep 10677 rptd info London Ecato 1588.

Foster

1. The OEEC mission, which included the Secretary General and the Chairman of the Executive Committee, Marjolin and Hall-Patch respectively, arrived in Washington on December 9 for ten days of informal conversations centering primarily on the short supply of strategic raw materials caused by the Korean crisis.
2. See the discussion of this subject under Item V, Other Business, in the minutes of the December 19 meeting of the North Atlantic Treaty Council with the Defense Ministers, p. 595.
3. For documentation on U.S. policy on stockpiling for long-term needs, see vol. i, pp. 126 ff.
4. In telegram Repto 6995, December 22, not printed, Katz suggested that any talks between U.S. representatives and Stikker await development of a definite U.S. position (840.00R/12–2250).
5. Giovanni Malagodi of Italy, Chairman of the OEEC Manpower Committee, and Herbert Prack of Austria, vice chairman of the OEEC Council.