740.5/1–551: Telegram

The United States Deputy Representative on the North Atlantic Council (Spofford) to the Secretary of State 1


Depto 391. Perkins from Spofford.

1. Subject is NATO-OEEC relationship, reference Todep 171.2

2. I have not as yet been able to confer with Katz other than by telephone but expect to see him in Paris over weekend, following which joint comments requested will be forthcoming. In meantime these are my tentative views, which I discussed with Knapp before his departure to Washington.

3. I agree time has come to reconsider NATO-OEEC relationship and develop clear-cut US position. I also strongly support Katz approach that we think in terms of functions to be performed by both organizations and assets represented by each and that with rapid shift in emphasis we should not regard either organization or relations between them in static terms.

4. In my view principles which should govern reorganization in order of priority are:

Primary consideration should be attaining most effective economic underpinning for NATO defense effort. In economic field emphasis is going to be heavily on defense at least for near future and it should have top priority for expert personnel.
In whatever consolidation or regrouping is decided upon there should be minimum of overlap or duplication and most efficient use of personnel. This is particularly important for smaller NAT partners who have limited resources in economic expertise.
Any such consolidation or regrouping should be done so as to preserve, so far as possible, asset now represented by OEEC delegates and secretariat. With Katz I would place less emphasis than Washington on morale of OEEC staff.

5. While present arrangement with twelve man group3 has not gone far enough to come to final conclusion on workability, strong [Page 13] probability that as temporary [tempo?] and activity step up separation of deputies and important element of economic staff will not be satisfied [satisfactory?]. Therefore we should plan on assumption that entire NAT economic organization responsible for defense matters should be located in same city as deputies and DPB.

6. Some consolidation of NAT economic agencies and OEEC therefore seems necessary. Alternatives are (a) consolidation of entire OEEC organization and NAT agencies or (b) regrouping and transfer to NAT of those OEEC functions relating directly to defense, presumably those set out in Katz analysis in Paris Repto 69054 subparagraphs (c), (d) and (e) of paragraph 2. Functions performed by OEEC not directly related to defense, e.g. EPU, trade liberalization and integration, et cetera not to be consolidated.

7. From NATO standpoint and aside from political and security problems arising from different membership, I see following disadvantages in over-all consolidation:

Assimilation of large organization dealing with functions not relating to defense effort would be time consuming organizational job which would most certainly slow up necessary reorganization in overlapping fields, which will be difficult enough in any event. Sheer numbers of OEEC organization would make total consolidation difficult business.
Although I make point with hesitancy because of limited direct contact, I have feeling that “back to normalcy” psychology in OEEC organization would involve psychological disadvantage in over-all consolidation.

8. From OEEC standpoint I think it should be carefully considered whether consolidation into NAT and attempt to streamline organization for essentially defense purposes may not involve loss of OEEC’s present and possible future effectiveness in non-defense fields, in which I am sure we all want to see it continued and strengthened.

9. For foregoing reasons I favor alternative (b) in paragraph 6.

10. If regrouping is decided upon, question of geography becomes unimportant. NAT economic staff would be based in London; residual OEEC would continue in Paris. In any event geography is not controlling, certainly from US standpoint.

11. To summarize, my tentative views are that:

Economic functions of NAT and OEEC related to defense should be consolidated.
These should be performed by single staff in same city as deputies.
This should not involve over-all consolidation of OEEC and NATO economic agencies to which I see objections from standpoint of NATO and possibly from standpoint of OEEC.
Preferable alternative is regrouping of functions and consolidation only those directly related to defense;

12. Will comment more fully when I have had talk with Katz.

[ Spofford ]
  1. Repeated to Paris.
  2. Dated December 16, 1950, not printed.
  3. Presumably the so-called Working Group of Twelve which was established in late 1950 to meet in Paris for the study of problems involved in the distribution of the defense financial burden among the NATO participants. It was composed of representatives from each of the NATO member governments.
  4. Not printed.