Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

320/9–354: Circular instruction

The Acting Secretary of State to Certain Diplomatic Offices¹

official use only

Washington, September 3, 1954.

CA–1601. Subject: Economic Issues at the Forthcoming (Ninth) Session of the General Assembly.

The Department normally desires to exchange views with other friendly members of the United Nations concerning economic issues which may be expected to arise during the Ninth General Assembly, scheduled to convene in New York on September 21, 1954. However, after reviewing the proposed agenda (A/2667), it is considered that no useful purpose would be served by soliciting the views of governments on these items. In some cases the United States position is well known, and in others it is felt that no additional support for the United States position could be obtained at this time.

If, however, during the discussion of other subjects any governments raise questions as to the United States position on any of the economic items, the Embassy officers may base their replies on the following information:

It appears from the provisional agenda (A/2667), dated July 23, 1954, which has been distributed to all member governments that the economic topics at the forthcoming Regular Session (9th) of the General Assembly (GA) will be:

• Item 12: Report of the Economic and Social Council on Economic and Social Matters;
• Item 17: Korean Relief and Rehabilitation;
• Item 25: Economic Development of Underdeveloped Countries:

  (a) Question of the establishment of a special United Nations fund for economic development (SUNFED);

  (b) Question of the establishment of an international finance corporation (IFC);

  (c) International flow of private capital for economic development of underdeveloped countries;

  (d) Land reform;

• Item 26: Report of the Economic and Social Council on Expanded Program of Technical Assistance.

It is difficult to anticipate what issues will be raised under the Economic and Social Council (ECOSOC) Report (Item 12) aside from the proposal for SUNFED, the proposal for an IFC, and the question of price relationship on which ECOSOC established (17th and 18th Sessions) an Advisory Commission. The first two of these subjects, however, are also on the agenda for special consideration as sub-items under Item 25. It is not possible to make a comment at this time on Item 17. Item 26 will be covered in a separate instruction.

SUNFED and IFC:

Both SUNFED and IFC have been under consideration in the GA and ECOSOC for several years. Their consideration at the 9th GA Session this fall will be in response to two resolutions adopted at the 8th Session last fall as well as in context of the ECOSOC Report.

The 8th Session resolution on SUNFED invited member governments to transmit to the Secretary General comments on recommendations contained in a blueprint for SUNFED, which was prepared by a committee of experts for the United Nations, and the degree of moral and material support which they would be prepared to give to such an institution. In addition, by this resolution Mr. Raymond Scheyven (past President of ECOSOC) was appointed to consult with the member governments and to make an interim report to ECOSOC at the 18th Session and a final report to the GA at the 9th Session.² In his interim report to ECOSOC this summer (18th Session) Mr. Scheyven emphasized the critical problems of underdeveloped countries and stressed the great contribution that such a fund could make to the solution of these problems. In his oral statement to the Council he enlarged upon his written report and indicated growing moral and material support for the Fund. In the opinion of the United States Delegation at the session, and some others, he claimed stronger material support than the replies of governments actually indicate. He did point out, however, that the principal capital exporting countries were not willing to contribute at this time.

Several resolutions were introduced by underdeveloped countries recommending more or less specific action toward setting up the Fund by the GA.³ The United States Delegate in his speech reiterated the previous United States position on this proposal and indicated that he could not support these resolutions. The United States position has been that international tensions make it necessary to apply large resources to the requirements of defense, that until savings could be achieved through internationally supervised disarmament, there is little likelihood that our people will accept heavy additional financial commitments, that an international fund could not be successfully operated without considerable resources from many nations, and that to secure these resources would not under present circumstances appear feasible.

After some difficult negotiations, and because of the recognition of the underdeveloped countries and Mr. Scheyven that from a practical point of view no further steps toward the establishment of SUNFED could be made without the cooperation of Great Britain and the United States, ECOSOC adopted a resolution recommending (1) that the GA urge governments to review their respective positions with regard to SUNFED in accordance with changes in the international situation; (2) that the appointment of Mr. Scheyven be extended in order that he may continue his consultation with governments. The vote on this resolution was unanimous.⁴

The GA (8th Session) resolution last fall on IFC urged governments to give consideration to the establishment of such a Corporation and to inform the International Bank, which by a previous ECOSOC resolution was called upon to study and report on this proposal, as to their views on the possibility of supporting such a corporation. The resolution also called upon the International Bank to continue consultation with the governments and to report the results of its further consideration to ECOSOC at the 18th Session.

There appeared to be a rather surprising lack of enthusiasm for the IFC at ECOSOC (18th) this summer and the debate was limited since it was apparent almost immediately that the majority of the members recognized that the establishment of IFC was not at present practicable. The Council adopted a resolution introduced by Pakistan, Australia, India and Norway recommending that GA request member states in a position to provide capital for an IFC to keep the problem under review and that the International Bank report further to the Council upon its consultation with governments and any further suggestions the Bank might have regarding such an institution. In the debate on this item, the United States took the position that we were unconvinced that the establishment at this time of an IFC is either necessary or desirable, but in view of the many difficulties and complex problems raised by the proposal, we were prepared to cooperate with other members of the Council who believed that the matter ought to be kept under review by the International Bank. Accordingly, the United States voted for the resolution.

The position which the United States will take at the 9th Session of the GA is still under consideration. In view of the rather extensive discussions and debates which these two items have received in the United Nations over the past few years, however, no relevant issues are now foreseen which would require prior consultation with other governments.

International Flow of Private Capital:

The International flow of private capital for economic development will be on the GA agenda in connection with action taken by ECOSOC at its 17th Session after consideration of a Secretariat study on this subject. One of the conclusions of the study was that an increase in private capital exports today, however important for production in the future, can be expected to make only a minor contribution towards restoring economic stability because the prevailing economic uncertainty tends to reduce the volume of private capital for investment. In the discussion the United States Delegation stressed its sympathy with the desire of underdeveloped countries for accelerated economic development and stated that private capital can play an increasingly important role provided steps are taken to create conditions making for a favorable international investment climate. To these ends it introduced, jointly with Belgium, Pakistan and Turkey, a draft resolution which recognized the necessity for action by the underdeveloped countries to remove impediments to the flow of capital and included a number of recommendations both to countries seeking to attract foreign capital and to countries able to export capital. A compromise resolution finally adopted recommends ways capital importing countries can improve their investment climates and urges capital exporting countries to take measures designed to increase the flow to capital-importing countries. The resolution further recommends that both groups of countries consider the possibility of establishing investment corporations designed to encourage the participation of private investors. The United States accepted the latter provision in order to win the support of some underdeveloped countries for the resolution as a whole.

It is expected that the GA will endorse this resolution. Although no issues on it are now foreseen in the Assembly which would require prior consultation with other governments, Missions should take advantage of any opportunity to encourage its support, especially in countries not represented at the 17th ECOSOC.

[Here follows discussion of the issues of land reform, international commodities, economic development of fisheries, and the establishment of a world food reserve.]

Smith

1. Sent to 54 Embassies, and repeated for information to 4 additional Embassies.
2. Resolution 724B (VIII), passed Dec. 7, 1953; for text, see U.N. General Assembly, Resolutions adopted by the General Assembly at its Eighth Session during the Period from 15 September to 9 December, 1953, Supplement No. 17 (A/2630), p. 10.
3. Printed ibid., pp. 9–13.
4. Resolution 532A (XVIII), passed Aug. 4, 1954; for text, see United Nations, Economic and Social Council, Official Records: Eighteenth Session, 29 June–6 August 1954, Resolutions, Supplement No. 1, pp. 2–3.