Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

132. United States Position Paper on the Special United Nations Fund for Economic Development¹

Staff Document No. 732 (Revised)

Washington , June 23, 1955 .

Problem:

The Economic and Social Council will have on its agenda a report prepared by Mr. Scheyven, in response to General Assembly Resolution 822(IX), amending the recommendations of the Committee of Nine on the structure and functions of SUNFED. The problem is to determine the United States position on SUNFED in the light of the Scheyven report.

The report recommends:

a. That the establishment of the special fund should not wait until a sum of $250 million (suggested as the necessary minimum by the Committee of Nine) has been paid in or until disarmament has been achieved: the General Assembly should decide the initial sum and minimum membership with which the special fund might start operations.

b. That in general loans by the special fund should be repayable in local currency or be interest-free.

c. That the secretariat of the special fund should be minimal in size: the services of the International Bank and the United Nations and its Specialized Agencies should be utilized for analysis, administration and supervision of assistance to the maximum extent possible.

d. That a joint committee be established consisting of the Director General of the special fund, the Secretary-General of the United Nations and the President of the International Bank to review each application for assistance and advise the Director General which existing United Nations organization (or organizations) should examine and report on it. The Executive Board of the special fund would, in general, be guided by the recommendations of the United Nations organization examining the application.

The recommendations of the Scheyven report are intended to meet criticisms of the original SUNFED proposals with respect to “fuzzy loans” and the creation of a “new international bureaucracy”, and to accommodate the desire of potential contributing governments for more effective coordination between SUNFED and the International Bank.

United States Position:

1. The United States Representative should reiterate the United States position on SUNFED:

a. This Government desires to help promote the economic growth and vitality of the less developed countries of the free world and is supporting many constructive programs, both national and international, to effect this purpose. However, we do not believe that a global development fund would be an effective instrument at this time. Until international disarmament frees resources for constructive work, such a fund would have difficulty in attracting substantial contributions. Its operations would be largely of a token character. A significant part of its resources would go into overhead and a significant part of its energies would go into efforts at coordination. Because of its global responsibilities, it would have to spread itself thinly over many continents. We are not prepared to support the proposed international machinery at this time.

b. This does not mean that we are not prepared to consider new ways to promote economic and social progress. The United States is moving in response to the most urgent needs of the less developed countries through such techniques and institutions as it believes to be suitable and effective: e.g. the proposed regional fund for Asia, the IFC, the President’s proposal to share the costs of research reactors, the proposed International Atomic Energy Agency.

c. Countries which wish to assist in the task of development have channels and institutions at their disposal for getting such aid to the countries which need it.

2. The United States Representative should support a recommendation to the General Assembly that the Scheyven report be referred to governments for study and comment.

3. The United States Representative should oppose any resolution to establish SUNFED “in principle”, to establish a working party of governments to draft the Articles of Agreement of SUNFED or otherwise designed to bring SUNFED into existence at this time. If a resolution to establish a working party is proposed, the United States Representative should state that the United States is not prepared to participate in any such working party.

4. The United States Representative should not participate in any discussion on what is an appropriate initial sum and minimum membership with which the special fund might start operations.

5. At his discretion, the United States Representative may make such comments on the other substantive proposals in the Scheyven report as he deems appropriate and consonant with United States policy, bearing in mind item 2 above that the report be referred to governments for study and comment.

Discussion:

The United States position on SUNFED is well-known, and the amendments proposed in the Scheyven report do not alter that position. Only a brief statement of the United States Position should be necessary.

The unwillingness of the United States to support the establishment of the special fund will not, however, dispose of SUNFED. The proponents will most probably wish to recommend to the General Assembly that a working party of governments be established to draft the Articles of Agreement of the special fund, taking into account the Scheyven report and the views of governments thereon as expressed in the Economic and Social Council and the General Assembly. It is in our interest to delay such action. In this connection, should an effort be made to have adopted any resolution of the kind indicated in paragraph 3 of the US Position, the following points should be made, as appropriate: That the United States is not prepared to contribute to a fund such as SUNFED at this time; that the United States is not prepared to participate in any Working Party set up for the purpose of bringing SUNFED into existence; and that the establishment of SUNFED at this time might tend to make more difficult the eventual participation in such a fund by countries which are not now prepared to contribute. The United States Delegation should, therefore, give its support to alternative proposals consistent with the United States position, that would forestall such action. A reasonable alternative is to refer the report to governments for study and comment, much as the original report of the Committee of Nine was referred. On the basis of the replies of governments, the twenty-second Economic and Social Council and the eleventh General Assembly could give the matter further consideration.

The Scheyven report recommends that the General Assembly determine the minimum contribution before SUNFED should be established. It would be pointless for the United States to engage in debate on this subject since we are unprepared to contribute and are convinced that whatever contributions may be forthcoming from other governments would be insufficient to justify establishing a top-heavy international apparatus. On this subject the United States Delegation should not participate in any discussion.

The United States Delegation may wish to commend the authors of the Scheyven report for their constructive efforts to clarify issues and reconcile divergent views. It would probably be best to limit any remarks on the Scheyven report to simple courtesies.

1. Source: Department of State, NAC Files: Lot 60 D 137, NAC Staff Documents. Official Use Only. Approved by the Staff Committee of the National Advisory Council on International Monetary and Financial Problems (NAC), June 22, for the use of the U.S. Delegation to the 20th session of the Economic and Social Council, scheduled to convene in July 1955.