156. Minutes of a Meeting, Department of State, Washington, January 3, 1957, 3–4:45 p.m.1

POSSIBLE UNITED STATES PARTICIPATION IN THE UNITED NATIONS ECONOMIC DEVELOPMENT PROGRAM

PRESENT

  • Secretary Dulles
  • Secretary Humphrey
  • Ambassador Lodge
  • Deputy Under Secretary Murphy
  • Mr. Hoffman
  • Mr. Hollister
  • Mr. Randall
  • Assistant Secretary Wilcox

The Secretary opened the meeting by explaining the nature of the problem to be discussed and pointing out that it was the duty of the group, if at all possible, to resolve the issues before it without taking the matter to the President.

The Secretary then outlined the contributions which the United States has made to various United Nations programs. He went on to say that there are a good many situations which it is in the national interest to handle bilaterally, particularly since most of our economic aid is tied in closely to military assistance. This, he felt, is especially true of the Middle East. He said he could not conceive of our economic programs there being conducted on a multilateral basis as Mr. Hammarskjold had suggested. In this area we want to distinguish between the sheep and the goats—we want to build up those nations resisting communism and deny help to those with communist leanings. It is difficult for the United Nations to make these distinctions since it cannot lend itself to the political implications that we have in mind.

The Secretary also pointed out that certain bilateral arrangements are necessary to accomplish our economic assistance objectives. Unless Congress would authorize additional funds to finance further United Nations activities, he did not see how we could increase our multilateral assistance since that would require the elimination of certain essential bilateral programs.

Ambassador Lodge presented his views in the form of a 12 page memorandum.2 He urged that the United States demonstrate its [Page 408]willingness to participate in a limited economic development program under the United Nations. Our interests would be safeguarded by a system of weighted voting and supervision of the program by the International Bank. All nations would contribute to the fund at the same ratio as they now contribute to the United Nations regular budget. Ambassador Lodge stated that in his judgment the United States could effectively control the program, that it would involve only a small portion of our total economic assistance, and that it would win a great deal of support for us in the United Nations. A copy of Ambassador Lodge’s statement is attached.

Secretary Humphrey stated that he was “scared to death” of a common pool from which economic assistance might be dispensed. In such circumstances, he felt it would be impossible for the United States to control the situation.

The Secretary commented that our experience with the Atomic Energy Agency had proved disappointing. We took the leadership in creating the Agency and we will supply most of the materials, yet other countries are raising objections to American management of the Agency. When we start such things, he said, it is always difficult to know where they are going to end.

Mr. Hoffman pointed out the difficulty of employing American personnel for technical assistance and for economic development programs. He was convinced, he said, the United Nations could do a better job at a lower price than we could do on a bilateral basis. He said he supported the Lodge proposal not because he was sure of the details but because it would constitute an important experiment which we ought to go through with. The question we have to answer is “Is the United Nations important for us?” If so, then we ought to keep in mind that next to peace itself the problem most important to the underdeveloped countries is economic development.

In this connection, he said he was not recommending that a great amount be spent, and he recalled that in the Marshall Plan our contribution never went beyond 3% of the gross national product of Western Europe. He believed we should experiment with multilateral economic development as we did with technical assistance 7 years ago. A modest program with safeguards would have the following effect:

(1)
It would help the underdeveloped countries more than we could help them with purely bilateral assistance and
(2)
It would persuade people in the United Nations that we are genuinely interested in their progress.

[Page 409]

He felt that the technical assistance program had succeeded with the use of only a small amount of money and that further experimentation in the economic development field would be justified. He argued that we have broken the Asian-African bloc in the General Assembly and the underdeveloped countries are looking to us for continuing leadership. The announcement of our participation in such a program would have an electric effect in New York.

The Secretary pointed out that we cannot disentangle economic aid from military assistance. In Korea, Turkey, and elsewhere economic aid is the necessary complement to our military assistance. Military aid in the Middle East, he thought, was quite different from the Marshall Plan which was used in highly industrialized countries.

Mr. Hoffman stated that we should apply one simple rule—we should contribute to projects where there is a demonstrable need and where those projects can be successfully carried out. Economic development was by no means a bottomless pit because the under-developed countries could absorb only a limited amount of assistance.

Secretary Humphrey commented that we have three committees3 working on our aid programs at the present time and that undoubtedly a number of changes will be suggested in the next few weeks. He thought, therefore, that it would be inopportune to jump in now with new proposals for multilateral aid before we receive the reports of the Committees conducting the studies. He also questioned whether sufficient funds would be forthcoming from other countries to make a multilateral development program possible. The Dutch and the Germans, he thought, might put up some funds but most other countries were not in a position to do so.

Mr. Hollister commented that the request which had been made recently by the Secretary General for aid to Hungary had not met with encouraging responses. Other countries thus far, he said, have not put up any money.

Ambassador Lodge stated that if other countries were not in a position to contribute to a development program, the United States should go ahead anyway and make a bona fide offer to participate in such a program. If other contributions were not forthcoming, at least we would get the credit for having made the offer.

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The Secretary said he thought the arguments of those who favored the program were somewhat inconsistent. On the one hand it was argued the program could be successfully carried out. On the other hand, it was argued that the necessary funds probably would not be forthcoming but that we should support it as a propaganda move.

Ambassador Lodge replied that he believed the program could be successfully launched. However, even if insuperable obstacles should arise, he still felt it would be in our national interest to indicate our willingness to support it.

Mr. Randall said he was glad to see there had been no tendency during the discussion to link disarmament with economic development. Either economic development is logical or it is not—in any event he felt it ought not to be related to the disarmament problem. He also urged that we keep open the idea of some multilateral assistance disassociated from the United Nations. There might be projects in which we would want to enlist the assistance of other nations outside the framework of the United Nations. North Africa, for example, might well be developed by the countries of Western Europe.

The Secretary then suggested, in line with Secretary Humphrey’s remarks, that it might be well to let further consideration of this matter go over until the reports of the Committees now studying the problem are completed. He recognized that members of the group could take the matter to the President if they so desired. He thought that in view of the different opinions expressed in the meeting, however, the President would not be inclined to make an affirmative decision with respect to the program. The Secretary went on to say that one possible advantage of multilateral aid might stem from the creation of an international pool or panel of people which could be drawn upon for technical assistance and economic development purposes.

Secretary Humphrey suggested that the International Bank could raise large sums of money which could be made available for development purposes. He felt that it would be better to use existing instrumentalities of this kind—such as the Bank, the International Finance Corporation, etc.—rather than to create a new organization or new channels. Mr. Hoffman pointed out, however, that the funds of IBRD ordinarily could not be loaned in underdeveloped countries with primitive economies.

It was agreed that it would be impossible to arrive at any substantive changes in United States policy on economic development in time for the delegation in New York to put forward any new proposals during the present session of the General Assembly. The Secretary suggested that the delegation permit the initiative [Page 411]with respect to SUNFED to remain with other delegations. It was agreed, however, that Ambassador Lodge and Mr. Hoffman might inquire of certain delegations their concept of such a program and particularly the extent to which their governments might contribute to a multilateral economic development fund. This should be done carefully in such a way as to avoid any commitment on our part that the United States might be willing to participate in such a program.

  1. Source: Department of State, Central Files, 398.051/1–357. Confidential. Prepared by Wilcox.
  2. This memorandum, entitled “Multilateral Aid under the United Nations,” is similar to Lodge’s statement of November 30, 1956 (see Document 152). No copy was attached to the source text, but one is attached to the copy of these minutes, Department of State, U/MSC Files: Lot 59 D 471.
  3. The Fairless Committee was still in session. A second study was being conducted concurrently by the International Development Advisory Board, concentrating on technical assistance and economic aid. A third committee, the Interdepartmental Committee on Certain U.S. Aid Programs, composed of representatives of the Departments of State, the Treasury, Defense, and of the International Cooperation Administration, completed an examination of the military programs in six countries in August 1956. In addition to the investigations initiated by the Executive branch, House and Senate committees were also undertaking independent inquiries into various aspects of American aid programs.