Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

151. Draft Paper Prepared in the Office of International Financial and Development Affairs⁰

February 27, 1958.

SUBJECT

• Organization and Substantive Activities of the United Nations’ Special Fund

In anticipation of the meeting of the Preparatory Commission established by the United Nations General Assembly to define the organization of the substantive activities of the Special Fund which was voted at the last session to provide technical assistance “in depth”, an interdepartmental working party (State, ICA, Treasury, Commerce, Agriculture, Labor, HEW, Bu. of Budget) has been developing the U.S. position. The following is a summary of the negotiations that have evolved from the discussion of this group.¹ It is expected that these will subsequently be incorporated into formal instructions to the U.S. representative on the Commission:

I. Fund Organization

The Fund would be headed by a Manager with overall responsibility for operations and with sole power to recommend projects for financing to the appropriate intergovernmental body mentioned below. He would be appointed by the Secretary General and subject to confirmation, perhaps by the Economic and Social Council (the question to be decided is whether he should be an American and, if so, what names to suggest to the Secretary General); the Manager to be assigned by an Advisory Committee composed of the United Nations Secretary General, the President of IBRD and the Executive Chairman of the Technical Assistance Board (which is concerned with operating the present United Nations Technical Assistance Program). Specialized Agencies directly concerned with projects under discussion by the Advisory Committee would participate in such discussions on an ad hoc basis. While the Manager would have a small professional staff, he would utilize existing facilities of the United Nations to the greatest feasible extent, such as those of the Specialized Agencies for making technical appraisals on proposed projects and carrying them out.

Both the present United Nations Technical Assistance Program and the Special Fund would be subject to the supervision of a single intergovernmental body. (Precisely what the composition and the total membership of such a body might be, what voting arrangements might apply and whether subcommittees of the intergovernmental body might be established to be concerned with programming activities of the Special Fund of the existing Technical Assistance Program will have to be worked out during the negotiations in the Preparatory Commission.) In any case, as regards the Special Fund, this intergovernmental body would (a) provide general policy guidance on administration and operations (b) be the final authority for the approval of projects recommended for financing by the Manager (c) be responsible for the coordination of the activities of the Special Fund with those of the present technical assistance program. All decisions of this body would require a ⅔ vote. (Various compromises will probably by necessary with respect to such points as total membership of the intergovernmental group and the general composition of the membership.)

II. Substantive Activities of the Special Fund

The Fund would undertake projects falling largely in the fields of assessment of resources and training and research. It might also be authorized to undertake projects designed to provide on a broad regional basis selected fundamental benefits of existing technology that would contribute directly and immediately to the well-being and productivity of individuals in less developed countries, such as the project for world-wide malaria eradication which is currently under way.

Within these fields, the Special Fund would undertake projects which cannot now be adequately covered by existing United Nations technical assistance programs which lack the resources to undertake projects requiring substantial amounts of supplies and equipment or which must be sustained for long periods of time. Also, priority would be given to projects that would have the widest possible impact, preferably regional, so that the Fund would concentrate on a relatively few projects at any given time rather than scattering its resources among many small projects as in the case with the existing United Nations technical assistance program. Project approval would be on an ad hoc basis with no prior allocation of funds to countries or specialized agencies.

III. Financial Problems of the Special Fund

Three financial problems relating to the establishment of the Special Fund may be mentioned:

(a) The problem of assuring that financial support of the Special Fund does not result in a fall-off of contributions to the existing United Nations technical assistance program. The U.S. view would be that the latter at least be maintained at present levels, i.e., about $30 million.

(b) The question of what amount of resources should be available for the Special Fund before it comes into existence. The sum of $5 or $10 million has been mentioned.

(c) The question of the form of contributions to the Special Fund. The view is that a strong effort should be made by the U.S. to get some partial convertibility requirement attached to contributions which otherwise would be made entirely in inconvertible currency.

In general, there is agreement among the agencies on the working party with respect to the positions set out above. Two exceptions should be noted:

(1) Agriculture is in basic disagreement with the idea of a central fund operated by a strong Manager. For example, they prefer annual allocation of resources by the Special Fund among the various functional fields represented by the Specialized Agencies-Agriculture, Labor, etc, thus assuring each Specialized Agency its “share” of the projects undertaken, rather than having projects selected without regard to this consideration. This reflects a view long held by Agriculture that governmental contributions for United Nations technical assistance activities should be made directly to each of the Specialized Agencies for work in their respective fields.

(2) Treasury feels a real push should be made to assure a substantial proportion of convertibility in cash contribution, whereas other agencies, including officers sitting for the Department, are dubious as to the political wisdom of precipitating a fight on this issue should informal soundings indicate that such a move would be vigorously resisted by the major potential contributors.²

0. Source: Department of State, E Files: Lot 60 D 68, Special Project Fund. Official Use Only. Drafted by William J. Stibravy.
1. Documentation on meetings of the Working Party on the Special Fund is ibid.
2. The U.N. Preparatory Committee on the Special Fund met in New York March 11–April 4. The U.S. position at this meeting, essentially that outlined above, was summarized in Current Economic Developments, No. 541, March 18. Current Economic Developments, No. 544, April 29, reviewed the meeting’s results. (Washington National Records Center, Current Economic Developments: FRC 72 A 6248) For text of the U.S. opening statement in the committee, see Department of State Bulletin, May 5, 1958, p. 745. Further documentation on the meeting is in Department of State, E Files: Lot 60 D 68, Special Projects Fund.