420. Cedto 505 from Paris, November 281
From Leddy. Brussels for USEC. Geneva for GATT. Subject: OECD Ministerial Meeting, Development Assistance.
Most statements covered same or similar topics such as Kristensen thesis that aid should be continuing function of govts, AAR, coordination, effectiveness of aid, Convention of Protection Foreign Property and multilateral investment guarantee, and Development Center. Among highlights was Danish declaration that they applied to join DAC and Japanese statement on their desire for closer participation in work of organization. Several delegations welcomed Danish move and chairman replied to Japanese that he certain Permanent Council will give Japanese request most serious consideration.
After Riddleberger’s report, highlights of which were summarized in Cedto 479, Kristensen spoke. He welcomed mandate for closer coordination trade and aid and pointed out that organization can also contribute to talks of development in fields of science, education, agriculture and industry. Expressed concern that 1) private investment flowing to LDC’s has been stagnating, 2) [Facsimile Page 2] proportion of grants in total flow declining, 3) recent appropriation measures in some member countries presage leveling off of aid volume in ’62 ’63. Such would likely bring about major adverse political and psychological repercussions in LDC’s. It is for these reasons he proposes that aid should be made well established govt function in industrialized countries not dependent on vicissitudes balance of payments and similar considerations.
Also necessary that quality and effectiveness aid be improved. Kristensen announced agreement establishment Development Center and exchange letters with Japanese Ambassador on Japanese participation in Center.
Under Secretary Ball supported Kristensen thesis that aid should be continuing international public responsibility of governments. He encouraged those not yet members of DAC to join. He emphasized need to liberalize aid terms. He joined in Kristensen’s concern of serious effect leveling of aid would have on LDC’s. He welcomed Development Center. Referring to earlier Belgian intervention re Convention on Protection Foreign Property he said if sufficiently favorable reaction by LDC’s US would no doubt look upon it with favor. Re multilateral investment guarantee he pointed out its effectiveness would depend [Typeset Page 1696] upon widespread support and contributions by industrialized countries. If this forthcoming US would probably support and would certainly encourage further study.
Highlights of other countries’ statements as follows:
UK agreed aid should be constant and growing function of govts. Stressed usefulness coordinating groups on selective basis and expressed satisfaction results East Africa, Thailand group accomplishments. On Development Center pointed up role of training economic administrators from LDC’s.
Denmark made interesting comparison that U.S. with economic potential of about 40% of world against 20% of Western Europe should naturally continue to exert leadership although Europe should increase its share in aid burden. On other hand Western Europe’s [Facsimile Page 3] 40% share in world trade, vs 20% U.S. share places responsibility on Europe to take lead in providing markets for LDC’s. Denmark wishes to assume its responsibilities in field of aid, has preferred multilateral channels in past but in future will also extend bilateral aid. Application for DAC membership submitted to SecGen.
Belgium encourage others to join. Argued that DAC itself should pay attention to TC. Expressed support for Foreign Property Convention and multilateral investment guarantee and asked views others.
Japan stated desire for closer participation in other work OECD. Welcomed selective coordinating group activities especially in Far East. Emphasized close relationship between trade and aid and requested to be informed on outcome those discussions.
Netherlands supported multilateral investment guarantee and argued against aid tying even on B/P unless coupled with serious under utilization resources.
Greece in long emotional statement, criticizing sharp distinction being offered pleaded for highest political decisions in favor of Greek aid.
Norway constant external deficits place limitation what Norway can do. One fourth percent income tax earmarked for aid introduced in Norway with view achieving favorable political, psychological effects. Will be glad to report on experience.
Italy after long expose problems southern Italy, endorsed coordinating groups which should help to sort out priorities. Also supported consortia in general and Greek and Turkish consortia specifically. Approach to development aid should be on global and long-term basis.
Switzerland spoke in favor Convention Foreign Property and [Facsimile Page 4] multilateral investment guarantee.
Germany stressed importance effectiveness of aid and in favor convention foreign property.
- OECD Ministerial: Development Assistance. Official Use Only. 4 pp. Department of State, Central Files, 374.800/11–2862.↩