Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

186. Memorandum From the Under Secretary of State for Economic Affairs (Ball) to the Assistant Secretary of State for International Organization Affairs (Cleveland)⁰

Washington, August 12, 1961.

SUBJECT

• Proposal for United Nations Development Authority

Despite the elimination of any specific commitment of United States funds from the proposal for a United Nations Development Authority, I continue to have serious reservations about the desirability of a US initiative along these lines. Before proceeding to crystallize our thinking on this proposal, I believe we must have satisfactory answers to the following questions:

1. Would the UNDA actually represent a significant addition to existing facilities in the field of development planning? At present, in addition to our bilateral arrangements and those of other countries, there are various multilateral devices available, including the IBRD and the UN Special Fund. Assistance in development planning can also be provided by certain regional organizations and by private foundations. Since there are obviously a limited number of personnel who possess real talent in this field, I think we have no assurance that a UNDA, even if created under favorable conditions, would possess the means to offer substantial assistance to the lesser-developed countries.

2. Would the UNDA proposal, as now formulated, actually be received enthusiastically by the lesser-developed members of the UN? There is also a strong possibility that the lesser-developed countries would make a strong drive to amend—and succeed in the effort—the proposal in order to create something in the nature of SUNFED. Might it not be dangerous to risk the prestige of the President of the United States on a proposal of this kind?

3. Is it not probable that a UNDA, because of its broader function and the larger sums of money involved, would be subjected to much stronger and less responsible political influences than has been true of the UN Special Fund?

4. Even if the UNDA could actually be established under optimum conditions, isn’t there a strong possibility that its operation would prove to be a political liability to the US rather than an asset? We would face a continuing problem of priorities between UNDA-approved projects and other projects which we may wish to work out bilaterally. For example, we might arouse considerable political resentment in Country A if we should fail to offer to finance a UNDA-approved project in that country at the same time that we are engaged in financing projects in Countries B, C and D which have never received a UNDA stamp of approval. Automatic priority for UNDA-approved projects would be a “pig-in-the-poke” policy. On the other hand, the failure of the donor countries to give priority to UNDA-approved projects might backfire politically against the US and other donor nations.

5. Would other major donor nations support the UNDA proposal, and would they be willing actually to use it as a basis for a significant portion of their economic assistance? I suspect that the fact that UNDA has approved a particular project would be meaningless in the case of France. Germany, of course, is not a member of the UN. I suspect the United States would in the end be the only country channeling significant amounts of aid into plans approved by UNDA.

6. The foregoing questions seem to me to cast considerable doubt on the desirability of making the UNDA proposal a major Presidential initiative. But in addition there is an objection which I think may be even more important. In entrusting the AID program to a single agency we have sought to achieve both coherent administration and the effective utilization of foreign assistance in support of foreign policy objectives. It can be argued that the UNDA proposal itself represents the fulfillment of a foreign policy objective since it might serve to strengthen the UN. But at the same time there is no assurance that the plans proposed by UNDA would be consistent with the more precise requirements of our foreign policy, and certainly the existence of UNDA would tend in the direction of diffusing rather than concentrating the direction of our foreign assist-ance effort. It seems to me quite necessary that in the next few years we should think not merely in terms of the development of individual countries but of such matters as the effect of total development planning on world markets or even on the commercial interests of areas for which we have special responsibility. The proliferation of agencies to guide country planning by the creation of new instrumentalities such as UNDA would seem to make these objectives more difficult to achieve.

George W. Ball ¹

0. Source: Kennedy Library, National Security Files, Kaysen Series, Economic Policy,OECD Development Center. Confidential. Transmitted through S/S. Copies were sent to David Bell, Kaysen, Labouisse, Edwin Martin, and John Bell.
1. Printed from a copy that bears this typed signature.