92. Airgram From the Mission to the Organization for Economic Cooperation and Development to the Department of State 1

CEDTO A–293

SUBJECT

  • Role of DAC in Post-UNCTAD World

From Leddy. ADCOR. As reported CEDTO 265,2 this delegation has been giving thought to the question of the appropriate role for DAC in the light of the new factors in the relations between DCs and LDCs introduced by UNCTAD and the imminent establishment of the new UN Trade and Development Board.3 The results of these reflections to date are embodied in the attached paper,4 which is being forwarded for Washington review and comment.

The paper is based on an appreciation of the current situation which may be summarized as follows. The Developed Countries find themselves faced with mounting pressures from the Less Developed Countries for an increased transfer of resources needed by the LDCs to increase the pace of their economic development. The demands of the LDCs are not likely to be satisfied by actions which the DCs will feel able to take in the field of trade, with the result that pressures will increase in the aid field. At present, the DCs collectively are ill-prepared for this development, either in terms of basic data, a positive common doctrine, or institutions. The existence of the Trade and Development Board, which with its predominant LDC membership and its partisan secretariat will be the arena favored by the LDCs for consideration of the full range of problems in trade and aid, makes it imperative from the point of view of the DCs to make good these deficiencies.

A review of the institutions operating in the field of aid leads to the conclusion that though parts of the over-all problem are being effectively handled in one place or another—the IBRD, the IMF, the CIAP, the Colombo Plan, etc.—there is a vital area uncovered which can only be treated in the DAC.

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The DAC is the only institution available which can effectively meet the requirement of the Developed Countries to assess the availability of essential data bearing on the financial relations of the DCs with the LDCs, to arrange that gaps in these data are filled, and to assure to the DCs possession of an adequate body of statistical material together with an assessment of its implications.

The DAC is the only institution where it will be possible to develop a reasonable and coherent body of doctrine which will make it possible to gear aid programs more effectively to economic development and relate them properly to the performance of the developing countries.

DAC can also, and without any great bureaucratic proliferation, contribute significantly to the effective co-ordination of bilateral programs in the most important areas which now lack such co-ordination (and are not likely to attract IBRD leadership), and in so doing aid in the application of the body of doctrine referred to above.

If Washington agrees with the general conclusions reached in this paper, the immediate operational problem will become one of persuading the other members of DAC that these are the proper goals to pursue. Some will be favorably disposed, some will be negative, while most will probably be neutral. Conversations to the positive lines proposed will not be won quickly, and a sustained campaign will be required.

The single most positive element on which it may be possible to capitalize is no doubt the existence of the three DAC working groups established after the High Level Meeting. They have the potential of developing in a manner which will point to the validity of the proposals made in this paper, and could take the DAC some distance down the paths proposed. The Chairman of the Working Parties are thus seen as key figures, meriting a special effort at persuasion on our part.

Moreover, an educational effort in the capitals of some of the more important and/or influential DAC members will be indicated. This could be effectively begun with the visits of Hollis Chenery in November, already, tentatively agreed to. If Administrator Bell makes a pre-Christmas trip to London and to Bonn, as there are indications he might, he could lend powerful support where it would help most. For quiet, low-pressure but continuing persuasive efforts directed at operating officials, the Embassies in six or eight capitals should be mobilized. Assuming Washington approval, the Delegation would propose to bring the Economic Counsellors of the Embassies concerned to Paris for a day of discussion, intended to make clear the objectives sought, and to explore ways and means of securing agreement from the several Governments.

The overt side of the campaign might be most effectively opened, it is suggested, in the course of Under Secretary Ball's speech at the Ministerial meeting December 2–3. As a minimum, this speech might suggest [Page 258]that the fifth anniversary of the establishment of the DAC, coming at a time when the relations of the DCs and LDCs are in a state of flux, makes timely a re-examination of DAC operations, and consideration of the institution's appropriate role and that this should be the basic concern of the Ministerial meeting tentatively agreed to in the DAC last July.5

It would be better if after having made this statement the Under Secretary went on to suggest the changes in the nature of DAC operations called for by the changes in the world situation and to ask that the DAC working parties specifically address themselves to a consideration of these matters with a view to reporting recommendations to a DAC Ministerial meeting in the spring.

Finletter
  1. Source: Department of State, Central Files, AID(OECD) 8. Limited Official Use. Drafted by Alex B. Daspit, cleared by Leddy, and approved by Frank M. Coffin. A stamped notation on the source text reads: “Noted—WSG[aud].”
  2. Dated October 10. (Ibid., AID 1)
  3. The Final Act of UNCTAD recommended, among other things, the creation of a Trade and Development Board, consisting of 55 members, as part of the U.N. machinery on economic matters. Resolution 1995 (XIX) adopted without dissent (under a no-voting arrangement agreed to on December 1, 1964) by the U.N. General Assembly on December 30, which established UNCTAD as an organ of the U.N. General Assembly, also established the Trade and Development Board as part of the U.N. machinery in the economic field. See American Foreign Policy: Current Documents, 1964, pp. 134, 166, 188–190.
  4. Entitled “Report of the DAC in the Post UNCTAD World,” undated, not printed.
  5. See Document 87.