Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

141. Letter From the Representative to the Economic and Social Council (Baker) to the Assistant Secretary of State for International Organization Affairs (Wilcox)¹

New York, February 16, 1956.

Dear Mr. Wilcox: You will recall that in my letter of December 7, 1955,² I made certain suggestions concerning new economic policies for the Economic and Social Council and also from the point of view of our general position. As a result of this there was a memorandum prepared in the Department setting out certain specific affirmative measures which the United States might take in the United Nations and related agencies. This formed the basis of the very valuable discussions we had in Washington on January 17. I have now had occasion to give the matter further thought in the light of these discussions and believe that we should concentrate on a few specific points for a short-term program, while at the same time continuing with a long-term program along the lines of some of the suggestions contained in my letter of December as well as in the Departmental memorandum.

We are now all agreed, I believe, on the premise that the principal preoccupation of the under-developed countries is their rapid economic development, and that for this the two things needed are “know how” and capital I, therefore, would like to suggest for serious consideration in the Department the following short-term program that might be accomplished through the Economic and Social Council.

1. Technical Assistance Capital Fund. If there is no change in the US position on SUNFED as recently recommended by Ambassador Lodge, there is still the possibility of establishing a capital fund for technical assistance projects, not only for demonstration purposes, but also as a means of implementing recommendations of experts relating to technical improvement and economic development. A pilot plant “SUNFED” could be started with a $60 million fund for grants-in-aid related to technical assistance projects. This idea has already been advanced by the Secretariat, and I understand has been passed on to the Department informally. Some of the advantages such an agreement might have are outlined in the attached annex. I understand that the Secretariat’s thinking in connection with a combination Technical Assistance Capital Fund has gone so far that they are now considering presenting it to TAC next summer. The French, as you know, may suggest an expansion of the UN Technical Assistance Program, and have expressed the view that SUNFED should be established as a going operation. With this new development and with what the Secretariat is considering, it would seem only timely that we give immediate consideration to something of this nature.

Any contribution by the United States to the above suggested funds should be on the basis of the UN putting up 50% of the money on a matching basis and convertibility of funds being the same as suggested below for an increased Technical Assistance Program, i.e. 25%–50%.

2. Disposal of U.S. Surplus Agricultural Products Through UN. As you know, FAO has conducted a fairly successful pilot project in India with respect to use of surplus agricultural products for economic development. I think it would be well to consider the possibility of disposing of surplus agricultural projects through the UN. The necessity of disposing of US surplus agricultural commodities without affecting world markets is a difficult problem with which we are all familiar. Such products might well be utilized for economic development through the UN, and would relieve the United States of the responsibility of the method of disposal while at the same time acquiring for us substantial good will. Of course, any other country could contribute commodities for disposal through the UN.

3. UN Technical Assistance Program. Increase the US proposed contribution to the UN Technical Assistance Program from the present $15,500,000 to $25,000,000 on a matching basis. This would make a program goal of $50,000,000, which I understand is the amount that TAB thinks could presently be absorbed by the program. Also on my trip I learned from several UN country representatives that they felt this total could be wisely and effectively used.

In view of the great number of restrictions on convertibility of contributions to the program which tend to guide its use, particularly in the case of the USSR contribution, we should condition our increased contribution on other countries’ making a certain amount of their contributions freely convertible. The percentage might range from 25% to 50%.

4. Evolving a Senes of Recommendations on Private Investment by ECOSOC Over and Beyond the UN Private Investment Resolution of 1954. In any such new project the Secretariat should be requested to undertake an examination of various special aspects of the matter in a series of separate studies. Action in ECOSOC along this line should serve to force attention not only on the flow of foreign private capital but also on the encouragement of domestic private enterprise, including the position of the local entrepreneur and investor, and should result in foreign investors gaining confidence in the economy. Furthermore, such policies should tend to increase greatly the number of centers of influence in under-developed countries working toward increased employment and the general economic development of these countries in many areas and at many levels.

My present plans are to be in Washington on February 28 and 29, and if convenient would be pleased to pursue the matter mentioned herein further to the end that we might develop a specific and dynamic program of action for ECOSOC.

This afternoon I had a chance to discuss this with Mr. Lodge, and he seemed enthusiastic about the idea. Sincerely yours,

John C. Baker³

Annex

(1) It would be a logical outcome of the present forms of technical assistance to be able to implement the recommendations and findings by providing modest financing.

(2) Grants would be based on the recommendations of technical assistance experts.

(3) The availability of such funds would lead to more careful recommendations as well as use of experts’ recommendations within recipient countries, since competition for available funds would be very keen.

(4) The purposes of the SUNFED program could be achieved on a modest scale without involving the establishment of a new administrative structure. Thus, the available funds could be disbursed through the existing headquarters and field offices of the Technical Assistance Board.

(5) By establishing this program it would be possible to carry out a kind of pilot project on the SUNFED idea.

(6) Internal financing of projects in recipient countries would be facilitated by agreements providing for local matching of grants-in-aid, and through the deposit of specified amounts of counterpart funds.

1. Source: Department of State, Central Files, 340/2–2156.
2. Document 135.
3. Printed from a copy which bears this typed signature.