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

169. Despatch From the Mission at the United Nations to the Department of State¹

No. 543

New York, December 20, 1957.

REF

• Delga 603, December 14, 1957²

SUBJECT

• New U.N. Special Fund

The unanimous resolution adopted on December 14³ establishing a new Special Fund for expanding the scope of United Nations technical assistance activities has been widely hailed as one of the major achievements of the 12th General Assembly. From the U.S. standpoint it accomplished three important objectives:

1. It is a realistic program for UN action to help the less developed countries in furthering their economic progress;

2. The Assembly accepted the U.S. view that it would be unwise to consider establishing a capital development fund until adequate resources are prospectively available to the UN;

3. The U.S. re-established its leadership in UN economic affairs by initiating the most important UN program for promoting the economic development of the less developed countries since adoption of the Expanded Technical Assistance Program in 1950.

In his closing statement to the Assembly, President Leslie Munro listed establishment of the Fund first among the major achievements of this session. Munro said: “With the support and cooperation of member governments, this new measure can be expected to make a real contribution towards raising the levels of living in the less developed countries of the world.”

Secretary General Dag Hammarskjold, speaking to the press December 16, on the accomplishments of the Assembly, said: “I would highlight, first of all, the special projects fund decision, which opens new possibilities for the development of economic assistance in forms which are not open to all those various political objections which we know only too well. It may have opened the door to a much more active contribution both of the United Nations itself and of Member Governments. With the very keen sense of the importance of this problem which you know I have, I of course regard this as a major achievement. I may remind you of the fact that the United States representative, in commenting upon it, used the word ‘milestone’, which is a very strong word, and I for one would agree with him.”

Congressman Walter H. Judd, who represented the U.S. in the 2nd Committee where the Fund was considered, characterized the resolution as a U.S. victory (Delga 603, December 14).Judd noted that the U.S. Delegation starting from a position where some 70 countries favored the immediate establishment of SUNFED pursuant to ECOSOC Resolution 662B (XXIV),⁴ had induced them to reverse their position. The result was a unanimous resolution approving the U.S. proposal for enlarging the scope of United Nations technical assistance programs and accepting the U.S. view that neither SUNFED nor any other UN capital development fund will be practicable until sufficient financial resources are prospectively available to the UN. As Congressman Judd said, the underdeveloped countries “will admit there is no chance of sufficient prospects until the U.S. and other industrial countries are willing to contribute for such purpose. This gives us practically complete control over the time and conditions where such a fund could be established.”

Congressman Judd came to the General Assembly skeptical of the United Nations Expanded Program of Technical Assistance and with the conviction that the U.S. percentage contribution should decline to 33⅓% as quickly as possible. After studying the problem here, however, he became convinced that the new Special Fund proposed by the U.S. was so sound in terms of U.S. objectives and the welfare of the less developed countries that he announced publicly his intention to ask the U.S. Congress to stabilize the percentage ceiling of the U.S. contribution at 40%, at least for several years. This assurance by Dr. Judd was one of the most important factors in convincing other delegations that the U.S. was sincere in its proposal. Another important factor was Dr. Judd’s own evident sincerity. His role in obtaining Washington concurrence to such changes as were required for negotiations was of equal importance. In fact, it is hard to see how this excellent result could have been achieved without his help.

Ambassador Lodge’s View

To Mr. Lodge this resolution represented a significant achievement and the attainment of an objective for which he himself had been striving for many years. In a press release of December 14⁵ (20 copies enclosed) Mr. Lodge listed the new program as one of the four major accomplishments of the 12th General Assembly from a U.S. standpoint. He observed that the new program “provides a new way to strengthen underdeveloped countries against subversion from abroad. It could greatly improve prospects for solving big political problems. It creates and will create new good will for the United States.”

Mr. Lodge’s statement was more prophetic than he realized. On December 17 the United Nations Secretary General told him that the Egyptian Foreign Minister Fawzi⁶ planned to request technical assistance from the new Special Fund to help set up a central bank which would serve the proposed Arab Economic Union. Mr. Hammarskjold expressed the hope that this could be done. He thought it is a job which the Fund could do very well and which the Arabs could not possibly do by themselves. He also believed that this might be the beginning of something which could radically change the Arab approach to major questions, and that it could lead to greater Arab unity in the political field, possibly culminating in a regional organization. Fawzi himself spoke to Mr. Lodge the same day concerning technical assistance from the Fund in setting up the proposed bank. The Egyptian Foreign Minister referred to Mr. Lodge’s statement of December 14 on the Fund and said it expressed exactly what Fawzi himself had in mind.

Negotiations Leading Up to the Resolution

When the U.S. tabled its proposal on November 18,⁷ the Committee already had before it a draft resolution to establish a fund for financing the economic development of the underdeveloped countries. This was draft resolution L/331,⁸ sponsored by Argentina, Ceylon, Chile, Egypt, Greece, India, Indonesia, Mexico, the Netherlands, Venezuela and Yugoslavia. Though not called SUNFED, the fund envisaged therein was in fact that foreseen by the SUNFED supporters during six years of debate in the General Assembly. At the time L/331 was presented it was estimated that more than 70 of the 82 delegations supported it. The position of its co-sponsors was strengthened by the fact that the Economic and Social Council in Resolution 662B (XXIV) had recommended that the 12th General Assembly establish SUNFED.

The immediate reaction of the 11 sponsors to the U.S. proposal was that it was an attempt to sidetrack SUNFED. They argued at great length that the U.S. proposal should be tabled under Item 29 (Technical Assistance) and not under Item 28 (Economic Development of Underdeveloped Countries). If the U.S. insisted on presenting its proposal under Item 28, they contended, it could do so only by making its proposal a part of a general fund which would go on to the financing of economic development.

The U.S. Delegation refused both of these suggestions. It made it clear that the U.S. proposal was neither a part of the SUNFED idea nor a substitute for SUNFED, but a program which stood on its own merits and which could make a constructive contribution to economic development. Moreover, although theoretically there was no incompatibility between the two proposals, in practice the Committee would have to make a choice between them or neither could operate effectively. Since it was clear that there were not sufficient resources available to the UN for a capital fund for financing economic development, the only wise and realistic course was to concentrate available resources on the program suggested by the U.S.

The 11 co-sponsors saw the logic of the U.S. position. On the other hand, they had behind them six years of campaigning for SUNFED. Obviously it was difficult for them to drop SUNFED altogether, at least openly. As a compromise, a resolution was worked out which was essentially the U.S. program, with just enough reference to the financing of economic development to save face for those who had for so long supported SUNFED. This made possible a resolution that could receive unanimous support⁹ (20 copies enclosed). The U.S., France and Canada then joined the 11 co-sponsors of the original draft resolution L/331 in presenting the compromise resolution to the Committee.

The principal substantive change from the program originally set forth in U.S. draft resolution L/354 was the recognition of the separate identity of the new Special Fund. Initially the U.S. proposal would have placed the Special Fund within the Expanded Program of Technical Assistance. In the resolution as adopted, the Special Fund is conceived as an expansion of existing technical assistance and development activities of the UN and the specialized agencies. The U.S. Delegation agreed to this change, which was urged not only by the underdeveloped countries, but also by such NATO allies as the U.K., Canada, the Scandinavian countries and France. The latter argued that the new type of project envisaged should not come under the Technical Assistance Board and its Chairman, David Owen, nor should the new program include such features of the Expanded Program as country targets and specialized agency percentages. After studying the question, the delegation came to the conclusion that such separate identity would also be preferable in terms of U.S. objectives. At the same time the delegation was careful to insist on language making it clear that the new Fund would be integrally related to the Expanded Technical Assistance Program and that a minimum of new machinery would be established.

The face-saving features of the compromise resolution were two references to SUNFED in the Preamble, the inclusion of part of the Annex from the original resolution L/331, and Section C. The preambular references did nothing but recall previous resolutions of the General Assembly and the Economic and Social Council. The Annex was not specifically voted on, was not binding and was referred to in such a way as to give it no more standing than the views of any government. Section C reads as follows:

“Decides that as and when the resources prospectively available are considered by the General Assembly to be sufficient to enter into the field of capital development, principally the development of the economic and social infrastructure of the less developed countries, the General Assembly shall review the scope and future activities of the Fund and take such action as it may deem appropriate.”

The U.S. had originally proposed that adequate resources be defined in Section C as from $400 to $500 million in addition to those devoted to technical assistance. The 11 co-sponsors considered this figure too high and would have preferred $250 million. Consequently no figure was mentioned. To make the U.S. position clear, however, Congressman Judd explicitly mentioned the figure of $400–$500 million in his statement to the General Assembly on December 14¹⁰ (20 copies enclosed). Dr. Judd’s statement also underlined the fact that Section C reserves until the time when such adequate resources may become available to the UN any decision by the General Assembly to enter into the field of capital development, and any commitment on the part of any government to that decision.

In addition to the U.S. intervention, statements by the Soviet bloc and other delegations confirmed that the resolution put SUNFED “on ice” for some time to come.

Mr. Arkadev,¹¹ the Soviet representative, bluntly accused the U.S. of having shelved SUNFED by exerting pressure for the adoption of its own proposal. Speaking of the resolution just after it was adopted unanimously by the General Assembly on December 14 Mr. Arkadev said: “The Soviet Delegation considers that this resolution constitutes to some extent an expression of an attempt to replace SUNFED by a broader concept of the technical assistance fund—in other words, to prevent the establishment of SUNFED. The fact that the establishment of SUNFED is being postponed until some time in the future was confirmed in the statements of a number of representatives in the Committee.”

The previous day, explaining his vote on the same resolution in the 2nd Committee, Mr. Arkadev said it was clear that the establishment of SUNFED as contemplated by the underdeveloped countries was postponed indefinitely, despite the explicit recommendation of the Economic and Social Council in resolution 662B (XXIV). He agreed with the representative of Iraq that the principal effect of the resolution that had been unanimously approved would be to remove the question of the establishment of SUNFED from the Agenda of future sessions of the Committee, “undoubtedly to the great satisfaction of certain delegations.” Mr. Arkadev made it plain that he was unhappy not only about this feature of the resolution, but also about the provisions limiting the fund’s activities to technical assistance, and the first paragraph in the Annex of the resolution providing that contributions should be in generally usable currencies. The reason he gave for voting in favor of the resolution as a whole, while abstaining on those parts he considered objectionable, was that the underdeveloped countries appeared to want it. A more likely explanation is the desire of the Soviet Union not to be excluded from the Preparatory Committee.

The feelings of the Soviet bloc about the resolution were also made plain by the representatives of Czechoslovakia and Bulgaria at the 510th meeting of the 2nd Committee held on December 13. The Czechoslovakian representative said: “Mr. Chairman, the struggle for the establishment of SUNFED carried on for years by the underdeveloped countries and their supporters has resulted yesterday in its first phase in the adoption of a resolution which is far from being a victorious successful or satisfactory outcome of the long negotiations. The general feeling is that the losses suffered are heavy ones. Actually we have seen SUNFED throughout the last phase of its negotiations in such agony that there may be doubts as to its actual survival if a more energetic action is not taken in the near future. He said in the general debate on this subject that we would vote for any resolution which would make for the drafting of a statute by the Preparatory Commission, the establishment and the early start of the operations of SUNFED.

“The resolution adopted yesterday is too remote from any such scheme, it is a kind of compromise which nearly kills the main idea so that the feeling of frustration here and in the world may be deep and general. The present very weak, very attenuating scheme is obviously the result of the heavy pressure of the United States aimed at watering down of all better ideas and hopes in this respect.”

The Bulgarian representative said: “With great attention I listened yesterday to the statement of the distinguished representative of the United States in which he stated that he was fully aware of the hard plight of the less developed countries and that it was necessary to render them serious aid. Following the rules of logic, I expected him to make a wider, larger concession from the original U.S. attitude but I was disappointed when he insistently demanded such an editing of the resolution which would leave SUNFED aside for the time being and under which the aid would be confined to technical assistance and technical development only.”

Full transcripts of these statements have been sent to the Department and copies are being retained by the Mission. The transcript of the Soviet statement, in particular, may be useful in the Preparatory Committee if the Soviets or other delegations attempt to change the character of the Fund.

India and Yugoslavia, who with the Netherlands represented the leadership of the SUNFED group made it clear to the 2nd Committee that they were not very happy about the resolution of which they become co-sponsors. That they finally accepted what was essentially the U.S. proposal was evidently due to two factors: (1) they wanted to bring the U.S. along on any further UN program and feared that rejection of our proposal would make any later attempt more difficult; (2) there was a steady and very appreciable defection of SUNFED supporters to the U.S. proposal during the final three weeks before adoption of the resolution. This was due to some extent to the efforts of the U.S. Delegation in making individual contacts with almost all delegations outside the Soviet bloc for the purpose of discussing in detail the essentials of the U.S. position. The most important defections were those of the Scandinavian countries and France, leaving the Netherlands as the only potential contributor which had not gone over to the U.S. proposal. In the case of France, at least, this change of position was aided materially by efforts in Washington and Paris, supplementing those made with the French Delegation here.

Speaking in the 2nd Committee at its 510th meeting on December 13, Ambassador Jung¹² of India expressed his disappointment that some delegations which had originally supported the 11-Power draft resolution had “unexpectedly” declared themselves in favor of the U.S. proposal. Though Mr. Jung did not say so, it was evident that the long series of statements not only by potential contributors but by the less developed countries themselves in favor of the U.S. proposal had an important effect in persuading the 11 Powers which had originally proposed the capital development fund to accept a compromise resolution which was essentially the U.S. proposal.

Ambassador Brilej (Yugoslavia) also expressed some misgivings about the resolution which he had co-sponsored. Mr. Brilej acknowledged to the Committee that the resolution was not a further step towards the financing of economic development; nevertheless, it represented a step forward in that it had been adopted unanimously and contained certain positive features. Similar regrets that the establishment of a capital development fund had been postponed were expressed in the 2nd Committee’s 510th meeting by the representatives of Sudan, Iraq and Saudi Arabia.

The Preparatory Committee

The final negotiation with the 11-Power group was over the composition of the Preparatory Committee. The U.S. proposed that Ambassador Mir Khan of Pakistan, now President of the Economic and Social Council, be named as Chairman. Ambassador Jung, the Indian representative, strongly opposed this on procedural grounds, while saying he had no objection to Mir Khan personally, if Pakistan became a member of the Preparatory Committee and if the Committee decided to elect him. As a compromise, the U.S. agreed that Pakistan would become a member of the Committee and that the Chairman would be elected when the Committee met.

The Committee will include the following countries: U.S., U.K., France, USSR, Netherlands, Denmark, Canada, Japan, India, Egypt, Pakistan, Ghana, Mexico, Peru, Chile and Yugoslavia.

The Indians attempted to enlarge the Committee further to include Poland and Ceylon, but this attempt was successfully resisted by the U.S., aided by Canada, the UK and France. As constituted, the Committee appears to be reasonably balanced from the standpoint of getting a sympathetic approach to U.S. proposals and objectives. Also, if Mir Khan can be made available, there would seem to be a good chance for the U.S. through informal consultations to ensure majority support for him as Chairman. This would be important from the standpoint of keeping the Committee within the limits outlined for the Fund as interpreted by the U.S. and other major contributing countries. For this purpose it would appear advisable for the U.S. to consult fully in advance with friendly members of the Committee. It would also appear advisable to have on hand the transcripts of significant statements made in the meetings of December 12, 13 and 14 at which the resolution was discussed. These precautions should all be useful in keeping the new Fund on the rails and seeing that it develops in line with U.S. objectives.

S.M. Finger
Senior Adviser Economic and Social Affairs

1. Source: Department of State, Central Files, 398.051/12–2057. Official Use Only.
2. Printed as telegram 4 to Paris, supra.
3. Resolution 1219 (XII), adopted by the General Assembly at its 730th plenary meeting, December 14. For text, see Resolutions adopted by the General Assembly during its Twelfth Session from 17 September to 14 December 1957, General Assembly Official Records, Twelfth Session, Suppl. No. 18 (A/3805), p. 15. The text of the resolution appears in a slightly altered format in Department of State Bulletin, January 13, 1958, p. 71.
4. Adopted by the Economic and Social Council at its 993d and 994th plenary meetings July 30 and 31. For text, see United Nations, Economic and Social Council, Official Records, Twenty-Fourth Session, 2 July–2 August, 1957, Annexes, Agenda item 6, p. 50.
5. U.S. Delegation press release 2849, printed in Department of State Bulletin January 6, 1958, p. 31.
6. Mahmoud Fawzi.
7. Draft resolution A/C.2/L.354 presented at the 492d meeting of the Second Committee. The texts of this and related resolutions are printed or summarized in the Report of the Second Committee, Document A/3782, United Nations, Official Records of the General Assembly, Twelfth Session, Annexes, Agenda item 28, p. 43.
8. Draft resolution A/C.2/L.331.
9. Draft resolution A/C.2/L.331/Rev. 1.
10. U.S. Delegation press release 2848, printed in Department of State Bulletin, January 13, 1958, p. 69.
11. G.P. Arkadev, Deputy Permanent Representative to the United Nations.
12. Ali Yavar Jung, Indian Ambassador to Egypt.