Foreign Relations of the United States, 1958–1960, Western European Integration and Security, Canada, Volume VII, Part 1

105. Telegram From the Mission at the North Atlantic Treaty Organization and European Regional Organizations to the Department of State⁰

Paris, February 20, 1960, 11 p.m.

Polto 1647. Brussels for BUSEC. Department pass Treasury. Dillon and Anderson from Burgess. Subject: Economic Organization. As a result of reactions from various hearings before group of four, we have become increasingly concerned regarding developments pertaining to Development Assistance Group (DAG) as they relate to role and functions of a new economic organization (OEC).

Dillon in his statement of January 12¹ stated that it would probably take 18 months to form a successor organization to OEEC. Accordingly, he proposed “in the meantime” such a group as DAG which “should operate in an informal manner” and which “would not require any special international staff.” Instead, as Dillon suggested, it “could make effective use of certain studies which might be carried out by the staff of the OEEC.”

Dillon suggested that group should deal specifically with bilateral long-term assistance and developed thesis that this was the only appropriate task of a creditors group. Further, Dillon responded to Zorlu’s² concern re creditors group by stressing “particular rather limited job” of DAG.

Recently we have noted London’s 4066 to Department repeated Paris 688, Brussels 133,³ in which the British are reported as favoring a staff and establishment of group on a “permanent” basis.

We note that London Embassy supported this position. See also paragraph 2 Brussels Ecbus 499 to Department repeated Paris 151, London 101⁴ in which reference is made to DAG “as probably having continuing distinct existence.”

We believe there are strong reasons for adhering to original concept and avoiding implications of permanent distinct organization with its own Secretariat.

In first place we call attention to stress by Turks, Greeks and others on undesirable international implications of permanent, separate creditors group which they called “capitalist club,” and which would give Communists fertile issue for exploitation and arouse opposition of debtor countries.

Also in considering new look for new OEC we are struck with fact that of subjects discussed in January 12–13 meetings aid for less developed countries was only new task. We have noted Wormser’s recent remarks to effect that without proper function in this field new OEC will have little attraction. More fundamentally, we feel strongly that, in effort to maintain outward-looking orientation of OEC, it is essential that it be given effective role in this area as originally contemplated.

Therefore we feel that it is essential to avoid firming up DAG on permanent basis with only vague relationship to the successor organization. The new OEC should provide the permanent roof for DAG.

In addition, establishment of some such relationship would provide a frame in which help could be obtained from European countries not now in DAG which are well able to contribute (such as Switzerland, Sweden, etc.). If DAG becomes firmly established on permanent basis outside of new OEC, this will serve to let these various European countries off the hook.

Admittedly there is a difficult interim problem if indeed it takes 18 months to ratify new convention. Hope we could find some way to shorten this period for practical purposes to keep organization from drying up. At any rate we feel it essential to find an interim working arrangement between DAG and OEEC once agreement has been reached re prospective functions and charter of new OEC. In this manner we would avoid loss of momentum gained at January meeting.

[1 paragraph (7-1/2 lines of source text) not declassified]

Tuthill and I hope State and Treasury will take account of these suggestions in arrangements and public posture as to March meeting of DAG.

Burgess

0. Source: Department of State, Central Files, 374.800/2–2060. Limited Official Use. Repeated to London, Brussels, Rome, Tokyo, Ottawa, Bern, Lisbon, Athens, and Ankara.
1. For text of the statement, see Department of State Bulletin, February 1, 1960, pp. 140–145.
2. A memorandum of Dillon’s conversation with Turkish Foreign Minister Fatin Rustu Zorlu in Paris, January 15, is in Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199.
3. Telegram 4066 from London, February 17, reported on discussions with representatives of the British Treasury on the organization of the DAG.
4. Ecbus 499 from Brussels, February 19, reported on discussions with Robert Faniel of the EEC’s External Affairs Department on Japanese participation in OECD activities. (Department of State, Central Files, 398.00-WA/2–1960)