Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 1

740.5/4–1451: Telegram

The United States Deputy Representative on the North Atlantic Council (Spofford) to the Secretary of State ¹

confidential

London, April 14, 1951—6 p. m.

Depto 780.1. Organizing comite for FEB reached agreement today on report to CD and proposed terms of ref for FEB. Difficulties arising from Dutch reservation that DPB shld be subordinated to FEB overcome when Dutch this morning withdrew formal reservation and substituted statement in minutes that Netherlands Govt has not had time study carefully and may raise question later. Last moment Italian reservation that FEB while giving gen guidance DPB cld provide guidance only on request DPB for transactions of specific nature (meaning bilateral agreements) was also avoided by including statement Italian position in minutes. Italian del indicated wld not press viewpoint in CD.

2. While report and resolutions does not meet US proposal in every particular believe they lay base for effective operation FEB and early establishment. Expected that resolution will be considered Apr 23 with adoption indicated.² On level membership, UK, France, and Denmark unwilling to stipulate “official level OEEC council” and so compromised on “senior official level” but with indication in report that FEB members shld have sufficient authority and competence make board effective. Several dels indicated informally intention appoint heads OEEC dels but UK clearly expects appoint Roll. French apparently undecided. On direct contact FEB with govts, see para 5 of resolution which we believe to be workable compromise. Had considerable difficulty on this issue with UK supported by France and in spite of support from several dels cld not get agreement on original US proposal.

3. Msg will fol on issue raised in para 3 of report after consultation with Katz Apr 17.

4. Text report (verbatim text begins):

“1. Comite considers desirable there be set up central body to handle econ and fin problems arising out of work of NATO and this shld be fin and econ board, normally mtg in Paris. It shld be composed of one member from each signatory country. In view ad hoc comite desirable govts shld appoint to board officials of sufficient authority and knowledge of econ and fin problems to ensure effective discharge of functions assigned to board. Draft resolution containing proposed terms of ref for such board is annexed to this report.

“2. Board shld be responsible to CD and shld as rule submit reports and recommendations to them. It appears, however, necessary provide procedure for speedy transmission to govts of recommendations not involving issues of gen policy. Terms of ref embodied in draft resolution allow for this.

“3. Board shld have general responsibility for dealing with financial and economic problems arising in connection with NATO defense programs. It shld take over functions at present exercised by PWS/DFEC, economic and finance WG³ and advisory group on raw material problems. Majority of dels felt it wld be appropriate in new circumstances to remove limitations contained in para 4 of additional terms of ref for economic and finance WG (D–D/199 annex I)⁴ to enable board make such recommendations as it may find possible taking into acct all economic and finance considerations. This matter submitted to CD for decision.

“4. Board shld maintain close liaison with other NATO bodies under CD and in particular with DPB. Best method maintaining liaison will have to be worked out in practice between bodies concerned. Comite discussed number of suggestions relating particularly to contact between DPB and board. While not possible at this stage make exhaustive proposals comite is of opinion that in order to ensure effective liaison between these two bodies fol arrangements represent minimum:

• “a. Direct contact between two bodies. Wld include close contact both at membership and staff level; efficient and comprehensive arrangements for exchange of documents; provisions for attendance, in appropriate cases by officers or members of two bodies at each others mtgs.
• “b. Supervision of liaison arrangements between two bodies thru central staff of chairman of CD. Comite is of opinion it is desirable have one member of staff of chairman of CD specifically charged with responsibility.

“5. In opinion of ad hoc comite, it is necessary that board shld keep itself closely informed of and as appropriate maintain contact with work of other international organizations dealing with finance and economic problem. This particularly important as far as relations with OEEC are concerned. In broader and more gen economic field which is fundamentally important but not directly related to defense efforts of NAT member countries, NATO shld rely as far as possible on activities of OEEC. Maximum degree of coordination of work of board and of OEEC is highly desirable, including flexibility in assignment tasks as between two organizations. It is for these reasons that:

• “a. It is proposed board shld be located in Paris;
• “b. Ad hoc comite must view that in making their appointments to board, member countries shld bear in mind need to ensure closest possible contact with OEEC at all official levels; and
• “c. Board when established will need in its working arrangements (including its staff arrangements) to pay due regard to need to avoid duplication.

“6. Proposals for setting up a finance and economic board now put forward including abolition PWS/DFEC and overlap existing terms of ref and auth DFEC itself. Necessary changes to enable present proposals to be carried thru wld in any case be made if reorganization NAT now in contemplation takes place. Comite hopes, however, that any delay in reorganization will not be allowed stand in way of early implementation present proposals.”

5. Text of draft resolution (verbatim text begins):

“CD in furtherance objectives NAT and in particular of Art 2, thereof, resolve that:

“1. There shall be established forthwith, responsible and reporting to CD, Finance and Economic Board. It shall be composed of rep at senior official level from each signatory country.

“2. Board shall elect its own chairman and make own rules of procedure. It may establish such subcomites and working parties as it considers necessary for effective discharge of its work. It shall normally meet in Paris, but may also meet in London or elsewhere whenever deemed appropriate. It shall be responsible for formulating proposal to chairman of CD for staff arrangements both at its normal place of mtg and in London. It shall conduct all operations in conformity with NATO security requirements.

“3. Board shall be responsible for considering and making recommendations upon finance and economic problems arising in connection with NATO defense programs and upon best use financial and economic resources in member countries in support common defense effort. It shall provide other NATO bodies under CD with guidance on all relevant economic and financial questions arising out of their work. It shall succeed to functions and responsibilities of PWS/DFEC, advisory group on raw material problem and economic and finance WG, these functions and responsibilities being transferred in such manner and at such time as the board shall itself determine. At that time said PWS, said advisory group and said WG shall be dissolved.

“4. In pursuance of its responsibilities board:

• “a. Shall carry out such tasks as CD may assign it.
• “b. May on its own initiative, undertake work in pursuance para 3 above; provided, however, this shall not include advance planning in economic and finance field for possible wartime purposes unless CD shld so direct.
• “c. Shall maintain close working relations with all other bodies under CD, in particular DPB, and provide them as necessary with guidance on all relevant economic and financial factors, obtain from them info on those aspects of defense programs which are relevant to consideration of economic and financial questions, and provide them as appropriate with guidance on financial and economic arrangements to meet requirements of defense programs. Board shall report as necessary to CD on economic and financial implications of work carried out by other NATO bodies under CD.
• “d. Shall report to CD on financial and economic aspects of progress of defense programs in member countries.
• “e. Shall maintain close contact with work of other international organizations dealing with financial and economic problems and in particular with OEEC, having in view need to avoid duplication of effort. It shall advise CD and bodies under CD on financial and economic aspects measures initiated by such other organizations which are relevant to defense effort of NATO countries.
• “f. Shall keep CD regularly informed of progress of its work.

“5. Reports and recommendations of board shall, except as provided for below, be submitted to CD for consideration and appropriate action. In order make possible speedy transmission to govts of reports and recommendations which do not raise issues of gen policy:

• “a. CD may, in assigning particular tasks to board, specify matters on which reports or recommendations, when approved by board, may be submitted to govts;
• “b. Where board undertakes work on its own initiative, it may decide to submit reports and recommendations resulting from such work to govts, unless CD shld desire to review such reports and recommendations.” (End verbatim text.)

Spofford

1. Repeated to Paris for OSR, to Frankfurt, and to Heidelberg for Handy.
2. According to telegram Depto 802 from London, April 19, not printed, discussion of the FEB resolution was postponed to the CD meeting of April 25 in view of the anticipated consideration of the subject by the Netherlands Cabinet on April 23. As a part of that decision, finalization of the revised Canadian proposal was deferred to April 30 in hope of including therein an agreed paragraph on the FEB. (740.5/4–1951)
3. Working Group of Twelve. See footnote 3, p. 12.
4. Not printed.