357.AD/9–1751: Telegram
The Ambassador in Korea (Muccio) to the Secretary of State
256. Ref Deptel 208, Sept 12. Concur Dept’s view that under present circumstances with UNC operating agency of UN for indefinite period it desirable to proceed with negotiation CINCUNC–ROK agreement, including control by CINCUNC over ROK foreign exchange, with editorial changes suggested your msg. Further recommend that when legislation now before Congress is passed relieving ECA responsibility for counterpart funds and other residual functions under agreement on aid that responsibility these functions be transferred from Embassy to CINCUNC.
Successful conclusion of negotiations for payment of ROK of dollars reed from won sales to UN personnel prior opening discuscussions on CINCUNC–ROK agreement might create more favorable atmosphere for these discussions. If negotiators authorized to agree to wipe out ECA counterpart fund by application on ROK overdraft, as previously proposed by Embassy, believe this too might assist in expediting conclusion satisfactory CINCUNC–ROK agreement. Negotiators shld be prepared demonstrate that all possible steps being taken to increase flow of supplies for sale on Korean market since danger of runaway inflation now matter of utmost concern to responsible ROK officials.