Bruce Mission files, lot 57 M 38, “U.S. Loan—Implementation”
No. 217
Louis C. Boochever
of the Office of European Regional Affairs to
Robert
Eisenberg of the Office of the United States
Representative to the European Coal and Steel Community, at
Luxembourg
Dear Bob: I enclosed a copy of the April 23 press release in my last letter,1 so I assume you are now au courant.
I am puzzled, however, by your request since you should have received the text by priority telegrams Edcol 108 to Paris of April 22 repeated 125 to Luxembourg,2 and Edcol 109 to Paris of April 23 repeated 126 to Luxembourg.3 In fact, we made quite an effort in the last hectic hours of the negotiations to get the text to you and others before it appeared in the press, and I am disappointed that we seem to have missed connections somehow. The phrase which you mention seeing in the French press is the last sentence of Edcol 108.
On looking over my letter to you of May 10, I see that my brief paragraph about the origins of the text of the release is not at all clear. By way of further explanation on the text of the release that finally emerged, you will recall that M. Monnet discussed a High Authority draft with General Smith and Secretary Humphrey. Subsequently, I tried my hand at a U.S. draft, which was cleared by RA and various people in the E area. This draft was later revised to incorporate language on restrictive practices, which had not [Page 391] been touched on in my draft, and to modify the wording on coal restrictions, in accordance with some drafting by Ray Vernon. Also, Mr. Waugh had received suggestions from Treasury which had to be incorporated in the revision. Mr. Waugh then discussed the revised U.S. draft with Mr. Monnet, and possibly others, and reached agreement with the HA on a modified version.
In the course of this negotiating process, certain elements that our side was sponsoring were modified. In particular, the paragraph which had been introduced on restrictive practices lost part of its concluding sentence. The last sentence in the U.S. version ran as follows, with the dropped section being underlined:4
“It was recognized in the discussions that considerable progress has been made in this direction over the past year and that further progress is needed in order fully to achieve the objectives of the Community.”
In the paragraph on coal import restrictions, the clause which now states that the “removal of such restrictions is not precluded by any provisions of the Community’s Treaty” disappeared for a time. Mr. Waugh subsequently called Mr. Monnet and secured agreement on the insertion of this phrase at the last minute, but the paragraph on restrictive practices was left in the truncated form which appears in the release. I can understand your feeling that it would have been better to omit the reference entirely.
With respect to the reference to private capital, you will recall that the HA draft stated that “The U.S. and the HA in continuing negotiations will together seek new means by which, with the assistance of the Government, the mobilization of capital for such investments can be promoted without increasing the burden on the American taxpayer.” As far as I can find out there was no detailed discussion of the meaning of this paragraph. On checking the various drafts which I have, I am quite sure that the insertion of the word “private” was at the request of the top echelon in Treasury, the idea being to make explicit what seemed to be implicit in the HA’s draft. In the final release, you will see that the reference in one sentence is to “capital” being encouraged to provide investment funds, while the sentence on continuing negotiations refers to “private capital”. Presumably, this represented a compromise between the U.S. and HA proposals.
I will enclose some of the earlier drafts of the press release to give you a better idea of the evolution.
In Edcol 110,5 and in my last letter, I mentioned the studies that are to be undertaken on the advisability of enlarging the pledge in [Page 392] the loan agreement. I find that I have been mistaken in thinking that the responsibility for this study rested with Exim Bank on the U.S. side. In the agreement, the language was changed very late in the game to say that the U.S., (rather than Exim Bank) would do the studying. Treasury is assuming the leadership on the U.S. side, in view of Mr. Humphrey’s special interest in the issue, and I expect that they will have some views to try out on us before long. George Bronz is working on the problem in Treasury.
One further bit of information re the loan is that IBRD has expressed some concern at the covenants included in the loan agreement in relation to the possibility of the IBRD lending to the HA at some future time. They believe that they would have difficulties with the “enlarged pledge” and that the U.S. might have to grant a waiver to its agreement in order for the High Authority to receive a loan from the IBRD which would have to be guaranteed by member governments—i.e., one in which more favorable terms were extended to the IBRD. I have not seen the written comments of IBRD as yet, and will try to comment further when I do, but I am not convinced that the problems which they raise are too serious.
Apart from the loan, you will sooner or later get a request to follow up on the instruction to Stockholm, repeated to Luxembourg, re Sweden’s uneasiness about its future ore exports to the Community. Also, we had a Departmental session this afternoon on U.K. association, and I will struggle with a message on that subject over the next few days. Ruth Phillips will do up an instruction for USRO dealing with the export cartel.
[Here follows a paragraph of personal remarks.]
Sincerely,