Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

Conference files, lot 59 D 95, CF 106

No. 28
Memorandum of Conversation, by the Officer in Charge of Swiss and Benelux Affairs (Scott)¹

[Extract]

²

top secret

Washington, April 3, 1952.

Subject:

• Discussion of Items of General Interest to the Dutch³

Participants:

• The Secretary
• Assistant Secretary of State Perkins
• Ambassador Selden Chapin
• Joseph W. Scott
• Foreign Minister Stikker
• Netherlands Ambassador von Roijen
• J.G. de Beus

. . . . . . .

OEEC and EPU

Mr. Stikker said that there had recently been some talk of a crisis or even a failure of the OEEC. The danger arose from the fact that creditor nations in the EPU would not be prepared to increase their credit any further and from the fact that if the EPU fund were not increased, these creditor nations would probably prefer to return to bilateral negotiations. He said that if we now had to go back to the practice of bilateral negotiations in Western Europe in order to reach trade agreements that that would be the end, in his opinion, of liberalization of trade. He thought that this was one of the really fundamental problems confronting Europe today and that it had been particularly complicated by the heavy credit position of Belgium, Portugal and Sweden in the EPU.

According to Mr. Stikker, Mr. Draper’s recent statement that the U.S. did not expect to make a direct contribution to the EPU in the coming fiscal year had had a very depressing effect. Another cause for depression was the UK’s whole attitude toward the OEEC. He referred to his letter to me⁴ regarding the British attitude and in elaboration said he was sure that the UK Treasury had a sympathetic attitude toward the OEEC but that the Foreign Office did not. Unfortunately, the Foreign Office was running the UK Delegation in Paris. Sir Edmond Hall-Patch of the UK Delegation in Paris was so much in disagreement with the Foreign Office’s attitude that he was going to be replaced. Hall-Patch, along with Spierenburg and Marjolin, had made invaluable contributions to the working of the OEEC. The first two of these had now left and Marjolin was giving serious consideration to leaving before the Organization became a “museum for economic papers.”

Mr. Stikker went on to say that if we looked at the UK attitude, which was definitely inclined to favor NATO over the OEEC, and if we looked at the recent streamlining of the OEEC staff, we are bound to wonder whether the OEEC can continue to do a job. He said that if the financial situation of every country could not be studied on the basis of collective responsiblity, he was sure that Europe was headed for a real economic crisis. He believed that before the end of June a solution had to be found to this latter problem as well as a solution for the critically high credit position for the Belgians, Portuguese and Swedes.

Under pending MSA legislation it seemed to the Dutch that funds could be given directly to an international organization such as the EPU but, he added, the Draper statement referred to above seemed to exclude this. He thought that an investment of a small amount in EPU was more important even than military aid today. He believed that the EPU would need between two and three hundred million to continue another two years beyond June. He thought that most of this, that is about two hundred million, could and should come from Europe. So far, only the Dutch and Italians, however, have seemed definitely willing to contribute. He thought that the U.S. should contribute one hundred million.

I asked Mr. Perkins what had been the basis of the Draper statement. Mr. Perkins replied that in so far as our financial objectives were concerned it could be said that the EPU had contributed to European convertibility but had not contributed to world convertibility. He added, however, that Mr. Draper had said in the same statement that although no further capital contribution to the EPU itself is contemplated at this time, the U.S. expects to continue to assist several European countries to meet their deficit with the EPU.

Mr. Stikker recalled that Mr. Draper had said this but he said that that would not solve the problem of providing a fund of about three hundred million dollars which would enable the EPU to run for the next two years.

I asked Mr. Stikker how firm the figure of 300 million he had mentioned really was, adding that if we were to ask for 100 million to contribute directly to the EPU we might very well expect Congress to want to see how far the EPU could get on the 200 million Mr. Stikker thought EPU members should contribute. I said, however, that we would get in touch with Mr. Harriman and Mr. Snyder before Mr. Stikker’s return on April 10 and would try to have some more information on this subject for him by that time.⁵

On the matter of the external credit position of the Belgians, Portuguese and Swedes, Mr. Stikker thought it might be advisable to float a loan in the international market for some 500 million. He believed that this sum would take care of all three. He wondered who he should talk with in Washington about the possibility of floating such a loan. I told him I thought we would check with Willard Thorpe and Ed Martin on this and would let him know as soon as possible.

. . . . . . .

1. Drafted by Scott on Apr. 7.
2. The omitted sections of this memorandum of conversation summarize discussions of the Korean armistice, Indochina, Tunisia, the Netherlands Antilles, and the EDC.
3. Foreign Minister Stikker was in Washington to accompany Queen Juliana on her trip to the United States. Documentation on Stikker’s visit to Washington, including background papers on the various subjects of common interest, is in Conference files, lot 59 D 95, CF 106.
4. Not found in Department of State files.
5. For a record of Acheson’s second meeting with Stikker, Apr. 10, see Document 30.