Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

102. Airgram From the Embassy in the United Kingdom to the Department of State⁰

London, March 30, 1961, 1 p.m.

G-1215. From Ball. Subsequent to Monday morning DAG session Heads of Delegation Meeting was held to consider further U.S. proposal. Minutes of Meeting, of which two copies circulated to each Delegation, are quoted below.

"Sir Frank Lee said that he had suggested this restricted meeting because he thought that it would be helpful if Heads of Delegations considered together what should be aimed at as the outcome of the Fourth meeting of the Group in respect of the proposals made by the United States Government. There might be some limit to the extent to which it was practicable to take final decisions at this meeting, but it was important to convey the sense of urgency which Mr. Ball had emphasized and which all Delegations shared.

"Mr. Ball said that he had had an opportunity since he made his statement at the first full session¹ of having some conversations with Heads of Delegations and their colleagues and had found that there were some areas where his proposals were perhaps not fully understood.

"So far as burden sharing was concerned the United States aim was to secure recognition from the major industrial powers that they each had an obligation to contribute to the effort to raise the standard of the less-developed countries to the fullest extent, having regard to their own capacity and commitments. It was not the intention at this stage to seek agreement on a precise mathematical measure of what each country’s effort should be. The suggestion that 1% of the aggregate national incomes of the industrialised countries should be devoted to less-developed countries was a broad indication of the overall target. It was not a new figure: something of the kind had been talked of for some time past. It might be possible later for the D.A.C. or the Development Assistance Committee of the O.E.C.D. to consider whether a more precise formula which was acceptable could be found, but he entirely agreed that there should be no question of dictation by the Group to member countries. He thought that an extended exchange of information about member countries’ policies and programmes and the pooling of common experience might lead to more effective action and should be considered by the D.A.C., which should also address itself to the somewhat delicate question of its own relations with the less developed countries.

"So far as the proposal that the D.A.G. should have a full-time Chairman was concerned he said that the description ‘full-time’ was more important than the description ‘permanent’. It was clear that the Chairman would have to be an experienced man of first-rate qualities but a man who at the same time could work easily with member Governments and not impose his views on them. Mr. Ball hoped that this meeting of the Group would be able to agree in principle that there should be a full-time Chairman for the future. This would give considerable impetus to the work of the Group: and problems could be the more readily solved the earlier they were tackled. Delay would mean not only wasted time but that the task ahead might prove still more difficult.

"M. Sadrin (France) said that the D.A.G. did not itself make a contribution to the less developed countries but one of its functions was as it were to carry a message to them. The effect of the United States proposals would be to give a clear impression that the D.A.G. in future would concentrate on practical measures rather than purely theoretical approaches to the problem of providing aid, and this impression would be reinforced by the appointment of a Chairman who would devote his full time to the work of the Group. Co-ordination could be even more important than an increase in the total amount of aid since it would help to ensure that aid was not wasted, and it was most desirable that the Chairman, who could bring about better coordination, should begin work without delay.

"So far as the 1% formula was concerned, this would have the advantage of demonstrating the desire of the industrialised countries to continue to contribute to the poorer countries according to their means and capacity, but he thought that it was important that no specified amount of aid should be allocated to donor countries. In any case nothing was more difficult than to find a statistical formula which would suit a number of countries. The intangible pressures which a Group like the D.A.G. could put upon member countries could be more effective than agreement on mathematical burden sharing.

"M. Marjolin (European Economic Commission) said that he agreed fully with Mr. Ball that the most urgent task was the creation of an effective D.A.G. with a competent and skilful Chairman and a good Secretariat. The essence of the problem was co-ordination and this in turn implied a need for more information. Among the first tasks of an improved D.A.G. would therefore be, as Mr. Ball had said, an extension of existing reporting procedures. This involved some difficult technical problems—for example the question of comparability of aid statistics—but he had no doubt that a meeting of experts from the countries concerned could find solutions quite quickly. The D.A.G. itself should proceed to a broad exchange of views on the experience of member countries. In particular they should be frank about aid which in the past had been wasted or not used to the best advantage. The provision of aid also raised certain social and political problems which might be considered in a more restricted session of the D.A.G. like the present meeting of Heads of Delegations. In theory it was possible to argue that while each country should control its own programmes there should be a broad ‘division of labour’ among donor countries and programmes should be co-ordinated beforehand, but each donor country had areas of priority and had to make its own decisions about the direction of its own effort. He thought that the D.A.G., and later the Development Assistance Committee of the O.E.C.D., should be ready to help under-developed countries to draft their own aid programmes. The President of the United States had said that if aid was to be provided by the donor countries on a long term basis there should be long term planning on the part of the recipients also, but many of the less developed countries could not draft their programmes without outside help. He thought finally that it might be desirable for a Working Party to meet before the next session of the D.A.G. to consider how best the Group might be made a more efficient instrument.

"Mr. Westrick (Germany) said that he agreed with Mr. Ball that the principle should be adopted that each country must do the maximum that it could having regard to its own circumstances, and must decide for itself what contribution it should make, though he sympathised with the view that it was useful to have some formula as a guide so long as a precise allocation was not imposed on donor countries. So far as the question of a full-time Chairman was concerned it would be useful to obtain a decision at this meeting on this matter, but this would have to be a decision in principle only since it was necessary to know in more detail the precise functions which the Chairman would have. It was important to proceed slowly and not to put too much power in the hands of the Chairman at the outset. It might be desirable to set up a small working party to consider what the functions of a full-time Chairman should be. It was certainly important not to lose time. Mr. Westrick added that in his view it was important to examine all programmes and projects for aid to under-developed countries so as to ensure that they were arranged in the interests of the less developed countries themselves and not in the interest of the exporters of the donor countries. Only on this disinterested basis could the Group hope to achieve its political aims.

"Mr. Ferrari-Aggradi (Italy) said that he entirely agreed that there was a need for effective action, but the present meeting should seek agreement on the aims of the Group rather than on details. It was right that each country’s effort should be made in accordance with its own capacity. His Government fully recognised the importance of the problem of aid to under-developed countries and thought that the next few years would be crucial. There were many difficulties in this field, both economic, psychological and practical. There was a lack of capital and a shortage of trained men, as well as the psychological difficulty that the less developed countries were often impatient to get ahead with development plans more quickly than was practicable. While it was important that donor countries should themselves act quickly and decisively, it was nevertheless true that long-term programmes needed time in their preparation as well as their fulfilment. The Group would be achieving something if it gave hope that the programmes would be carried out. So far as the question of a full-time Chairman was concerned he agreed that this was most desirable. He thought also that aid should be organized on a regional basis since the problems were not the same, for example, in Latin America and in Africa. The question of co-ordination and collaboration was most important, since among other things it would help to avoid mistrust and should lead to a more effective joint effort.

"Sir Denis Rickett (United Kingdom) thought that it might be useful to consider briefly the past history of the Group. Its life had been relatively short and it had held three meetings.² These had concentrated first on the collection of information, and this had led to the preparation of the O.E.E.C. Basic Study;³ secondly the Group had used the technique of confrontation under which the host Government on each occasion made a statement about its own aid policies and practices and was subject to questioning by other member governments. In addition the third meeting of the Group had concerned itself with the question of technical assistance. The Group already had some achievement to its credit: the question now was to determine how far its functions should be changed and developed. It should be remembered that at the first meeting it had been expressly decided and stated in the Press Communique that the ‘Group’s efforts should not involve discussion of amounts of financing for particular regions, countries or projects’. It might be desirable to reconsider this, but it would be necessary to examine the position thoroughly before any change was made. The Group had also agreed that it would not embark on elaborate statistical calculations of burden sharing, though an equitable distribution of the burden of providing aid had always been one of the broad objectives of the Group. What might now be desirable would be to consider whether there were any objective tests which could be applied so as to ensure that member countries were taking a fair share.

"So far as the question of a full-time Chairman was concerned, he thought that this was an eminently sensible idea and that the importance of the Group’s work fully warranted the appointment of someone who could impart new drive and direction to it. In addition it might be desirable to arrange in future for fewer large formal sessions and more informal restricted meetings. The Working Party which had been meeting in Paris under Dr. Stedtfeld’s Chairmanship had already achieved a great deal in a short space of time, and still more use might be made of such working parties. The next steps might be to get ahead with the appointment of a full-time Chairman and then for a small group to be called together to draw up plans for the future work of the D.A.G.

"Mr. Plumptre (Canada) said that it was clear that the D.A.G. could be more useful in future if it concentrated on an improvement of both the quality and the quantity of aid programmes. He welcomed the proposal that there should be a full-time Chairman whose own character and ability, however, would be of supreme importance. So far as proposals for the expansion of arrangements for exchanging information were concerned, he thought that member countries ought to be sure that the information already available was being fully used before it was agreed to embark upon still further exercises. So far as the question of a formula was concerned, he attached much more importance to the influence of personality than to mathematical calculations, and thought that the right Chairman could help to solve the problem by giving sensible and effective guidance. The provision of aid was a heterogeneous matter: it depended very greatly on the political background in each donor country, and formulae which suited political conditions in one country would not suit another. It would in his view be necessary for the D.A.G. to move very cautiously in respect of any direct consultation with the under-developed countries. The United Nations and the other international institutions of which the less developed countries were members were far more suitable bodies for activity of this kind. He agreed that the Group should consider most carefully the question of changing the decision that it should not allocate aid to countries or projects.

"Mr. Kristensen (Organisation for European Economic Co-operation) said that so far as reporting of aid transactions and the exchange of information was concerned the arrangements made within O.E.E.C. were already developing and improving. The Basic Study of the flow of funds from donor countries in the years 1956-59 would be kept up to date by a system of half yearly reporting and the Secretariat was now seeking also to provide figures, so far as possible, of the flow of funds into recipient countries. They were finding new staff and hoped to embark on new analysis and evaluation. So far as the question of the early appointment of a full-time Chairman was concerned he agreed that a man with all the qualities which had been mentioned could make the Group very effective, but there were difficulties about the proposal. In particular, the Preparatory Commission had recommended that the Development Assistance Committee of the new O.E.C.D. should appoint its own Chairman.⁴ Even if it was agreed now in principle that the appointment of a full-time Chairman for the Group was desirable it was advisable to leave the actual election until after the O.E.C.D. came into being. There might be danger in the interim period in having two centres of gravity—the Chairman of the D.A.G. and the Secretariat of the O.E.E.C. There might also be intensified difficulties with less developed countries and members of O.E.E.C. who were not members of the D.A.G., as well as those who were considering whether to join, and this should be borne in mind. If the Working Party which it had been suggested might be set up to consider the new functions of the D.A.G. were agreed upon it might also consider these problems.

"Mr. Shimoda (Japan) said that while he agreed that the idea of a full-time Chairman had advantages there were some disadvantages and he found it difficult to come to a conclusion without knowing more precisely what the powers and functions of the Chairman would be. Moreover, since Japan was not a member of the O.E.C.D. he would like to have time to consider the relationship of this Chairman and the O.E.C.D. He entirely agreed that the matter was urgent but nevertheless thought that there should be time for him to consult his Government before the Group took any decisions.

"Dr. Pereira (Portugal) said that he thought that ideally the election of the Chairman should not be made until after the O.E.C.D. came into being. If it were decided to nominate a Chairman of the Group before that, much would depend on the powers to be given to the Chairman and the qualities of the man who was proposed to be elected and he could not give a final decision on behalf of his Government. He was attracted by Sir Denis Rickett’s proposal that the D.A.G. should meet more frequently in smaller groups.

"Dr. Van Houten (Netherlands) agreed about the desirability of a full time Chairman for the Group who would be able, among other things, to deal with the question of relations with the under-developed countries. The powers given to the Chairman, would, however, be a matter for consideration. He would have a very important co-ordinating task. He would have to see that aid to under-developed countries was provided more efficiently and to study the various proposals for burden-sharing according to a formula. But he would have to base himself on the assumption that the provision of aid to under-developed countries must remain in essence a national responsibility. All these questions ought to be considered in working out what should be the powers of a full-time Chairman.

"M. Daufresne de la Chevallerie (Belgium) said that he had sympathy with the view that the appointment of a full-time Chairman before the inception of the O.E.C.D. could create two separate centres of gravity even though the Chairman of the D.A.G. sat in Paris, and that this must receive full consideration.

"The following further points were made in discussion:

(a) Mr. Ball emphasised that the United States proposal would be for the full-time Chairman to have his office in Paris.

(b) The recommendation of the Preparatory Committee of O.E.C.D. was that the Development Assistance Committee should elect its own Chairman.

(c) The sense of urgency which member countries were agreed was important might be dissipated if decisions on the Chairmanship were postponed until after the O.E.C.D. came into being—which might not be until September 1961.

(d) In considering the functions of a Chairman of the D.A.G. reference must be made to the original Resolution of the Special Economic Committee in Paris on 12th January 1960.⁵

"Sir Denis Rickett (who took the Chair after Sir Frank Lee had left the meeting) said that it was quite clear that the D.A.G. could not appoint the Chairman of the Development Assistance Committee of the O.E.C.D. On the other hand it would be possible for member countries of the D.A.G. to agree upon the election of a Chairman of the D.A.G., and to arrange subsequently that the same Chairman should be elected by the Development Assistance Committee. The discussion had illustrated some of the difficulties which the proposal that there should be a full-time Chairman of the D.A.G. presented, but it had also shown the broad lines on which a resolution for adoption by the Group at the Fourth Meeting might be drawn up.”

Barbour

0. Source: Department of State, Central Files, 398.00-LO/3-3061. Official Use Only. Repeated to Reykjavik, Oslo, Stockholm, Copenhagen, Luxembourg, Athens, Ankara, Madrid, Vienna, Bern, the other DAG capitals, USRO in Paris, and USEC in Brussels.
1. See Document 101.
2. The first three meetings of the DAG were in Washington March 9-11, 1960, Bonn July 5-7, 1960, and Washington October 3-5, 1960. Documentation on these meetings is in American Foreign Policy: Current Documents, 1960, pp. 329-331, and Department of State Bulletin, October 24, 1960, pp. 645-646.
3. Reference presumably is to the Study Group of Four, which the Special Economic Committee created on January 13, 1960, and the OEEC approved the following day. The OEEC published the report of this study group, A Remodelled Economic Organisation, in April 1960.
4. On July 23, 1960, the OEEC created the preparatory committee to complete the draft convention on the OECD. For text of this committee’s report, late November 1960, see The Organisation for Economic Cooperation and Development: Convention of 14th December 1960, Report of the Preparatory Committee, Related Documents, pp. 23-83.
5. Reference may be to the prepared draft on the establishment of the Development Assistance Group and its terms of reference, which the U.S. delegation circulated to the Special Economic Committee on January 12, 1960. See Department of State Bulletin, February 1, 1960, pp. 144-145.