§ 39. Mr. Reeves
asked the Secretary of State for Foreign Affairs what replies he has made to the eight-point questionnaire of the United Nations on the proposal for the creation, rôle, and workings of the Special United Nations Fund for Economic Development
§ Mr. Dodds-Parker
I will, with permission, circulate in the OFFICIAL REPORT the full text of the Memorandum submitted last week by the United Kingdom Delegation to the Secretary-General of the United Nations
§ Mr. Reeves
In view of the fact that 32 nations have already indicated that they support S.U.N.F.E.D., will the Minister state the Government's attitude?
§ Mr. Dodds-Parker
I would prefer the hon. Member to look at the statement. Perhaps he will then put down a Question
§ Mr. Gaitskell
Are we to understand that Her Majesty's Government's attitude remains unchanged, namely, that they will not do anything to support this plan until there is a disarmament agreement?
§ Mr. Gaitskell
Will not they think again about it? In the opinion of many it is becoming really urgent that we should support, with all the force we can, a fund of this kind if we are to reduce the tension and conflict which will otherwise develop in the under-developed areas
§ Mr. Dodds-Parker
It is even more urgent that we should get on with an agreed measure of disarmament
§ Following is the Memorandum:
§ I. General
§ 1. Establishment Her Majesty's Government, in principle, support the establishment of a fund in which all nations would co-operate when circumstances permit and when adequate resources become available. They are not at this stage in a position to subscribe to it financially. In their view, the establishment of such a Fund should wait on the fulfilment of the following three conditions—
- (i)A programme of internationally supervised world wide disarmament under the auspices of the United Nations should have been embarked upon. So far as the United Kingdom is concerned, and indeed this applies to many other industrial nations, their economic resources are fully deployed at present, and until significant reductions all round in the level of expenditure on arms can be achieved, there can be little hope that funds on the scale required will be forthcoming.
- (ii) A certain minimum of money should be available to the Fund before it embarks on any operations at all. The tasks which would face the Fund and the claims made on its resources will be so manifold that unless it were at the outset able to meet a material proportion of such demands and claims, it might betray the hopes of its sponsors and supporters and consequently tall into disrepute. The size of this minimum sum is discussed in paragraph 6 of this memorandum.
- (iii)The membership of the Special Fund should embrace the bulk of the members of the United Nations. It should include both the highly industrialised nations and those with less developed economies, and all should make a contribution.
§ In Her Majesty's Government's view, until the three conditions mentioned above are in sight of fulfilment, it would be inappropriate to draw up a statute for the Fund. Conditions obtaining at the time when the Fund could begin operations might in many respects be substantially different from those obtaining at present. As an example, it might he found that many of the leading currencies of the world had achieved full convertibility, and that the proposal, discussed in both the Report of the Committee of Nine and the Scheyven Report that contributions should be made only in a local currency might well require modification
§ 2.Rôle and operations. Her Majesty's Government are broadly in agreement with the views expressed in paragraph 11 of the Scheyven Report, viz. that the function of the Special Fund should not be that of a vast international charitable organisation, and that it should concentrate directly on development aimed to raise the national income and the total production of recipient countries. While H.M. Government would not wish to put a narrow interpretation on the type of project which would so lead to material betterment of under developed countries. it feels that applicants for assistance should be required to demonstrate that expenditure by the Fund would lead directly to an expansion in productive resources. It would therefore agree with the views expressed in Chapter V of the Report in favour of the integration of the Fund's activities with a coherent development programme in which, for instance, a part of the capital was drawn from the International Bank for Reconstruction and Development (I.B.R.D.)
§ 3.Structure. (See paragraph 9 below.)
§ II. Answers to particular questions
§ 4. What, in the expectation of your Government, will be the role of a Special Fund in the economic development of your country?
§ H.M. Government is unlikely to make any direct claim to payments from the Fund though it might well wish to apply on behalf of its dependent territories.
§ 5 What is the opinion of your Government as regards the nature of contributions to the operational budget of the Special Fund?
§ H.M.G. accept the recommendation that contributions should be voluntary. H.M. Government's resources for overseas development are already fully extended and any contributions made to the Fund would have to be within H.M. Government's capacity at the time the Fund was established and to bear a proper relationship to other commitments in this field. As was explained in the Memorandum submitted by H.M. Government under cover of a note verbale dated 21st March, 1954, and printed in General Assembly Document No. A/2646, H.M. Government accept in general the view that contributions should be in the form of deposits of local currency, convertible into other currencies only to the extent that Governments permit conversion. It repeats the assumption however that it would not be intended that Governments which already maintain convertible currencies, or even transferable currencies, and are in strong creditor position, should impose on the transfer or conversion of money subscribed to the Fund 829 restrictions more severe than those applied to other current transactions. H.M. Government is opposed to the "tying" of contributions in general, and would not favour the payment of contributions, in kind, as according to paragraph 19 of the Scheyven Report, has been suggested by certain countries y.
§ 6. What is the opinion of your Government as to the initial sum which should be collected before the Special Fund starts its operations?
§ As regards the initial minimum sum for the commencement of operations, H.M. Government reiterates the view expressed in the Memorandum under reference that it would not be desirable for the Fund to begin operations until it was assured of substantial resources, of not less than $250m.
§ 7 What does your Government think as to the Special Fund making grants-in-aid and loans and under what terms and conditions?
§ Broadly speaking. Her Majesty's Government subscribe to the view expressed in the Scheyven Report (paragraph 30) that "the Special Fund should he authorised to give grants-in-aid, and that these would be the most important, and also the preponderant method through which the Special Fund would disburse its resources", and it agrees with the reasons which led the Committee to this conclusion. As regards the granting of loans, Her Majesty's Government remains of the view expressed in its previous memorandum on this subject, and in particular it welcomes the recommendations of the Scheyven Report that the provisions made for flexibility and renegotiation of loans in the Report of the Committee of Nine should not be retained. Her Majesty's Government would go further and say that if the Fund were to make any loans at all they should be at the rate of interest and for the period which would apply to comparable 1.B.R.D. loans. Any departure from generally accepted interest rates and periods of repayment would involve difficulties in the determination of variations from the norm, variations which could not be justified by reference to any firm principle.
§ 8 What is the opinion of your Government about the relationships between the Special Fund on the one hand and the United Nations and the Specialised agencies on the other.
§ Her Majesty's Government welcomes the views expressed in the Scheyven Report in favour of close liaison of the Fund with both the United Nations and its Specialised Agencies, in particular the Technical Assistance Board and the International Bank. It doubts however whether the formal composition of a Joint Committee, as envisaged in paragraphs 57–59 of the Scheyven Report, would constitute suitable machinery, and it doubts whether the International Bank would be willing to perform the functions assigned to it on that Committee.
§ 9. What, in the opinion of your Government should be the structure (governing bodies and management) of the Special Fund?
§ Her Majesty's Government sees no objection to a system of control and administration based on the General Council as described in paragraph 50 of the Scheyven Report, with powers for day to day administration vested in a subordinate Executive Board.830
§ 10. What, in the opinion of your Government, should be the methods and mechanism for the appraisal of projects submitted by Governments?
§ See paragraph 2 above.