740.5/3–451: Telegram
The United States Deputy Representative on the North Atlantic Council (Spofford) to the Secretary of State 1
Depto 586. Following joint message from Katz and myself supersedes paragraphs 2 and 3 Depto 517, February 15 [19]:2
a. In view at best serious delay in resolving problem geographical consolidation, we now consider it essential proceed forthwith on FEB proposal. In view CD discussion on general economic problems scheduled for Tuesday March 6 as result Alphand statement, desire table paper quoted below at that time.
b. Note paper does not pose question geographical location FEB, although this question bound arise early in discussions of proposed ad hoc organizing committee. We are engaged in clearing supplementary message3 on this subject, together with comments on Todep 287, March 24 which hope you will have Monday morning. Regarding FEB chairmanship, will take soundings at appropriate time as suggested Todep 273.5
- “1. In view of mounting number, complexity and seriousness financial economic problems confronted by members NATO, and in view importance to common defense effort of effective solution these problems, US Government has been giving urgent consideration to question of how, within NATO framework, and in relationship to other agencies such matters might best be handled.
- “2. Clearly measures which are necessary in each member country provide financial and economic support for its defense effort and protect civilian economy against undue deterioration are primarily national responsibility that member. However, US Government also impressed with need for taking coordinated action along many lines financial and economic field to maximize defense efforts while maintaining sound basic economic structure. Existing NAT agencies this field (financial and economic WG in Paris, PWS/DFEC, and advisory [Page 76] group on raw materials problems), as presently organized, not adequate for this purpose. US Government therefore proposes establishment as part of permanent NAT organization under CD, a high-level NATO financial and economic board (FEB), to be concerned with all aspects financial and economic mobilization in support defense effort which require multilateral consideration, and to complement DFB in task stimulating output military equipment. It is recommended that this board be given broad assignment of responsibility within NAT framework for promoting effective cooperative action in such fields as materials conservation and limitation, conversion civilian production, economic and financial stabilization, stimulation additional production of scarce defense-supporting requirements, and financial measures to promote defense programs.
- “3. US Government appreciates that one of the major factors which has hitherto delayed effective action within NATO framework to deal with financial and economic problems has been concern lest such action infringe upon responsibilities and effective functioning of OEEC. US Government is keenly aware of long run importance maintaining OEEC with genuine vitality as body promoting economic cooperation among a11 free nations of Europe, and fully recognizes value having any economic mobilization and adjustment measures which might be agreed upon among NAT countries accepted by wider membership of OEEC. Arrangements should, therefore, be contemplated which would provide maximum degree collaboration between NATQ Financial and Economic Board and OEEC, including maximum flexibility and transferability in assignment tasks as between two organizations. To this end, it is recommended that so far as possible FEB should operate as inner circle within outer circle of OEEC, with individuals who serve on FEB or its subcommittees normally representing their governments in corresponding OEEC bodies. Especially in broader, more general fields finance and economic planning, of fundamental importance to, but not directly related to, defense efforts NAT member countries, NATO should rely so far as possible upon activities OEEC.
- “4. In general, CD should have same authority to give continuous political leadership and guidance to FEB as in case DPB. Recommendations developed by Board for communication to NAT member countries would be transmitted directly to governments unless board or CD considered subject concerned was of sufficient importance to warrant review and endorsement proposed recommendation by CD. FEB should work in close collaboration with other NATO bodies, particularly with DPB. DPB should identify economic or financial problems obstructing the accomplishment of defense production programs and refer them to FEB for appropriate multilateral action. May also be occasions on which FEB would make recommendations to DPB for example on desirability directing assignment of defense production tasks toward countries with underutilized resources. There is clearly need for close collaboration between the two agencies on such problems as assuring provision raw materials, productive equipment, and finance required for defense production. It is contemplated that existing NATO staff organizations in financial and economic fields would become subcommittees of FEB, which would become responsible for immediate direction their activities. Would also be necessary [Page 77] for board be equipped with secretariat staffed with appropriate technical experts.
- “5. It is recommended that CD consider passing resolution along lines of draft attached in order secure expeditious consideration in NATO of above proposal.”
Begin resolution: CD, having examined proposal by USDep for creation FEB, invites member governments to designate representatives to constitute ad hoc organizing committee which should be convened London at the earliest possible date to prepare proposed terms reference for NAT financial and economic board. These terms reference should be in conformity with general principles expressed in US proposal and should provide general statement functions this body and define its relationships with other NAT agencies. Organizing committee is also requested include in its report to CD general statement of how it would envisage relationship between operations of FEB and those of OEEC. End resolution.
Spofford