192. Memorandum From Secretary of State Rusk to President Kennedy1

SUBJECT

  • Financing United Nations Peace and Security Operations

The financing of United Nations peace and security operations has become increasingly acute since the Congo operation began. The UN has unpaid bills of nearly $100 million, all reserves will be exhausted in a few months, and spending authority for Congo and UNEF (Emergency Force in Palestine) expires December 31, 1961.

Soviet bloc nations, France, Belgium, China, many Latin American countries, and others are seriously in arrears. Some do not have the revenues to pay, some argue on principle that the permanent Security Council members should pay the bill, others refuse to pay to show disapproval of the operations. (See Tab A for key financial facts.)2

Funding of these operations to date has been by a combination of assessed and voluntary contributions. The U.S. payments were 47.5% of the total this year. Because we paid more than our usual UN share (32.5%), 79 smaller nations least able to pay were given rebates up to 80%.

The cost of the Congo operation is running $10 million and UNEF about $1.7 million per month. This General Assembly must take action if current Congo and UNEF operations are to continue. (See Tab B for additional details of funding.)

Course of Action

It might well be advantageous from the United States point of view for UN forces to be placed in other world areas, especially where indirect aggression occurs. Financial uncertainty or haggling over costs and assessments could abort necessary action. We therefore propose to use the “honeymoon period” of the new Secretary General to persuade him to present a plan both to solve the immediate cash problem and to get a little ahead of the game on peace and security operations through 1963. This plan would include three major steps:

1.
Finance the immediate need to June 30, 1962, by pushing through a special scale of contributions somewhat like the present one. Ambassador Stevenson believes this may be possible for this short period. To make [Page 411] another “every member canvass” work, the U.S. would have to pay about 50% of the bill. Smaller nations’ contributions would have to be rebated by about 90%. But even this will not be popular with most other nations.
2.
Submit to the International Court of Justice for an advisory opinion the question whether Member States are legally required to pay peace-and-security assessments that are already past due. We expect a favorable opinion. In that event the Latin Americans, France and even the Soviets might find it politically easier to back down and pay arrearages.
3.
Undertake by negotiation to secure the agreement of 15 or 20 key States to a one-time UN Peace and Security Bond issue. $200 million would be required. With 25 year repayments at 2% interest, about $10 million would be required annually to pay principal and interest. We should press for repayment by all members as a part of the regular UN budget based on the regular assessment scale. The United States might have to buy $100 million of the bond issue.

(Tab C is a staff paper which supplies additional facts on the UN financial crisis and on this proposal.)

Merits of this Approach

1.
It could take care of the cash crisis for as much as two years. This would be a year longer than the UN has ever been able to look ahead.
2.
It maintains principle of collective responsibility.
3.
It brings the prospective annual repayment cost within capability of members.
4.
It provides Secretary General with a new basis for collection of unpaid assessments.
5.
It provides non-paying States with a “face-saving” device if they want to start paying again.
6.
It avoids a U.S. contribution so large that propagandists could characterize Congo as a “U.S. operation.”
7.
It provides an initial approach and gives us time to work out more permanent arrangements. Our objective will be to devise an even longer range approach to financing UN peace and security efforts, perhaps by establishment of a special fund for this purpose.

U.S. Steps

1.
Ambassador Stevenson and Ambassador Klutznick in New York are starting to discuss the whole UN financial problem with the new Secretary General to get him to act in a timely fashion.
2.
Ambassador Stevenson would discuss this approach with a few friendly States. The Secretary General would discuss with the Soviets and other financially recalcitrant States.
3.
The State Department will take soundings with Congressional leaders on the whole proposed strategy. If the proposal should go through at this session of the General Assembly, Congress would be asked rather early in its 1962 session to authorize purchase by the U.S. of $100 million of the UN bond issue. Other Member States would purchase the balance.

Concurrences

This whole range of ideas has been under review for several months. The Bureau of the Budget (Mr. Staats) and Treasury (Mr. Leddy) concur in the approach and in holding the exploratory discussions outlined above and spelled out in greater detail in Tab C. We all realize there are numerous problems associated with it, not the least of which is shortness of time; the General Assembly should really act before the end of the year. We are therefore asking Ambassador Stevenson to go ahead with consultations within this framework.

We believe the program has a fair chance of success. But our judgment on that will be better after we have had a chance to consult some of our European friends and some of the key members of Congress.

Dean Rusk3
  1. Source: Kennedy Library, National Security Files, Subjects Series, Congo. Confidential.
  2. None of the tabs is printed.
  3. Printed from a copy that bears this stamped signature.