INTERNATIONAL REVIEW SERVICE ANALYSIS AND REVIEW OF PROBLEMS OF INTERNATIONAL PUBLIC POLICY B 1,635,663 A. G. MEZERIK, Editor PHYLLIS GREENE, Associate Editor 15 WASHINGTON PLACE NEW YORK 3, U.S.A. UN BUREAU: Room 352 UNITED NATIONS, N. Y. PLAZA 1-0833 CABLE: UNOVIRS ECONOMIC AID for UNDERDEVELOPED COUNTRIES Edited by A. G. Mezerik Clients are authorized to quote or reprint all material, giving IRS credit. Others should request permission for excerpts exceeding 500 words. IRS has no official connection with United Nations. Vol. III. No. 35 July 1957 BuHRlgad HC 60 這 955 ܗ ܘ ܢ ܐ ܕ * Technical Assistance Through UN... Shortage of Capital International Bank Inadequate SUNFED The US, UK and USSR on SUNFED International Finance Corporation Capital Used As Instrument of Cold War Aid by US Predicated on Policy Toward USSR...... Neutralism and US Aid ... Soviet Policy of Breaking Ties ......... Bargaining Power of Underdeveloped Countries Increases .... USSR Breaks the West's Monoply The Soviet Programs USSR Aid to the Middle East..... CONTENTS United States Aid Since 1945 The Eisenhower Doctrine Main Weight of US Program on Military Aid ...... US Policy to Continue Aid..... Revolving Fund US Agricultural Products for Economic Aid Atomic Aid Grows in Importance ... Non-Government Economic Aid Not in US Total.... US Private Investment in Economic Development Many Other Aid Sources References and Bibliography.... Submerging National Self-Interest ... Aid Small As Development Factor ... Population Growth Complicates Economic Development... Appendixes A: UN Technical Assistance B: Contributions to UN Technical Assistance (Table) C: International Bank for Reconstruction and Development D: International Bank Lending, 1946-1957 (Table) E: International Finance Corporation ……………… ………… ●་ F: Special UN Fund for Economic Development (SUNFED) ... G: Export-Import Bank of Washington H: Export-Import Bank Operations by Country and Area (Table) .... J: US Policy Statement on Economic Aid K: US Mutual Security Program by Area and Function, 1956-1958 (Table) L: US Foreign Grants and Loans by Area, 1945-1956 (Table) M: US Aid Shipments and Total Exports of Agricultural Commodities, 1956 (Table) ... N: Comparison of Living Standards in Developed and Underdeveloped Countries (Graph) ..... © by A. G. Mezerik 1957 …….. .... "PAGE 122~3 mm 3 3 4 4 5 5 6 7 8 8 9 9 10 10 11 11 12 12 13 14 14 15 17 19 20 20 21 22 22 23 24 25 26 27 28 29 ! . ! : . ECONOMIC AID FOR UNDERDEVELOPED COUNTRIES In the first years following the war, emphasis was on relief and re- habilitation of war-devastated areas. As relief needs were met and reconstruction was completed, the military assistance given as part of the cold war dominated the picture of aid. Now, more and more emphasis is moving into the field of economic aid for underdeveloped countries. The growing system of technical assistance, as the necessary pre- cursor for economic development, has already shown the results of this changing emphasis. Technical Assistance Through UN United Nations technical assistance began as an advisory service in December 1946. In 1949, UN technical assistance became an action program, involving the specialized agencies as well as UN. The group of 55 countries which first contributed to UN technical assistance--in 1950--has since been joined by 25 others, and the level of contributions has increased steadily from approximately $13 Million to $30,794 Million pledged for 1957. (See Appendix B p.20 for table of contribu tions.) UN technical assistance provides underdeveloped countries with training, study grants, a tiny amount of equipment and, principally, with experts who advise on problems ranging from narrow technical questions to the formulation of overall national economic and social plans. (See Appendix A p. 19 for details on UN technical assistance.) 2 Economic Aid for Underdeveloped Countries Shortage of Capital Technical assistance particularly when concentrated on national development planning -- sets the stage for the use of capital. The ability of UN to offer financial aid has not grown in relation to the need. International Bank Inadequate The International Bank for Reconstruction and Development, a UN affiliate, is not a development corporation, but an orthodox banking operation. This leaves the bank inadequate to meet the needs of the underdeveloped countries -- a fact which its president, Eugene Black, readily affirmed. (Reference 1). (See Appendix C p. 20 for additional background on bank. See Appendix D p. 21 for table on bank lending.) Recognition of the unmet need for capital brought the present drive by the underdeveloped countries for the Special United Nations Fund for Economic Development (SUNFED) to provide grants and long-term, low-interest loans. SUNFED The idea for an organization such as SUNFED began inside UN as early as 1949, and in 1950 was recommended by the United States Gray and Rockefeller comissions. In March 1953, a committee of nine experts appointed by the UN General Assembly submitted detailed plans for the establishment of SUNFED. They recommended that it come into being when 30 or more countries would pledge a minimum of $250 Million. (Reference 2). The question of SUNFED has been in UN since then. By 1957, 46 governments were in favor of immediate establishment of the fund, but International Review Service Vol. III. No. 35 3 these did not include either the US or the UK, who would be the princi- pal contributors. (Reference 3). The US, UK and USSR on SUNFED Expressing the US and UK positions on SUNFED, the US said, "The demands of defense still call for vast amounts of the world's resources, which obviously means a heavy burden of taxation, and a consequent curtailment or postponement of many desirable economic and social programs...A United Nations fund supported only by the relatively small resources which apparently could be made available to it by member countries under existing circumstances would, we feel, make little impact upon the worldwide problem of economic under- development". (Reference 4). Both the US and UK support UN resolutions on SUNFED, but say they will be willing to contribute only when the big powers agree to disarm. The Soviet Union in 1955 for the first time also supported the SUNFED resolution. (See Appendix F p. 22 for details on SUNFED). International Finance Corporation The unavailability of capital supplies caused the underdeveloped countries to push also for the creation of a new banking institution. Proposed in UN in 1952, the International Finance Corporation (IFC) came into being in 1956, as an adjunct of the International Bank. The corporation has 49 members, who have subscribed a total of $92 Million. (Reference 5). The USSR has not subscribed. The primary purpose of the IFC is not to lend, as a bank does, but to invest capital in productive private enterprises which are predomi- nantly industrial. However, the entire capital goal of IFC of $100 Mil- lion is but the size of a number of single loans made by the US and of a Soviet loan to Afghanistan. (See Appendix E p. 22 for additional background on IFC). 4 Economic Aid for Underdeveloped Countries Capital Used As Instrument of Cold War The capital along with the technical assistance to underdeveloped countries by the USSR and the US are increasingly used by both great powers as an instrument of foreign policy in the cold war. dent Eisenhower: Aid by US Predicated on Policy Toward USSR The US economic aid activities derive fundamentally from United States policy toward the Soviet Union. Since World War II, the general objective of US policy has been to compress the Soviet Union's power and influence within narrow limits. This objective has resulted in a US attempt to mobilize all strategically important uncommitted na- tions to its side. The US policy regarding economic aid has been set forth by Presi- made available "Because the conditions of poverty and unrest in less developed areas make their people a special target of international com- munism, there is a need to help them achieve the economic growth and stability necessary to preserve their independence against communist threats and enticements". (Reference 6). US strategy of directing economic aid as a weapon against commu- nism was emphasized by Vice President Richard M. Nixon on his re- turn from Africa in February 1957: "The communist threat under- lines the wisdom and necessity of our assisting the countries of Africa to maintain their independence and to alleviate the conditions of want and instability on which communism breeds". (Reference 7). Neutralism and US Aid committed. K Underdeveloped countries who join with the US in opposing inter- national communism receive more aid than those which remain un- C International Review Service Vol. III. No. 35 countries US Ambassador to Pakistan Horace A. Hildreth described eco- nomic aid received in 1955-56 by 21 countries from Egypt to Japan. He said that of these countries the 10 aligned with the US through mutual defense assistance agreements received, on a per capita basis, 12 times more economic aid than was given to the 11 countries that had not signed defense agreements. (Reference 8). Secretary of State John Foster Dulles said that in two years, Asian members of SEATO (South East Asian Treaty Organization) received $300 Million in economic aid. This was four times as much as those Thailand, Philippines and Pakistan -- had received in the preceding two years. (Reference 8). 5 Soviet Policy of Breaking Ties The Soviet policy in the same period has been to shake as many nations as possible loose from the US side. This Soviet cold war goal was accomplished in Afghanistan, where massive financing and economic aid supplied by the USSR has practi- cally excluded Afghanistan's dealings with the US and the West. Egypt, as a result of USSR military and economic aid, has left the Western sphere of influence. In many cases, USSR economic aid and neutralism are tied to- gether. Although the USSR may not be able to count on a country which receives aid, neither will the West be able to rely on its sup- port. Bargaining Power of Underdeveloped Countries Increases The cold war competition in economic aid has vastly increased the 6 Economic Aid for Underdeveloped Countries bargaining power of underdeveloped countries. An offer of economic aid by the USSR can be used to get the US to raise its bid, and vice Countries get cold war economic aid because they can be in- fluenced toward or away from one side or the other or because of their strategic location. In the cold war context, loans and grants sometimes are made to countries not equipped to handle them, or to countries who use the funds to enrich a few rather than to raise the standard of living for the many. In the search for countries which can be committed or uncommitted, both sides ignore misrule, economic and political injustice, official corruption, nepotism and like evils existing in some underdeveloped countries. These in themselves hamper a rise in standard of living which is the only publicly avowed objective of the economic aid policies of both the US and the USSR. versa. USSR Breaks the West's Monopoly The Soviet Union has broken a critically important Western monopoly. Up to now, when a country wished to embark on a development program, it obtained textile machinery from England or steel from the United States, as well as the required capital. The Western countries were the single source for these, and they built railroads and power plants, maintaining a degree of ownership. Now, for the first time since the industrial revolution, an under- developed country can consider alternatives with regard to its develop- ment. The Soviet Union has become a source of industrialization as well as of capital. India has bought a steel mill from the Soviet Union, B International Review Service Vol. III. No. 35 7 and Egypt has the promise of USSR atomic equipment. The fact that underdeveloped countries can now bargain between the Soviet Union and the West for capital and industrial equipment will have an increasingly profound effect on the development pattern of the under- developed segment of the world. Advantages For Each Each of the two great countries is in a position to take advantage of special conditions. The United States has surpluses of agricultural commodities such as wheat, rice and cotton, while the Soviet Union can absorb these products. The Soviet Union is therefore in a position to gain advantage by purchasing these products from the underdeveloped countries which produce them. In Burma the USSR bought rice, and in Egypt, cotton. Both purchases were coupled with Soviet charges that the US dumps surpluses of these commodities to the detriment of Burma and Egypt. On the other hand, the US has an advantage where loans, grants or industrial equipment are needed. The Soviet Programs G The USSR has rendered large-scale economic aid to countries in- side the Soviet group. (Reference 9). Aid to other underdeveloped countries remained insignificant until late 1955. Since then, Soviet and East European countries have made offers to Afghanistan, Egypt, Syria, India, Burma, Ceylon, Yemen, Lebanon, Turkey, Greece, Liberia, Libya, the Sudan, Pakistan, Yugoslavia and other countries, including a blanket offer to Latin America. These include loans, grants, technical assistance, 8 Economic Aid for Underdeveloped Countries arms, machinery and favorable trade arrangements. No Latin American country has accepted a Soviet offer, nor has any African nation other than Egypt. Afghanistan and Indonesia have each received credits of $100 Million, and India received a credit of $241.5 Million. (Reference 10). USSR Aid to the Middle East In the Middle East, Soviet aid has proceeded at a rapid pace. Like much of American economic aid, the major portion of USSR aid in this area is military. To Syria, the Soviet Union delivers arms, vehicles, agricultural equipment, metal products and industrial installations in exchange for cotton. Arms to Egypt are part of trade agreements which have made Czechoslovakia a top importer of Egypt's cotton -- mainstay of that country's economy. Rumania also takes much cotton. Barter and trade with Peking have also become important for Egypt. (Reference 11). Egypt's reliance on the USSR and its associated countries grew enormously after Egyptian funds were blocked by the UK, French and the US following nationalization of the Suez Canal Company. द United States Aid Since 1945 US aid has been large over a considerable period. From the end of World War II to 30 June 1957, the US made available in all forms of assistance more than $60 Billion. (See Appendixes K & L pp. 26 & 27 for tables of US foreign grants and loans by region. In 1947, the Truman Plan for Greece and Turkey combined relief, reconstruction and technical aid with military aid. This was the first time that a US program of foreign aid included economic development. I · 2 International Review Service Vol. III. No. 35 A year later, the plan initiated by George C. Marshall, then Secretary of State, extended all forms of aid to Western Europe generally. Economic aid has been part of US policy since then. These funds have been distributed under the Marshall Plan, Mutual Security Administration, Foreign Operations Administration, Inter- national Cooperation Administration and other smaller programs. Spending in Europe has decreased. In Latin America it has re- mained almost constant. However, since 1953 aid to the Middle East, Asia and Africa has been steadily increasing. The Eisenhower Doctrine 9 The Eisenhower Doctrine made new and enlarged economic aid MIDDLE EAST available to all countries wishing to subscribe to its anti-communist tenets. In 1957 Iraq received $12.5 Million and Jordan $30 Million from this source. (Reference 13). The US has resumed economic and military aid to Yugoslavia. This had been suspended when, in 1956, Yugoslavia and USSR expressed renewed cordiality in relations. A large loan to Poland in the summer of 1957 marked the first US economic aid given directly to a country within the Soviet group. Main Weight of US Program on Military Aid Except for Poland, US economic aid includes expenditures for military aid and defense support, on which, in terms of quantity, rests the main weight of the US foreign aid program. (See Appendix L p. 27 for break- down of US foreign aid.) In addition to providing arms and training under its defense agreements, the US provides large sums to enable the 10 Economic Aid for Underdeveloped Countries recipient countries to support their military forces. Of the approxi- mately $1 Billion spent annually for economic purposes in Asia, more than half goes to shore up the economies of South Korea, Taiwan (Formosa) and South Vietnam so they can continue to maintain large numbers of men under arms. While this type of expenditure does generate some economic development, the quantity is not significant. The 1957 US program for the first time separates military aid and defense support from the economic aid program, which is administered by the International Cooperation Administration. The military aspects are now being assigned to the Department of Defense. US Policy to Continue Aid The budgetary premise of US assistance programs had been that the need for foreign economic aid would decline year by year, as would the amount of resources allocated to it. The original attitude of the present administration followed this line, seeking to decrease the size of aid programs. This attitude has now been sharply reversed, Secre- tary of State Dulles stating: "We consider both the economic and the military aid will need to go on for a considerable period of time at about the present level." (Reference 14). Revolving Fund Established US aid programs have, up to now, been financed by Congress on an REQUESTED annual basis only. The administration in 1957 authority to establish a Loan Development Fund which has assurance of continuance for three years. For this, the revolving fund $500 Million for 1957-58 and $750 Million for each of the two succeeding WOULD HAVE the authorization for ¿ J ↓ I ? + years. The fund will make loans, rather than grants. (Reference 12). International Review Service Vol. III. No. 35 US Agricultural Products for Economic Aid A significant part of US aid is given in the form of agricultural pro- ducts. For the year ending 30 June 1956, $1.4 Billion worth - 41 per- cent of all agricultural exports -- were shipped under various aid programs. (See Appendix M p. 28 for table.) A law enacted in 1954 Public Law 480 -- authorizes disposal of surplus foods under especially advantageous conditions to speed eco- nomic development of underdeveloped countries. Under this law, a sur- plus disposal agreement with Indonesia provided for $96 million worth of farm surplus. Indonesia pays for the commodities in rupiahs, most of which are loaned back for financing long-term economic develop- ment. (Reference 15). Other such agricultural agreements have been made by the US with Japan, Burma, Iran, Brazil, Colombia, Argentina and other countries. tion are involved. 11 Atomic Aid Grows in Importance The US has entered into agreements to furnish atomic aid for peaceful purposes to many countries. Technical assistance, exchange of information, fissionable materials, reactors and funds for construc- countries. The US is also contributing, as is the Soviet Union and other countries, to the new International Atomic Energy Agency, which will make some atomic aid for peaceful purposes available to underdeveloped (See "The International Atomic Energy Agency," International Review Service, Vol. III, No. 29.) 12 Economic Aid for Underdeveloped Countries Non-Government Economic Aid Not in US Total The size of US economic development aid is difficult to assess. Up to now, economic aid totals have always included military and allied defense support figures. The huge sums going into these military uses cannot be designated as aid for economic development. On the other hand, large amounts which do go directly for economic develop- ment are not included in US government figures, because these funds emanate from non-governmental sources. This is the case with do- nations, loans and technical assistance to underdeveloped countries by individuals, churches and non-profit organizations such as foundations. In the postwar decade, individual Americans and organizations con- tributed more than $6 billion for relief. (Reference 16). Neither this amount nor the sums involved in the investment and development pro- grams of private business are included in figures of official US aid. US Private Investment in Economic Development The current volume of American private long-term investment in underdeveloped countries is about $500 Million a year (net). (References 17 and 21). More than 90 percent of this is direct investment by American corporations, most of which are pursuing one of two specific objectives: to open new sources of raw materials especially in petroleum, copper and iron ore mainly for export, and to establish branch plants abroad in order to gain or hold local markets from which they would otherwise be excluded by trade or currency restrictions. (Reference 17). 1 International Review Service Vol. III. No. 35 Private Plus Public Participation US private business also participates in economic development and aid with investors of other countries and their governments. Typical of these is the Industrial Credit and Investment Corporation of India (ICICI). The ICICI is a corporation formed by private investors of India, the UK and the US for the development of private industry in India. Loan capital participants are the International Bank and the Government of India, using counterpart funds derived from steel fur- nished by the US government. Many Other Aid Sources S ܚ 13 There are sources for economic aid other than the Soviet Union and the United States. Although these are many, their aggregate is small compared to US and USSR aid. Other countries also make loans and grants. The Colombo Plan, providing technical assistance, is the most important multinational agency. The UK is its leading member and with it are joined Australia, Canada, Ceylon, India, New Zealand, Pakistan, Cambodia, Vietnam, Burma, Nepal, Indonesia, and the British territories of Malaya, Sarawak, Singapore, North Borneo and Brunei. The US and Japan cooperate, and Thailand and the Philippines also receive assistance. Aid and development on a multinational basis but directly con- nected with military alliances -- are under consideration in NATO, the Baghdad Pact and SEATO. Eurafrica, the multinational aid program of the proposed European Common Market, is designed for the develop- ment of European colonies in Africa. S 14 Economic Aid for Underdeveloped Countries Submerging National Self-Interest Almost all aid programs other than those of UN -- are geared to political, economic or military interests. However, the lifting of the underdeveloped areas of the world to a better economic standard in- volves many operations where national competition should have no place. Efforts are being made in UN to find methods by which this competition may be submerged into the goal of benefiting the under- developed countries. Lester Pearson, Minister of External Affairs of Canada, has proposed that the UN should review all non-UN aid pro- grams. (Reference 18). The Secretary-General of UN has called for the establishment of an international professional and technical civil service. He described this as "a career service under international responsibility for qualified men and women of any nationality who were prepared to de- vote a significant part of their lives to work in less developed countries as public officials integrated in the national administrations of these countries while maintaining their international status' (Reference 19). These proposals along with suggestions made by the Secretary- General for channeling more of the available economic aid through UN reflect the growing feeling that economic aid will be needed for many years to come and that the machinery for dispensing aid should be made as devoid of strings as possible. However, no matter how rendered, economic aid is today not signif- ( icant in terms of the need. Aid Small As Development Factor The development needed is far beyond the amounts available to the International Review Service Vol. III. No. 35 15 underdeveloped countries. The gap between capital moving into underdeveloped countries and the real need has led underdeveloped countries to use export proceeds for development. This diversion of export proceeds has been a source of instability causing inflation. Population Growth Complicates Economic Development The rapid growth of population in the underdeveloped countries magnifies the already complicated problem by requiring that large sums must be expended if the population is not to move backward eco- nomically and socially. Simply to maintain per capita level of production where it has been requires increased investment in industry and agri- culture. (See Appendix N p. 29 for comparison of living standards in developed and under- developed countries.) In countries such as Turkey and Mexico, with a rate of natural in- crease of around 3 percent annually, employment opportunities must be doubled in about 23 or 24 years. In Brazil and numerous other un- derdeveloped countries with a rate of natural increase of about 2.5 per- cent, employment opportunities must be doubled in approximately 28 years. (Reference 20). Present aid programs are not adequate to the task of supplying the minimum of industrial, agricultural and social facilities now needed. They are clearly not of a size capable of providing the larger and larger development programs required by population growth. Economic Aid Role Significant Ten years of experience have demonstrated that economic aid can- not, in any event, be more than a marginal addition to any country's 16 Economic Aid for Underdeveloped Countries development efforts. They can however be significant in providing technical and managerial ability and, with adequate financial assist- ance, can be a key factor in helping a country to establish an effective program for itself. ########## 2 REFERENCES AND BIBLIOGRAPHY 1. "Report of the Economic and Social Council," General Assembly Official Records: Ninth Session, Supplement 3; (A/2686). 2. "Report on a Special United Nations Fund for Economic Development," United Nations Publication Sales No. 1953.II.B.1; (E/2381). 3. "Financing of Economic Development: Final Report of the Ad Hoc Committee on the Question of the Establishment of a SUNFED;" UN Economic and Social Council: 24th Session, 16 May 1957; (E/2961). 4. "Summary Record of the 358th Meeting of the Second Committee," General Assembly Official Records: 10th Session, 8 November 1955; (A/C.2/SR.358). 5. International Finance Corporation, Washington; Press Release No. 4, 20 June 1957. 6. State of the Union Message Delivered to the US Congress by President Dwight D. Eisenhower, 5 January 1956; as reprinted in the New York Times, 6 January 1956. 7. "Text of Vice President Richard M. Nixon's Report to President Eisenhower on His Recent Trip to Africa," New York Times, 7 April 1957. 8. New York Times, 7 March 1956. 9. Speech Before the Twentieth Party Congress, Moscow, by Nikita S. Khurshchev, 14 February 1956; as reprinted in the New York Times 15 February 1956. 10. "Economic Survey of Asia and the Far East 1956," United Nations Publication Sales No. 1957.II.F.1. 11. "Economic Developments in the Middle East, 1955-1956," UN Economic and Social Council: 24th Session, 24 June 1957; (E/2983). 12. "The Mutual Security Program, Fiscal Year 1958," US Department of State, Depart- ment of Defense, International Cooperation Administration; Washington, June 1957. 13. New York Times, 11 May 1957. 14. New York Times, 21 December 1955. 15. International Financial News Survey; International Monetary Fund, Washington, 6 March 1956. 16. New York Times, 15 June 1957. 17. "Financing of Economic Development: The International Flow of Private Capital, 1956," UN Economic and Social Council: 24th Session; (E/3021). 18. "Financing of Economic Development: Supplementary Report of the Ad Hoc Com- mittee on the Question of the Establishment of a SUNFED;"' UN Economic and Social Council: 24th Session, 27 May 1957; (E/2999). 17 3 REFERENCES AND BIBLIOGRAPHY, continued 19. Speech of the Secretary-General to the International Law Association, McGill University, 31 May 1956. 20. "Report on the World Social Situation, Part I," UN Economic and Social Council: 23rd Session, 27 February 1957; (E/CN.5/324). 21. "Economic Development Abroad and the Role of American Foreign Investment," Committee for Economic Development; New York, 1956. 22. "Annual Report of the Technical Assistance Board to the Technical Assistance Committee for 1956," Economic and Social Council Official Records: 24th Session; (E/TAC/REP/103 or E/3965). 23. "Economic Developments in Africa, 1955-1956," United Nations Publication Sales No. 1957.II.C.3; (E/2984, 6 May 1957). 24. "World Economic Survey, 1956,” UN Economic and Social Council: 24th Session, 20 May 1957; (E/2982). ######## 18 : APPENDIX A: UNITED NATIONS TECHNICAL ASSISTANCE United Nations technical assistance began in December 1946 by the action of the First General Assembly, which set up a UN technical advisory service, although without providing an adminis- tration. A small sum granted by the assembly in 1948 repre- sented the first specific appropriation for technical assistance. The function emerged as a concerted UN program in 1948, when at the recommendation of the Economic and Social Council, the Gen- eral Assembly created the Expanded Technical Assistance Program (ETAP). Under the ETAP, the Technical Assistance Board administers and coordinates the technical assistance activities of the UN spe- cialized agencies and the Technical Assistance Administration of the UN proper. The Technical Assistance Board is responsible to the Economic and Social Council through ECOSOC's Technical As- sistance Committee. ECOSOC is, in turn, responsible to the Gen- eral Assembly. C Funds for UN technical assistance come from annual contribu- tions of governments. The specialized agencies in ETAP are UNESCO (UN Educa- tional, Social and Cultural Organization), International Labor Or- ganization (ILO), Food and Agriculture Organization (FAO), World Health Organization (WHO), International Civil Aviation Organiza- tion (ICAO), International Telecommunications Union (ITU) and the World Meteorological Organization (WMO). The International Bank for Reconstruction and Development and the International Monetary Fund cooperate. - *** - UN technical assistance has gone to more than 130 countries and territories, supplying experts from 80 countries. Approxi- mately 10,000 fellowships have been awarded to persons in under- developed countries for study in other countries. (Reference 22). -19- APPENDIX B: CONTRIBUTIONS TO UN TECHNICAL ASSISTANCE PROGRAM Year 1950-51 1952 1953 1954 1955 1956 с 1957 C Total Con- tributing Countries 55 65 69 74 71 77 80 Total Con- tributions $20,035,578 18,797,232 22,320,725 25,021,056 27,666,200 28,833,700 30,794,000 US Contri- butions $12,007,500 11,400,000 12,767,145 13,861,809 15,000,000 15,500,000 15,500,000b UK Contri- butions $ 2,128,255 1,269,151 1,400,168 1,820,218 2,240,000 2,240,000 2,240,000 (a) Of 1950-1956 contributions approximately $1, 130, 000 has not been collected as of 1 May 1957. Source: United Nations Technical Assistance Board. -20- USSR Con- tributions (b) US pledge is geared to 50% of first $28 million. Balance of $1.5 million will be contributed at a reduced matching per- centage of slightly under 50%. (c) Amounts pledged. APPENDIX C: INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT $ 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 C The International Bank for Reconstruction and Development, conceived at the Bretton Woods Conference in 1944, was designed to finance the rebuilding of war-devastated areas and the economic development of member nations. With the need removed for re- construction, emphasis is now on development. The Bank cannot extend private loans without government guarantees and can make only fixed-interest loans. G As of 31 January 1957, the Bank had 60 members and a to- tal subscription of $9,268, 400, 000. The headquarters of the Bank are in Washington. It is a specialized agency of the United Nations. APPENDIX D: INTERNATIONAL BANK LENDING, 1946 – 15 May 1957 (in US $) Africa Algeria Belgian Congo East Africa Ethiopia French West Africa Rhodesia and Nyasaland Union of South Africa Asia Burma Ceylon India Iran Iraq Japan Lebanon Pakistan Thailand Australasia Australia Europe Austria Belgium Denmark Finland France Iceland Italy Luxembourg Netherlands Norway Turkey Yugoslavia Western Hemisphere Brazil Chile Colombia Costa Rica Ecuador El Salvador Guatemala Haiti Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay No. of Loans 1 1 1 3 13 ဂ မဟာ 5 15 2 1 10 1 1 7 1 6 ফ _5 34 6 4 3 1 6 1 5 4 1 Elwawö 03--22~ 10 5 11 1 1 1 1 6 10 alalwo-wa Source: International Bank Press Release, 15 May 1957 - 21 - Original Amount $ 10,000,000 40,000,000 24,000,000 8,500,000 7,500,000 122,000,000 135,200,000 $ 347,200,000 $ LA 40,800,000 $ 589,510,000 19,350,000 19,110,000 240,300,000 75,000,000 12,800,000 77,900,000 27,000,000 77,250,000 $ 317,730,000 LA $ 53,000,000 66,000,000 40,000,000 65,279,464 250,000,000 5,914,000 164,628,000 12,000,000 244,000,000 75,000,000 63,400,000 60,700,000 $1,099,921,464 $ 194,090,000 52,300,000 111,280,000 3,000,000 13,500,000 23,645,000 18,200,000 2,600,000 4,200,000 160,800,000 23,000,000 7,390,000 5,000,000 41,000,000 64,000,000 $ 724,005,000 $3,078,366,464 *A $ $ LA 122,000,000 135,200,000 $ 346,791,567 Net Amount 10,000,000 40,000,000 24,000,000 8,500,000 7,091,567 $ 19,350,000 19,110,000 224,044,313 75,000,000 6,293,946 76,033,389 27,000,000 77,250,000 40,800,000 $ 564,881,648 $ 317,730,000 53,000,000 66,000,000 40,000,000 65,081,595 250,000,000 5,914,000 163,028,000 11,761,983 236,451,985 75,000,000 60,822,383 60,700,000 $1,087,759,946 $194,090,000 51,854,456 111,205,441 3,000,000 13,500,000 23,645,000 18,200,000 2,600,000 4,200,000 141,327,888 22,990,115 6,847,426 5,000,000 40,910,528 64,000,000 $ 703,370,854 $3,020,534,015 : APPENDIX E: INTERNATIONAL FINANCE CORPORATION The concept of the International Finance Corporation appeared in the 1949 report of a UN group of experts which recommended the creation of a department within the International Bank to be responsible for raising funds and making development loans to governments. The original suggestion for an International Finance Corpo- ration as a separate institution was made by the United States In- ternational Advisory (Rockefeller) Board. The formal proposal was brought to UN in 1952 by another group of UN experts on fi- nancing economic development. Although discussed in the Economic and Social Council and the General Assembly of UN each year, the plan for an IFC did not gain the necessary support until November 1954, when at the Ninth General Assembly the US announced that it would subscribe. The corporation came into being on 20 July 1956, the goal • 30 countries subscribing at least $75 Million having been reached. IFC became a specialized agency of UN at the 11th General As- sembly (20 February 1957). As of 20 June 1957, the IFC had 49 members, with a total subscription of $92 Million. The US subscription is $35, 168,000; the UK, $14, 400, 000. The USSR is not a member. - IFC invests in productive private enterprises in association with private investors and without government guarantee of repay- ment. It can invest in the expansion or modernization of an exist- ing enterprise or the creation of a new one. Its investments are predominantly in industrial projects. IFC is prepared to invest in a company whose assets, after financing, total $500,000. The IFC share of any investment is less than half of the total cost of a project. The minimum IFC investment in any enterprise is about $100, 000; the maximum, about $2 Million. On 20 June 1957, the IFC made its first investment Siemens do Brasil Companhia de Electricidade. (Reference 5). T IFC investments are normally intermediate between loan cap- ital and share capital. Although in the form of loans, they carry some right to participate in the growth of the business. 22 APPENDIX F: SPECIAL UN FUND FOR ECONOMIC DEVELOPMENT (SUNFED) *** HOND in the The idea of establishing a fund specifically to meet the needs of economic development came to the United Nations in the spring APPENDIX F, continued of 1949, when the Sub-Commission on Economic Development pro- posed that an agency be set up, to be called the UN Economic Development Administration. This proposal was rejected by the UN Economic and Employment Commission, which maintained that a new international financing agency was unnecessary. The proposal was revived in 1952, when the Sixth General Assembly called for a detailed plan for a "special UN fund for economic development". (GA Resol 520 (VI) of 12 January 1952). In March 1953, a committee of nine experts submitted the plan, proposing that SUNFED provide grants-in-aid and long-term, low- interest loans and come into being when 30 or more countries would pledge a minimum of $250 Million. (Reference 2). With this report as a base, SUNFED has been discussed in the General Assembly and the Economic and Social Council every year. All members since the Soviet bloc acceded in 1955 now state that they agree with the principle of SUNFED. How- ever, the institution has not yet come into being for lack of as- surance of investment in its capital fund by the US and UK, who would have to be among the chief subscribers. APPENDIX G: EXPORT-IMPORT BANK OF WASHINGTON - - As of 16 May 1957, 46 governments, in answer to a UN questionnaire, signified that they were in favor of the immediate establishment of SUNFED, while eight laid down prerequisite con- ditions. The US did not submit an answer. Among the propo- nents of the immediate establishment of SUNFED are in addi- tion to the underdeveloped countries Belgium, Denmark, France, Netherlands, USSR and Czechoslovakia. (Reference 3). The Export-Import Bank, established in 1934 as a District of Columbia banking corporation, was reincorporated as an inde- pendent agency of the US government by the Export-Import Bank Act of 1945. The basic purpose of the bank, as stated by that act, is to aid in financing and to facilitate the exports and im- ports of the US. Most requests for assistance from the bank originate with the US supplier of goods or products. Credit re- quests originating overseas must be for acquisition of US materi- als, equipment and services. It is a statutory policy of the bank that its loans supplement and encourage, but do not compete with, private capital. 23 APPENDIX H: EXPORT-IMPORT BANK OPERATIONS BY COUNTRY AND AREA (in thousands US $) Country Latin America Argentina Bolivia Brazil Chile Colombia Costa Rica Cuba Dominican Republic Ecuador Guatemala Haiti Honduras Mexico Nicaragua Panama Paraguay Peru Salvador Uruguay Venezuela Various Total Latin America Asia Afghanistan China (Republic Of) India Indonesia Iran Iraq Israel Japan Philippines Saudi Arabia Thailand Turkey Total Asia Europe Austria Belgium Czechoslovakia Denmark Finland France Germany, W. Greece Hungary Total Credits Authorized 12 Feb. 1934 to 31 Dec. 1956 $ 386,282 47,031 1,155,452 186, 180 LA 103,831 23,053 116,645 1,852 49,259 65,891 128,794 $2,939,185 $ 3,402 40,558 2,978 40,350 2,783 386,481 8,494 8,530 15,600 165,739 39,500 221,737 16,270 200,000 80,830 360 135,000 453,769 118,615 49,000 3,607 53,205 $1,371,893 $ 27,255 200,000 23,729 30,024 135, 137 1,565,260 77,727 33,440 2,375 24 Country Iceland Italy Latvia Netherlands Norway Poland Portugal Rumania Spain Sweden United Kingdom Yugoslavia Various Total Europe Canada Africa Southern Rhodesia Egypt Ethiopia Liberia Portuguese E. Africa Portuguese W. Africa Union of South Africa Morocco Total Africa Oceania Australia New Zealand Total Oceania Other Countries Jamaica Puerto Rico Virgin Islands Various Total Other Countries Total Credits Authorized 12 Feb. 1934 to 31 Dec. 1956 $ 50 52,907 17,182 522,500 55,518 38,412 $3,408,884 tA $ 375,738 $ 1,004 199,957 1,903 303,162 61,004 $ 52,907 7,431 40 7,490 27,500 25,350 17,000 1,267 150,946 71 $ 229,664 $ 7,687 16,165 $ 23,852 $ 25 450 250 7,500 8,225 Source: Report to the Congress for the Period July - December 1956, Export-Import Bank of Washington. APPENDIX J: US POLICY STATEMENT ON ECONOMIC AID (Reprinted from United States Mission to the United Nations Press Release #2340, 11 January 1956) "Statement on Economic Foreign Policy by Members of the United States Delegation to the Tenth Session of the General As- sembly Transmitted by Ambassador (Henry Cabot) Lodge to Sec- retary of State (John Foster) Dulles and Released by the Sec- retary in Washington, Wednesday, January 11, 1956: Impelled by a unanimous feeling that economic and social questions are assuming increasing importance on the international scene, the United States Delegation to the Tenth General Assembly has joined in framing this statement. The present period in history may one day be recognized as a major turning point in the struggle between Communism and freedom. It appears to be clearly a shift in the cold war, in which economic and social problems have moved to the forefront. Members of the United States Delegation during this General Assembly session have observed the effectiveness of Soviet tactics under these new conditions. This can be seen both in the way the Soviet bloc delegates work in various United Nations meetings, and also in the voting that occurs in many committees. As we ob- served maneuvers, we were conscious that the Soviet Union, else- where in the world, was using economic and social collaboration as a means for jumping military as well as political barriers. Examples of this can be found in India, Egypt, and Burma. We believe that the United States must counter these Soviet efforts. We can succeed, not by outbidding communism in sheer amounts of economic aid, but by making newly independent and newly articulate peoples feel that they can best satisfy their wants by becoming and remaining part of the community of free nations. We welcome more emphasis on economic and educational en- deavors, for we have a proven experience in these fields. We are in a contest in the field of economic development of underdeveloped countries which is bitterly competitive. Defeat in this contest could be as disastrous as defeat in an armaments race. We could lose this economic contest unless the country as a whole wakes up to all its implications."' 25 Fiscal Year 26 Source: "The Mutual Security Program, 1958," ICA, June 1957 FY C EUROPE Area and Function Military Assistance Defense Support Technical Cooperation. Other Programs Total-Europe NEAR EAST, SOUTH ASIA AND AFRICA Near East Military Assistance Defense Support Development Assistance Technical Cooperation Others Programs …………… · Total Near East South Asia Military Assistance Defense Support Development Assistance Technical Cooperation Other Programs Total-South Asia Africa Military Assistance Defense Support Development Assistance Technical Cooperation Other Programs *** Total-Africa Middle East Undistributed Defense Support Development Assistance Total-Middle East Undistributed LATIN AMERICA ·· ………… …………. Total-Near East, South Asia and Africa Military Assistance Defense Support Technical Cooperation Other Programs .... ……. .. Total-Latin America ... ……… Recapitulation of Near East, South Asia and Africa Military Assistance Defense Support Development Assistance Technical Cooperation Other Programs ... ... ………… ... .. ... ... .. ·· .... ……… ... ... .. FY 1956 301,335 92,127 19,640 413,102 X X X 188,699 30,957 24,113 20,745 X X X XXX 92,453 69,800 23,662 7,786 XXX XXX 5,000 7,802 522 XXX 226,864 281,152 105,757 55,577 29,053 698,403 11,511 44,115 28,875 130 84,631 Programs FY 1957 261,262 103,064 12,200 376,526 XXX 125,000 89,359 22,483 21,500 XXX XXX 90,000 74,672 21,386 XXX XXX 6,412 42,580 9,020 XXX 36,088 8,239 44,327 352,410 257,500 214,850 52,889 21,500 899,149 28,447 52,000 33,200 113,647 Proposed FY 1958 338,509 30,000 3,500 29,900 401,909 XXX XXX 23,960 XXX 469,738 XXX X X X 24,040 XXX 170,379 X X X XXX 11,700 XXX 55,089 390,407 202,000 59,700 43,100 695,207 25,956 26,500 32,000 94,456 Area and Function FAR EAST AND PACIFIC Military Assistance Defense Support Development Assistance Technical Cooperation Other Programs .... Total-Far East and Pacific President's Fund for Asian Economic Development Total-Far East and Pacific NON-REGIONAL PROGRAMS Military Assistance Development Loan Fund Technical Cooperation UN Expanded Program of Technical Assis- tance Interregional Expenses Undistributed Total Technical Cooperation Other Programs Special Assistance Less: Funds distributed to programs re- flected under other items in this presentation Unobligated balance no longer available ... Undistributed Special Assistance Migrants, Refugees and Escapees ICEM UN Refugee Fund Escapee Program Hungarian Refugee Program Children's Welfare NATO Civilian Headquarters Fund) Ocean Freight (Voluntary Relief) Control Act Expenses Administrative Expenses-ICA Expenses (State, Administrative 411(d)) (Building Atoms for Peace Program Malaria Eradication Program Special Programs, Other Than Military Total-Other Programs ……. Section Magdal ……………. **** TOTAL PROGRAMS ALL AREAS AND FUNCTIONS FY. 1956 686.095 712,077 4,100 33,775 402 1,436,449 252 1,436,701 447,557 23,000 9,862 32,862 100,000 a --91,717 —1,200 7,083 11.990 1,200 5,997 14,500 2.542 1,910 1.109 28,648 Total-Non-Regional Programs Subtotal Programs—All Areas and Functions 3,206,939 Adjustment for Undistributed Military As- sistance Program Revisions in Process 4,918 1,400 12,386 93.683 574,102 321.262 Programs FY 1957 685,974 783,500 34,000 36,600 1,540,074 48,000 1,588,074 642,992 15,500 11,570 3,861 30,931 100,000 -73,864 26,136 12,500 1,900 6,000 39,500 10,000 2,500 1,175 30,169 4.576 5,500 139,956 813.879 3,791,275 241,916 Proposed FY 1958 639,829 668,000 39,000 1,000 1,397,829 47.548 1,445,377 955,299 500,000 15,500 14,700 30,200 300,000 -100,100 199,900 12,500 2,233 5,500 10,000 11,000 2,700 2,200 1,300 35,000 4,577 7,000 19,400 813,310 1,798.809 4,435,758 2,885,677 4,033,190 4,435,758 Special Presidential Fund Appropriated under Section 401(b) of the Mutual Security Act of 1954 as amended. (in thousands US $) APPENDIX K: US MUTUAL SECURITY PROGRAM BY AREA AND FUNCTION 1956-58 REGION Asia & Pacific APPENDIX L: US FOREIGN GRANTS AND LOANS BY AREA, 1 July 1945- 30 June 1956 (in millions US $) W. Europe (excl. Greece & Turkey) E. Europe Near East & Africa (incl. Greece & Turkey) Latin America Other Total T UNIVERSITY OF MICHIGAN TOTAL $12,698 35,869 1,095 5,356 3 9015 06552 4129 1,401 1,248 $57,667 B Source: ' "'Foreign Grants and Credits by the US Gov- ernment, September, 1956 Quarter," US De- partment of Commerce, Office of Business Economics, Washington, December, 1956 Quarter. 27 chat Thang è a dan f APPENDIX M: US AID SHIPMENTS AND TOTAL EXPORTS OF AGRICULTURAL COMMODITIES 1956 Bread Grains (Wheat and Rye) Cotton & Linters Fats, Oils & Oilseeds Coarse Grains Dairy Products Other Agricultural Commodities Total Agricultural Commodities Millions of $ Total Govt Aid Programs $ 423 276 142 232 204 144 $1421 Total US Exports 28 $ 599 382 621 399 Source: US Department of Agriculture 283 1209 $3493 % of US Exports Total Govt Aid Programs 70.6% 72.3 22.9 58.1 72.1 11.9 40.7 APPENDIX N: COMPARISON OF LIVING STANDARDS IN DEVELOPED AND UNDEVELOPED COUNTRIES LOW NATIONAL PRODUCT LACK OF BASIC FACILITIES Miles of Road (Per 1,000 Sq.Miles of Area) Gross National Product Per Capita ( Dollar Equivalents) $120 UNDERDEVELOPED AREAS 36 Years $1,400 SHORT LIFE SPANS Life Expectancy UNDERDEVELOPED AREAS DEVELOPED AREAS* 67 Years DEVELOPED AREAS "U.S. and Western Europe 75 1,000 29 UNDER- DEV. DEVELOP AREAS* 35% Electric Power Per Capita (KWH per Year) 2,200 UNDERDEVELOPED AREAS 80 WIDESPREAD ILLITERACY Percent Literacy UNDER- DEV. AREAS* - 95% DEVELOPED AREAS⭑ Source: "The Mutual Security Program, 1958," ICA, Washington, 1957.