194. Memorandum From Secretary of State Rusk to President Kennedy 1
SUBJECT
- $200,000,000 Bond Issue
1. Origins of Bond Proposal. About mid-October Ambassador Stevenson and the Department became convinced that the financial crisis in the United Nations was prospectively so bad, and there was so little support for continuing the financing of the Middle East (UNEF) and Congo (UNOC) from special assessments, that a new means of financing these Peace and Security Operations was needed. United Nations unpaid obligations, including borrowing, were estimated to total about $110,000,000 by December 31. Unpaid assessments by that date (Soviet bloc, France, Belgium, and the smaller, less-developed nations) totaled about $80 million. Against this background, a plan had to be found on which a majority of members could agree which would prevent a financial stalemate and produce the cash necessary to continue these peace-keeping operations.
The United States conceived the idea of getting General Assembly backing (a) to secure an advisory opinion from the International Court of Justice to put pressure on the recalcitrant nations to pay their arrearages and (b) to authorize the Secretary General to sell United Nations bonds. The outline of a plan was thrashed out in meetings between the State Department, the Treasury Department, and the Bureau of the Budget.
The UN bond issue was to finance the UNEF and UNOC operations for the eighteen months—July 1, 1962 to December 31, 1963. It was considered a gamble that even this could be agreed on, but it was hoped that this different plan utilizing U Thant’s “honeymoon period” as Secretary General might work and provide the needed breathing space for these peace-keeping operations free from financial crisis. After Budget and Treasury clearances, I authorized Ambassador Stevenson to canvass the matter with the UN, my memorandum to you dated November 11, 19612 explained fully the reasoning behind the proposal.
[Page 416]U Thant did in fact decide to make the UN’s financial problem his first order of business. In a remarkable series of interviews with every delegation, concentrated in six successful evenings, the Secretary General became convinced that the plan might work.
(From the beginning it was recognized that to succeed, this had to be a U Thant initiative. We advised no one of the United States role. It was inevitable that some newspaper comment would trace the original idea back to Washington. But it would be a mistake for us to do other than attribute it to U Thant, who developed and refined the plan in consultation with the United States and other major contributors. If the U.S. origin were to show through too clearly, it might seriously prejudice U Thant’s sale of bonds to some of the other governments.)
The first contacts with Congress on this matter were made after the Secretary General’s proposals had been introduced into Committee Five but before the General Assembly had acted on them. About ten members of the House and Senate Foreign Affairs and Relations and of the Appropriations Committees, and their key Clerks, were reached in person or by telephone. Contacts included Congressmen Zablocki, Fascell, Judd and Rooney and Senators Fulbright, Saltonstall, and Wiley. We had, of course, informed members of Congress in our hearings last year that we were exploring ways and means to put UN finances on a sounder basis. Additionally, Congressman Burleson of Texas and Congresswoman Church of Illinois were members of the U.S. Delegation to the current session of the General Assembly and the proposal was discussed with them.
2. What happens if the bond issue does not pass Congress? The Assembly adopted the UN bond plan by an overwhelming majority, with our affirmative support and vote, and over Soviet objections. If Congress fails to take favorable action, the political repercussions at the United Nations would be serious. It is known at the UN that while this was a U Thant initiative, the United States was active in the development of the plan. Our standing in the UN will have been undermined and there would undoubtedly be a loss of confidence by U Thant in us, for this would constitute the Executive’s inability to deliver on a proposal and move which we encouraged U Thant to make. It would tend to demoralize the UN leadership in connection with the Congo operation, and the potential ability of the UN to take on another Congo in the future would have been seriously weakened-both politically and financially.
In these circumstances, in order that we continue to achieve our objectives in connection with both the UNEF and Congo operations, we would have to seek other means to keep these peace and security operations going. One such probability would be to request a special General Assembly with a view to having it authorize new financing [Page 417] beyond June 30, 1962. This would be in the same form as in the past, namely a special scale of assessments. The cost would likely be to the United States more than 47% of the total which we have heretofore paid if the UNEF and Congo operations are to continue on their present basis. Another possibility would be a direct U.S. loan to the UN to tide it over until next fall at which time the Assembly would have to consider the whole question of financial solvency.
3. Size of Special UN Levies. The UN budget for peace-and-security operations in the Congo (UNOC) and the Middle East (UNEF), is running about $140 million per year. In 1961, UNEF cost about $19 million of which the U.S. paid $7.9 million. The actual amounts paid so far for 1961 for the Congo operation were $47.5 million for a $100 million budget for the first ten months of that year.
If financing of these operations were to be continued on the same basis, the 1962 U.S. costs would total for the Congo, $56.4 million and for the Middle East, $8.9 million.
4. Actions Being Taken by the Department with Congress. It is clear that we will have a difficult job in the Congress, particularly on the House side. We are canvassing carefully individual members of the Senate and House Foreign Relations Committees with a view to convincing them that it is in the national interest of the U.S. to support fully the UN bond issue. There have already been about twenty-five such individual discussions and there are many more to come. As a supplement and a corollary to these discussions with key Congressmen, the Department has prepared a detailed summary describing the purposes of the UN bond issue and giving both the political and financial reasons why it is in our national interest to participate. These summaries are being made available to members of Congress and their staffs. Over a period of the next few weeks we intend to broaden out our background discussions with individual members of Congress with a view to getting key members to come out publicly in favor of the proposal. Moreover, a number of Congressmen are receiving a good deal of correspondence from their respective constituents, and the Department is providing the necessary material to respond to such correspondence.
We have prepared a Presidential Message to Congress which will be forwarded to the White House this week. In capsule form, this message reiterates both the political and financial reasons for the UN bond proposal and emphasizes in particular that the peace-keeping operations of the UN—in the Middle East and in the Congo—are serving the national interest of the United States.
5. The Loss of Voting Privileges. The General Assembly voted to ask the International Court of Justice at The Hague for an advisory opinion to settle the question of whether past and future assessments for peace [Page 418] and security operations are mandatory obligations on governments under the UN Charter. U Thant has now transmitted the request to the International Court of Justice for the advisory opinion on debt payment. Presentations to the Court are scheduled to begin February 20. (The US will make a submission and oral agreements.) An opinion, which supports such assessments, would establish that such costs are to be considered as part of the regular expenses. This concept of collective responsibility for peace-and-security operations in the UN urgently needs to be reestablished. Armed with this opinion, the Secretary General, plus the concert of nations, may be able to persuade the recalcitrants to pay up.
6. Steps taken to get other nations to subscribe. The following steps have been taken to get other countries to fully subscribe the bond issue:
U Thant wrote a letter (January 5) to each member state urging them to buy bonds promptly.3 He intends to follow this up with personal solicitations by himself and his staff.
President Eugene Black (IBRD) has written letters to the finance ministers in most nations of the world urging the purchase of bonds. In addition, Black is contacting the Germans and the Swiss to get them to buy bonds.
The Department has cabled our diplomatic posts and asked our Ambassadors to stress the importance the United States attaches to subscription of the full $200,000,000 promptly. In our recent conversations with the British we urged that they buy a generous share. Mr. Ball urged the Canadians last Friday to increase their Bond purchases over their announced intention to buy $6.24 million.4 We will follow up with other nations on a selective basis.
The US Delegation announced, when it supported the bond issue proposal, that we have always stood ready to pay peace-and-security costs on a pay-as-you-go basis.
In summary, the technical case for the Bond Issue rests on three points: (a) the urgent need for cash by the United Nations; (b) the inability of smaller, less-developed nations to pay these heavy costs on a pay-as-you-go basis, and (c) the need for somewhat longer-range financing to remove the financial crisis from the difficult political problems of the Congo operation. The proposed Bond Issue would meet these requirements and reduce our United States contribution from 47–1/2 percent to 32 percent.
But essentially the case for our participation in the financing of the UN rests on broader political grounds. We cannot put a dollar sign on peace. For sixteen years the UN has served the national interest of the U.S. This has been particularly the case in its two principal peace-keeping operations—in [Page 419] the Middle East and in the Congo. Soviet opposition to UN peace-keeping operations attests to their effectiveness. A stronger executive capacity to act means a stronger UN to serve our interests-and the reality of the matter is that this cannot be accomplished without firm financing.
- Source: Kennedy Library, National Security Files, Subjects Series, United Nations (General), 1/62–2/62, Box 311. Confidential. The date is handwritten. Another handwritten note indicates that the original went to the President and a copy to Schlesinger. A January 18 covering memorandum from the Executive Secretariat to Schlesinger through Bundy, noted that since Rusk had not read the memorandum on the UN bond issue, it was essential that the President should at least “scan” it before his meeting with U Thant.↩
- Document 192.↩
- Not found.↩
- Not further identified.↩
- Printed from a copy that bears this typed signature.↩