MAKING U.S. THE GODFATHER OF EVERY NATION WE MAKE LOANS TO

The CHAIRMAN. In other words, we are going to be the godfather and godmother of every nation that we loan some money to, civil disorder

Mr. EICHHOLZ. This isn't to help a foreign nation, Senator. This is the case of an American private enterprise undertaking a new investment abroad.

The CHAIRMAN. Oh, but you are not that naive. You know that when Uncle Sam says to Joe Doaks who puts his million dollars into Lisbon, that "We guarantee you no injury." Lisbon knows that means we are going to put a police force in there the minute there is a riot.

Mr. EICHHOLZ. Not necessarily.

The CHAIRMAN. When you have got civil disorder you are guaranteeing the American investor by reason of war, revolution of civil disorder.

Senator HICKENLOOPER. You are guaranteeing dollar reimbursement.

Mr. EICHHOLZ. That is correct, we are not guaranteeing that he won't lose his investment by reason of war or civil disorder. All we are saying that if he does lose his investment, we will reimburse him.

Senator HICKENLOOPER. This may be farfetched, but human nature sometimes being what it is, I could envision many instances where somebody or some group would put a lot of money into a country and then be very happy if a little civil disorder could be kicked up some place and they would say, "Well, we couldn't help it. It was this civil disorder. Now pay us our investment." Mr. EICHHOLZ. That is always a possibility.

Senator HICKENLOOPER. Under the present situation perhaps these people might fight a litle harder to prevent such things destroying their property.

The CHAIRMAN. What is the next one?

REPAYMENT OF COUNTERPART FUNDS

Mr. EICHHOLZ. Under an amendment made last year, in the event that counterpart funds-and I am now talking about 90-percent counterpart funds, not 10-percent counterpart funds-if they were used to make loans in the participating countries, when the loan was repaid under the amendment made last year, that last had to be repaid to the central counterpart account.

Now that has caused two types of difficulties. Under the arrangements we have made in many countries we have set up revolving funds outside the master counterpart account, revolving funds to stimulate various enterprises abroad, and the effect of that amendment is merely in this respect, to say that the repayment doesn't have to be to the master counterpart fund.

It can be to the revolving fund which can then be reused for purposes already agreed to between the United States and the foreign government, and the second difficulty that last year's amend ment caused is that under the present law any balances in the

counterpart accounts, in the 90-percent counterpart accounts, remaining at the termination of the program are to be disposed of only as set forth in resolution of the Congress.

The difficulty has been under this amendment passed last year that it would be possible that these repayments would be made after the termination of the program and after resolution of the Congress, and it has been feared in some countries that it would then take another resolution of the Congress before final disposition could be made of these funds, and this is merely to clarify that that would not be necessary, that the one action by Congress would be sufficient. The CHAIRMAN. I will read it:

And provided further, That whenever funds from such special account are used by a country to make loans, all funds received in repayment of such loans prior to termination of assistance in such country shall be reused only for such purposes as shall have been agreed to between the country and the Government of the United States.

The phrase "prior to termination of assistance to such country." suppose that we don't give them any further economic assistance. and military assistance, but we have got working several bills of counterpart funds over which we have joint control. Part of that is loaned out, invested or otherwise. Now what?

Mr. EICHHOLZ. Under the present law-and this is unchangedat the termination of the program any balances in the master ac

count

The CHAIRMAN. Ninety percent.

Mr. EICHHOLZ. Ninety percent account may be-I will read you the specific provision of law:

Any unencumbered balance remaining in such account upon termination of assistance to such country under this Act shall be disposed of within such country for such purposes as may, subject to approval by Act or joint resolution by the Congress, be agreed to between such countries and the Government of the United States.

The CHAIRMAN. Then it calls for subsequent action. We still have our joint interest.

Mr. EICHHOLZ. That is correct.

The CHAIRMAN. If we take no action it continues.

Mr. EICHHOLZ. That is correct. And, of course, the act or joint resolution of the Congress could approve or disapprove of any use which might have been agreed between the executive branch and the government concerned.

Senator HICKENLOOPER. Let's take an illustration. Assistance to a country terminates on Jan. 1, 1955, let's say. I think I understand what happens to the disposition of the funds in the account up to Jan. 1, 1955, but on that date, the termination of assistance, there is then outstanding subject to repayment $1 billion in loans out all over the country, and that $1 billion will be paid in over the next 10, 15, or 20 years, let's say.

Now is it essential that by Jan. 1, 1955, a disposition of those repayments after the termination of assistance, that a disposition be made prior to Jan. 1, 1955?

Mr. EICHHOLZ. It is essential that there be some kind of agreement between us and the country concerned as to the use of that balance.

72-194-77-vol. V-34

Senator HICKENLOOPER. Of that outstanding

Mr. EICHHOLZ. And Congress has specifically reserved to itself the right to approve or disapprove of the agreement that might have been arrived at.

Senator HICKENLOOPER. Let us go another step along this journey and say that we were unable to agree with that country over there prior to Jan. 1, 1955, as to what would be done with those payments, and the date January 1955 would slip past.

What provision do we have for continuing authorization, or after Jan. 1, 1955, if no disposition were made of it and no agreement had been made by that time because one country or the other was obstinate, would those funds coming in in the next 10, 15, or 20 years be subject to the disposition of the country that developed

Mr. EICHHOLZ. No, sir, they would not. Bilateral agreements with these countries provide that these currencies may only be used for such purposes as are agreed on by the two governments, and they would simply remain stagnant.

The CHAIRMAN. Well, that seems to wind it up. You have done a pretty good job, young man. At least you have for me. I am only sorry the whole committee isn't here.

COMMITTEE MEETINGS

Now Monday I want to say at 10 o'clock we are to hear Mr. Sears. Monday at 10:30 we are going to continue to write up this MSA bill. Monday at 2 o'clock your European subcommittee, 3 o'clock your information subcommittee. We haven't designated where they will be. The European subcommittee at 4:30 and 3 o'clock the NARBA [North American Regional Broadcasting Agreement] Sub

committee.

Mr. MARCY. They are both at 4:30, Senator. There is no overlapping in the membership.

The CHAIRMAN. All right, the record will show that these two subcommittee meetings. Information Subcommittee and NARBA Subcommittee will meet at 4:30, and will occupy these two rooms.

SOVIET BLOC PARTICIPATION IN MULTILATERAL AGENCIES

Mr. MARTIN. Mr. Chairman, I have an answer to the question raised by Senator Hickenlooper with respect to Soviet bloc membership on the U.N. multilateral agencies. I have a statement which I will put in the record, but I might summarize very briefly the situation.

There are no Soviet members on the bodies which supervise UNKRA or on the Intergovernmental Committee on European Migation. There is no Soviet membership on the board which manages the U.S. technical assistance program.

However, that board reports to a new and technical assistance committee whose membership is identical with that of ECOSOC [Economic and Social Council]. There are two Soviet block members. Senator HICKENLOOPER. What control does ECOSOC have over the subordinate?

1 Mason Sears, nominated to be U.S. Representative on the U.N. Trusteeship Council.

Mr. MARTIN. Serving as the technical assistance committee, it has a very broad control. However, it does have a steering group of nine members which does not include any Soviet bloc members.

As far as the children's fund is concerned, there is a board elected by ECOSOC which consists of all the members of the social committee plus eight other members. There are three Soviet bloc members on the social committee who ex officio serve on the governing board for the children's fund.

Our people report that the Soviet bloc members have not taken an active interest in these programs, and have not thus far presented any problems.

Senator HICKENLOOPER. We ought to have a way of correcting that situation.

Mr. MARTIN. They do not in any case contribute. Our organizational problem is that by previous agreements these governing bodies with which they do participate have these responsibilities in ex officio capacity, and it would require a decision that the social commission, for example, should no longer be all members of the children's fund executive board, or a decision of the Technical Assistance Committee, which is not particularly active, be selected in a new fashion.

BILATERAL ASSISTANCE TO EDC AND GERMANY

Mr. Chairman, I have one other thing I would like to put in the record, if I may. In the House committee hearings, the question arose of the arrangements being made to negotiate bilateral agreements covering military assistance to the EDC and to Germany and Assistant Secretary Merchant made a statement about the status of those negotiations, which I think it might be useful to have also in the Senate record, and with your permission I would like to put that in so that the Senate would be officially informed of the status of these bilateral negotiations.

These, of course, are all in anticipation of the ratification of the EDC and of the German contractuals.

The CHAIRMAN. Are they extensive.

Mr. MARTIN. It is one page.

The CHAIRMAN. Have you got it with you?

Mr. MARTIN. Mr. Marcy has a copy.

The CHAIRMAN. I don't know why if it is just one page that you don't read it.

Mr. MARTIN. I do not have a copy and I do not know whether Mr. Marcy has it with him.

Mr. MARCY. I will put it in the record.

[Whereupon, at 5 p.m., the committee adjourned.]

MINUTES

MONDAY, JUNE 8, 1953

UNITED STATES SENATE,

COMMITTEE ON FOREIGN RELATIONS,

Washington, D.C.

The committee met in executive session at 10 a.m. in the committee room.

Present: Chairman Wiley, Senators Smith, Hickenlooper, George, Green, Sparkman, Gillette, and Mansfield.

The committee considered first the nomination of Mason Sears of Massachusetts, to the representative of the United States on the Trusteeship Council of the United Nations.

Mr. Sears testified personally in connection with his nomination. The committee then proceeded with the writeup of the Mutual Security bill. [This session on the mutual security bill was devoted to discussion of a pilot program to provide technical assistance to Italy, the Philippines, and Turkey, for the purpose of determining the feasibility of developing certain industrial projects to a point where they would attract U.S. private investment. The first such project-a survey of mineral resources in southern Italy-was examined in detail.]

For record of proceedings, see official transcript.

The committee recessed at 12:15 p.m., to meet again on Tuesday, June 9 at 10 a.m.