4. Requests the Secretary-General to submit that report to the Economic and Social Council at its forty-third session and to the General Assembly at its twenty-second session.

1473rd plenary meeting.

INTERGOVERNMENTAL

MARITIME CONSULTATIVE ORGANIZATION

Document II-61

Annual Report by the President (Johnson) to the Congress on U.S. Participation in the U.N., Transmitted November 15, 1967 (Excerpt) "

27

Activities of the Intergovernmental Maritime Consultative Organization During 1966

IMCO continued its excellent record of cooperation and accomplishment in maritime technical matters during 1966. In addition to its regular work program, which had already been scheduled and was accomplished without serious delays, it successfully met a new and major challenge posed by disastrous fires on passenger ships at sea by completely rewriting and upgrading the fire safety standards applicable to passenger ships under the Convention for Safety of Life at Sea.

Following the "Yarmouth Castle" disaster on November 13, 1965, during a cruise from Florida, the United States called for amendment of the Convention at the earliest possible time in order to minimize the risk of such occurrences in the future. The IMCO Maritime Safety Committee responded promptly by arranging a special meeting in May to be devoted exclusively to this problem. This gave sufficient time for the formulation of

U.S. Participation in the UN, 1966, pp.

U.S. proposals and consideration of these proposals by other governments before the meeting.

At the May meeting the Committee adopted a series of recommendations having to do with the installation of fire-resistant bulkheads, sprinklers, and construction of ships with noncombustible materials which were satisfactory to the United States, and also took account of the advice and concern of other leading maritime safety experts. An extraordinary session of the IMCO Assembly was then called for November, allowing only the 6 months that the Safety Convention provides for governments to consider proposed amendments. The Assembly approved a series of new rules for existing ships as well as those to be built in the future and recommended implementation of the rules as soon as possible and before they legally enter into force.30

29

Aside from passenger ship fire safety, IMCO's most important accomplishment of the year was the successful International Load Lines Conference held in March and April 1966. This conference dealt with the freeboard of ships, i.e., the extent to which their hulls may be submerged. New shipbuilding techniques, particularly the introduction of safe, watertight hatch covers, now make it possible to reduce freeboard, at least for some ships. The Conference drew up a new Load Lines Convention, replacing the Convention of 1930, which will have significant economic effects, notably by increasing the cargo that large vessels can carry." The U.S. acceptance of the convention was signed by the President on November 4, 1966, and deposited with IMCO on November 17.

During the year IMCO continued its work in a variety of fields, including stability of fishing vessels, radio communication, visual signals, navigation in congested areas, fire test procedures, lifesaving appliances, the

22 Adopted Nov. 30, 1966; not in force as of Jan. 1, 1968; text in S. Ex. Doc. E, 90th Cong., 1st sess., Feb. 15, 1967.

30 See IMCO doc. A/ES.III/Res. 109, Nov. 30, 1966. Before IMCO's action was completed, the U.S. Congress passed legislation complementing the proposed amendments to the International Convention for Safety of Life at Sea, 1960. (See Public Law 89-777, approved Nov. 6, 1966; 80 Stat. 1356.)

1 TS 858; 47 Stat. 2228; 135 LNTS 301. 32 Signed at London, Apr. 5, 1966; entered into force July 21, 1968 (TIAS 6331).

175-176.

See American Foreign Policy: Current Documents, 1965, p. 199.

handling of dangerous goods, tonnage measurements, and marine pollution."

INTERNATIONAL BANK

FOR RECONSTRUCTION AND DEVELOPMENT

Document II-62

Letter From the President (Johnson) to the Senate, February 16, 1966 31

34

Recommendation for Early and Favorable Senate Consideration of the Convention on Settlement of Investment Disputes Between States and Nationals of Other States

With a view to receiving the advice and consent of the Senate to ratification, I transmit the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States which was approved on March 18, 1965, by the Executive Directors of the International Bank for Reconstruction and Development and which is open for signature at the Bank's headquarters in Washington."

The convention was signed for the United States of America by Secretary of the Treasury Henry H. Fowler.

I transmit also for the information of the Senate the report of the Secretary of State with respect to the convention and also a copy of Resolution No. 65-14 adopted by the Executive Directors of the Bank on March 18, 1965, a copy of the accompanying report of the Executive Directors, and a summary containing further ex

33 For a U.S. Act to implement the provisions of the International Convention for the Prevention of the Pollution of the Sea by Oil, 1954 (American Foreign Policy: Current Documents, 1961, p. 196), as amended (TIAS 6109; 17 UST 1523), see Public Law 89-551, approved Sept. 1, 1966 (80 Stat. 372). 34 Department of State Bulletin, Mar. 14, 1966, pp. 419-420.

25 See post, doc. II-64.

planatory comments concerning the convention.36

The purpose of the convention is to provide facilities for settlement or adjudication of international disputes relating to international private investments and thereby to encourage a larger flow of such investments. The convention would establish an International Center for Settlement of Investment Disputes, the seat of which would be at the principal office of the Bank. The Center would provide facilities, rules of procedure, and panels for conciliation and arbitration of investment disputes directly between private citizens or corporations of one country and the government of another country.

The convention would not establish any substantive rules of international law. Moreover, by becoming a party to the convention a country would not obligate itself to submit any given dispute or contract to the mechanisms of the convention. Both conciliation and arbitration would be based on consent, to be given either ad hoc or as part of an investment agreement. Once a consent to resort to either conciliation or arbitration under the convention has been given with respect to a particular matter, that consent would be irrevocable. The arbitration mechanism provided by the convention is such that refusal by one party to name its arbitrator would not prevent arbitration proceedings from going forward. Arbitral awards are stated to be binding on the parties and not subject to any appeal except as provided in the convention. Where applicable, and unless otherwise provided, the convention would provide for settlement through the mechanisms of the Center, without requirement of prior exhaustion of local remedies.

As indicated in the enclosed report by the Secretary of State, the U.S Director of the Bank, pursuant to action 65-39 of February 12, 1965, of the National Advisory Council on International Monetary and Financial Problems, voted in favor of the resolution by which the Executive Directors of the Bank approved the text of the convention.

I recommend that the Senate give early and favorable consideration to the convention and to its ratification.

36 Texts in S. Ex. Doc. A, 89th Cong., 2d sess., Feb. 16, 1966.

PURPOSES AND FUNCTIONS

In contrast to one of its earlier objectives-that of postwar reconstruction-the current task of the International Bank is to provide investment capital for development projects and programs designed to raise the level of productivity and to stimulate economic growth in its member countries. An important corollary is the Bank's role in mobilizing private capital for international investment through the sale of Bank obligations to private investors. Since 1948, the Bank has been concerned chiefly with the long-term financing of productive projects in the less-developed countries of the world. The major portion of Bank lending has financed so-called infrastructure projects-chiefly transportation and electric power-which generally do not tend to attract private investment in developing countries. However, the Bank has also given attention to the growth and expansion of the private sector, either directly or through the medium of development banks, and this aspect of its lending has been of increasing importance in recent years.

CHANGES IN LENDING POLICY

The Bank has tried to achieve a closer relationship between its terms of lending and the particular circumstances of the recipient countries. For the developing countries, the Bank has adopted a policy of approving relatively longer maturities and longer grace periods where these are ap

H. Doc. 92, 90th Cong., 1st sess. Apr. 3, 1967, pp. 14-24 and 123-124. Concerning the establishment and work of the Council, see the Department of State Bulletin, Mar. 14, 1966, pp. 404-405.

propriate in view of the useful life of the project, the time required to bring it into productive use, and the debt situation of the borrowing country. With respect to loans to the more developed countries, which are able to cover the bulk of their financial requirements for external capital from the private market, the Bank in 1965 decided to charge rates of interest approximately comparable to those such countries pay when borrowing in the market. The Bank's standard interest

rate to developing countries, adopted in February 1966, is currently 6 percent, with rates up to 1 percent higher for those more advanced countries which are able to satisfy most of their external capital needs from market sources. The average maturity on Bank loans is 20 years. Borrowers are free to spend the proceeds of Bank loans in any of the Bank's member countries and in Switzerland.

AUTHORIZED CAPITAL

The total authorized capital stock of the Bank was originally $10 billion. In 1959, the authorized capital was raised to $21 billion, in order to make possible a general increase of 100 percent in the individual subscriptions of Bank members and larger increases in the subscriptions of certain members. The U.S. subscription to the Bank was increased from $3,175 million to $6,350 million. However, no cash payments to the Bank were required under this increase. A parallel proposal to increase Fund quotas by 50 percent became effective at the same time. In December 1963, a further increase to $22 billion was approved by the Bank to allow for the subscriptions of a substantial number of new members and for special increases in existing members' subscriptions. The United States did not subscribe to any portion of this increase. An increase of $2 billion to $24 billion became effective in August 1965 in order to provide for the admission of new members, for future increases in members' subscriptions, and to maintain the traditional relationship between members' quotas in the Fund and their subscriptions to the capital stock of the Bank. Ten percent of a member's subscription must be paid in, with the remainder being callable under certain specified

38

as A general increase of 25 percent in all International Monetary Fund quotas, and special increases in the quotas of 16 members, became effective, Feb. 23, 1966; see American Foreign Policy: Current Documents, 1965, pp. 221 ff.

Bank amounted to $22,426.4 million (see appendix table D-1).

LENDING OPERATIONS

Loans and disbursements

As indicated in table 6, the equivalent of $839.2 million, covering 37 loans, was authorized by the Bank in the current period for constructive programs and projects in Latin America ($375 million), Asia and the Middle East ($171 million), Africa ($141 million), Europe ($90 million), and New Zealand ($62.5 million). This compares with loans of over $1 billion in the preceding fiscal period and the equivalent of $396 million in the fiscal year ended June 30, 1956, a decade ago. Electric power projects, transportation, and industry accounted for over 75 percent of total loans. In addition, the agricultural sector benefited by loans totaling $121 million, or approximately 14 percent of the total. The larger loans included $154 million to Mexico, $62.5 million to New Zealand, and $58.3 million to Venezuela. Disbursements on loans were $668.4 million.

40 Printed at the end of this document.

From the beginning of the Bank's operations through June 30, 1966, the Bank authorized 461 loans in 79 countries and territories in the equivalent of $9,793.8 million ($9,583.6 million, net of cancellations, terminations and refundings). As indicated in table 7, $5.9 billion, or approximately 60 percent of the gross total was authorized in two geographic areas: Asia and the Middle East, and the Western Hemisphere. As a result of repayments and sales of loans, the portion of loans still retained by the Bank was reduced to

$6,527.9 million on June 30, 1966. Cumulative disbursements amounted to $7,258.5 million, with approximately one-third of the total disbursed in currencies other than U.S. dollars. The equivalent of approximately $1.4 billion was disbursed in Deutsche marks, pounds sterling and Swiss francs. Additional disbursements in the equivalent of $529 million were made in the form of Netherlands guilders, Canadian dollars, and French francs, with the remainder in the currencies of 30 other member countries.