So far as direct preinvestment projects are concerned we hope that opportunities are not being missed by the Special Fund through an excessive concentration on projects which, in essence, deal with general economic development. After all, it is capital investment from public and private sources that will create the resources for greater efforts in the fields now receiving Special Fund assistance. In fact if we go to the guiding principles contained in the resolution creating the Special Fund, we find that it was

.. envisaged as a constructive advance in United Nations assistance to the less developed countries which should be of immediate significance in accelerating their economic development by, inter alia, facilitating new capital investments of all types by creating conditions which would make such investments either feasible or more effective.

Resolution 1240 (XIII) went on to say:

Projects shall be undertaken which will lead to early results and have the widest possible impact in advancing the economic, social or technical development of the country or countries concerned, in particular by facilitating new capital investment.

I think that these words show that the General Assembly did not have in mind merely an extension of the work of the Expanded Program of Technical Assistance when it established the Special Fund. It was formed rather to provide a bridge between the kinds of technical assistance which deal with the general economic development of a country and those which deal with or lead to capital investment. In this connection we hope to see a further development through the establishment and use of a Special Fund financial advisory service, which would be in a position, on completion of a successful preinvestment study, to suggest promising sources of capital to governments requesting it.

The best way to illustrate the great potential of the Special Fund in the future is to mention a few areas where there is a great need to create specific opportunities for investment. The newly independent countries of Africa often have need for outside help in identifying areas which can productively absorb and utilize capital, but it has been difficult for the World Bank and IDA to extend assistance on any significant scale to those countries because of the lack of suitable development projects. My Government suggests that the Special Fund and the executing agencies give special attention to the types of projects in that area which might pave the way for World Bank and IDA

assistance.

The importance of industrialization for developing nations is today broadly accepted. The Managing Director reported to the Committee for Industrial Development last March that virtually every project approved by the Governing Council has some bearing on industrial development and that over 40 percent of total approved costs were for projects intended to assist directly and specifically the industrialization of low-income countries. Yet we find a concentration of effort on training, education, and research, with very few projects leading directly to investments in industry. Our analysis shows a decline of emphasis on industrialization, dropping to 30 percent of the total at

the last session and under 20 percent for the program recommended at this session.

In consultation with the Commissioner for Technical Assistance and the Commissioner for Industrial Development, the Managing Director may wish to explore the possibility of Special Fund assistance in surveys of industrial potential or feasibility studies of industrial estates and similar undertakings. We are confident that the newly created Committee for Industrial Development and the Center for Industrial Development will greatly assist the Special Fund, and the other U.N. technical assistance operations as well, in identifying projects in the field of industry.

Considering the broad range of Special Fund activities, and the modesty of its resources, it is not surprising that some activities tend to get neglected. But it seems that housing, in particular, has received too little attention. The grievous inadequacy of rural and urban housing around the world, which is susceptible to improvement through known housing techniques, led to the creation of the Committee on Housing, Building and Planning. Furthermore the Secretary-General has pointed out in his report entitled Housing, Building and Planning in the Development Decade (Document E/C.6/2, paragraphs 12 and 13) that:

Generally up to 75 per cent of total fixed capital investment, in developing and advanced countries alike, takes the form of building and construction. The pace and size of development programmes is, therefore, heavily influenced by the availability of building resources in materials, labour, management and equipment. The cost of development programmes-thus very often their feasibility and viability—is determined in large measure by the efficiency and productivity of the construction and building-materials industries.

If total fixed capital investment is 15 per cent of gross national product and if about two-thirds of this investment is building and construction (or 10 per cent of gross national product), a reduction in building costs of 10 per cent will amount to an additional 1 per cent of gross national product available for investment. . . .

The potential for great return from limited preinvestment seed capital is thus very great. We are sure that the Special Fund will cooperate fully with the new committee in its efforts to strengthen U.N. programs in these fields.

It is perhaps all too easy to suggest things for the Special Fund to do, and these suggestions and recommendations are made in the full realization that the Managing Director has very limited resources at his command. My Government does hope, however, that in choosing among its many opportunities the Special Fund will keep alive that freshness of approach, that quality of innovation, which so characterize the long and distinguished career of the Managing Director in the business of development.

Meanwhile the most obvious way in which the Special Fund can be strengthened to meet the needs of the developing countries is, of course, to give it the funds to do the job. Meetings and words cannot do this; additional resources are necessary if the Special Fund is to succeed. Once again it is necessary to express our disappointment that the minimum goal of $100 million in contributions by member states has not

been met. In my country campaigns for voluntary contributions often carry the slogan "give until it hurts." Considering the need, the goal here is a modest one, and it wouldn't even "hurt" many countries to increase their contributions. My Government strongly urges that member countries make sure that this goal is met in 1963.

In closing I wish to express the deep sense of appreciation which my Government feels for the work of the Managing Director, his able staff, and the executing agencies in making the Special Fund a symbol of what can be accomplished through international cooperation. Through their efforts, the Special Fund has not only assisted the developing countries but has also contributed to the growing realization that vital common objectives can be and are being successfully achieved through the medium of the United Nations.

II-36

"THERE IS... NO REASON WHY OUR GREAT BODY OF ADVANCED TECHNOLOGY SHOULD NOT BE BROUGHT TO BEAR SO THE NEWLY DEVELOPING NATIONS CAN LEAPFROG INTERIM STAGES IN THE PROCESS OF MODERNIZATION": Statement Made by the President (Kennedy) on the Forthcoming U.N. Conference on the Application of Science and Technology for the Benefit of the Less Developed Areas, January 25, 1963 10

II-37

"IT WOULD BE TRAGIC IF OUR DISSATISFACTION WITH THE PROJECT IN CUBA WERE TO DESTROY OUR SUPPORT FOR THE SPECIAL FUND": Address by the Deputy Assistant Secretary of State for International Organization Affairs (Gardner) Before the Mid-Atlantic Model General Assembly, Washington, February 23, 1963 (Excerpt)11

There are a number of things that are done at the U.N. with which we do not agree. During the last 2 weeks we have had a dramatic illustration of this in the decision of the U.N. Special Fund to proceed-albeit on a tentative basis-with an agricultural research project in Cuba.

This project was approved by the Governing Council of the Special Fund in May 1961. It calls for an allocation of $1,157,000 from the Special Fund to assist in the expansion of an agricultural experimental station in Santiago de las Vegas.

1 White House press release dated Jan. 25, 1963; the Department of State Bulletin, Feb. 25, 1963, pp. 302-303. The statement was made after the President's meeting with the U.S. delegation, headed by Walsh McDermott. For details on the Conference, which met in Geneva, Feb. 4-20, 1963, see Yearbook of the United Nations, 1963, pp. 248-249.

11

Department of State press release No. 99, Feb. 22, 1963 (text as printed in the Department of State Bulletin, Apr. 1, 1963, pp. 477-481).

The United States Government did everything consistent with the U.N. Charter to oppose this project. We oppose any source of aid and comfort to the Castro regime. We argued that Special Fund assistance to Cuba at this time could not be justified under the economic and technical criteria of the Special Fund's charter, in view of the chaos in Cuban agriculture which has resulted from the application of Communist techniques and the subordination of the economic and social welfare of the Cuban people to the narrow political aims of the Castro regime.

Our arguments, I am sorry to say, did not receive the necessary support in the Governing Council. Mr. Paul Hoffman, the Managing Director of the Fund, concluded that he had no choice but to proceed with the project on a tentative basis. In the next few months he will send several experts to determine whether or not conditions in Cuba will permit the project to proceed, and it is possible that the actual operation of the project will not go forward when representatives of the Fund have the opportunity to take an up-to-date reading of conditions on the spot.

The Special Fund project in Cuba is an example of a U.N. action with which we do not agree. But it is well in these matters to keep our eyes on the big picture. The Special Fund, like all U.N. economic agencies, is prohibited by its charter from making decisions on political grounds. The failure of other U.N. members to support us in our opposition to the Cuban project came not out of any solicitude for Cuba but out of the fear that stopping this project would jeopardize other projects to which the Soviet Union and other countries have objected. The Special Fund has 11 projects, totaling $7.5 million, in Korea, Viet-Nam, and free China which the Soviets do not like-and which are being carried out today despite their misgivings.

The fact is that the U.N. Special Fund has been a great asset to the free world through its efforts to promote the material basis for free institutions. Even on the narrowest of political calculations the free world has got more out of the Special Fund than it has put in, while the reverse is true of the Communist bloc. The bloc countries have contributed some $7 million to the Special Fund; with this project in Cuba added to two previous projects in Poland they will have received $3 million in return. If you add Yugoslavia, Communist contributions add up to $8 million, projects in Communist countries to $6 million. Out of the 288 Special Fund projects so far authorized, 282 have been in non-Communist countries. In financial terms, some $248 million of the grand total of $254 million of Fund projects-over 97 percent-go to the non-Communist world.

It would be tragic if our dissatisfaction with the project in Cuba were to destroy our support for the Special Fund. It would be the height of folly to sacrifice the 97 percent of its work we do like for the 3 percent we do not like. We do not bench a baseball player who is batting .970 nor fire a football coach because he loses 1 game in 30.

The price of participating in any political institution is that you cannot get your way all of the time. We cannot expect to get our way

all of the time in the United Nations. There will be entries on the debit as well as on the credit side of the ledger. The central question is whether the credits exceed the debits-whether, looking at the balance sheet as a whole, the institution is making a net contribution to our national interest. The United States Government continues to believe that the answer to that question is overwhelmingly in the affirmative.

II-38

INTENSIFICATION OF DEMOGRAPHIC STUDIES, RESEARCH AND TRAINING: Resolution 933 C (XXXV), Adopted by the U.N. Economic and Social Council, April 5, 1963 12

II-39

"WHILE THE UNITED STATES WILL NOT ADVOCATE ANY SPECIFIC FAMILY-PLANNING POLICY TO ANY OTHER COUNTRY, WE CAN HELP OTHER COUNTRIES, UPON REQUEST, TO FIND POTENTIAL SOURCES OF INFORMATION AND ASSISTANCE ON THE WAYS AND MEANS OF DEALING WITH POPULATION PROBLEMS": Address by the Deputy Assistant Secretary of State for International Organization Affairs (Gardner) Before the American Assembly on "The Population Dilemma," Harriman, N.Y., May 4, 1963 13

II-40

"WE COME HERE WITH A CLOSED MIND IN ONE IMPORTANT RESPECT; WE DO NOT WANT THESE MEETINGS TO BE AN EMPTY PROPAGANDA SHOW": Statement Made by the Deputy Assistant Secretary of State for Economic Affairs (Frank) Before the Preparatory Committee of the United Nations Conference on Trade and Development, Geneva, May 27, 1963 14

We had intended to avoid any general tour d'horizon. The United States has not, however, submitted a written statement, and some preliminary expression of our views on this meeting of the Preparatory Committee and on the Conference itself would be in order.

12 U.N. ECOSOC Official Records, Thirty-Fifth Session, Supplement No. 1 (E/ 3753), pp. 4-5. This resolution was adopted unanimously at the 1248th plenary meeting.

13

Department of State press release No. 243, May 3, 1963; the Department of State Bulletin, June 10, 1963, pp. 906–914.

1 The Department of State Bulletin, July 29, 1963, pp. 173-178. Isaiah Frank was chairman of the U.S. delegation to this second session (May 21-June 29, 1963) of the 32-member-nation Preparatory Committee. The first session (Jan.