Mr. LODGE. Of course the money wasn't there. When this thing hit the United Nations, first the Gaza strip force and then the Congo force, there wasn't any money in the regular fund. So in that sense it had to be-in a bookkeeping sense it had to be separate.

I know in the Eisenhower administration, and I am sure it is the same in this administration, the contention always was that this was just as much of an obligation on the U.N. as the payment of the salaries and the building in New York and it ought to be so regarded.

Setting it in a separate pocket was simply because there wasn't the money in the regular budget. It didn't mean that it was an obligation of inferior quality. I made many statements which were authorized by the administration to the effect that this was an obligation on the Russians and they ought to honor it and they would be welching if they didn't.

Mr. MCDOWELL. If there is any possibility, Mr. Chairman, of any clarification on this point, I would appreciate it if the committee could have that information.

Chairman MORGAN. We will be glad to obtain it for you. (The information is as follows:)

THE INTENTION IN ESTABLISHING SEPARATE ACCOUNTS FOR UNEF AND THE CONGO

For a number of years prior to 1956 (when the United Nations Emergency Force in the Middle East was established) expenses of relatively small magnitude for various peace and security operations (e.g., U.N. missions in Palestine and Kashmir) had been carried in the regular budget of the United Nations. As a matter of fact, similar costs are currently included in the 1962 regular budget of the U.N. for special United Nations missions and the United Nations field service.

Upon the recommendation of the Secretary General the use of a separate account originated with UNEF in 1956. The use of a separate account was not intended to differentiate the expenses for UNEF or their treatment from those for peace and security operations which had been and are reflected in certain sections of the regular budget. When the Emergency Force was established in November of 1956 the regular budget estimates for 1957 were already in final form. Moreover, because of the nature of the operation, the Secretary General was not in a position to provide the Assembly with a definitive estimate of the total costs that might be required. The Secretary General, therefore, recommended to the Assembly in November 1956 (A/3302) that the costs of UNEF be assessed on the basis of the regular scale of assessments and recommended that an initial amount of $10 million be authorized and be handled accountingwise as a special account separate from the regular budget.

On the question of the apportionment of the costs of UNEF (and later Congo) member governments put forward a variety of suggestions such as: (1) The costs should be included in the regular budget and apportioned among all member states on the basis of the regular scale of assessments; (2) the costs should be borne by the aggressor powers (in the case of UNEF) or by the former administering power (in the case of the Congo); (3) the greater portion of the costs should be borne by the permanent members of the Security Council as having a major responsibility for the maintenance of peace and security; (4) the costs should be assessed on all governments, however, those able to do so should make voluntary contributions in order to lessen the amount to be provided by assessments on those states with a limited capacity to pay; (5) the costs should be financed entirely out of voluntary contributions; etc.

The

In the face of the cost-sharing dilemma, the Assembly in November 1956 in resolution 1122 (XI) approved the Secretary General's recommendations and authorized the establishment of a $10 million special account for UNEF. Assembly put aside until November of 1957 action on the apportionment of UNEF costs among member states.

With respect to the Congo force a similar situation developed in 1960, costs being authorized from the outset, but cost sharing not being voted until December of that year. It is important to note that the Assembly's Resolution 1583 (XV)

of December 20, 1960, states: "The General Assembly, * * * Recognizing that the expenses involved in the United Nations operations in the Congo for 1960 constitute 'expenses of the Organization' within the meaning of article 17, paragraph 2, of the Charter of the United Nations and that the assessment thereof against member states creates binding legal obligations on such states to pay their assessed shares, * * *.”

In essence, therefore, the separate accounts were set up as a matter of administrative convenience and as an orderly way to keep the books.

Mr. MCDOWELL. I want to thank both the gentlemen for being here. I think your presence here again fortifies this committee and Members of Congress in the position that I think we are always sound in taking, that when civilian and military experts in and out of the Government of this country come before us and testify almost to a man, on issues of this importance, that in their opinion it is necessary, think it is pretty difficult for us as Members of Congress to go contrary to those opinions.

I

I appreciate your presence here, and the statements you have made. Mr. McCLOY. You mentioned, Mr. Congressman, that it was a gamble. It is a gamble. But I think it is the best gamble that I can think of for the time being because this payment is going to be diluted in terms of the capacity to pay, of some of these underdeveloped nations, over a period of 25 years, and I think it is a whole lot more likely to be paid than if you lumped it in 1-, 2-, or 3-year payments.

It is interesting to see how these moneys have been raised in the past. I was very much involved in the Suez affair. Mr. Hammarskjold asked me to come in and help him because he didn't have any money to clear the canal. There was nothing in the coffers to take care of it.

Well, it was strange how informally and yet effectively it worked

out.

I called up all the seafaring countries I could find and said, "Would you put up some money in the pot to help clear the canal?"

They said, "When do we get it back?"

I said, "I don't know when you will get it back, but we will try to get it out of tolls."

We raised the money on the basis of a gamble and that money has all been repaid now. A greater and greater number of countries contributed to it as they saw others doing so and there was a certain sense of obligation, and it has been all paid back now.

I think considering the form of this loan and the general desire of nations to meet their obligations, it is something less than a pure speculation-something better than pure speculation or a gamble.

Mr. O'HARA. It was about that time, too, that the Export-Import Bank loaned five times this amount-$500 million-to the United Kingdom?

Mr. McCLOY. Yes.

Mr. O'HARA. That money came back and that is five times the amount of money involved here. Also the Congress voted about $4 billion for the space venture, our quest to reach the moon, and that is 40 times the amount of money, and they are both gambles, aren't they?

Mr. McCLOY. I saw some figures the other day that this figure for this year's military and aid program is $300 per capita for each man, woman, and child in the United States, and $1.06 for the United Nations proposal.

Mr. LODGE. Speaking of gambles that work out well and of the Suez Canal, you remember the destruction was perfectly tremendous and it was considered it would take a long time to get it open again.

The Secretary General set up a force entirely for the countries. that were not involved in the dispute. They got Gen. "Spec" Wheeler of the U.S. Army Engineers to head it up, and all those people, speaking different languages and never having worked together before, were able to get that thing opened in a matter of months.

It was opened in March after it had been destroyed in October, which is a gamble that succeeded better than anybody possibly dreamed it could under extremely difficult conditions.

Mr. O'HARA. Gambles do pay off.

Mr. LODGE. Sometimes.

Mr. McCLOY. It cost $12 million rather than $45 million. That was because "Spec" Wheeler did it. He was engineer officer of the 4th Division in World War I and that is how he happened to be appointed. When Hammarskjold came to me and said "Where do I go to get a fellow to clear up the canal?" I said "Spec" Wheeler. I had used him as chief engineer of the World Bank when I was president. He had been in charge of the Panama Canal and he built emplacements for my guns when I was an artillery officer along the Moselle River in World War I.

Mr. LODGE. How old was he when he cleared the canal?
Mr. McCLOY. Past retirement age.

Chairman MORGAN. Mr. Barry.

Mr. BARRY. Thank you, Mr. Chairman.

I wish to add my word of praise to the comprehensive statements you have given this morning, and your observations in regard to this problem. I think in facing up to this in the next few weeks, that we must be aware of the technical problem that we have in view of the Gross amendment last week, which showed that there were a majority of members at least last week who seemed to be unhappy about other nations' contributions to the United Nations which is this same feeling that many of us have expressed here. In view of the technical situation, I wonder if you had given thought to possibly another method which would meet Mrs. Church's objection to the bill which might also meet Congressman Frelinghuysen's point with regard to working up a permanent future financing plan for the United Nations, if something along the lines of a general loan by this Government for 3 years of $100 million, giving the United Nations this period of time to straighten out the financial problems that face it today.

I know that this method was discussed in the Foreign Relations Committee. The Senators, if they did not have a committee vote on the amendment, failed to take any action on the proposal.

There are those in the Chamber who, if we don't come in with a better solution to this problem, are going to vote against it. Then there are those who traditionally vote against it. They may possibly outnumber the people who are willing to take this middle ground, especially if the vote were to come prior to a decision of the World Court.

I don't worry along the lines of the Congressman from Ohio when he says that the Soviets would just say "Well, you don't recognize the World Court, so as far as we are concerned, we won't contribute and

pay our share." I say this because the Soviets will be required to pay their share of servicing the bond issue and under article 19 if in 2 years they have not paid their share of the servicing of these bonds, as I understand it, they would no longer have a vote in the General Assembly.

If they no longer have a vote, they have no right to be heard, or to be recognized in the General Assembly under section 19. Is this a correct interpretation, Mr. Ambassador?

Mr. LODGE. The language is "shall have no vote in the General Assembly." I have never contended that the Russians are going to pay their share no matter what the decision of the Court is. I don't think they are going to pay their share.

We have just got to brace ourselves for that fact. When you look at the arrearages, you have the Communist bloc―you have the group of countries that don't want to pay, which consist of the Communist bloc, plus France, Belgium, and of course the Arab states on the Gaza strip thing.

Then you have China, which is unable to. Then the rest of the ones that you think you can probably get, who are doing it—who don't pay for various reasons. I have never contended that the Russians will pay, no matter what the decision of the Court is.

You mentioned a loan proposal which would not require the amortization out of the regular appropriation of the U.N. I think it would be a pity to drop that. I think that is very much in our American best interest, to make these peacekeeping expenditures a part of the regular budget.

I think that is one of the ingenious and constructive things about this proposal that it does that.

Mr. BARRY. It says the money for repayment comes out of the regular budget. There is a 2-year provision after a country has defaulted on the regular budget. Let's say we do go ahead and buy the bonds. Let's say the entire indenture is picked up by the end of this year, so beginning a year following would be the due date time on repayment.

You have to wait 2 years beyond that date before a country is in default. In effect, we are talking about 311⁄2 years from now before we could pinpoint anyone in default under the bond issue.

Mr. LODGE. I think you are talking about loss of voting rights.
Mr. BARRY. Yes, I am.

Mr. LODGE. As distinct from payment for the expenses of the peacekeeping activities. They are two separate things. The voting right isn't an issue in this legislation at all.

Mr. BARRY. No; it isn't an issue except for the fact that one of the reasons for pushing the bond issue is that the repayment on the bonds and servicing of the bonds would be part of the regular budget. This will be pointed up on the floor with a statement that it is going to be 3 or 311⁄2 years before there will be any leverage from the use of this provision from the indenture to force a nation to come across in the servicing of the bonds

Mr. McCLOY. If I may interrupt, the greatest leverage I think is going to be when it gets under the regular budget, with the advisory opinion, assuming that the advisory opinion is favorable.

Mr. BARRY. Then you are going to rely on the advisory opinion?

Mr. McCLOY. Sure, because one of the things that is going to induce these people to pay up these assessments-pay up their assessments— is the fact that it is legal, whereas now there is an argument that this is illegal. There is going to be a big campaign made, I would assume, I would hope, for the collection of arrearages once you get this through, and have the favorable opinion.

I don't think you have to wait, in other words, for the 2-year lapse. There will be a lot of people that will come forward before that time. Some of them will come forward in

Mr. BARRY. You are basing the success of the enforcement provision of the bond issue on the decision of the Court? You think that is going to be persuasive. I am merely making the observation that in standing up in the well of the House of Representatives and trying to sell them a bond issue and they say "What force of repayment is there?" I have to say to them "For 32 years I don't think we have a weapon in this to get other nations to repay."

Mr. McCLOY. You have a weapon right now. We lent money to the United Nations to buy the building in New York. That was in the regular budget. That has been repaid. Anything that gets into the regular budget prima facie is going to be paid.

Mr. BARRY. How can you be sure they won't withhold that percentage for the servicing of the debt?

Mr. McCLOY. It is conceivable they will. In the first place they would be acting illegally and they would be subject to suspension of their vote after 2 years.

Mr. BARRY. It would be the year intervening plus 2 years, and that is 311⁄2 years before we would know that. Why wouldn't it be advisable to take what some of the Senators think would be a way to get out of this thing, by lending $100 million to the United Nations for 3 years?

Mr. LODGE. First of all, the Russians are going to lose their vote in 1964. That is not 312 years. It is 2 years.

Mr. BARRY. Is that because of the present dues they now owe? Mr. LODGE. Present dues

Mr. BARRY. They could pay 1 year's dues and continue to vote and default on the bonds a year and a half hence.

Mr. LODGE. They will lose their vote in 1964. Now your second question. What is the second question? You had so many I have forgotten-they are good ones, too-it was on a straight loan without requiring that the amortization come out of the regular budget.

I think we would lose something if we didn't try to put the peacekeeping activities in the regular budget. That is advantageous to the United States because they become legally binding obligations on all governments.

Mr. BARRY. Legally binding, but not enforcible.

Mr. LODGE. It is as enforcible as anything in the U.N. is. It has no sovereignty. But the assessments are legally binding on countries and that is one reason why the record of paying assessments is very good, where the record for peacekeeping activities is very bad. Chairman MORGAN. The gentleman's time has expired.

Mr. Gallagher.

Mr. LODGE. The law is broken, but the law is obeyed a great deal in that respect.