But even more important than this, it seems to me that the bond issue comes down to the question of whether or not the peacekeeping functions of the United Nations as they have been developed are going to be supported. I think it is true that whereas the U.N. was conceived as an organization that would keep the great powers together, it has not quite worked out that way. It has worked out quite differently but nonetheless effectively. What the U.N. has been able to do is to keep the great powers apart. It has made it possible to avoid a direct confrontation of the kind that could trigger off world war III. This special U.N. role has come about as the committee well knows, through the extraordinary development of the powers of the office of the executive secretary. A kind of international case law has been developed. The demonstration of this has been Korea, the Middle East, and the Congo. As long as this peacekeeping function is kept intact there is some hope of avoiding a direct head-on confrontation of the kind that nobody wants. I am sure you have heard plenty of testimony on the development of the instrument of the United Nations as the one means by which the free West and the United States have been able to counteract indirect aggression successfully. I have been in the Middle East and I have examined those U.N. outposts, as I am sure many of you have, between Israel and the bordering Arab lands. In this no man's land it is very comforting to see the blue U.N. flag flying with U.N. personnel standing watch alongside of it, between two armed camps. There is a tension there which could trigger off another explosion. Mr. CHIPERFIELD. And without American boys there. Mr. LINDSAY. Yes; without American boys there. Without a stabilizing influence, without the U.N. presence in these border lands, the tension is such that any border incident could trigger off such a wave of reaction and counterreaction that the whole world would be immediately embroiled. Right there you have a justification, without anything more, for this bond issue which is designed to keep the peacekeeping functions of the U.N. alive. It's a cheap price to pay in this nuclear day and age. And in the Congo, that controversial area, the question at issue is the right of the policemen to be on the beat. It is always difficult to suggest what would have happened or might have happened, but for a particular event. You can't ever prove that "X" would have hapened but for "Y." But the fact of the matter, as I see it, one mans' opinion, is that but for the presence of the U.N. in the Congo the world would have been faced with a blood bath of the most appalling proportions, plus the establishment of a Communist beachhead, followed possibly by a direct confrontation of the kind that is to be avoided except under the most extreme provocation. So then why the bond issue? Is not this a reasonable price to pay? As a practical matter, further, the U.N. Assembly has acted on it. It is there. Forty-four member nations have responded to the U.N. resolution to the extent of $73 million either pledged or actually paid. This, to me, is significant. If Congress should now reject the bond issue as it has been agreed to by the member nations of the United Nations, then we should have on our hands a tragedy of unending 86138-62- -14 proportions, the fallout from which would most seriously affect the delicate balance of the continuing cold war tension. The legality of the bond issue is established. I should like for the record at this point, Mr. Chairman, if I may, to submit an excellent memorandum of law which was prepared by the Committee on International Law of the Association of the Bar of the City of New York, one of the countrys' leading bar associations, in which the legal aspects of the bond issue are set forth. The memorandum confirms the binding nature of the bond issue, based on article 104 of the charter. Mr. ZABLOCKI. Without objection the memorandum will be made a part of the record at this point. (The memorandum follows:) COMMITTEE ON INTERNATIONAL LAW REPORT ON THE UNITED NATIONS BOND ISSUE, On December 11, 1961, the Acting Secretary-General of the United Nations at the 899th meeting of the Fifth (Administrative and Budgetary) Committee predicted that by the end of 1961 there would be a gap of $107.5 million between the Organization's debts and its available net cash resources, which could be expected to increase to $170 million by June 30, 1962. The alarming rate at which the costs of the Congo operation alone had been multiplying, of which the members had been aware for some time as evidenced by the various previous actions taken and resolutions passed both by the Advisory Committee on Administrative and Budgetary Questions, the Security Council and the General Assembly, required immediate action. As a result on December 20, 1961, Resolution 1739 (XVI), providing for a bond issue, was adopted by the General Assembly. The General Assembly recognized that while the proposed bond issue should not be deemed a precedent for future financing of the expenses of the United Nations, existing circumstances required extraordinary financial measures. Pursuant to the resolution the Secretary-General was authorized to issue bonds not exceeding $200 million (U.S.) in principal amount and to use the proceeds from the sale of such bonds "for purposes normally related to the Working Capital Fund." The resolution provides that an amount sufficient to pay interest charges on the bonds and the installments of principal due is to be included annually in the regular budget of the United Nations. The bonds are to have a 25year maturity and carry a rate of interest of 2 percent. They may be issued in U.S. dollars or in such other currency as determined by the SecretaryGeneral. Each bond will be payable in 25 annual installments at a rate increasing from 3.1 percent of the principal amount at the end of the first year to 5.1 percent at the end of the 25th year. There is provision for prepayment in whole or in part at any time provided the partial prepayment is applied equally and ratably to all the bonds outstanding. The bonds may be offered to states which are members of the United Nations, members of the specialized agencies and of the International Atomic Agency as well as to the official institutions of such members, and, if the Secretary-General, with the concurrence of the Advisory Committee on Administrative and Budgetary Questions, shall so determine, to nonprofit institutions or associations. The bonds will be transferable only to governments or institutions to which the bonds may be initially offered pursuant to the resolution. Agreements for the sale of the bonds must be concluded before the end of 1962, but may provide for delivery of and payment for the bonds at any time on or before December 31, 1963. II It is clear that the United Nations has the power to issue valid and binding obligations. Although like a sovereign state, the Organization could not be sued without its consent, its international obligations are similarly binding. Article 104 of the charter provides: "The Organization shall enjoy in the territory of each of its members such legal capacity as may be necessary for the exercise of its functions and the fulfillment of its purposes." The borrowing of funds is a necessary consequence of the exercise of the Organization's functions. Indeed, the authority of the Organization to borrow was not challenged in 1948 when it financed the construction of its headquarters. The members have been regularly assessed to repay that loan as part of the Organization's annual budget. The International Court of Justice recognized the Organization as a legal entity capable of operating as such, in the case of Reparation for Injuries Suffered in the Service of the United Nations, I.C.J. Reports, 1949, 174, which considered the question whether the Organization had the capacity to bring an international claim against a state for damage caused to the Organization and its agents. "In the opinion of the Court, the Organization was intended to exercise and enjoy, and is in fact exercising and enjoying, functions and rights which can only be explained on the basis of the possession of a large measure of international personality and the capacity to operate upon an international plane * * "Accordingly, the Court has come to the conclusion that the Organization is an international person. That is not the same thing as saying that it is a state, which it certainly is not, or that its legal personality and rights and duties are the same as those of a state. Still less is it the same thing as saying it is 'a superstate,' whatever that expression may mean. It does not even imply that all its rights and duties must be upon the international plane, any more than all the rights and duties of a state must be upon that plane. What it does mean is that it is a subject of international law and capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims" (p. 179). The reasoning which led the Court to conclude that the Organization has rights against states under international law would likewise lead to the conclusion that it would be obligated under international law to pay the bonds. III There is presently before the International Court of Justice a related question which could affect the repayment of the bonds. On the same day it passed the resolution concerning the bond issue the General Assembly by Resolution 1731 (XVI) asked the Court pursuant to article 96 of the charter for an advisory opinion on the question whether expenditures by the Organization for operations in the Near East and Congo were "expenses of the Organization" which "shall be borne by the members as apportioned by the General Assembly" under article 17, paragraph 2 of the charter. The committee has not considered the merits of this question, but the character of the bonds as valid and binding obligations of the Organization would not be affected if the Court should rule that the expenditures for the Near East and Congo operations were not "expenses of the Organization." In this connection it is to be noted that: 1. Under the terms of the General Assembly's resolution, the proceeds of the bonds are not specifically allocated for reimbursing the expenditures referred to in the request for the advisory opinion. 2. The assessments out of which the bonds are to be repaid will not be specifically allocated for such repayment but will be included annually in the regular budget of the Organization. Thus, if the Court should rule that the Near East and Congo operations were not "expenses of the Organization," and if this should permit a member to withhold payment of that portion of its proposed regular assessment representing the payment for expenditures of a type referred to in the request for the advisory opinion, the Organization would nevertheless remain obligated to repay the bonds out of available resources. Committee on International Law: Isaac N. P. Stokes, Chairman; Mr. LINDSAY. That, Mr. Chairman, completes my testimony and I repeat what I said at the beginning, that it is simply a question as to whether or not the U.S. Congress wishes the United Nations to survive as a viable peacekeeping organization with a degree of power or whether it wishes to have it fade into a rather meaningless debating society. Mr. ZABLOCKI. Thank you very much, Mr. Lindsay, for a very fine statement and for your personal observations on the organization of the U.N. and the necessity for the proposed U.N. loan. Mr. Chiperfield? Mr. CHIPERFIELD. Thank you, Mr. Lindsay, for a very fine and constructive statement. I think you have put your finger right on the main issue and that is the question whether the United Nations is going to be able to carry on its peacemaking powers. If the United Nations should be unable to continue in the Near East or in the Congo and would have to withdraw, do you not agree with me that that would be disastrous to our foreign policy, not only for ourselves but for the free world? Mr. LINDSAY. I certainly do agree with that statement, Mr. Chiperfield. Mr. CHIPERFIELD. That is the issue before us, it seems to me. You can talk around the other issues all you want; but if the United Nations can't keep its peacemaking powers and continue them then, as you say, it will be a debating society. Thank you very much, Mr. Zablocki. Mr. ZABLOCKI. Mr. Fountain? Mr. FOUNTAIN. No questions, Mr. Chairman. I do want to thank Mr. Lindsay for a very thought-provoking statement. Mr. ZABLOCKI. Mr. Whalley? Mr. WHALLEY. I want to thank Mr. Lindsay for his very excellent statement. I think, as he does, this is an emergency for funds that cannot be put off and the other will have to come later. Thank you. Mr. ZABLOCKI. Mr. Seely-Brown? Mr. SEELY-BROWN. I have no questions, Mr. Chairman. Mr. LINDSAY. Thank you, Mr. Chairman and members of the committee. Mr. ZABLOCKI. We are indeed pleased to have with us this morning Mr. Clark M. Eichelberger, executive director, American Association for the United Nations, Inc. I have known Mr. Eichelberger for many years and I am happy to present him to the committee. STATEMENT OF CLARK M. EICHELBERGER, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION FOR THE UNITED NATIONS Mr. EICHELBERGER. I am indeed very glad to have an opportunity to supplement some of the things my Congressman from New York has said. I am sorry he has already left, but I happen to be one of his constituents in the 17th District and we are very proud indeed of the representation he gives our district. Mr. ZABLOCKI. I am sure Mr. Lindsay will not disagree with me when I state he is just as proud of you as you are of him. Mr. EICHELBERGER. Between the statements of Mr. Lindsay and Mr. Chiperfield many of my points have been made, so I will not read my statement but I will supplement a few things if I might. Mr. ZABLOCKI. Would you care to have this included in the record? Mr. EICHELBERGER. Yes. Mr. ZABLOCKI. Without objection it will appear in the record at this point. (The prepared statement is as follows:) STATEMENT OF CLARK M. EICHELBERGER, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION FOR THE UNITED NATIONS, JULY 19, 1962 Mr. Chairman, I appear in support of S. 2768, a bill which authorizes the President on behalf of the United States under certain conditions to lend up to $100 million to the United Nations. United Nations financing may be divided into three areas. It is only the third, the emergency peacekeeping area, that has presented the problem which necessitates a United Nations loan at this time. The first area of United Nations financing covers the expenses of the so-called regular day-by-day operation. The U.N. collected 92.68 percent of the assessment for 1961. Because the United Nations fiscal year is different from that of some governments, there are frequently technical arrears. For illustration, the United States is $33 million technically in arrears for 1962, but that obviously will be corrected before the year is out. The second area of United Nations financing may be considered as wholly voluntary. Here the U.N. adopts a program and sets the goal of funds needed. However, contributions to such a program are voluntary, rather than assessed. In some cases, a few nations pay a great deal toward these goals. In others, many nations pay something. For illustration, the United Nations determines a budget for the maintenance of Arab refugees, a large share of the cost of which is borne by the United Kingdom, the United States, and a few others. On the other hand, many nations contribute to the U.N. technical assistance program. The United Nations has set a goal of $150 million for 1962 for economic and social assistance and the Special Fund. On October 17, 1961, the U.N. held a pledging conference at which nations said what they would give to the program. At this conference and since, 86 governments volunteered a total of about $100 million for this program. Of this, the United States volunteered 40 percent. It is interesting to note that the Federal Republic of Germany and the Vatican made pledges. It should also be noted that Canada, the Netherlands, Norway, Sweden, and Denmark made pledges for technical assistance that are more per capita than the contribution of the United States. It was a matter of pride for the governments of the underdeveloped countries to contribute something toward the overall cost. It shows that a great many members of the United Nations are making an effort to carry some of the expenses of the operation. A third area of United Nations financing is that which has caused the financial crisis. This is the financing of two major emergency operations. One is the maintenance of a United Nations force in the Gaza strip and the Sharm el Sheikh area to keep the peace between Israel and her Arab neighbors. The other is the United Nations activity in the Congo. Both these U.N. operations are serving the national interests of the United States. The Congo operation is the largest cause of the financial difficulty for two reasons: The United States and many other governments take the position that the obligation to meet these expenses has the same legal status as the regular expenses. However, there are those who say that they are not obligated to meet the assessed cost of an emergency operation unless they choose to do so; there are those who have a hard time paying more than their regular assessed dues. The excuse of the Soviet Union and its Communist allies for not paying for either program is that these budgets should have been voted by the Security Council, since it is primarily responsible for the maintenance of international peace and security. Of course, in the Security Council the Soviet Union has a veto and it is apparent that they would have used the veto for these emergency expenditures. The Soviet Union has taken the position that it and the United |