Mr. WHALLEY. Has the resolution already been passed saying they will agree to the additional regular assessment to pay Mr. BALL. That is the resolution which authorizes the bond issue. That contains the language of it as follows, a paragraph in this resolution decides to include annually in the regular budget of the United Nations, beginning with the budget for the year 1963, an amount sufficient to pay the interest charges on such bonds and the installments of principal due on the bonds. This has already been authorized, the increase in the budget by that necessary amount. Mr. WHALLEY. The next question is: If the United States furnishes the $100 million on the bond sales at 2 percent, what would it cost the United States over the 25-year period in the difference of interest between the 4 percent average it would have to pay for the money and the 2 percent it would receive? Mr. BALL. We have some figures on that. I will ask if I may, Mr. Cleveland, if he would respond to that. Mr. CLEVELAND. Taking all the income and outgo into account, we figure the U.N. net outlay for the whole U.N. bond arrangement would be $54,100,000. I would be glad to insert a calculation by which this is reached or to go over it now step by step. Mr. WHALLEY. The time is getting late. Maybe you could work up something. It would cost us about $4 million a year for the money. It might cost us $30, $40, $50 million over the 25-year period. Perhaps you can get the information and give it to the committee. Chairman MORGAN. The Secretary has volunteered to put this table in the record. Would that be satisfactory? (The information is as follows:) Cost which would be incurred by the United States under the terms of S. 2768: Outlay: Initial U.S. purchase price. Repayments to U.N.: Of $200 million principal, at 32.02 assessment.. Total U.S. cash outlay.. In millions $100.0 64. 0 17.6 181. 6 Senator John Sparkman, who presided for the Senate committee at the U.N. bond hearings, requested the views of Treasury Secretary Dillon in order to get a definitive answer to the question of the proper handling of an alleged "interest difference loss," which certain Members of the Senate believed should be added to the above net cash outlay. The letters referred to between Senator Sparkman and Treasury Secretary Dillon, which indicate that "the calculations made [in the above table] are correct," are quoted below: U.S. SENATE, COMMITTEE ON FOREIGN RELATIONS, March 19, 1962. Hon. DOUGLAS DILLON, DEAR MR. SECRETARY: The following is taken from the report of the Committee on Foreign Relations on S. 2768 which would authorize the President to purchase United Nations bonds. "As noted above, there was a difference of opinion in the committee on how to calculate the net cost to the United States of the purchase of $100 million of bonds. Some believed that there should be counted as an element of cost $54.7 million, which would represent 3.9-percent interest payments to the U.S. public on annual balances of U.S. borrowing for bond purchases. Others felt that since the President intends to use taxes rather than Treasury borrowing to raise the money to buy bonds, it would be improper to include any interest charge in the calculation of net cost. If interest is counted, the net cost of buying U.N. bonds will be about $108 million and if interest is not counted the net cost will be about $54 million." It would be appreciated if I could have from you, in time for use in a debate in the Senate on this subject which will begin perhaps sometime this week, an analysis of and your comment on this financial question. Sincerely yours, JOHN SPARKMAN. THE SECRETARY OF THE TREASURY, DEAR SENATOR SPARKMAN: Reference is made to your letter of March 19 quoting a statement from the report of the Committee on Foreign Relations on S. 2768, concerning the cost incurred by the United States under that bill which would authorize the President to purchase United Nations bonds. Upon the basis of the assumptions on which the statement in the committee report is predicated, the calculations made are correct. However, it is not customary to attempt to allocate interest costs to expenditure programs of the Government. All of the revenue collections and public debt receipts are deposited into the general fund of the Treasury and all expenditures are made from that fund. S. 2768, as reported by the committee, specifically provides that the $100 million appropriation shall be made "out of any money in the Treasury not otherwise appropriated." We do not attempt to tag specific dollar receipts either from revenue or from borrowing as applicable to meet specific dollar expenditures. In my opinion, the President's proposal is the most satisfactory way now available to approach the present financial problem facing the United Nations. Any of the alternative proposals being discussed, or return to the previous pay-as-yougo method of financing U.N. operations, would involve a greater net cash outlay to the United States than the bond purchase method. Sincerely yours, Mr. WHALLEY. That would be fine. Thank you, Mr. Chairman. Chairman MORGAN. Thank you, Mr. Secretary. DOUGLAS DILLON. The committee stands adjourned until 10:30 tomorrow morning. (Whereupon, at 12:45 p.m. the committee adjourned, to reconvene at 10:30 a.m., Friday, June 29, 1962.) PURCHASE OF UNITED NATIONS BONDS FRIDAY, JUNE 29, 1962 HOUSE OF REPRESENTATIVES, Washington, D.C. The committee met, pursuant to call, in the Ways and Means Committee room, New House Office Building, at 10:35 a.m., Hon. Thomas E. Morgan (chairman of the committee) presiding. Chairman MORGAN. The committee will come to order. The committee meets this morning for a continuation of hearings on S. 2768. The witness this morning is Hon. Francis T. Plimpton, U.S. deputy representative to the United Nations. Mr. Ambassador, we understand you have a short statement. You may proceed, sir. STATEMENT OF HON. FRANCIS T. PLIMPTON, U.S. DEPUTY Mr. PLIMPTON. Thank you, Mr. Chairman. I thought if the committee were willing I would like to talk informally about Afro-Asians. "Afro-Asians" is a perfectly good geographical term but it really doesn't mean much of anything else. Afro-Asian in the U.N. includes such friendly countries as Japan, Liberia, and Turkey. It includes countries which are as different in their governments as the Kingdom of Saudi Arabia, which is a monarchy, and the Philippines or Israel, both of which are democracies. If one talks about Africans one is talking about 12 or so former colonies of France whose traditions and loyalties are in the French direction. One also has to talk about former colonies of Great Britain, whose traditions and outlook is toward the British Isles. In other words, there is no similarity between one Afro-Asian and another Afro-Asian. There are some 52 of them, but they are anything but a bloc. They are anything but a voting unit. They vote all over the place, just as Western Europe does or other parts of the world. They meet, to be sure, quite often to try to reach agreement on whom their candidates are going to be for the offices in the United Nations. Sometimes they agree, other times they don't. At the moment they are pushing two candidates-three, as a matter of fact— for the presidency of the General Assembly next year. 86138-62-——7 I think the best way to analyze the effect of the fact that there are 52 Afro-Asians in the U.N. is to analyze just what they have done during the last General Assembly, which just adjourned yesterday. The committee will remember that the 16th General Assembly met in the shadow of Hammarskjold's tragic death. That presented a problem which one thought last September was going to be insoluble. In the first place, the Soviet Union and its allies pushed very hard for a troika for three Secretaries General, each one of whom would have a veto over the actions of the Secretariat. That proposal got absolutely no support from any Afro-Asian at all. They recognized just as the United States did that any such three-cornered monster would be utterly unworkable and would mean that the United Nations would be paralyzed whenever it wanted to do something that the Soviet Union didn't like. The Afro-Asians and the United States agreed 100 percent on the inadvisability of a troika at the top level. The next thing the Soviets tried to do was establish a troika at the next level down, to admit there could be one Secretary General but there had to be three deputies and the Secretary General had to consult and couldn't move unless they all approved. The three, of course, would be one Communist, one Western, and one so-called neutral. The Afro-Asians gave no support to that. As the committee knows, this finally ended up with the selection unanimously of U Thant as the Acting Secretary General, a man of obvious integrity, of obvious impartiality, of obvious ability, who already through quiet decisiveness has shown he will be a Secretary General who will live up, we think, to the high traditions of that office. He has done things which the United States does not wholly approve. One wouldn't expect him to do otherwise. Clearly the choice of U Thant was a triumph for responsible and constructive elements in the international community and for the future of the U.N. Furthermore, he took office without any commitments to anybody as to what his program is going to be. His election, as I say, was supported entirely by the Afro-Asians. The next most important thing that happened in a way in the 16th General Assembly was the question of Communist China. As the committee knows, the U.S. delegation this year for the first time actually deliberately brought this question up for full discussion before the U.N. Heretofore it has always been put off by the so-called moratorium device. The first important thing that came up was the decision by the General Assembly as to whether the supplanting of Nationalist China by Communist China would be an "important question" within the meaning of the U.N. Charter, which would mean that a two-thirds vote would be required. We won that one handsomely. Among the Afro-Asians, 27 voted for, 18 voted against, and 8 abstained. This is a crucial matter for the United States. It is a matter on which Afro-Asian opinion is divided. There is a great deal of sentiment among some of the Afro-Asian states that the U.N. ought to include everybody. But when it comes to this question of principle— is it an "important question" or isn't it-they voted on the same side we did, 27 to 18. |