On August 30, 1954, a close vote on a motion to prevent debate in the French National Assembly consigned to history a spectacular scheme for the unification; of western Europe. The defeat of the European Defense Community (EDC) precipitated a seven-week crisis in the western world that only adroit diplomacy, spurred by a sense of desperation, could overcome. In the ensuing conferences of London (September 28— October 3) and Paris (October 20–23), the foreign ministers accomplished two vital purposes. They salvaged the Atlantic alliance and they brought Adenauer's; Germany into the family of free nations.

An economist in an international organization has certain obligations as a member of his profession, as a citizen of his country, and as an international civil servant. These are not always readily harmonized in the individual. For economists from different backgrounds (i.e., economies which are capitalistic, welfare-oriented, underdeveloped, etc.), of different nationalities, and working in different capacities with organizations of differing international functions, there can surely be no single prototype. There may nonetheless be some generalizations which can be made about the role of this sort of professional in this occupational setting. Where may the lines be drawn between the pursuit of truth, however relative it may be, and the advocacy of policies? To what extent must the economist align himself with the practical when that is the enemy of the desirable? Does an economist withdraw from the heady atmosphere of academic recognition into bureaucratic anonymity when he fills out the twenty-page employment form of an international organization; or does he escape from the pallid world of equilibrating models into the invigorating arena of problems, pressure and power? Is an economist trained in a particular school of thought—whether Marxist, Keynesian, Chicago or institutionalist—under any obligation to suppress or dilute the distinctive point of view he initially brings to bear on economic problems?

When the North Atlantic Treaty was negotiated in the critical days of 1948–1949, it was hoped that this arrangement might be helpful in assisting the contracting parties to build up sufficient strength to deter aggression in Europe and to augment their diplomatic influence so that they could negotiate with the U.S.S.R. from a more advantageous position than they had held since 1945.

I. The Rationale of the Veto

At the time of San Francisco, and intermittently since, five separate but interrelated arguments have been advanced to support the veto privilege: I) that the terms of Article 27 (3) of the Charter, by requiring big power negotiations before a vote is taken, in fact guarantee preservation of international peace; 2) that, since big powers cannot and will not submit to being voted into a war by small and medium states, the chain of events theory is valid and a big power should be permitted to exercise a veto on a subject which might eventually lead to enforcement action by the United Nations; 3) that the veto acts as a kind of safety valve preserving the status quo and preventing controversial changes which might cause conflict among the Big Five; 4) that the veto enables states in a minority position to protect their vital interests against infringement by the majority; and finally, 5) that the veto has, in fact, been used as a bargaining weapon by small states or by a minority.

Special United Nations Fund for Economic Development: Pursuant to a resolution approved at the ninth session of the General Assembly, Mr. Raymond Scheyven submitted for consideration at the tenth session of the Assembly a further report on the proposed Special United Nations Fund for Economic Development (SUNFED). The report, prepared by Mr. Scheyven in cooperation with a panel of experts appointed by the Secretary-General, dealt with the form or forms, functions and responsibilities which SUNFED might have, and especially with the methods by which its operations might be integrated with the development plans of the countries receiving assistance from it. Mr. Scheyven felt that SUNFED should not confine itself to financing or assisting in the financing of nonself-liquidating projects exclusively; he felt that SUNFED should be able to contribute to any project which was related to economic development but which for some reason, such as balance of payments difficulties, was unable to attract investment capital. He likened the proposed fund to the European Recovery Program, although he pointed out that the analogy was not complete. On the question of the financing of the fund and the size of its initial resources, Mr. Scheyven emphasized the necessity of long-term commitments and felt that the $250 million initial capitalization which had been put forward as the minimum amount on which SUNFED could begin operation should not be considered an absolute; he felt that the limited capacity of underdeveloped countries to absorb capital and the inevitable slowness with which the operation of SUNFED would begin would make it practicable to begin with a smaller amount. He therefore suggested that the General Assembly bear these considerations in mind in reaching decisions and suggested that the fund might be established provisionally for a five year period during which its operations could be assessed. Mr. Scheyven and the experts with whom he consulted felt that SUNFED should be empowered to provide under-developed countries with grants or with loans repayable in local currency but should not be empowered to grant low-interest loans on indeterminate and extremely liberal terms; a combination of grants from SUNFED and loans from such an agency as the International Bank for Reconstruction and Development was suggested as a possible procedure.

The following summary covers the activities of the Security Council from its 681st meeting on October 7, 1954, through its 698th meeting on April 19, 1955.

Commissions

Economic Commission for Europe: The tenth session of the Economic Commission for Europe (ECE) was held in Geneva from March 15 to 30, 1955, under the chairmanship of Mr. Max Suetens (Belgium). Delegates from 25 European countries and the United States, as well as observers from Australia, Brazil, Canada, Iran, Israel, and several specialized agencies and inter-governmental and non-governmental organizations attended the meeting. Action was taken at the session on reports from a number of the Commission's committees. After discussion of the desirability of re-convening the Industry and Materials Committee, a resolution was unanimously adopted calling for the convening of an ad hoc working party on agricultural machinery, and inviting governments to suggest to the Executive Secretary of ECE the establishment of further ad hoc working parties to deal with specific economic, industrial, legal or institutional problems. The Housing Sub-Committee was raised to the status of an independent committee, as a result of unanimous approval of a resolution sponsored by the United Kingdom. A draft resolution sponsored by the Soviet Union in the course of debate on the report of the Trade Committee, which would have called for action on the matter of strategic goods restrictions on east-west trade, was rejected by 13 votes to 5. Other resolutions adopted by the Committee included the following: 1) a resolution submitted jointly by the Soviet Union and the United Kingdom on the exchange of technical experience, which noted the positive work on technical questions already being done by the committees, and recommended the expansion of reciprocal exchange of technical experience between the countries in the Commission, was adopted unanimously; 2) as a result of consideration of the question of inter-regional cooperation, a resolution was unanimously adopted which reaffirmed the view of the Commission that inter-regional trade consultations of the type used in ECE might be useful for strengthening inter-regional trade relations and expanding world trade, and which called the matter to the attention of the Economic and Social Council; and 3) a Soviet draft resolution calling for representation of the German Democratic Republic and of the Federal Republic of Germany at the tenth session of ECE was defeated in a vote of 13 to 5 after representatives of a number of western countries maintained that, under the Commission's terms of reference, Germany could be represented only through the delegations of the occupying powers.

The fifteenth session of the Trusteeship Council, which had opened at Headquarters on January 25, 1955, ended on March 28, 1955

Cameroons under French administration: The Council considered the report of its drafting committee2 on conditions in French-administered Cameroons on February 24 and 25. On the basis ofthe draft report and clarifying amendments, the Council requested the administering authority totransmit a concise statement evaluating the effects of the association of the Cameroons with the French Union on the future political development of the territory. The administering authority was further asked to inform the Council of the results of studies being undertaken concerningthe status of the inhabitants of the territory and to consider the possibility of establishing a Cameroonian citizenship. By a vote of 7 to 1 with 4 abstentions, the Council, noting that thebill providing for the extension of the powers of the Territorial Assembly and the establishment of an Executive Council had not as yet been submitted to the French Parliament for adoption, recommended that steps be taken as soon as possible to realize these goals and, in particular, that the Territorial Assembly be given powers to discuss political questions and to take decisions on all matters internal to the territory. Unanimous approval was given a recommendation expressing the hope that the French National Assembly would put into effect as soon as possible the proposed legislation converting Douala, Yaoundé and N'Kongsamba into communes de plein 1 For information on the early part of the fifteenth session, exercice. Continued development of elected municipal institutions throughout the territory was also recommended. A recommendation by the drafting committee on the question of the reorganization of the traditional chiefdoms, concerning which a bill was awaiting action in the French Parliament, was amended by theCouncil to delete any inference that the Council was not reaffirming its earlier view that universal suffrage should be achieved. The Council, in the amended recommendation, expressed the hope that the bill would be adopted and implemented before the next elections, if necessary.

Judgments

Nottebohtn Case: On April 6, 1955, the International Court of Justice ruled on the admissibility of Liechtenstein's claim in the Nottebohm case (Liechtenstein v. Guatemala). Liechtenstein had contended that Guatemala, in taking various actions in regard to Nottebohm, a naturalized citizen of Liechtenstein, had acted in breach of its obligations under international law, and should be required to make reparations; Nottebohm, Liechtenstein contended, had received his Liechtenstein nationality in accordance with Liechtenstein's municipallaw, and there had been no breach of international law in that connection. Guatemala had argued that the Court should declare the claim of Liechtenstein inadmissible, claiming that Liechtenstein had failed to prove that Nottebohm's nationality had been properly acquired under the terms of Liechtenstein municipal law, that naturalization had not been granted to Nottebohm in accordance with “the generally recognized principles in regard to nationality”, and that in any case, Nottebohm, who had formerly been a German national, appeared to have solicited Liechtenstein nationality fraudulently, with the sole object of acquiring the status of a neutral national before returning to Guatemala, and without any genuine intention of establishing a “durable link” between himself and Liechtenstein”.

A report on the activities of the Food and Agriculture Organization (FAO) under the United Nations expanded program of technical assistance for 1953–1954 stated that the funds available to FAO under the program fell from $6,049,000 in 1953 to $5,536,000 in 1954, and that the decision to increase the working capital and reserve fund of the technical assistance program had had the effect of lessening current available funds. While certain projects planned for 1953–1954 had had to be reduced in scope or postponed because of financial limitations and changes in world conditions, the quality and efficiency of FAO's technical assistance activities had improved, the report stated. Virtually no unspent balance of technical assistance funds had remained at the end of 1953, and it was unlikely that there would be any unspent balance at the end of 1954; in itself, the report stated, this was an indication that more activities desired by governments could be undertaken, were adequate resources available. In planning its 1954 program, FAO had continued its practice, endorsed by the Technical Assistance Board, of preparing country programs at the country level, in consultation with the governments concerned, and the system had been further developed in planning the 1955 program. The FAO technical staff, it was reported, had played a large role in the field of program evaluation, as well as planning and supervision.

Lending Operations

During the period from March 24 to June 22, 1955, the International Bank for Reconstruction and Development made nine loans in seven countries. A loan of $12 million in European currencies to the Bank of Finland was announced on March 24, bringing the total of Bank loans in Finland to over $50 million. The new loan was to be used to help finance projects for expansion and modernization of the woodproducts industry and for further development of electric power. Two commercial banks in the United States were participating in the loan, without the Bank's guarantee, to an extent of $2, 288, 000. It was expected that the Bank's loan would finance about one-fifth of the proposed projects, the remainder being financed from Finnish sources. Approximately $8 million of the loan had been allocated to five woodproducts companies and about $4 million to two electric power projects. It was further expected that about three-fourths of the foreign exchange provided by the Bank's loan would be spent in Denmark, France, Germany, Sweden, Switzerland and the United Kingdom and about one-fourth in the United States. The loan was for a term of 15 years at an interest of 4⅝ percent a year, including the Bank's one percent commission; amortization was to begin on April 15, 1958.

Council

The twenty-fourth session of the Council of the International Civil Aviation Organization (ICAO) met in Montreal, ICAO headquarters, from January 25 to April 2, 1955. The twenty-fifth session of the Council was scheduled to open on May 17, 1955, prior to the convening of the ninth ICAO Assembly on June 1.

Report of the Director-General

The annual report of the Director-General (Morse) of the International Labor Organization (ILO) to the 38th session of the ILO Conference had a special theme, that of labor-management relations in thedeveloping industrial society.1 The state of labor-management relations was an important conditioning factor in attaining the broad goals laid down for the ILO in recent years, the Director-General stated; for example, productivity had been widely emphasized during the preceding year, and in the last analysis, the success of efforts to bring about higher productivity depended largely on improved cooperation within industry between management and labor. Labor-management relations were fundamental to the achievement of better manpower utilization in underdeveloped countries, and to the improvement of working and living conditions. In connection with the desire for greater economic security, faulty labor-management relations, creating an obsession with security and an aversion to change on the part of labor, could result in economic stagnation. Research and standard-setting and technical assistance were noted by the Director-General as important contributions being made by the ILO to industrial development, but he stated that these activities, while related to the problems of labor and management, were limited in that they were primarily concerned with setting the goals and establishing the legislative and administrative framework for social policy. It was worth considering, he thought, whether the ILO was not in need of a more positive, active and varied program for improved labormanagement relations.

Sixth Annual Report on Exchange

Restrictions

On May 4, 1955, the Managing Director of the International Monetary Fund (Rooth) transmitted to the Governors and members of the Fund the sixth annual report on exchange restrictions. In the third series of consultations on exchange restrictions, the Fund had consulted with 45 member governments under Article XIV, Section 2, of the Articles of Agreement. During the year reviewed, March 1954 to April 1955, the Fund reported further progress toward convertibility, although progresshad been more gradual and mainly by means of numerous relatively small measures of relaxation. There had been greater reliance on monetary and fiscal measures for coping with balance of payments problems, as contrasted with earlier reliance on restriction of foreign trade and payments; this shift in emphasis had made possible the introduction and operation of facilities for increased convertibility. Developments in the exchange and monetary field had, the report noted, focused attention on the problem of discrimination, especially in the form of bilateral agreements, and on the question of whether these arrangements were justified in a world in which there was a general trend toward multilateralism, convertibility and freedom from restriction. The period reviewed in the report was also marked by larger exchange allocations for various purposes and significant relaxation of discrimination against dollar payments. In addition, exchange controls had been simplified or their administration liberalized in a number of countries.

The Council of the Arab League met in Cairo beginning December II, 1954, and adopted several recommendations proposed by the League's Political Committee which had finished its session on December 9. The Council approved of the participation of the League members in the forthcoming conference of Asian and African countries in Bandung, Indonesia, approved the appointment of Faha Hussein (Egypt) as chairman of the Arab League Cultural Committee, decided that Jordan's home guard should be strengthened, and agreed that Syria should lodge with the United Nations Security Council, on behalf of Jordan, a complaint against Israel diversion of the waters of the Jordan River. The 23d regular session of the Council opened in Cairo on March 27,1955.

Consultative Assembly

The third part of the sixth ordinary session of the Consultative Assembly of the Council of Europe was held in Strasbourg from December 8 through 11,1954.

Policy of the Council of Europe in the light of recent developments in the international situation: During the third part of the sixth session of the Consultative Assembly, discussion of the policy of the Council of Europe centered on 1) the London and Paris agreements, 2) the organization of the Western European Union (WEU) Assembly and links to be established between it and the Council of Europe, and 3) the Franco-German agreement on the future Statute of the Saar.

Council

At a ministerial meeting of the Council of the North Atlantic Treaty Organization (NATO) in Paris on May 9 to n, 1955, the German Federal Republic was formally admitted to NATO, raising total membership to fifteen. The Council reaffirmed the purely defensive character of the organization and expressed gratification on the entry into force of agreements establishing the Western European Union. The Council welcomed declarations by the ministers of NATO members signatory to the Italian Peace Treaty reaffirming their view that various discriminatory aspects of that treaty were considered inconsistent with the position of Italy as an ally.

Representatives of eight central and eastern European nations—Albania, Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and Rumania— met in Warsaw from May 11 through 14, 1955, and concluded a twenty-year treaty of friendship, cooperation and mutual assistance. In a communique issued at the close of the discussions, the participants stated that they had considered the changes in the international situation resulting from the ratification of the Paris agreements,1 and concluded that the ratification of the agreements meant that a new military group, Western European Union, in which a remilitarized west Germany would participate, increased the danger of war and created a threat to their national security. The treaty signed by the eight participants at the close of the conference was intended to meet the alleged new military threat; under it, the signatories agreed (i) to abstain from threats or the use of violence, and to settle international disputes by peaceful means; (2) to cooperate in all international actions, including attempts to reduce the level of armaments, with the purpose of ensuring peace and security; (3) to hold mutual consultations on all important international problems, particularly in the event of a threat of armed attack against one or several of the signatories; (4) to afford immediate assistance in the case of armed aggression in Europe against one or several of the signatories, which assistance would cease as soon as the United Nations Security Council had taken measures to ensure peace.

On May 6, 1955, the Western European Union (WEU) formally came into existence.1 On May 7, the WEU Council held its inaugural meeting in Paris. The Council considered various questions relating to the structure of WEU and, after approving the Interim Commission's report and adopting the draft agreement on the status of WEU and its staff, appointed Louis Goffin (Belgium) Secretary-General of WEU. Admiral Ferreri (Italy) was appointed director of the Agency for the Control of Armaments. The Council also decided, on the basis of studies carried out by a working group established at the nine-power conference in Paris on October 21, 1954, to create a Standing Armaments Committee composed of national representatives and served by a small secretariat. The Standing Committee had the task of “the development of the closest possible co-operation between member countries of Western European Union in the field of armaments, in order to seek the most practical means of using the resources available to these countries for equipping and supplying their forces and of sharing tasks in the best interest of all”. In order to promote liaison with the North Atlantic Treaty Organization, the seat of the Standing Committee was to be Paris; Charles Cristofini (France) was appointed Assistant Secretary-General in charge of the international secretariat of the Standing Committee. The Council further decided that the first meeting of the WEU Assembly should be held in Strasbourg during die same period as the next session of die Consultative Assembly of die Council of Europe and that the WEU Assembly should be composed of die representatives of the Brussels Treaty powers to the Consultative Assembly.

The twenty-fourth annual report of the Bank for International Settlements was made public in June 1954. In reviewing the period April 1, 1953, March 31, 1954, the report noted that 1953 had been a year of economic progress for most countries, and adjustment and consolidation for the world as a whole. In a great many nations production had reached new record heights; prices had shown a remarkable degree of overall stability; and monetary confidence had been strengthened, as evidenced by the improvement in reserves and in quotations on the exchange markets, and by the fall in the free-market price of gold. These facts were important not only in themselves but also because they had dispelled preconceived ideas and prejudices, such as: 1) the claim that changes in interest rates or other measures in the field of credit were ineffective and outmoded as instruments of economic management; 2) the idea that a small decline in industrial output in the United States would lead to a proportionately greater reduction in American imports and consequently widen the dollar gap; and 3) the notion that a strengthening of monetary reserves and an improvement in the value of individual currencies could be achieved only by a policy of “deflation” and at the cost of large-scale unemployment. At the same time the business trend in the individual countries had been characterized by an exceptional degree of diversity due to the growing strength of most European economies and the pursuit in the western hemisphere of policies designed to lighten the impact of a downward adjustment of levels of business activity.