COORIDINATING COMMITTEE RECORD OF DISCUSSION ON THE BUDGET AND FINANCES OF THE COORDINATING COMMITTEE 20TH MARCH 1960

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00647A000200020062-1
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 9, 2016
• Document Release Date: August 20, 1998
• Sequence Number: 62
• Publication Date: April 5, 1960
• Content Type: MIN

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C 0 N F I D E N T I A L
54
5th April, 1960. COCDM Document No. 31'8,
COORDINATING COMMITTEE
RECORD OF DISCUSSION
ON
THE BUDGET AND FINL,NCES OF THE COORDINATING COMMITTEE
28th March, 1960
Present: Belgium(Luxembourg), Canada, Denmark, France, Germany, Italy, Japan,
Netherlands, Norway, United Kingdom, United States.
References: COCOMDocs. Nos. 1737, 3919, 3936, Sub-C(60)1.
1. The CHAIRMAN drew the Committee's attention to the Report by the
Chairman of the Budget Sub-Committee (COCOM Sub-C(60)1). Before considering
the particular financial problem with which the Committee was faced in view of
its forthcoming change of premises, the Chairman invited the Chairman of the
Budget Sub-Committee (Mr. R.M. CAZLLET) to corzment on his report. Lastly, he
called the Committee's attention to a Memorandum submitted that day by the
French Delegation concerning the latter-s contribution to the Committee's bud-
get (cO cOM Doc. 3936).
2. The CHLIRMAN of the Budget Sub-Committee stated that he would
comment both on ais own resort and on the abovementioned French Memorandum as
and when appropriate. He explained that his report contained three annexes
showing figures for the year 1959. Annex .El was a statement of total expendi-
ture covering both cash expenditure and contributions in kind. From the figures
cited, it could be seen that the Committee, a small but efficient body, was run
on very economical lines, the total amount spent in 1959 being only 41,000,000
old francs. The Chairman noted that the figures given for the French contri-
bution were marked with an asterisk since they were based on an evaluation
made in November 1956, and asked the French Delegation for confirmation of
them. He referred briefly to Annex B, from which it would be seen that cash
income and expenditure were evenly balanced with very little to spare. Annex
C showed the pattern of contributions in kind and cash. It was on this basis
that the Committee had worked efficiently for the past ten years, and any
change of structure must be of material benefit to the Committee to be worth-
while.
3. Turning to the French Memorandum, the Chairman of the Budget Sub
Committee noted that his report replied to certain points raised therein in that
it showed the pattern of expenditure. Some change would have to be made to
meet any additional housing cost in the future, While possible alterations in
staff might lead to a saving in the cash expenditure. He noted that the French
Delegation were suggesting that all the Committee's operating costs, including
rent, should be shared among Member Governments according to some agreed scale.
Such a system would, he felt, involve certain difficulties in view of the dis-
proportionate nature of the various contributions. Some countries loaned
officials from their foreign services on a temporary basis, and the percentage
thus contributed by them was dependent upon the rank and status of the official
concerned. Adjustments were continually necessary in the case of countries
which had borne a disproportionate share of the Committee's expenditure, such
as had been the case with Belgium and Japan for instance. The obvious conclu-
sion was that it would be difficult but, he thought, not impossible to esta-
blish a scale of percentages which would take account of all these factors.
Speaking lastly of the rehousing of the Committee, the Chairman stated that
since the new premises would certainly be more expensive, considerable economies
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would be necessary. It was the first time that the Committee had had to face
such a radical change in its budgetary pattern. The yearly rental of the
premises proposed in the Hotel Pierre ler de Serbie totalled 57,600 new francs,
exclusive of heating, lighting and other services. As against the present fi-
gure of 36,000 NP paid by the French Government and inclusive of heating and
lighting, this would entail an extra 21,600 NF per annum plus all the additio-
nal costs. The only way to meet this situation was to economise on the Secre-
tariat staff or to increase the contributions of Member Governments, although
this last possibility might not perhaps be favourably received at this- -stage -
4. The CHAIRMAN of the Committee thanked the Chairman of the Budget
Sub-Committee for his report and additional comments. He too shared the view
that the Committee was run on very economical lines. Turning to the question
of the forthcoming change of l.re::lisos, he explained that, in his view, two
issues were raised. Firstly, until such time as the general financial question
had been resolved - and this seemed hardly possible before the 31st May - some
temporary measures would have to be taken to moot the increased expenses to be
incurred from the 1st June onwards. Secondly, once these temporary measures
had been instituted, the Committee could, during that time, seek a solution to
the general financial problem - a task which could hardly be completed under
pressure before the 31st May. As regards the temporary problem, the Chairman
suggested either that France and possibly other member countries should share
the extra expenses for a few months, until the end of 1960 for instance, or
that France and/or other member countries should advance this same amount during
the said period and the Committee would make the necessary adjustments on the
basis of whatever financial agreements had been reached by December 1960. As
for the general problem, the Chairman himself could foresee three possible
solutions:
A. The system would remain unchanged, France deciding upon its on
monthly cash contribution and the remaining expenses, if any, being
shared among other countries. The countries asked to pay more, for
example, might be those whose contribution was below that paid to
N.A.T.O. in terms of percentage. Nothing would be asked from
countries paying more than their N.A.T.O. quota.
B: Contributions would still be made in cash and in kind as at present,
but France would pay a cash contribution based on a fixed percentage
such as that paid to N.A.T.O., and at the end of the year diffe-
rences would be adjusted, some countries paying and others recei-
ving. In this case the Secretariat might have to engage an
accountant.
C. The whole system would be reorganised, as advocated by France, with
each country contributing in cash on the basis of some scale like
the N.A.T.O. one. Some financial and juridical problems would arise
here. First, the Committee would have to provide for complete
accounting and control services to regulate its income, contracts,
purchases, inventories, etc. Second, the status of the staff would
have to be determined as regards engagement, facilities, secu.zrity,
liquidation and indemnities. At present the staff was engaged
according to the rules of the United States Department of State, or
on empirical terms by the Chairman, and employees engaged on these
latter terms had no guarantees whatsoever. Third, the juridical
status of the Chairman and any other foreign diplomat engaged on
the Secretariat would have to be determined. This would involve
the question of the juridical status of the whole organisation.
5. The GERMAN Delegate also thanked the Chairman of the Budget Sub-
Committee for his clear and most enlightening report. lie fully agreed that the
system adopted for the past ten years had made it possible to run the Committee
cheaply and efficiently, especially when compared with other international
organisations. While it might be true that the staff was not kept to the bare
minimum necessary during the slackest periods, there was no doubt that it was
far from the maximum necessary during periods of peak activity. Turning to the
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Chairman's suggestions for the future, the Delegate noted that a rough estimate
of the extra expenses involved would total some 60,000 NF per annum, i.e. about
1 V of the Committee's yearly expenditure. In view of the fact that the cost
,of living had risen considerably over the past ten years, he hoped that Govern-
ments might be prepared to share this increase if necessary. From the fore-
going, it was evident that he favoured solution #. as proposed by the Chairman,
since the other suggestions would entail complete reorganisation and extra
expenses. Moreover, in view of the comparatively small amount involved, he felt
that it should be possible to arrive at a soluti~.n easily and rapidly. If none
had been found before the 31st May, however, it would be necessary to take some
transitional measures. its for the Fronch Memorandum, the Delegate was glad to
see that the French Delegation had confirmed their willingness to continue to
pay an adequate contribution. He believed that COCOM Sub-C(6f)l replied to many
of the points raised by the French Delegate. On the question of establishing
some scale of percentages, he noted that the Committee would be ready to study
any proposals brought before it.
6. The FRENCH Delegate bek-an '3y thanking the Chairman of the Budget
Sub-Committee for his concise report, which clearly showed that the Coordinating
Committee's expenditure was low without its efficiency being; in any way im-
paired. The financial system used for nearly ten years had 1.roduced no major
drawbacks, but the Delegate believed that the rational changes he had been in-
structed to propose could but be beneficial to the structure of the Committee
and contribute to its efficiency. It seemed more laical to the French autho-
rities that the total expenditure, as shown in the budget report just submitted,
should be shared among Member Govo'nments according to some agreed scale, rather
than to an empirical method whereby some countries laid the rent, others the
office equipment, others certain members of the staff, etc... It was not for
him at this stage to go further.into the advantages of a normal procedure,
adopted by all international organisations.
7. The Delegate went on to explain that, of course, the Chairman, :Cunds
assisted by the Budget Sub-Committee, would continue as in the past to put t
contributed to the best poa:Ablo use to ensure the smooth running of the
Committee. Contrary to what had previously been said, he did not think that
the system proposed by his Delegation would incur additional expense for the
Committee:
(a) It was not the purchase of paper or light office equipment, nor
the paying of the comparatively low expenses incurred considering
the number of persons on the Committee, which would reasonably
make a full-time accountant necessary. A member of the Secretariat
might assure this duty in addition to his regular work. If the
need arose, the accounts might be checked each year and a statement
drawn up by a chartered accountant engaged for a few days for that
purpose.
(b) Moreover, the staff not paid by the United States Department of
State were entaged on a contractual basis by the Chairman.
The staff changed vary infrequently. There would seem to be no
problem in this respect, since more than half the Secretariat had
been engaged in this manner.
(c) If it were true that the changing of the contracts of the persons
employed by the United States Department of State would be a
relatively minor problem since these persons would be re-engaged
immediately under the same conditions by the Coordinating Committee,
it would be for the United States authorities, their present
employer, to find the solution.
(d) Finally, if it proved too difficult for the Chairman or other Sec-
retariat members having diplomatic status to be remunerated by the
Committee, it would always be ossible to evolve some system by
which these persons would continue to receive payment from their
own countries, the sums paid being charged to the percentage
contributed yearly by such countries.
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6. From the practical point of view, the Delegate explained that the
whole financial picture had changed since, for the first time in its history,
the Committee was to be housed on private premises. The French authorities
would now have to pay a cash contribution which must appear in the national
budget as a contribution to an international organisation, and this was why they
iad looked into the matter, and had suggested the establishment of a.fixed scale
of percentages. Replying to the question from the Chairman of the Budget Sub-
Committee in paragraph 2 above, the Delegate confirmed that the figure of
3,600,000 old francs could be taken as valid for the 1959 rent also. In
conclusion he undertook to report the views expr,:ssed to his authorities, and
was prepared to discuss any other su-Costion rut forward.
9. The UNITED KINGDOM -"eleLate thanked his French colleague for giving
the reasons underlying; the French authorities' desire to establish a more for-
mal system of cash payments on an agreed scale. The rehousing of the Committee
on private premises might call for some change in the budgetary system, on
which point it would be advisable to seek advice from Governments. He himself
had hoped that the change of premises would not have produced any substantial
difference in the Committee's finances.
10. A lengthy exchange of views ensued on the question of the legal
itatus of the Committee and its Chairman. The ITALIAN Delegate believed that,
before making any change in the budgetary -pattern, and especially in the scale
of national contribut_ons, it was necessary to state the issue more clearly and
define the juridical nature of the Committee since the financial problem was,
in his view, conditioned to a very large extent by this more general question.
There was no doubt that the Committee had no international legal personality
like other international organisations; it was rather in the nature of a per-
manent diplomatic conference whose Chairman and executive officers all belonged
to national diplomatic services and had always been administered by their
respective authorities. As a result, the contributions of certain countries
like Italy, Germany and the United Kin_.;dom were already fixed by the very fact
that they provided officials from their own diplomatic services to run the
Committee. The contributions of these countries would therefore al-irays remain
fixed as long as their officials continued to serve on the Committee as
Chairman or one of his executive assistants. It was for this reason that the
Delegate believed it would be extremely difficult to set up a different scale
at least insofar as concerned those countries which had placed officials at the
Committee's disposal.
Tl. The Delegate then turned to the more particular aspect of the pro-
blem. He first thanked the Chairman of the Budget Sub-Committee for his very
clear and concise report, which afforded Member Governments an exact picture
of the Committee's financial situation. He wished to draw the attention of
delegates to the fact that, speaking of national contributions in terms of
percentage, it could be seen that 9 out of 14 member countries had contributed
about 14% of the Committee's budget, while the other 5 had, for their part,
contributed the remaining 860. It would thus be advisable and logical to study
the three alternative solutions suggested by the Chairman taking into account
that the contributions of certain countries - in this lastmentioned group - were
of a pre-arranged nature and could not easily be changed. In conclusion the
Delegate stated that he would seek specific instructions from his authorities
on the overall problem he had just evoked.
12. The FRENCH Delegate stated that, in the light of the views expres-
sed and in order not to press the Committee into adopting a new budgetary sys-
tem in the short time remaining before its removal, his authorities would be
willing to contribute in cash the amount shown under Item 2 of Annex A to COCOM
Sub-C(60)l, i.e. 36,000 NF per annum, until the end of 1960. They would also
continue to pay the interpreter of the Committee. Furthermore the French autho-
rities would be willing to/iftg rent of the new premises on a reasonable
basis, such as for instance that envisaged for the offices proposed in thg Hotel
Pierre ler de Serbie. The Delegate reminded the Committee that, if the French
authorities were now prepared to make a considerable financial effort, it was
because they were convinced that the system they proposed was a logical and
equitable one. In conclusion, he noted that it was in their capacity as the
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host country that the French Government would be ready, in keeping with the
,views expressed in their Memorandum, to take charge of the entire rent of the
new premises of the Committee.
13. The UNITED STATES Delegate began by thanking the Chairman of the
$udget Sub-Committee for his report. He recalled that the Committee had once
decided to have twice yearly budget reports (COCOM 1737) and felt this would
be an excellent practice to resume. He had no instructions as to the question
under discussion,- but he saw much merit in the French proposal from the stand-
point of principle and he recognised the practical problem the French Govern
ment would face in making their contribution for premises once the Committee
moved to premises not owned by the French Government. On the other hand, the
organisation had worked efficiently and economically with its present informal
status and financial arrangements and any basic change in the budgetary system
would take time to work out, whereas the Committee had a pressing practical
problem. It was to be hoped that the question of principle would not deter the
seeking of a speedy solution to the practical problem of rehousing the Commit-
tee. The Delegate believed that the last French statements had greatly contri-
buted to such a solution.; He observed that the budgetary problem might perhaps
be approached less in terms of the form of contributions than in terms of the
equity of contributions, regardless of their nature.
14. The NORWEGIAN Delegate stated that the Committee was faced with
two important issues: the finding of promises and financing the extra costs
involved. In view of the latest French statement, a solution to the second
problem was in sight. He felt, however, that the Committee should have an
opportunity of studying the French proposal in writing before deciding how to
proceed further.
15. The CHAIR." N thanked the French Delegation for their very helpful
sufgestions. It was agreed that time should be allowed to study the latter and
that discussion shoald be resumed on the 28th April. As to the invitation from
the French authorities?to inspect the suggested premises in the Hotel Pierre
ler de Serbie, it was agreed that the Chairman and the Budget Sub-Committee
should visit these premises on the 29th March, and report on their suitability.
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