In a memorandum to Cabinet dated October 4 you make proposals concerning future Canadian contributions to various United Nations relief and assistance programmes - among them, the UNKRA programme. ²⁵ The UNKRA section of the memorandum mentions the efforts made in recent months to improve UNKRA's financial position and refers more specifically to a United States proposal for a reduced total programme for 1954-55 of $44.9 million. This proposal involves a contribution of $9.9 million from the United Kingdom, Australia and Canada, of which $7 million would be met from the unpaid portion of previous United Kingdom and Australian pledges and the remaining $2.9 million from possible increased contributions by the three countries. You are suggesting to Cabinet that an additional $750,000 would be an appropriate Canadian share of the approximately $3 million gap to be filled if the United States proposal is to be made workable. The memorandum further notes that the United Kingdom and Australia are to be asked whether they would also be prepared to increase their original pledges to help fill this gap.

The purpose of this memorandum is to acquaint you with the present United Kingdom and Australian positions (as reported by our Delegation to the General Assembly) and to seek your approval for a proposed joint approach to the United Kingdom by Australia and Canada with a view to securing an increase in their original pledge.

The United Kingdom Position

Our Delegation to the General Assembly reports that the United Kingdom would be prepared to pay the balance of their pledge provided their contribution does not exceed 17.5 per cent of total contributions past and present. 17.5 per cent of total UNKRA receipts to date ($123 million) is $21.5 million. In fact, the United Kingdom has already paid $22.5 million (out of their original pledge of $28 million) or approximately 18.3 per cent of total receipts. The implication of the present United Kingdom stand is that their original pledge will only be paid when total contributions amount to $160 million, and that it will take additional contributions amounting to more than $6 million before any additional United Kingdom contribution can be contemplated. Since the United States contribution now represents 68.6 per cent of total pledges and since pledges from all other countries (excluding United States and United Kingdom) amount to $3.1 million (Australia $1.5 million, other countries $1.6 million), the United Kingdom decision is tantamount to a refusal to contribute anything more at this time to UNKRA.

The Australian Position

While Australia is willing to pay the balance of its original pledge of $4 million (i.e. $1.5 million), there has been until very recently an obstacle in the way of further consideration by the Australian Cabinet of an increase in its original pledge. This obstacle was due to the fact that UNKRA had not expended to any substantial extent the credits deposited in Canberra in favour of the agency. However, latest reports from our Delegation in New York indicate that this obstacle is likely to be removed if a proposal of the Agent General of UNKRA to purchase $2 million worth of Australian wool goes through. On this assumption, the Australian Delegate in New York has expressed the personal opinion that the Australian Cabinet - being seriously concerned over the political implications of a hurried winding up of the UNKRA programme - might go as far as increasing its pledge irrespective of the United Kingdom position, provided the United States and Canada persisted in their positive approach to the problem.

The United States position continues to be that they are ready to match any future payments provided the United States contribution does not exceed 65 per cent of total receipts. As mentioned above, their contribution now represents 68.6 percent; thus it will be impossible for the Administration to recommend an additional contribution to UNKRA in the President's budget message next January unless the United States contribution is brought down to 65 per cent by the end of the year.

The restrictive position taken by the United Kingdom during the informal discussions between the United States, United Kingdom, Australia and ourselves in New York has led the other three to wonder whether the implications of their stand have been fully thought out by all concerned including the Foreign Office. This situation has prompted the Australian Delegate to suggest that Australia and Canada might approach the United Kingdom, preferably at a high level, with a view to persuading them to increase their original pledge in proportion to possible similar Australian and Canadian increases. The United States Delegation has approved this idea of a joint approach but has regretted that the United States could not participate in view of their recent démarches in London and New York.

It should perhaps be mentioned here that while another $11.4 million will be required to permit the United States to pay the balance (i.e. $8.6 million) of their pledge this year, only $4.7 million from other countries are actually required to bring the United States percentage to 65 per cent. The United States Delegation has indicated that if additional contributions in the latter amount or more were received by UNKRA - either through payment of all or part of the United Kingdom balance of $5.5 million or by additional payments by the United Kingdom, Australia and Canada - they might suggest to the Administration that the United States make what might be called an "advance payment" which might be announced at a possible pledging conference to be held during the General Assembly session.

In view of the considerations set forth above, and on the assumption that Cabinet is in agreement with your recommendation concerning a Canadian contribution contingent on parallel and proportionate contributions by Australia and the United Kingdom, would you agree with the proposal for a joint Australian-Canadian approach to the United Kingdom with a view to persuading them not only to pay the balance of their pledge but also to make some additional contribution proportionate to possible additional payments by ourselves and Australia. ²⁶

Your recommendation to Cabinet was framed in consultation with officials of the Department of Finance. In view of the recent advice we have received, however, it is clear that we may face the possibility that the United Kingdom Government will not contemplate a new and additional contribution. In order to avoid a further reference of this matter to Cabinet, the question arises whether Cabinet would be prepared to agree to authorize an increase of $750,000 in our pledge if the United States and Australia alone are prepared to make similar additional contributions. ²⁷

There are informal indications that the Australian Government might decide to increase its pledge if two main contributors act similarly. So far as the United Kingdom is concerned, should the effort to secure an additional and proportionate contribution be unsuccessful, the secondary steps might be to request them not only to pay the balance of their original pledge with a pledge to contribute an additional amount based on the contributions announced at the pledging conference should one be held, or as a last resort to pay as large a proportion as possible of the outstanding balance in order to help bring down the United States percentage to the lowest possible level. While this would evidently be a less satisfactory solution, and would mean that we would be asked to make an additional contribution, together with the United States and Australia even though the United Kingdom were not prepared to do so, the problem of UNKRA is a serious and urgent one.

In view of the effects of the failure of United Nations economic assistance in Korea, Canadian contribution in this case should be governed more by political considerations than by strictly economic and financial criteria which normally obtain.

For this reason it would be most helpful if some flexibility could be given in the Cabinet authorization with respect to a Canadian contribution.

J[ULES] L[ÉGER]