MINISTERIE VAN BUIT EITL AMD SE ZAKEN
' s - G r a v e n h a g e , 21 J u n i 1950 Smidswater 2 «Q„ V a
B u r e a u van de R e g e r i n g s commissaris voor het E u r o p e s e H e r s t e l Programma, No.
13327 Aan de M i n i s t e r s , v a n de R.E.A.
Bijl,I.
Bijl.II
leden
Ik he"b de e e r Uwer E x c e l l e n t i e h i e r b i j aan t e b i e d e n h e t memorandum i n z a k e h e t E u r o p e s e d e f i c i t van N e d e r l a n d i n h e t f i s c a l e j a a r 1 9 5 0 / 5 1 , d a t i n g e v o l g e h e t o p g e l e g d e t i j d s c h e m a v a n de E.C.A. op 19 J u n i j . 1 . aan de E C A - M i s s i e t e Den Haag werd aangeboden. B i t memorandum kwam t o t s t a n d d o o r o v e r l e g t u s sen het M i n i s t e r i e van F i n a n c i e n , het D i r e c t o r a a t G e n e r a a l v a n de BEB en h e t B u r e a u v a n de R e g e r i n g s c o m m i s s a r i s v o o r h e t E.H.P. I n de v e r g a d e r i n g v a n Uw Raad op 20 J u n i werd b e s l o t e n , d a t i n de d a a r a a n v o l g e n d e v e r g a d e r i n g een d i s c u s s i e z o u p l a a t s v i n d e n o v e r de s i t u a t i e v a n Ned e r l a n d i n h e t E.P.U. B i j de r i c h t l i j n e n , w e l k e d o o r de E.C.A. werden g e s t e l d v o o r h e t v e r v a a r d i g e n v a n d i t memorandum w e r d u i t d r u k k e l i j k g e s t e l d , d a t h e t n i e t i n de bed o e l i n g v a n ECA l a g z e l f s v o o r de s t r u c t u r e l e deb i t e u r e n een r e g e l i n g t e t r e f f e n , w a a r b i j h e t E u r o p e s e d e f i c i t bepalend zou z i j n voor het v a s t s t e l l e n van de z . g . " i n i t i a l a i d " . De o p v a t t i n g v a n E.C.A. i s , d a t h e t s t e l s e l van de E P . U . i m p l i c e e r t , d a t d e b i t e u r e n i n h e t i n t e r E u r o p e e s v e r k e e r g e b r u i k moeten maken v a n de c r e d i e t f a o i l i t e i t e n , w e l k e o n d e r de E.P.U. w o r d e n g e s c h a p e n . Het i s d u i d e l i j k , d a t h e t g e b r u i k m a k e n v a n de e r e d i e t m a r g e v o o r de d e b i t e u r e n een o f f e r b e t e k e n t , a a n g e z i e n h i e r d o o r hun s c h u l d e n l a s t w o r d t v e r g r o o t en e v e n t u e e l i n een v e r d e r s t a d i u m de g o u d r e s e r v e s k u n n e n w o r d e n a a n g e t a s t . De E.C.A. i s e c h t e r v a n o o r d e e l , dat d i t o f f e r a l s n o o d z a k e l i j k wordt beschouwd omdat a l l e e n l a n g s d i e weg v e r w a c h t k a n word e n , d a t de d e b i t e u r - l a n d e n een p o l i t i e k z u l l e n voeren strekkende t o t vermindering of e l i m i n e r i n g van het d e f i c i t . Hoe z e e r dus ook h e t a r g u m e n t , d a t i e d e r e geb r u i k m a k i n g v a n de e r e d i e t m a r g e de s c h u l d e n l a s t van N e d e r l a n d v e r z w a a r t , j u i s t i s , het gaat tegen h e t g e h e l e p r i n c i p e v a n E.P.U. i n w a n n e e r een l a n d z o u c l a i m e n , d a t h e t b e h a l v e de d i r e c t e h u l p en de c r e d i e t f a c i l i t c i t e n v a n E.P.U. ook nog v r i j w e l h e t g e h e l e E u r o p e s e d e f i c i t a l s " i n i t i a l a i d " wenst te ontvangen. Onder de h y p o t h e s e v a n c o n s o l i d a t i e v a n " e x i s t i n g b a l a n c e s " o v e r een p e r i o d e v a n 2 j a a r en een a c c e p t a t i e v a n h e t b i l a t e r a l e a r r a n g e m e n t met D u i t s l a n d werd het Europese d e f i c i t v a n Nederland i n de E . P . U . i n b i j g a a n d memorandum bcr'ckond op ' 123 m i l l i o c n . f
•
Op grond h i e r v a n werd de d e z e r z i j d s zeer hoog geachte i n i t i a l a i d van $ 90 m i l l i o e n gevraagd onder de argumentering, dat d i t zou i m p l i c e r e n , dat Nederl a n d i n het e e r s t e j a a r van de E.P.U. reeds i n aanz i e n l i j k e mate op de g o u d v r i j e swing i n de c r e d i o t marge zou moeten t r e k k e n . De s c h a t t i n g van het Europese d e f i c i t i n " b i j gaand memorandum i s naar onze mening c o n s e r v a t i e f . Een hogere s c h a t t i n g zou het doorslaggevende nadeel hebben, dat i n v e r g e l i j k i n g met het v o r i g e f i s c a l e j a a r i e d e r p e r s p e c t i e f u i t de Nederlandse b e t a l i n g s b a l a n s zou z i j n verdwenen. De i n v e r g e l i j k i n g met de ramingen o p v a l l e n d g u n s t i g e r e s u l t a t e n van het a f gelopen j a a r z i j n zowel u i t de D e v i e z c n n o t a a l s u i t het j a a r v e r s l a g van de Nederlandse Bank p u b l i e k bekend. Omtrent de beide v e r o n d e r s t e l l i n g e n over de c o n s o l i d a t i e en het a c c e p t e r e n van het D u i t s e a r r a n gement s t a a t op d i t moment nog n i e t s v a s t . Mochten één of "beide v e r o n d e r s t e l l i n g e n te o p t i m i s t i s c h b l i j k e n , dan kan d i t i n de volgende b e s p r e k i n g e n over het memorandum k r a c h t " b i j z e t t e n aan het verzoek om een i n i t i a l a i d van r e l a t i e f g r o t e omvang. Het l e e k i n de onderhandelingen j u i s t e r om een e v e n t u e l e u i t spraak over de o n m o g e l i j k h e i d van Nederland om de l i b e r a l i s a t i e - m a a t r e g e l e n t e handhaven of v e r d e r door te v o e r e n , t e bewaren t o t d a t de e e r s t e r e a c t i e s op het memorandum van Amerikaanse z i j d e z i j n gegeven. In de thans t e voeren b e s p r e k i n g e n z a l zeker k r a c h t i g naar v o r e n moeten worden g e b r a c h t , dat i e d e r e t r e k k i n g op de c r e d i c t m a r g e , welke Nederland i n de E.P.U. t e r b e s c h i k k i n g s t a a t , een e r n s t i g o f f e r betekent, 2 ' i de zware s c h u l d e n l a s t , waaronder Ned e r l a n d reeds gebukt g a a t . Het l i g t i n do b e d o e l i n g , dat Uwe E x c e l l e n t i e voor de E..E.A. van a.s. Dinsdag ook een n o t a z a l b e r e i k e n over andere a s p e c t e n van de Nederlandse pos i t i e i n de EPU. G z
c n
De Wnd .-Regeringscommissaris voor deze De D i r e c t e u r van het Bureau voor het EuroDqse H e r s t e l Programma
ï<
£
Drs^E
3-y3-<±o9-öO-o- '5 0
der B e u g e l ) .
B
M
The, j l e j i i e r I and
IJ
O B i jf 33 U
i n t ra-Buropean
Mi
pay me n t s g|Q s i t i o n •
O.S.K. liac r e q u e s t e d t o g i v e a f o r e c a s t o f the E u r o p & f ^ payments p o s i t i o n w i t h t h e p a r t i c i p a t i n g c&untrigM-'%^-'%^^^>l. G i v e n t h e f a c t t h a t t h e l i b e r a l i z a t i o n has been c a r r i e d through to a c o n s i d e r a b l e e x t e n t , i t i s i m p r a c t i c a b l e to give a r a t h e r exact prognosis, i n c o n t r a s t to previous years when e x p o r t s and i m p o r t s were c o n t r o l l e d by q u o t a s y s t e m s . T h e r e f o r e t h e p r o g n o s i s had t o be l i m i t e d t o an e s t i m a t e o f the o v e r a l l b a l a n c e t h e b r e a k down o f w h i c h was e s t i m a t e d f o r t h e most i m p o r t a n t a r e a s o n l y , ks a m a t t e r o f f a c t t h e s e b r e a k down f i g u r e s may i n t e r c h a n g e a s a r e s u l t of s w i t c h e s * 3 x p e c t a t i o n s f o r 1950/ 51 s r e as f o l l o w s : ( u n i t : one m i l l i o n d o l l a r ) Balanc e current account ( t r ad e and invisibles) a) S t e r l i n g a r e a
+14
b) B e l g i u m
- 118
c) Germany
- 2 6
d) O t h e r p a r t i c i p a t i n g c oiintrie a
0 o n t r ac t u a l oblications on c a p i t a l account - 7 - 19 —
+
13 - 117 - 40
- 14 - 40
- 157 mi--.
Lie above f i g u r e s do n o t i n c l u d e t h e e x i s t i n g b a l a n c e s p e r J u l y 1 s t , 1 9 5 0 , a s t h e manner o f c o n s o l i d a t i n g t h e s e b a l a n c e s h a s n o t y e t been d e t e r m i n e d . These b a l a n c e s a r e : ( U n i t : one m i l l i o n
dollar)
Whan t a x i n g
When no a,
i n t e account the amre e men t w i t h Germany )
taxing into acc o un"G uiie agreement w i t h Germany ) J- '
1
?
S t e r l i n g area Germany
-g^vv,
{ ~ ¿4
c - ¿4
- 40
. - 40
/
participating countries Total balance.
v
+ 41 (87-45)
.
* 37
Other
Note
') I n a c c o r d a n c e
<
_ m
— + ?2
w i t h s b i l a t e r a l agreement v/i-feh. Oaymany
separate a^ooni t o £ c h a s e s i n 1950/51•
o
I f : l ) the e x i s t i n g balances w i l l be c o n s o l i d a t e d w i t h i n 2 y e a r s and 2) the " b i l a t e r a l agreement w i t h Germany i s t a k e n i n t o account the e s t i m a t e d o v e r a l l d e f i c i t f o r 1350, 51 o f , 157 w i l l be r e d u c e d by i 34 t o , 125• The amount o f 34 h a s been c a l c u l a t e d as f o l l o w s : d e c r e a s e by , 46 on account o f t h e b i l a t e r a l agreement w i t h Germany; i n c r e a s e by ,', 12 ( h a l f o f the e x i s t i n g b a l a n c e o f minus 23) Net d e c r e a s e :
s
34«
S h o u l d the b i l a t e r a l agreement w i t h Germany prove n o t t o be c o n s i s t e n t w i t h t h e Z'^P.U. , t h e e x i s t i n g b a l a n c e s p e r J u l y 1 s t , 1950 would n o t be - :. 23 b u t + .. 23, and t h e e s t i m a t e d d e f i c i t f o r 1950/51 w o u l d have t o be r e d u c e d by about ; 12 t o ( 145« ^ — The f i g u r e of -f ,. 23 •
, 12 r e p r e s e n t s h a l f
of the e x i s t i n g
e x p l a n a t i o n o f t h e e x p e c t e d s u r p l u s e s and d e f i c i t s b a l a n c e o f payments 1950/51.
balance
i n the
The 1950/51 programme submitted! i n P a r i s i n December 134 9 showed a b a l a n c e w i t h p a r t i c i p a t i n g c o u n t r i e s o f + ,. 11 c a l c u l a t e d on t h e b a s i s o f d i r e c t a i d a m o u n t i n g t o y
balance w i t h p a r t i c i p a t i n g S t e r l i n g area (U.K. and D.O.T.) balance w i t h other p a r t i c i p a t i n g c o u n t r i e s ( . 15 o f w h i c h t o be p a i d i n S t e r l i n g )
4- ... 84 -
75
The o t h e r S t e r l i n g - t r a n s a c t i o n s a t t h e t i m e had been e s t i m a t e d t o bejlj; ^-transactions with participating countries ( e x c l u d i n g J.Z. and D.O.T) T
- ;"• 15
^ - t r a n s a c t i o n s w i t h "Western H e m i s p h e r e
- , 34
- - t r a n s a c t i o n s w i t h the lion P a r t i c i p a t i n g Sterling area
-
35 84
The above shows t h a t i n .December 1949 an e q u i l i b r i u m was expected i n .".-transactions, as c o n s i d e r e d from the ourrencyand not f r o m t h e g e o g r a p h i c a l a r e a a n g l e , w h e r e a s t h e t r a n s a c t i o n s w i t h the P a r t i c i p a t i n g and N o n - P a r t i c i p a t i n g S t e r l i n g a r e a were e s t i m a t e d t o r e s u l t i n a s u r a l u s o f + . 84 - :. 55 rr + .. 49* "Then c a l c u l a t i n g t h e b a l a n c e o f t h e P a r t i c i p a t i n g S t e r l i n g a r e a as * ] 34 ^nd t h e b a l a n c e o f t h e o t h e r P a r t i c i p a t i n g C o u n t r i e s as - =. 73 i n t h e programme s u b m i t t e d i n December 1949 the s t a r t i n g p o i n t hacf bc-Cn a l i b e r a l i s a t i o n p e r c e n t a g e which was l o w e r t h a n t h e p r e s e n t "ocrcentage •
F u r t h e r m o r e t h e c o n s e q u e n c e s o f l i b e r a l i z a t i o n have beer found t o be much more o n e s i d e d t h a n had been e x p e c t e d a t t h e time, f a k i n g i n t o c o n s i d e r a t i o n the probable c u t i n d i r e c t a i d , these f a c t o r s w i l l not f a i l t o e x e r c i s e t h e i r i n f l u e n c e upon t h e N e t h e r l a n d s p o s i t i o n w i t h the o t h e r P a r t i c i p a t i n g C o u n t r i e s i n 1950/51* Re a: The ^ - e a r n i n g c a p a c i t y i n t h e P a r t i c i p a t i n g S t e r l i n g a r e a h a s b e e n r e d u c e d b y the above mentioned f a c t o r s and i s now e s t i m a t e d t o be + , 75. On t h e o t h e r hand ci-payments a r e n o t e x p e c t e d t o r e c u r i n r e l a t i o n v/ith o t h e r P a r t i c i p a t i n g C o u n t r i e s under the s y s t e m o f the 3.P.U., but t h e y w i l l c e r t a i n l y r e c u r i n t h e c u r r e n t payments w i t h the N o n - P a r t i c i p a t i n g S t e r l i n g a r e a , t h e Y/estern Hemisphere and a l s o o t h e r N o n ~ P a r t i c i p a t i n g C o u n t r i e s . The S t e r l i n g p o s i t i o n w i l l t h e n be e x p e c t e d t o be as f o l l o w s : B a l a n c e o f r e c e i p t s and payments w i t h t h e P a r t i c i p a t i n g S t e r l i n g area
4
.Balance o f r e c e i p t s and payments w i t h t h e N o n - P a r t i c i p a t i n g S t e r l i n g a r e a , the W e s t e r n H e m i s p h e r e and o t h e r NonP a r t i c i ID a t i n s C o u n t r i e s
- a
69
+ 0
7
2) N o t e :
including capital
v
76
2)
account.
Eg b: A. p r o g n o s i s on the development o f the monetary account w i t h B e l g i u m has become e x E e d i n g l y d i f f i c u l t s i n c e t h e l i b e r a l i s a t i o n . The above f a c t o r s a p p e a r t o make t h e i r i n f l u e n c e f e l t p a r t i c u l a r l y w i t h r e g a r d to B e l g i u m . The l i b e r a l i z a t i o n p e r c e n t a g e v i s - a - v i s B e l g i u m i s c o n s i d e r a b l y h i g h e r t h a n the p e r c e n t a g e v i s - * - v i s the o t h e r P a r t i c i p a t i n g C o u n t r i e s , w h e r e a s t h e market i n the N e t h e r l a n d s h a s n o t y e t been s a t u r a t e d i n c e r t a i n s e c t i o n s i n c o n t r a s t t o a. s a t u r a t e d B e l g i u m market. In a r e l a t i v e sense the B e l g i a n market t h e r e f o r e h a s o f f e r e d p r a c t i c a l l y no a d d i t i o n a l p o s s i b i l i t i e s as y e t t o the" -^^^«i^#$,S^^^ -Hietfe#riand.s e x p o r t s. Only a f t er t h e p r o s p e c t i v e c o o r d i n a t i o n o f t h e N e t h e r l a n d s and B e l g i a n . g r i c u l t , the • s e c t i o n may be e x p e c t e d to o f f e r p e r s p e c t i v e s t o N e t h e r l a n d s e x p o r t s . :
;
The c o n s e q u e n c e s of l i b e r a l i z a t i o n i n t h e t r a d e v/ith B e l g i u m have p r o v e d t o be much more f a r - r e a c h i n g t h a n had f i r s t b e e n a n t i c i p a t e d . The d e f i c i t o f t h e f i r s t f o u r months o f 1950 a m o u n t i n g t o about 30 m i l l i o n d o l l a r c a n n o t be t a k e n as a b a s i s f o r c a l c u l a t i n g an a n n u a l d e f i c i t , g i v e n the f a c t t h a t s e a s o n a l i n f l u e n c e s play an i m p o r t a n t p-:rt i n the f i r s t f o u r months o f every y e a r and t a k i n g i n t o a c c o u n t t h e c o n s i d e r a b l e p r e s s u r e on t h e b a l a n c e o f payments, r e s u l t i n g f r o m the b a c k l o g demand i n the N e t h e r l a n d s , which i s o f a d e c l i n i n g n a t u r e • In s p i t e of the f a c t t f t ^ t " ^ ^ ^^.^^^teif^fc months o f 1950 i s n o t s y m p t o m a t i c , i t shows t h e heavy s t r a i n on t h e N e t h e r l a n d s balance o f payments caused by l i b e r a l i z a t i o n . I n v i e w o f t h e s e f a c t o r s t h e d e f i c i t on the c u r r e n t a c c o u n t o f the 1950/51 b a l a n c e o f payments may be e s t i m a t e d t o amount t o about 118 m i l l i o n .
When a d d i n g t o t h i s f i g u r e tlie d e f i c i t on c a p i t a l account the t o t a l d e f i c i t would be about 137 B i l l i o n * When :
comparing t h i s d e f i c i t w i t h the 1949/50 d e f i c i t v;hich w i l l amount t o about , 152 m i l l i o n , an i d p r o v e s i e n t i n the p o s i t i o n w i t h Belgium, a p p e a r s t o he e x p e c t e d now i t h s t a n d i n g the g r e a t p r o g r e s s i n l i b e r a l i z a t i o n . Re c:
4 d e f i c i t of about 26 m i l l i o n i s t o be e x p e c t e d w i t h Germany i n 1950/51, due t o a g r e a t e x t e n s i o n o f t h e l i b e r a l i z a t i o n o f i m p o r t s tTom Germany,reBurning t o u r i s t - t r a f f i c t o Germany and t h e r e c e n t l y imposed r e s t r i c t i o n s on the t r a n s i t - t r a d e t o Germany. T h i s i s a l l t h e more p r o b a b l e a s H e t h e r l a n d s e x p o r t s cf consumer-goods a r e as a r u l e p a i d f o r i m m e d i a t e l y , whereas N e t h e r l a n d s p u r c h a s e s o f German c a p i t a l goods w i l l a f f e c t the b a l a n c e o f payments i n a l a t e r s t a g e .
lie jdU
^n e q u i l i b r i u m w i l l be e x p e c t e d t o e x i s t w i t h t h e o t h e r countries. Whereas an e q u i l i b r i u m w i l l be l i k e l y t o e x i s t w i t h S w e d e n , s u r p l u s e s may be e x p e c t e d i n the b a l a n c e s of payments w i t h llorway and Denmark, The b a l a n c e o f payments w i t h f'ranoe i s d e v e l o p i n g f r o m an e q u i l i b r i u m i n t o a r e l a t i v e l y s m a l l d e f i c i t , w h e r e a s the b a l a n c e s w i t h the r e m a i n i n g c o u n t r i e s w i l l p r o b a b l y show a s u r p l u s . k p r o g n o s i s f o r t h e b a l a n c e of payments w i t h S w i t z e r l a n d i s h a r d l y t o make on a c c o u n t of t h e s p e c i a l n a t u r e o f the goods t o be i m p o r t e d f r o m t h a t c o u n t r y . N e v e r t h e l e s s i t i s taken i n t o account t h a t the p o s i t i o n w i t h S w i t z e r l a n d w i l l a l t e r f r o m an a r t i f i c i a l e q u i l i b r i u m i n t o a deficit. rissuming t h a t a f t e r t h e e s t a b l i s h m e n t o f the "E... .U. f u r t h e r l i b e r a l i z a t i o n w i l l be c a r r i e d t h r o u g h , i t i s # l f S i e i 3 - i ^ e l y h o w e v e r , t h a t an o v e r a l l s u r p l u s on t h e c u r r e n t account of about 13 m i l l i o n c a n be a c h i e v e d $
f h e d e f i c i t on t h e e r g i t a l a c c o u n t w i t h t i w i l l be a b o u t 14 m i l l i o n , so t h a t t h e o v e r a l l w i l l show .:. d e f i c i t o f about 1 million.
b;lance
Whe n t ak i n g i n t o a ceo ajgftj "'.^fife* - also ve e s t i m a t e s , a d e f i c i t w i t h the d o l l a r a r e a o f . 175 m i l . L i o n and a s u r l u s w i t h t h e r e s t o f the w o r l d 5 m i l l i o n , the t o t a l b a l a n c e o f payments w i l l g i v e t h e following p i c t u r e : D o l l a r area
ÉsÈt
( -
175
Participating Countries Other c o u n t r i e s
gld.•
+
5
327
gld« ~ .'Id. +_ gld.
655 600-" 20
-1245
i»— mm
4f t e r t ak i n g ' lato; iae.COUpfe tlie d e v a l u a t i o n w h i c h took p l a c e i n t h e meantime, t h e e s t i m a t e o f t h e g r o s s d e f i c i t on the 1 9 4 9 / 5 C - b a l a n c e o f $$mnt& ainounteö t o a b o u t Gld.1500 m i Ä l i o n , f h e s m a l l e r d e f i c i t ' o f G l d . 1000 m i l l i o n f o r the c a l e n d a r y e a r 1 9 4 9 , a s shown by t h e r e a l i z a t i o n f i g u r e s , has been ï > v o u r a b l y i n f l u e n c e d by a number o f e x c e p t i o n a l f a c t o r s in the sœad.
h a l f of 1949? w h i c h can not be reckoned w i t h when making the e s t i m a t e f o r 1950/51? p a r t l y as t h e s e f a c t o r s a r e a b s o l u t e l y u n c e r t a i n , p a r t l y as t h e y a r e c e r t a i n n o t to r e c u r , These f a c t o r s a r e « a) t h e d r o u g h t i n 1949 i n W e s t e r n E u r o p e , w h i c h e n t a i l e d e x t r a e x p o r t - p o s s i b i l i t i e s i n the N e t h e r l a n d s a g r i c u l t u r a l s e c t i o n b) t e m p o r a r y o n e s i d e d l i b e r a l i z a t i o n of. t h e N e t h e r l a n d s p o r t s i n t o W e s t e r n Germany; c) the improvement i n the t r a d e e.nd payments w i t h w h i c h cannot be e x p e c t e d t o c o n t i n u e \
im-
Indonesia
9
d) i n the l a s t q u a r t e r of 1943 the c u r r e n t a c c o u n t o f t h e b a l a n c e of payments w i t h the p a r t i c i p a t i n g c o u n t r i e s showed a s u r p l u s , an abnormal phenomenon, w h i c h can be e x p l a i n e d by the f a c t t h a t the b u y e r s i n t h i s c o u n t r y i n view of d e v a l u a t i o n ? have been a b i d i n g t h e development o f p r i c e s on the w o r l d m a r k e t , i n the meantime e a t i n g i n t o t h e i r stocks. She f a v o u r a b l e i n f l u e n c e o f t h e s e f a c t o r s i s e s t i m a t e d t o amount t o Gld« 50C t o 400 m i l l i o n :nd e l i m i n a t i o n o f t h e s e f a c t o r s would b r i n g t h e 1949 d e f i c i t up t o a b o u t &!&• 1550 m i l l i o n * Ihe 1950/51 e s t i m a t e of G l c L 1245 m i l l i o n , t h e r e f o r e e s s e n t i a l l y means an improvement o f a b o u t G-ld. 100 m i l l i o n as a g a i n s t 1949« T a k i n g a d e f i c i t i n t h e 3.P.U. o f & 123 p o i n t , thus presuming t h a t a) the
e x i s t i n g balances
will
be
m i l l i o n as a
0
starting
c o n s o l i d a t e d w i t h i n two
years
b) the b i l a t e r a l agreement w i t h Germany w i l l m a t e r i a l i s e 5 i t seems r e a s o n a b l e t o s u g g e s t t o 0«S*m t o c o n s i d e r an amount of IQ m i l l i o n t o c o v e ; t h e i n i t i a l p o s i t i o n , h a v i n g r e g a r d to the f a c t t h a t t h i s d e f i c i t w i l l r e s u l t f r o m 1 1) t h e l i b e r a l i z a t i o n of
trades
2) the i n c r e a s e d s t r a i n on the b a l a n c e of payments w i t h the p a r t i c i p a t i n g c o u n t r i e s c o n s e q u e n t upon a c o n s i d e r a b l e c u t i n the d i r e c t a i d . I f an i n i t i a l p o s i t i o n of i 90 m i l l i o n s h o u l d be g r a n t e d , a b o u t h a l f of the c r e d i t m a r g i n n o t r e q u i r i n g s e t t l e m e n t i n g o l d or d o l l a r s w o u l d be e x h a u s t e d i n the f i r s t y e a r , - j x h a u s t i n g a much l a r g e r p o r t i o n of the E . P . u . - - c r e d i t m a r g i n i n ftie f i r s t y e a r , w o u l d i n t h e o p i n i o n o f t h e N e t h e r l a n d s Government; e n t a i l c e r t a i n r i s k s ; n o t o n l y because t h e ad vantage o f the German agreement w o u l d no l o n g e r e x i s t i n 1951/52, but a l s o because t h e N e t h e r l a n d s h a r d c u r r e n c y r e serves have t o be p r e s e r v e d as much as p o s s i b l e , e s p e c i a l l y i n view of the f a c t t h a t a f t e r June 1952 no more M a r s h a l l - a i d w i l l be f o r t h c o m i n g . Such r e s e r v e s a r e i n d i s p e n s a b l e t o c o v e r the o b l i g a t i o n s on the c a p i t a l a c c o u n t and p o s s i b l y a l s o a d e f i c i t on t h e c u r r e n t a c c o u n t i n l a t e r y e a r s . Ihe N e t h e r l a n d s Government, h o w e v e r , c o n s i d e r i t t o be p o s e . i b l t h a t the b i l a t e r a l agreement w i t h Germany w i l l n o t be c o n s i s t e n t w i t h the s y s t e m o f t h e ^.J?.U. C o n s e q u e n t l y c a l c u l a t i o n s h o u l d a l s o be based upon a c o n s o l i d a t i o n of t h e e n t i r e German b a l a n c e p ;,r J u l y 1 s t , 1950, w i t h i n two y e a r s . I h i s would mean :
t h a t t h e d e f i c i t i n t h e E.P.U. v/ould n o t be £ 123 n i l l i o n but y 145 m i l l i o n . S h o u l d an i n i t i a l p o s i t i o n o f $ 90 m i l l i o n bo g r a n t e d , the _ o r t i o n o f t h e c r e d i t m a r g i n not r e q u i r i n g s e t t l e m e n t i n g o l d o o r d o l l a r s would p r a c t i c a l l y be e x h a u s t e d e n t i r e l y i n the f i r s t year i n view o f t h e above the- N e t h e r l a n d s Government , t h e r e f o r e a p p l i e s f o r an a l l o c a t i o n o f > 90 m i l l l e a t o c o v e r t h e i r i n i t i a l p o s i t i o n i n the E.P.U. s
R e g a r d i n g t h e p r o s p e c t s f o r 1950/51 and l a t e r y e a r s the f o l l o w i n g o b s e r v a t i o n s must be made. S h o u l d l i b e r a l i z a t i o n be a p p l i e d i n t e g r a l l y by t h e o t h e r 2 u r o p e a n c o u n t r i e s a f t e r • t h e e s t a b l i s h m e n t o f the 1*P#U., p. g r a d u a l improvement may be e x p e c t e d t o o c c u r i n t h e N e t h e r l a n d s p o s i t i o n , , The s t r a i n on t h e c a p i t a l a c c o u n t e x e r t e d by c o n t r a c t u a l engagements w i t h the P a r t i c i p a t i n g C o u n t r i e s w i l l then f o r the g r e a t e r p a r t have d i s a p p e a r e d . B e s i d e s , the c o n s i d e r a b l e d i s e q u i l i b r i u m i n the b a l a n c e o f payments w i t h B e l g i u m , o c c a s i o n e d by t h e h i g h d e . r ^ e of l i b e r e l i z a t i o n i n the t r a d e w i t h t h i s c o u n t r y ~ w h i c h i s n e c e s s a r y w i t h a v i e w t o t h e r e a l i z a / t i o n of t h e „'.nclux - ' w i l l be r e d u c e d t o more n o r m a l p r o p o r t i o n s , I l o r e o v e r t h e f i g u r e s r e l a t i n g t o the m o n e t a r y d e v e l o p m e n t s end the g r a d u a l r e c e s s i o n i n consumption a l s o i n d i c a t e a s i m i l a r improvement i n t h e N e t h e r l a n d s Ion,;; t e r m p o s i t i o n * I f m o r e o v e r a l s o the b a l a n c e o f payments w i t h t h e o t h e r p a r t i c i p a t i n g c o u n t r i e s s h o u l d g r a d u a l l y be showing an i n c r e a s i n g s u r p l u s , t h e a s s u m p t i o n a p p e a r s t o be w a r r a n t e d t h a t t o w a r d the ma of t h e P . . P L . P . - a i d the N e t h e r l a n d s d e f i c i t i n the o v e r a l l x,uro._:ean b e l ".nee o f payments w i l l have decreased c o n s i d e r a b l y , P o r 1951/52, however, z c o n s i d e r a b l e d e f i c i t w i l l s t i l l have to be r e c k o n e d w i t h .
MEMORANDUM OP THE E.C.A.
INTRODUCTION. 1. S i n c e the b e g i n n i n g o f the d i s c u s s i o n s on a E u r o p e a n Payments U n i o n i t h a s b e e n r e c o g n i z e d t h a t c e r t a i n d e f i c i t s of p a r t i c i p a t i n g c o u n t r i e s would be e l i g i b l e f o r s p e c i a l f i n a n c i n g a f t e r the e s t a b l i s h m e n t o f t h e Payments U n i o n . The Second R e p o r t o f the O.E.E.C. r e f e r r e d t o d e f i c i t s w h i c h m i g h t be c a l l e d "structural o r " e x c e p t i o n a l " whose f i n a n c i n g would be d i s t i n c t f r o m t h e o r d i n a r y c r e d i t f a c i l i t i e s of t h e E.P.U., a l t h o u g h p r o b a b l y a d m i n i s t e r e d w i t h i n the E.P.U., and whose d e t e r m i n a t i o n w o u l d be an E.C.A. r e s p o n s i b i l i t y . The r e c e n t v e r y e n c o u r a g i n g p r o g r e s s t o w a r d f i n a l agreement on the Payments U n i o n makes i t a d v i s a b l e t o p r o c e e d at once t o t h e d e t e r m i n a t i o n n f s u c h e l i g i b i l i t y f o r s p e c i a l financing. 1 1
2. The t e r m " s t r u c t u r a l " h a s f r e q u e n t l y been used i n r e f e r e n c e t o t h e d e f i c i t s i n q u e s t i o n ; t h e terms " e x c e p t i o n a l " and " p e r m a n e n t " have a l s o b e e n o c c a s i o n a l l y u s e d . E a c h o f these terms i s capable o f s e v e r a l i n t e r p r e t a t i o n s ; f u r t h e r more, i t h a s n o t h e r e t o f o r e been made c l e a r w h e t h e r a l l o r o n l y some p a r t o f s u c h d e f i c i t s a s m i g h t be c o n s i d e r e d " s t r u c t u r a l " w o u l d be c o v e r e d by s p e c i a l f i n a n c i n g . I n v i e w o f t h e a m b i g u i t y o f t h e t e r m s " s t r u c t u r a l " and " e x c e p t i o n a l " and t h e u n s u i t a b i l i t y o f t h e t e r m " p e r m a n e n t " , we s h a l l h e n c e f o r t h r e f e r t o t h e o p e r a t i o n s f a l l i n g under t h i s g e n e r a l heading as the e s t a b l i s h m e n t of i n i t i a l p o s i t i o n s v i s - a - v i s the E.P.U. 3. A l t h o u g h t h e e x a c t method o f a c c o u n t i n g f o r s u c h i n i t i a l p o s i t i o n s i s n o t y e t f i n a l l y d e t e r m i n e d , they w i l l i n g e n e r a l take the form o f c r e d i t s t o the accounts of c e r t a i n p a r t i c i p a t i n g c o u n t r i e s w i t h t h e E.P.U. w h i c h may be used t o s e t t l e n e t d e f i c i t s w i t h t h e E.P-rU. w i t h o u t g o l d s e t t l e m e n t or repayment o b l i g a t i o n s . 4. The s p e c i a l f i n a n c i n g o f s u r p l u s e s w i l l be t h e s u b j e c t of s e p a r a t e d i s c u s s i o n w i t h t h e c o u n t r i e s concerned* C-eneral C o n s i d e r a t i o n s . 5. As a f r a m e w o r k f o r c o n s i d e r i n g t h e e l i g i b i l i t y o f a country f o r an i n i t i a l p o s i t i o n i n i t s f a v o r v i s - a - v i s the H.P.U., t h e f o l l o w i n g c o n s i d e r a t i o n s s h o u l d be k e p t i n mind. 6. An i n i t i a l p o s i t i o n i n f a v o r o f a p a r t i c i p a t i n g c o u n t r y r e p r e s e n t s i n t r a - E u r o p e a n a i d on a g r a n t b a s i s . I t must t h e r e f o r e be j u s t i f i e d by s p e c i a l f a c t o r s i n t h e e c o n o m i c p o s i t i o n of the country d u r i n g the t r a n s i t i o n a l period of p o s t - w a r r e c o v e r y and must be r e l a t e d t o a p r o g r a m f o r t h e e l i m i n a t i o n o f t h e need f o r e x t r a o r d i n a r y o u t s i d e a s s i s t a n c e by o r b e f o r e t h e end o f t h e E.R.P. p e r i o d .
7. I t i s not the i n t e n t i o n o f the B.C.A. to arrange special financing v i a I n i t i a l positions f o r a l l forecast i n t r a - E u r o p e a n d e f i c i t s . The o r d i n a r y c r e d i t f a c i l i t i e s o f the E.P.U. are themselves expected t o provide a l a r g e measure of f l e x i b i l i t y i n the payments p o s i t i o n s o f i t s members; and i t i S Goo e n t i a l to r e c o g n i z e the c r e d i t s provided by the E.P.U., accompanied by g o l d payments on the schedules to be agreed, as the normal method f o r f i n a n c i n g the d e f i c i t s which occur. Thus, w h i l e the development o f an estimate of a country's i n t r a - E u r o p e a n payments p o s i t i o n i s a necessary p a r t of the a n a l y s i s o f that country's e l i g i b i l i t y , the e s t a b l i s h m e n t of an I n i t i a l p o s i t i o n must r e s t on something more than a forecast d e f i c i t . 8. J u s t as the i n i t i a l p o s i t i o n s are not designed to r e p l a c e the f a c i l i t i e s of the E.P.U., they are s i m i l a r l y not designed t o postpone o r o h i a t e s t o p s towards economic r e adjustment which may be e s s e n t i a ? t o the u l t i m a t e b a l a n c i n g "of a c o u n t r y ' s payments. 9. I t i s i m p o r t a n t t o r e c o g n i z e t h a t the complete i n t r a European t r a n s f e r a b i l i t y o f a l l i n t r a - E u r o p e a n e a r n i n g s and of E.P.U. c r e d i t s w i l l a l l e v i a t e many o f the most i n t r a c t a b l e payments problems w h i c h have g i v e n r i 3 e to drawing r i g h t s under the p r e s e n t o r post I n t r a - E u r o p e a n Payments Agreements. Those drawing r i g h t s have l a r g e l y been d e s i g n e d to cover part i c u l a r b i l a t e r a l payments d e f i c i t s . Any p r o s p e c t i v e d e f i c i t whose f i n a n c i n g through an i n i t i a l p o s i t i o n i s under c o n s i d e r a t i o n must consequently be an o v e r a l l d e f i c i t i n Europe. 10. I n view o f the f o r e g o i n g c o n s i d e r a t i o n s i t w i l l be c l e a r t h a t t h e r e i 3 no n e c e s s a r y r e l a t i o n s h i p between the i n i t i a l p o s i t i o n s e s t a b l i s h e d i n favour of c e r t a i n c o u n t r i e s and the drawing r i g h t s w h i c h have been e s t a b l i s h e d i n the p a s t . The f a c t t h a t a c o u n t r y has r e c e i v e d drawing r i g h t s d u r i n g the l a 3 t two y e a r s would not i n i t s e l f j u s t i f y the e s t a b l i s h ment o f an i n i t i a l p o s i t i o n w i t h E.P.U. At the same t i m e , i t i s c l e a r t h a t a c o u n t r y r e c e i v i n g an i n i t i a l p o s i t i o n i n i t s f a v o u r w i t h E.P.U. s h o u l d snow s u b s t a n t i a l p r o g r e s s toward e q u i l i b r i u m by comparison w i t h the p r e v i o u s years# PROCZLVJiZ FOB Dgg S B A T I O . Og INITIAL POSITIONS. 11. "Tith governments t h a t f e e l t h e r e are s p e c i a l f a c t o rs i n t h e i r i n t r a - E u r o p e a n payments which, i n vie // o f the c o n s l a t i o n s o u t l i n e d above, would j u s t i f y i n i t i a l p o s i t i o n s i n t h e i r f a v o u r , the O.S.R. w i l l h o l d i n d i v i d u a l d i s c u s s i o n s i n Pa d u r i n g the few days b e g i n n i n g 22nd June. As a b a s i s f o r t d i s c u s s i o n s the O.S.R. would w i s h t o r e c e i v e , from the do a t i o n o f each such government, a memorandum by 1 9 t h June. 1
12.
The memorandum should i n c l u d e : a) an e s t i m a t e o f the country .~ i n t r a - E u r o p e a n 1
pay
f a s h i o n , f o r the f o l l o w i n g y e a r , t a k i n g i n t o a c -anticipated -
a n t i c i p a t e d t r a d e l i b e r a l i s a t i o n as w e l l as o t h e r r e l e v a n t f a c t o r s . T h i s e s t i m a t e s h o u l d be p r e s e n t e d i n the c o n t e x t o f a c o n t i n u i n g development" toward independence of o u t s i d e a i d by 1952 and s h o u l d i n d i c a t e the p a r t i c u l a r elements whose improvement by 1952 w i l l l e a d t o o v e r a l l b a l a n c e . b) s p e c i a l e l e m e n t s w h i c h r e f l e c t p a r t i c u l a r government programmes; c) p a r t i c u l a r elements of u n c e r t a i n t y i n payments or receipts; d) the s t r u c t u r e of i n t r a — E u r o p e a n debts owed by or owed t o the c o u n t r y p a r t i c u l a r l y the debts t h a t have not been c o n s o l i d a t e d . 9
13• F i n a l l y the memorandum s h o u l d s t a t e the s i z e of the i n i t i a l po s i t i o n t h a t the government wishe s the E.C.k. t o c o n s i d e r and s h o u l d s e t f o r t h e x p l i c i t l y those f a c t o r s t h a t , i n the 3udgement 0 f the government, may make the c o a n t r y e l i g i b l e t o r e c e i v e i n t r a - E u r o p e a n a i d on a g r a n t b a s i s a f t e r the i n s t i t u t i o n o f the European Payments Union* ?
?
14. The E.G.A. M i s s i o n s may, i n t h e c o u r s e of t h e i r c o n s u l t a t i o n w i t h t h e governments, s u g g e s t a d d i t i o n a l p o i n t s r e l e v a n t t o the memoranda o f p a r t i c u l a r c o u n t r i e s . 15. At the time of the i n d i v i d u a l d i s c u s s i o n w i t h a c o u n t r y d e l e g a t i o n the c o r r e spending E.G.A. M i s s i o n w i l l be r e p r e s e n t ed i n P a r i s to take p a r t . I t i s hoped t h a t the memorandum t o be s u b m i t t e d t o 0.S.R. by 1 9 t h June w i l l be p r e p a r e d i n c l o s e c o n s u l t a t i o n w i t h t h e E.G. A . M i s s i o n ; t h e O.S.R. w i l l r e l y h e a v i l i y on the M i s s i o n f o r t e c h n i c a l a n a l y s i s and recommend a t i o n . I n p a r t i c u l a r j any p a r t s of t h e memorandum which r e q u i r e d e t a i l e d a n a l y s i s s h o u l d be d i s c u s s e d s u f f i c i e n t l y w i t h the M i s s i o n t o a v o i d t i m e - c o n s u m i n g e x a m i n a t i o n o f d e t a i l s i n t h e P a r i s d i s c u s s i o n . I n any event a copy o f thec o u n t r y ' s memorandum s h o u l d be t r a n s m i t t e d to the E.G.A. M i s s i o n by the time o f t i s t r a n s m i t t a l t o O.S.R* ?
- 0 - 0 - 0 -
3-4:53-60-
1
6- 50
