CONSEIL DE L'ATLANTIQUE NORD NORTH ATLANTIC COUNCIL

EXEMPLAIRE N0 COPY 350

051G-IHALÎ ENGLISH NATO CONFIDENTIAL *1< IOth August, 1959 SUMMARY RECOED - C-^RC 59 )30

Summary Record.- of a meeting of the Council field at the Palais de Chaillot, Paris, XVIe on Wednesday 5th August- 1959 at Lt- p.m.

PRESENT

Chairman: Mr. P.-H. Spaak

BELGIUM GREECE NORWAY

Mr.JoPapeians de Mr. M. Melas Mrjj J, Boyosen Morchoven ICELAND PORTUGAL CANADA Mr, P, A. Bridle Mr. N.P. Sigurdsson Mr. A. de Faria DENMARK ITALY TURKEY Mr. T. Oldenburg Mr. A. Alessandrini Mr. Selim Sarper. FRifINCE LUXEMBOURG UNITED KINGDOM

Mr. P. de Leusse Mr. P. Reuter Mr. J0 S., H0 Shattock

GERMANY NETHERLANDS UNITED STATES Mr. H. Schwörhel Mr. D.U. Stikker ' Mr.W. Randolph Bxirgass INTERNATIONAL STAFF

Deputy Secretary General: Mr.A. Casardi Deputy Assistant Secretary General for Economics and Finance: Mr. D. Bendall Assistant Secretary General for Political Affairs: Sir Evelyn Shuckhurgh DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED Assistant Secretary General for Production and Logistics: Mr, R. B.- Fiske Acting Executive Secretary: Mr. H. Voigt. ALSO•PRESENT Standing. Group Representative : Brigadier R, A. Pigot Head of the Permanent Headquarters . Office: CONTENTS

Item Subject Paragraph Nos,

I. Military Procedure for the Processing of Criteria and Standards for Common Infra- structure and .Révisions thereto 1

II. Credits to the Soviet Bloc 2-10 k III. Request for Supplementary Credits to the " Special Budget for the Construction of the New Headquarters 11 - 22 IV. Exercise "SIDE STEP" 23 - 27 V. Date of the Next Meeting 28 DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED -3- NATO 'GONPIIffiNTIAL C-R(59)30 ~ NATO CONFIDENTIAL I. MILITiiRY PROCEDURES FOR THE PROCESSING OP CRITERIA AND

STANDARDS FOR COMMON INFRilSTRUCTURE AND REVISIONS THERETO

Document: MC 32/16 •

:1. The COUNCIL: . (1) took note of the Report hy the Military Conmittee (Document MC 32/16); (2) invited the attention of national authorities thereto. NATO CONFIDENTIAL II. CREDITS TO THE SOVIET BLCC , / w

References: C-M(59)36 C~R(59)12 Document: C-M(59)75 ^

2. The UNITED STATES REPRESENTATIVE had pleasure in stating that his government was. prepared to approve the recommendations in C-M(59)75 and welcomed the reaching of this agreement. He would have preferred the submission of reports at more frequent intervals than 6-monthly, hut would wait until the presentation of the' first report, reserving the right to raise this matter at that time,

3. The UNITED KINGDOM REPRESENTATIVE said that he also was glad to he able to accept these recommendations. i|. The GERMAN REPRESENTATIVE congratulated the Committee of Economic Advisers on its report, which represented a valuable contribution to co-operation within the Alliance. His government regretted, however, that the procedure outlined in paragraph 6 provided for the communication of only the global figures representing the total of the sums indicated in the reports by the different member countries. He reserved the right to bring up this question again if it appeared necessary.to know the more detailed breakdown of these global figures in order to assess their possible consequences. He also regretted that no figures DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED ' He pointed out that for the purpose of this exercise his government did not consider as a foreign country either the Soviet zone of Germany or the Soviet sector of Berlin, and that it considered exchanges between East and West Germany as internal exchanges inside Germany. His government was nevertheless prepared to in- clude in its reports figures of credits granted to the Soviet zone and to the Soviet sector of Berlin. 5. The CiiNADIAN REPRESENTATIVE said that it was the view of his delegation that the exchange of views in the Committee of Economic Advisers, and their resultant recommendations, would provide an opportunity to determine more precisely the nature of the situation which the Alliance faced as a result of Soviet efforts to obtain credits and credit guarantees from NATO countries« The information to be obtained by the proposed reporting procedure, would be of considerable assistance in deciding what, if any, future action was required.

6. During discussions in the Cornmittoe, certain delegations had expressed serious apprehensions lest the granting of Western credits might significantly contribute to the economic development of the Soviet Bloc, thereby being detrimental to the purposes of the Alliance. While not entirely sharing such concern, he agreed that the problem merited attention. The Canadian authorities would do their best to supply the necessary information.

7. He would also like to emphasize that, as a result of this exercise, there should be no implication that the members of the Alliance were intending to enter into any form of economic warfare with the Soviet Bloc. On the other hand, he assumed that member countries would not wish to facilitate trade with the Soviet Bloc by the extension of long-term credit guarantees on terms more favourable than they would make available for trade in similar goods with other countries in similar circumstances, or by granting government-to-government credits; both such types of intervention by governments in trading activities appeared to him to go beyond the concept of developing normal commercial relations. He added that the granting of credits to the Soviet Bloc was only one aspect of the general problem of East/\¥est trade; in the view of his authorities, other aspects such as USSR pricing practices, barter arrangements, etc., deserved careful consideration by NATO countries, and might warrant discussion in the Committee of Economic Advisers at a later date.

8. The NETHERLANDS REPRESENTATIVE, approving the report, said that his government welcomed the reaching of an agreement in • which all member countries participated. He hoped that the figures supplied by member. countries would be treated as confid- entially as possible. He would have preferred the reports to indicate a breakdown of the global figures, including figures for the satellite countries but was glad to accept this compromise

DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED solution.

9. The DilNISH REPRESENTATIVE could accept the report in a spirit of compromise and on the assumption that the procedure recommended would not involve any commitments by nations regarding decisions on credit guarantees or exports to Soviet bloc countries. 10. In conclusion, the COUNCILS

(1) approved the report C-M(59)755

(2) noted that the Committee of Economic Advisers would report to the Council on the outcome of the reviews described in paragraph 6 of this report ;

(3) noted that other aspects of the problem of East-West trade would"bc considered by the "Committee in due course.

'NATO UNCLASSIFIED III. REQUEST FOR SUPPLEMENTARY CREDITS TO THE SPECIAL BUDGET FOR THE CONSTRUCTION OF THE NEW HEADQUARTERS References: C-M(59)72 C-R(59)29 11. The UNITED STATES REPRESENTATIVE said that his author- ities had had considerable difficulty in obtaining appropriations for the new Headquarters from Congress, which had fixed a firm ceiling on expenditure. Since total expenditure was now very near this ceiling, it was more than ever necessary to exercise very close supervision. He was prepared to approve the expend- iture listed in C-M(59)72 subject to the following modifications:

(i) deferral of the works listed in paragraph U(d-) °> (ii) the reduction of the credit for contingencies and claims from the figure of F.fr. 50,000,000 to F.fr. 37 ? 500,000, He Ti^as glad to note that no drawings would be made on the - contingency fund without the prier consent, in every case, of the Restricted Committee.

12. The FRENCH REPRESENTATIVE said that in spite of the limited amount of information provided he could agree to the expenditure envisaged in paragraphs 4(a), (b.), (cj and (e), and could approve paragraph 4(d) if the majority of his colleagues were in agreement. He thought that the credit of F.fr.50,000,000

DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED for contingencies was a very large sum, especially at this late date, when the number of contingencies should be reduced, and he asked for a justification.of this figure.

13«. The GERiMiiN REPRESENTATIVE could approve the expenditure listed in C-M(59)72 but hoped that it might be possible to reduce it, particularly expenditure on contingencies. NATO UNCLASSIFIED ll+. The UNITED KINGDOM REPRESENTATIVE coulcL approve the document subject to the modifications proposed hy the United States Representative» He would also like a further breakdown of the expenditure listed, together with, a detailed breakdown of the.total sum of F.fr. 1+,367,000,000 for which contractual authority had been given to date, 15. In answer to a question by the Netherlands Represent- . ative, the HEAD of the PERMANENT HEZxDQUZiRTERS OFFICE said that if a decision on the items in 1+(d) were Referred, it would bo technically possible to carry out the works at a later date, but with an approximate increase of 25% in the cost. The work would also inconvenience the users of the building, 16. The TURKISH REPRESENTATIVE was prepared to approve the document in its entirety.

17. The CANADIAN REPRESENTATIVE said that on the basis of the available information he questioned the need for the works listed in paragraph l+(&) and also the size of tho sum estimated for contingencies. Ho was therefore inclined to agree with the United States proposal. 18. The ITALIAN and PORTUGUESE REPRESENTATIVES were prepared to approve the document in its entirety if this was the majority view of the Council,

19. The DEPUTY SECRETARY GENERAL said that he would like to make a special plea for the retention of the OEEC shop, a project to which the Staff Association attached importance in view of the considerable advantage to the staff in having a branch of the OEEC shop on the premises. He would also placo a most serious reservation on his position as regards tho possibility of terminating work on the new building within the limits of the credits now contemplated by the Council. If it was the wish of the Council to reduce the credit for contingencies from F.fr. 50,000,000 to F.fr. 37,500,000 he must, of course, accept it, while reserving the right to return to the Council should further credits be necessary. It was true that the architect had stated in writing as recently as 21+th July, that, in his opinion the funds requested in C-M(59)72 would bo adequate to terminate the work, but he emphasised that past experience had shown that on a number of occasions the architect's estimates had proved to be incomplete. Generally speaking, costs had always been substantially higher.- DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED It might cause further complications if the Council had to be consulted each time a small increase over the estimate occurred. 20. In answer to questions, the DEPUTY SECRETARY GENERixL said that the estimate for tho OEEC shop, whfch would be situated in the basement, was approximately F.fr. 12,500*000, including installation of ventilation. He suggested that in the absence NATO UNCLASSIFIED

of agreement on this credit the Council might authorise the necessary infrastructure work,, leaving over the question of the installation of the shop«

21. The GSEEK REPRESENTATIVE said that he supported the project for an OiiEC shop on the premises since there was no direct transport between the Porte Dauphine and the Chateau de la Muette.

22. In conclusion, the COUNCIL:

(1) approved the expenditure listed in paragraphs 4(a), (b) and (c) of C-M(59)72 (F.fr. 13,560,000, F.fr. 13,080,958 and F.fr. 28,700,000 respectively)

(2) agreed that the credit for contingencies and claims should be reduced from F.fr. 50,000,000 to F.fr. 37,500,000;

(3) deferred a decision on paragraph 4(d), and requested the International Staff to propare a paper showing:

(a) a detailed breakdown of the expenditure • envisaged under paragraph 4(

(b) a breakdown of the payments from the fund for 'contingencies;

(c) a breakdown of the expenditure of F.fr. 4,367,000,000 contracted to date;

(I4) took note of tho statement by the Deputy Secretary General that he reserved his position as regards the adequacy of the crédits now authorised by the Council, and that reserved the right to return to the Council on this question, if necessary

NATO CONFIDENTIAL

IV, EXERCISE "SIDE STEP" DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED ^3 References : P0/59/1053 RDC/59/221

23. The CHAIRMAN invited the members of the Council to inform the Secretariat as soon as possible whether they intended to accept the Supreme Commander's invitation to be present from 21st - 23rd September at Exercise "SIDE STEP". 21+. The STMDING- GROUP REPRESENTATIVE, in answer to questions, regretted that no details of the programme were yet available. It was tentatively proposed that the visit hy the Council should last three days, to cover one and a half days in the Central Army Group/ij-th Allied Tactical Airforce area, and one and a half days in the Northern Army Group/2nd Allied Tactical Airforce area. The Council would he "invited to see some headquarters in operation and certain troop training activities. 25. It was pointed out that it would he of assistance if further details of the programme could he provided as soon as possible and that, if they were unable to attend personally, some Permanent Representatives would like to send their deputies.

26. The CHAIRMAN said that 'it was his intention to accept the invitation.

27. The COUNCIL: (1) agreed that the members of tho Council should , notify the Secretariat as soon as possible of their intentions with regard to the invitation by the Supreme Commander to attend exercise "SIDE STEP" from 21st - 23rd September; (2) invited the Standing Group Representative to circul- ate further details as soon as they were available» NATO UNCLASSIFIED

V. DATE OF THE NEXT MEETING

28. Wednesday, 12th August, 1959 at. 10.15 a.m. (Private). DECLASSIFIED - PUBLIC DISCLOSURE / DÉCLASSIFIÉ - MISE EN LECTURE PUBLIQUE LECTURE EN - MISE / DÉCLASSIFIÉ DISCLOSURE - PUBLIC DECLASSIFIED