Dear McElligott/Leydon/O'Broin,
We hope to have the draft Agreement on European Economic Co-operation before the Government at its meeting tomorrow.

You may like to have, for your information, a copy of this note of a number of general considerations applying to the Agreement which are not specifically referred to in the Submission to the Government.

[enclosure]

1. In connection with the draft Agreement on European Economic Co-operation which will be before the Government tomorrow, there are a number of general considerations which it may be useful to have in mind. They are as follows.
2. The wording of some of the Articles of the Agreement is obviously rather awkward and loose. This is primarily because many of the Articles are compromised texts adopted in an effort to reconcile conflicting points of view. The looseness of the drafting responds to the feeling of the majority of the sixteen countries concerned that, at this stage, the more flexible the whole set-up is kept, the better.
3. There is no danger of undue restriction of the national sovereignty of the participating countries. National sovereignty is more than adequately safe-guarded by the provisions that (a) the whole organisation is subjected to the authority of the Council on which all the participating countries will be represented, and (b) the decisions of the Council must be reached unanimously. The proposed organisation is purely an instrument of co-operation between the sixteen countries concerned.
4. Right up to the opening of the recent Conference, it was assumed that, in the administration of the ERP Act, the U.S. Administrator would deal directly and individually with each of the participating countries. The American Government has changed its mind on this point. It has now definitely pronounced in favour of a multilateral, instead of a bilateral, approach. In other words, instead of the Administrator discussing directly with each participating country what its needs are, what its allocations are to be, how the goods it receives under the Act are to be financed, etc., the Administrator will confine himself, so far as possible, to dealings with the organisation; and it will be for the organisation to present to the Administrator the programme for each participating country drawn up by agreement between its members. This is obviously a fundamental and very far-reaching change, which immensely enhances the importance of the organisation for the individual members. The question what part the local ERP staffs which the American Government proposes to appoint in each participating country will play in this set-up has yet to be discussed and settled.
5. The particular body which will carry out negotiations of this kind with the U.S. Administrator on behalf of the members as a whole is the Executive Committee. Although, therefore, under the Charter, the Council of sixteen members is the supreme authority, the Executive Council will be the most important instrument of the organisation in practice. It - and not the Secretary General - will be the European 'opposite number' of the U.S. Administrator. The Executive Council will probably consist of seven members - the same number as carried out the conversations with the U.S. Government in Washington last autumn. Britain, France and Italy will each have a seat, and two other seats will go to Benelux and the Scandinavian States, respectively. Greece and Turkey are likely to claim one of the two remaining seats, and the seventh seat will probably go to the Amorphous group, consisting of Portugal, Switzerland, Austria and Ireland.

[matter omitted]