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THE European Coal Organization ceased to exist on January 1, 1948, when its functions were transferred to the Coal Committee of the Economic Commission for Europe in Geneva, an agency of the Economic and Social Council of the United Nations. But the record of the ECO forms an important part of the history of postwar Europe, and is also an instructive example of the possibilities and present problems of international economic collaboration.
The origin of the Economic Coal Organization was the Solid Fuels Section established at SHAEF during the war, under Colonel Robert P. Koenig, to get the coal mines wrested from the Germans into operation as quickly as possible. Sub-sections of the Solid Fuels Section were organized in the liberated countries, and a skeleton organization was set up for Germany, since the production and distribution of Ruhr coal was the major task. Experts of the SHAEF agency entered the badly damaged Aachen mines in the midst of battle in October 1944. The Ruhr mines were seized from the Germans in April 1945. Production of coal in the enemy countries was put in the hands of the Occupation authorities in the various zones; the task of allocating the output was entrusted to a combined Allied Fuel Committee which was located first in Frankfort and then in Berlin.
In August 1944, Samuel D. Berger and Arthur Notman of the United States Embassy in London had drafted a memorandum outlining the need for an organization to allocate coal for Europe, and representatives of the United States, the United Kingdom and the Soviet Union had discussed the matter in the fall of 1944. Early in 1945 France was included in these talks. The ECO was organized in London in May 1945 by Belgium, Denmark, France, Greece, Luxembourg, the Netherlands, Norway, the United Kingdom, the United States and Turkey. The Eastern European Governments did not join when the Soviet representative advised that he was without instructions. Poland, however, joined in March 1946 and Czechoslovakia in July of the same year.
The primary purpose of the organization was to recommend to its member governments the equitable allocation of coal. This necessitated periodic statements to ECO by the member governments of their needs for coal and the supplies available for export. The participating governments retained their sovereign rights to accept or reject recommendations; ECO was an advisory agency, with no executive powers and no authority over production. ECO undertook also to recommend allocations of coal tar pitch used in the manufacture of patent fuels, and informally aided member governments to obtain equipment for the mines. It coördinated the demands for transport of coal and mining machinery with the European Central Inland Transport Organization (ECITO) and assembled information about problems of production and labor supply.
Before 1940, Britain had exported no less than 40,000,000 tons of coal annually, but her postwar output was not sufficient to meet even her internal needs. When hostilities ended, Ruhr output was about 5 percent of the prewar rate. Most of the military experts on the spot were not optimistic about the chances of quick improvement in the chaotic conditions in the Ruhr mines. Allied policy precluded much use of experienced German personnel, and the coal operators turned soldiers had too intimate an acquaintance with the nature of military direction of economic enterprise to be sanguine about its results. Except for Great Britain and Poland, no member of the ECO had had an appreciable export surplus before the war. In the first postwar years France succeeded in bettering her prewar output, but she had never met more than approximately 75 percent of her internal needs from her own mines, and had imported the balance from Britain and Germany. Moreover, the task of reconstruction increased her coal requirements. Belgium and the Netherlands were nearly self-sufficient prior to 1939, but were unable to meet their own minimum needs in 1945 and have since been dependent on imports, particularly for special purpose coal. The remaining ECO members -- Denmark, Norway, Greece and Luxembourg -- must import practically the whole of their solid fuel supplies. Italy likewise must be supplied with coal.
In 1946 the United States exported 16,400,000 tons of coal to the ECO countries, Sweden, Switzerland and (in small amounts) Jugoslavia; this was about 46 percent of their total imports of 34,800,000 tons. In 1947, the United States supplied 36,700,000 tons out of a total of 55,000,000, or more than 65 percent of the imports of these countries. Including the 5,000,000 to 6,000,000 tons supplied to ECO countries in 1945, the United States shipped about 58,000,000 tons in two and one-half years. Despite this huge effort, the European needs were far from satisfied, and in addition most American export coal was of poor quality. Even if we had been able to provide the full quantity required, American rail transport and port facilities during the second half of 1945 and during 1946 would have been incapable of handling it. Moreover, such dollars as were at the disposal of European countries had to be apportioned for food, fertilizers and other essential commodities. The cost of ocean freight rates was enormously high until the summer of 1947. The carrying charge on coal which sold for about $6 or $7 a ton in the United States was about $12 a ton to northwest Europe and more than $13 to Italy.
Germany exported about 35,000,000 tons annually before the war. Unfortunately, it was argued that since her industrial plant was wrecked her internal needs would diminish greatly and more Ruhr coal than before would be available for the rest of Europe. The SHAEF Solid Fuels Section had tried hard but unsuccessfully to make clear to the Army the fallacy in this reasoning. The consequent difficulties are familiar and need not be reviewed here. We may, however, note briefly the variance in the views of the occupying Powers with respect to the use of German coal, and thus of the availability to ECO of German exports. The United States was concerned with general European economic and political well-being and wanted to be released from the necessity of supplying Europe with huge quantities of coal (which was strongly demanded at home) and from the burden of granting the large dollar credits for the purchase of the coal. The British were afraid that their Zone, which included the Ruhr, would drain their resources, but seemed to find it hard to strike a clear policy as to whether German coal should be exported to gain immediate foreign exchange or used to restore German industrial life. France was concerned to exploit the Saar fully and integrate it into the French economy, and to combine a minimum of industrial restoration in the Ruhr with maximum exports of coal. The Soviet Union had access to the potentially large Polish production and to the extensive brown coal deposits in their own Zone, and was little concerned with the question of making Ruhr coal available to the ECO countries. This was reflected in her failure to join the organization. The U.S.S.R. at first looked with disfavor on the rehabilitation of the Ruhr, particularly since this might affect the shipment of industrial plants to Russia as reparations, but after this reparations policy proved illusory, and the Soviet Union substituted a policy of reparations out of current output, the Russian view of industrial rehabilitation changed. The Soviet representatives in Berlin were uninterested in the obligations which the other three occupying Powers had undertaken to get coal to the European members of ECO.
American policy put general European recovery ahead of assistance to any particular country. This was the principle of the ECO. The agency had no voice in setting the monthly or quarterly totals of German coal exports, but its recommendations on the division of the total among the different countries were accepted without question. The Control Council endeavored also to ship to ECO countries the kinds of coal it specified. This was done through the British operating agency, the North German Coal Control. Furthermore, ECO arranged to send to Germany liaison officers from the recipient countries to assist in facilitating shipments. Perhaps it should be noted, however, that occupation authorities tend to be averse to the presence of liaison officers or observers even from their own governments.
The relationship of ECO to the U.S.S.R. and the countries of Eastern Europe is worth noting in some detail. Since V-E Day the Soviet Union has consistently maintained that German resources should be allotted chiefly to the victors who suffered the severest devastation. To the western Allies, destruction was one very important factor in allocating coal, but they insisted that the distribution had to bear a relation to the prewar coal consumption of the various countries. No western country was prepared to postpone its own recovery until the U.S.S.R. had first restored a major portion of her own economy. In short, the western nations sought to restore the status quo while the Communist-minded countries sought to advance their industrial capacity relative to the west.
The immediate fact that determined Soviet abstention from the ECO was, apparently, the knowledge that she could conclude bilateral agreements with Poland which would give her far more coal than could be allotted to her from an inter-Allied pool. It must have seemed to Russia unnecessary to queue up with all other claimants for available resources on any formula of comparative needs, when all she had to do was to demand coal from Poland. As we have noted, when the Soviet Union failed to participate in ECO, Czechoslovakia and Jugoslavia abstained also. Poland, who was invited as soon as her political status was clarified, likewise rejected membership. This was a serious blow to the other members, since with the Upper Silesian fields (an acquisition which is provisional under the Potsdam Agreement) Poland's potential production is probably as much as 100,000,000 tons per year. Even within one or two years she seemed likely to have much more production than she could use. (It is now running at a rate in excess of 50,000,000 tons a year, while Poland's annual requirements do not exceed 35,000,000 tons.) In late 1945 and throughout 1946, most of Poland's exports of coal went to Russia, though she did export approximately 4,300,000 tons to ECO countries during 1946. Possible additional shipments to ECO countries were limited by inadequate westward rail transport. Poland also entered into a coal export agreement with Sweden, but transport limitations also reduced these deliveries.
Despite the fact that almost all Poland's immediate exports were mortgaged to Russia, ECO tried hard to persuade her to join. Finally, in March 1946, she joined, but the Polish Government made plain that ECO could expect only a limited amount of coal, and that Poland reserved the right to make bilateral coal pacts. This was contrary to the basic ECO principle that coal should be allocated according to comparative need and should not be employed for economic bargaining, but the shortage of coal was so great that the condition was accepted. Poland also requested that a Vice-Chairmanship should be created and be filled by a Polish national. This was gladly granted. Shortly after, Czechoslovakia, who had been represented by an observer, became a member; but since she had only small amounts of certain qualities for export her rôle was not important.
The sincere desire of the Western European governments, and particularly of the United States, to extend the machinery for equitable distribution of coal to all Europe was evidenced by the effort which was made to include Jugoslavia in ECO. Jugoslavia was a claimant for coal and not a supplier, but she never stated to ECO her reasons for refusing to become a member; indeed, there appeared to be no rational basis for the refusal. UNRRA sought coal for Jugoslavia as well as for Greece (who was a member of ECO and could, of course, apply in her own right) and ECO wanted to assist UNRRA in its work. Representatives of ECO pointed out, however, that there could be no recommendation for coal for Jugoslavia unless she was willing to submit monthly data on her own production, imports, exports, and so on, as every member did. ECO was not concerned with the use to which coal was put and asked for no information about it. Since UNRRA lacked information on the production of the Arsa mines in Venezia Giulia, the Jugoslav Government agreed after a long delay to permit ECO and UNRRA to send a competent engineer to these mines to report on their output.
A British engineer then visited them, but no little commotion was aroused because, after describing conditions in the mines, he went on to state his opinion of Jugoslav needs for coke, anthracite and bituminous coal. He confirmed the dire need for coke and anthracite, but doubted the advisability of sending the large tonnage of bituminous coal which had been asked, on the ground that it could not reach Jugoslavia in the winter of 1945-46 and that in the spring Jugoslav coal would begin to be available. The fact was that whatever tonnage was sent to Jugoslavia would have to be taken from the allotments granted to the members of ECO, for the American State Department had made plain that the United States could not possibly increase her shipments of coal at that time. Jugoslavia's refusal to accept the responsibilities of membership in ECO and to coöperate in the joint effort very naturally made the members of ECO reluctant to deprive themselves of badly needed coal for her sake. UNRRA officials, however, insisted that coal must be sent to Jugoslavia, and the United States representative on ECO obtained the consent of all the governments to the shipment of one cargo of coke (8,500 tons) and 1,500 tons of anthracite, though the representatives of the other countries on ECO voted against it. It was done as a token of goodwill toward Jugoslavia, and as an inducement for her to join the organization. The United States was anxious to promote collaboration, however tenuous, with Eastern Europe.
Jugoslavia, however, failed again to respond to the invitation to accept membership in ECO, and assumed that the token shipment was a precedent for future allocations. The other members of ECO protested strongly, but nevertheless, when UNRRA asked for coal for Jugoslavia the following month, the United States again insisted that it be sent. By this time the United States had arrived at the definite conclusion that UNRRA, as a United Nations agency, was entitled to request coal for any country for which it was responsible. The country for which it spoke did not have to be a member of ECO, but would have to supply ECO with the customary data. This policy toward UNRRA should probably have been stated earlier, but it was not until the Jugoslav case arose that the issue required clarification.
Meanwhile, UNRRA, acutely conscious of its responsibilities, had placed its grievances against ECO forcibly in Washington. Simultaneously, a meeting of the United States, British and UNRRA officials was called at the British Foreign Office to reconcile the differences of opinion and, above all, to assist Jugoslavia through the winter by exploring the possibilities of immediate shipments from other sources, particularly Poland. The result was that the ECO members finally agreed to the principle that UNRRA-sponsored requirements for coal to cover relief and rehabilitation should be heard, regardless of membership, and merited recommendations granted.
ECO also had to work out a policy toward countries which had been neutral in the war, and toward Italy and Austria. The emergency economic organizations initially confined their thinking and their efforts to inter-Allied coöperation for mutual benefit, paying little or no attention to the needs and the resources of neutrals, and of the ex-enemies who would be treated differently from Germany. It was assumed that an agency such as ECO should consist of members of the United Nations only, and that only the victors in the war were entitled to German coal; it appeared unthinkable in the moment of victory that a sadly inadequate coal supply should be shared among countries which had not fought in the war, let alone among peoples who had fought with Germany.
Sweden, Switzerland and Portugal, however, informally submitted their coal problems to ECO and to the United States representatives. The case of Sweden demonstrated how impractical it was for the victors to assume that they could advance their own reconstruction merely by dividing the resources of the vanquished among themselves. Sweden's timber is essential to Europe, particularly for housing construction and inland transport. Coal production in Britain, Belgium, France and the Netherlands was directly dependent upon it for pit props. Sweden has no coal of her own, and imported about 9,000,000 tons of coal and coke annually before the war. During the war she had to get along on about 4,500,000 tons annually, and when the war was ended, she found herself unable to obtain any coal at all. The United States stepped into the breach by allocating Sweden approximately 75,000 tons a month, but Sweden pointed out that unless she could obtain substantially larger quantities somewhere, she would have to use her production of timber for fuel, and would be unable to cut and transport sufficient timber for the Continent and Britain.
Switzerland's case was similar, for she had almost no coal of her own. During the war she obtained about 1,800,000 million tons annually, but after V-E Day she was able to get only about 25,000 or 30,000 tons per month, supplied by the United States. Her industrial output was important to Europe, and if she was to maintain it and supply electric power and pit props to France, she had to have additional coal. And Portugal and Finland were in much the same predicament.
Belgium has considerable coal (though not an adequate amount for her needs) and she sought to get the timber that she required by diverting coal to Sweden or Finland from her mines, or from the coal she received from the United States. Such a solution was feasible for a country who, like Belgium, could sacrifice some coal and had some forest resources; it was no solution for a country like Great Britain, who was in desperate need of imported timber and could spare no coal, or for a country like Denmark, who had no fuel production whatever to trade for timber.
These difficulties led to the formation of a coal-timber committee, representing ECO and the Emergency Economic Committee for Europe (EECE), which evolved formulas for exchanging quantities of coal from the ECO pool for quantities of timber from the neutral and Allied suppliers. Thus the capitalist countries put into effect the principle "from all according to their abilities, to all according to their needs." Unfortunately, Communist Russia seemed to disapprove.
Simultaneously with these arrangements, the ECO members agreed in March 1946 to admit Sweden, Portugal and Finland as "associated countries." This meant that these countries could submit their requirements to ECO and send representatives to the meetings of the Allocations Proposal Committee, but that they had no voice and no vote, and could not participate in the formulation of ECO policies. It was understood, however, that they would be eligible for membership in ECO as soon as former neutral countries were accepted in the United Nations. Coal also had to be supplied to Italy and Austria if they were to survive; both were represented at meetings of the ECO Allocations Proposal Committee by officers of the Allied Control Authority, but after January 1, 1946, UNRRA assumed responsibility for Italian procurement, and Italy was later admitted as an associated country.
The core of ECO's job was, of course, to recommend the amounts of coal which would be distributed to the various countries. At the beginning, ECO undertook to devise formulas which would give each participant a just share of the inadequate supply. In fact, however, allocations were for the most part made on a basis of current needs, current supply and available shipping facilities -- though the prewar consumption of each country was always kept in mind. Early in 1947, the United States sponsored a formula which made recommendations proportionate to the 1935-38 average consumption of each recipient country, adjusted to allow for bonuses to producing countries as incentives to increase production, for rehabilitation of war damage, and for deductions based on increased generation of hydroelectric power. Whenever it was deemed possible to stimulate production of critical items, such as foods and phosphates for export, by additional coal supplies, further adjustments were made. The application of a general formula was rendered difficult, however, by Poland's insistence on the right to enter bilateral agreements. The ECO principle of making allocations according to comparative need rather than through the bargaining power of individual countries excluded bilateral arrangements except in isolated instances for some limited object. But Poland looked upon her coal resources as her major weapon in obtaining the material she needed for reconstruction, and as we have noted joined ECO on condition that she have the right to bargain. She proposed two allocation categories, one for coal delivered under bilateral agreements where deliveries would be fully accounted for under a basic ECO formula, and another for coal delivered under particular bilateral arrangements. These arrangements specified that the recipient country would furnish assistance to her, particularly in the reconstruction of her transportation system.
The Poles pointed out that such an arrangement would provide them with the foreign credits which they so badly needed, since by means of it they could have obtained credits up to several times the value of the coal delivered. The United States, however, declared that certain countries would be placed under a decided disadvantage if the Polish views were to prevail -- for example, Denmark, whose stock-in-trade is food. A major part of Denmark's food exports were, by agreement, subject to allocation recommendations by the Food and Agriculture Organization, and thus she was not free to bargain her food for coal. This problem was never satisfactorily solved, although by and large the formula sponsored by the United States was employed.
It was also hard to bring the distribution of German coal under a general formula because its price was lower than that of American coal, transport costs were less, and better qualities were available. Moreover, almost 15 percent of the German coal available consisted of brown-coal briquettes which could be shipped only to adjacent countries because of the danger of spontaneous combustion, and because long hauls were in any event uneconomic. Calorific allowance values, however, were made in the recommendations for these lower quality coals. There was also the problem of special purpose coals, which had to be sent to certain countries. Sweden and Switzerland, for example, particularly require coals suitable for gas, locomotive and metallurgical purposes. The liberated countries, however, felt that they should be granted the major part of the German coal in preference to neutrals and ex-enemies. However, ECO followed the principle that, in general, there should be no separate allocation of German coal, but that it should be distributed on a basis of need as part of the whole ECO pool, without discrimination.
On the whole, it may be said that the work of ECO was successful. The member governments accepted the monthly recommendations so consistently that these proposals were tantamount to authoritative allocations. Since ECO had no executive authority whatever, this willingness to abide by its recommendations was a tribute to the fairness of the agency's decisions. Paradoxically, ECO's provisional and advisory character contributed rather than detracted from its effectiveness. The secretariat of the agency and the governmental representatives knew that they were dealing with a terribly pressing problem. The emergency evoked a spirit of give-and-take, of compromise and of agreement. A formal vote was never required. Such a spirit is not so likely to pervade organizations which are built up on elaborate constitutions, oriented toward distant objectives and accustomed to inflexible administrative regulations. Governments with reasonably similar outlooks are more likely to cooperate successfully under loose arrangements than when every decision is final and irrevocable. Thus, in the ECO, they were disposed to participate in improvisations which seemed to meet a particular situation but did not constitute hard and fast commitments. It was not until January 1945, more than half a year after ECO was organized, that the member governments formally signed a charter drawn in general terms; and perhaps the chief reason for this was merely to provide a legal basis for obtaining operating funds and thereby relieving the British Government of the task it had voluntarily assumed of supplying office space, civilian personnel and administrative facilities.
An important factor of ECO's success was that the job of fitting inadequate amounts of coal to pressing needs was, though complex, at least a concrete and definable problem. The men who represented the various governments were in almost all cases technically competent and experienced in the coal industry. They perceived the importance of an orderly distribution of coal in Europe. Moreover, many of them came to the monthly meetings in London direct from their respective capitals, and hence were in close touch with the attitudes of their home governments on the problems with which the agency had to deal. Thus they imparted a reality to the deliberations which gave substance to the final recommendations. This sense of reality can easily be lacking in the decisions of an international body. The fact that the headquarters of ECO were in a major capital, London, made closer the working relationship between the home ministries and the agency. The American representatives in ECO, as well as in certain other European emergency economic organizations, were part of the Mission for Economic Affairs of the State Department in the Embassy in London. They were thereby able to coördinate their activities with the policies of the United States on related economic matters; and they enjoyed the practical advantage of seeing the relevant cables which passed between the State Department and the Embassy. They were thus helped to gain an accurate understanding of American policy and practice.
The experience of the SHAEF Solid Fuels Section was of great help in getting the work of ECO going. A loan of personnel by the Solid Fuels Section smoothed the transition from a military to a civilian basis, and several military members of the staff remained as civilians after demobilization. Fortunately, ECO leadership was strong and experienced. The two successive chairmen, Mr. John C. Gridley and Mr. J. Eaton Griffith, both British nationals, and the Secretary-General, Mr. Basil P. Aicard, a Frenchman, had wrestled with the problem of coal supply during the war, and their expert guidance enlisted the devoted support of the staff of this agency and the government representatives. The delegations of all the governments were composed of men of great technical competence and high character.
Now that ECO as such has ceased to exist, and its functions have been transferred to Geneva, the organization becomes part of the huge United Nations administrative machinery. The important political difference in this new set-up is that the Eastern European Governments are entitled to participate in the allocation of coal as members of the United Nations. For a long time, ECO eagerly sought their collaboration, but under the present circumstances one can only wonder whether their participation will not be more likely to paralyze the effective allocation procedure than to promote it. Thus far, Poland has joined in the work of the Coal Committee of the Economic Commission for Europe; Czechoslovakia, Jugoslavia and Hungary have participated intermittently. The U.S.S.R. has still abstained.
In a period of intense diplomatic friction, it is surely wise to try to separate international economic and social activities from the international political quarrels in so far as this is possible. If (as all hope, but few expect) collaboration on certain economic matters proves possible, then some impulse toward political coöperation may be felt. The main problem in regard to coal, of course, is not how to distribute an insufficient supply among needy claimants but how to increase production so that there will be enough for all. And, indeed, there will probably be a day when the problem is a surfeit of coal. The European countries have recently indicated that they would not take the full amount available from the United States in the second quarter of 1948, but would depend on their own mines plus imports from European sources. However, this may be a reflection of the shortage of dollars rather than a decrease in needs for coal.
If we can generalize from the experience of one successful postwar agency, the conclusion to be drawn from the work of the European Coal Organization seems to be that international collaboration is effective when specific organizations are designed to meet immediate problems, when they are a product of previous experience, and are small, supple and free of the administrative rigidities imposed upon vast organizations. Their effectiveness is probably enhanced by an awareness of political realities and diminished by too much of an international civil service climate. It is interesting to note that the restricted regional pattern forced upon ECO by the Eastern European countries did not measurably detract from its usefulness, and also that collaboration did occur between Eastern and Western Europe when an eastern country had something to trade. Most important of all, it may be that such agencies, working successfully in many sectors of international life, can help to overcome the jealousy with which national states guard every particle of their sovereign authority.
Charting the Disastrous Choices Ahead