3. Memorandum From the Administrator of the Agency for International Development (Bell) to Secretary of State Rusk1
Two actions I would like to propose to the President in connection with the 1965 foreign aid program have significant political overtones which I am bringing to your attention in this memorandum.
The first proposal is to announce plans to make no new economic assistance commitments after June 30, 1964, to the following nine countries: Free China, Greece, Israel, Iraq, Syria, Libya, Southern Rhodesia, Mexico and Surinam. Projects under way would of course be carried through to completion. We would plan to withdraw virtually all A.I.D. mission staffs from these countries by June 30, 1965.
I would propose to recommend to the President that he announce this decision in his foreign aid message, which will probably be sent to the Congress within the next two weeks.2 The President would make plain at the same time that while he does not expect to resume economic assistance programs in these countries, he has not foreclosed the possibility of doing so should their economic circumstances so require.
Each of these countries has been discussed with the relevant geographic bureau of the Department. There is uniform concurrence that the proposed decision to make no new commitments is warranted in every case in the light of normal aid criteria and the President’s desire to pre-sent an austere program for 1965.
On the political side, Mr. Mann and Governor Williams have no objection to the proposal as it affects the countries in their areas (provided, of course, that advance notification is given to the countries concerned in appropriate ways before the President’s message is released). Mr. Hilsman and Mr. Poats have jointly queried Taipei as to the possible effects there.
With respect to the four Near Eastern countries, Mr. Talbot is concerned over the political impact of such an announcement. I understand he is sending you his views on the subject. I have discussed the problems involved with him, and on balance I would urge that we keep all four countries on the list. Israel and Greece are today the most prosperous and economically progressive nations still receiving economic aid. If we do not stop new aid commitments to them, we would have no logical basis for stopping commitments to any other country.
[Page 7]The political problem with Israel should be bearable, assuming we continue to help provide them with military equipment, (either through credit sales or direct MAP), and assuming we give them strong support in the Jordan waters matter.
The political problem with Greece, it seems to me, can be minimized by stressing that their economic success has eliminated their need for aid on concessional terms, and that PL 480,3 MAP, and Export-Import Bank loans will continue to be available.
Furthermore, both Greece and Israel have been on notice for at least a year, by repeated public statements made by me and others, that we regard them as doing so well their need for economic aid is coming rapidly to an end.
Accordingly, I recommend that we propose to the President ending aid in the nine countries, with appropriate plans for notification—including the possibility of personal letters from him to the leaders of the other governments, at least in the cases of Greece and Israel.
The second proposal we are considering is to withdraw virtually all direct-hire AID personnel from 15 additional countries on or before June 30, 1965. Including the nine countries mentioned above, the net effect would be to reduce the number of AID overseas posts by 24, or almost a third.
The countries from which we expect to withdraw AID personnel, but to which we expect to commit new program funds in FY ’65 or later, are the 12 UAM States, Sierra Leone, Haiti, and Trinidad. These are all countries in which the aid programs are quite small and concentrated on a few activities. We believe our operations can be carried out effectively in such countries without the necessity for a resident AID staff. Projects in such countries would be carried out by contractors, and AID supervision would be handled by staff stationed elsewhere, normally in a regional office or in Washington. We would expect to ask the Embassy in such countries to provide minimum liaison and service functions on our behalf.
We would expect to advise the countries concerned of our decision, stressing the administrative savings and efficiency that will result. If this is done, I would not anticipate any significant political reaction.
So far as I am aware, the regional Assistant Secretaries have no objections to this proposal.
- Source: Johnson Library, National Security File, Subject File, Foreign Aid [3 of 3], Box 16. Secret. Copies were sent to McGeorge Bundy, Kermit Gordon, Ralph Dungan, William P. Bundy, and John C. Bullitt.↩
- See Document 4.↩
- The Agricultural Trade Development and Assistance Act of 1954, as amended: P.L. 480, 83d Congress, approved July 10, 1954, as amended through P.L. 88–205, approved December 16, 1963. (77 Stat. 390)↩