Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

Current Economic Developments, Lot 70 D 467, FRC Acc. No. 72A6248

Current Economic Developments

[Extract]

[Washington,] November 12, 1951.

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Interim Procedures for Mutual Security Program

W. Averell Harriman, Director of Mutual Security, has established interim procedures for the mutual security program for the immediate future so that it may be carried on without interruption.¹ The arrangements are designed to make the best use of available personnel while the Director’s independent staff is being established and are subject to revision after further consultation with the agencies involved. All overseas missions have been advised that existing procedures and agency functions are to continue unchanged for the immediate future. The Chief of the Diplomatic Mission, as representative of the President, will continue to be responsible for assuring coordinated US positions and for such general direction as may be required. All existing organizational arrangements at the European regional level will also remain unchanged pending further study.

A clear distinction will be maintained between Mr. Harriman’s responsibility for the supervision and general direction of the over-all Mutual Security Program, which will be carried on with the assistance of a small staff in the Executive Offices of the President, and his responsibility as head of the new Mutual Security Agency. The transfer of functions from ECA to the new MSA is to be completed by December 29, 1951.

Mutual Assistance Advisory Committee In accordance with the Mutual Security Act of 1951 the International Security Affairs Committee was terminated by Executive Order² and in its place a Mutual Assistance Advisory Committee (MAAC) has been established by Mr. Harriman under the chairmanship of his Assistant Director for programs, Lincoln Gordon. Represented on the committee are State, Defense, Treasury, the Office of Defense Mobilization and the Economic Cooperation Administration. The committee will consider major issues involving more than two agencies. To the extent practicable it is planned to avoid permanent subcommittees but rather to establish ad hoc groups to deal with specific questions.

Basic Program Decisions The interim procedure states that the Office of the Director will be responsible for making, obtaining from the President, or otherwise assuring decisions on those questions which must necessarily precede the formation of definitive final programs as well as on preliminary decisions or planning assumptions on such questions as may be necessary to permit orderly program development, such as the use of authority to transfer funds within titles; the areas or countries in which aid is to be provided in the form of loans and the amounts thereof; and the extent and nature of bilateral agreement which must precede the provision of assistance.

Program Procedures The interim program procedures are designed to provide for the maximum decentralization of responsibility consistent with the effective execution by the Director of his responsibilities, as well as a minimum of bureaucratic process. It is emphasized that, in the development and execution of programs, there should be a full and free interchange of information among the several agencies. The agency which has the primary responsibility for the development or execution of a program is to assume responsibility for consulting with other agencies on matters within their spheres of interest, providing the Director with a program which has been fully coordinated. Differences of views between agencies are to be fully reported to the Director. The State Department will continue to be concerned with the political implications of all programs proposed, and will review all programs prior to their submission to the Director. The Department of Defense is primarily responsible for the development of programs for military assistance and ECA is to review and comment upon the economic implications of programs for those countries in which a complementary program of economic assistance is to be provided. ECA is primarily responsible for development of programs for provision of direct country economic aid, showing the amount of aid proposed as grants and as loans, the assumptions and estimates upon which the calculations were made, the level of defense expenditure it is estimated the aid will enable the recipient country to support, and the proposed uses of counterpart.

ECA will be primarily responsible for developing a plan for negotiation with each Title I country, doing so in close conjunction with the Departments of State and Defense and within a context outlined by the Office of the Director. These plans will set forth the location and timing of negotiation; the military, political, and economic objectives; the extent and nature of commitments proposed as conditions precedent to aid; and the extent and nature of commitment which it is proposed to make with respect to the provision of aid. After these plans have been approved by the Director for Mutual Security the primary responsibility for conduct of bilateral negotiations outside the US falls upon the US Ambassador in each country, who shall assure a coordinated participation by political, economic and military representatives as appropriate. State channels of communication are to be used.

With regard to functional economic assistance programs under Title I (such as strategic materials), the Director will establish the form and procedure for the submissions after consultation with ECA.

With regard to programs for economic and technical assistance sunder Titles II, III and IV, ECA is to develop and submit programs to the Director for approval of those countries where it is to administer the program and the Department of State for those countries where it will do so. It has been decided by Mr. Harriman that programs in India, Pakistan and Iran shall be handled by the Technical Cooperation Administration of State. These programs will show an illustrative breakdown of total funds by general project categories, the number of experts required for each category, and a justification for the proposed program.

It is intended that agencies responsible for extension of approved programs, as a general rule, shall have freedom to deviate from the approved plans provided the deviation does not reflect any change in the basic program objectives or involve provision of aid in an amount greater than the total figure approved for the country or functional program as approved by the Director. In particular cases of special importance or political delicacy, a more limited authority to deviate from approved programs may be required.

1. The interim procedures were set forth in a memorandum of November 1, not printed, transmitted by Harriman to the Secretaries of State, Defense, and the Treasury, and the Acting Administrator of the Economic Cooperation Administration (FRC Acc. No. 62A613: ISA/MDAP Files).
2. Reference is to Executive Order 10300, Providing for the Mutual Security Act of 1951 and Related Statutes, November 1, 1951. For text, see Department of State Bulletin, November 19, 1951, pp. 826–827, or American Foreign Policy, 1950–1955: Basic Documents, vol. II, pp. 3086–3088.