ISAC Files, Lot 53 D 443

Minutes of the Sixth Meeting of the International Security Affairs Committee, Held in the Department of State, 10:30 a.m., February 23, 1951 1

top secret
ISAC M–6

[Here follow a list of those present (18) and discussion of a matter unrelated to the question of grant aid to Latin America.]

Grant Aid to Latin America

5. Mr. Cabot said that the State Department accepts the Defense Department’s recommendation of an $80 million grant aid program for Latin America and will not oppose the inclusion of this item in the 1952 budget presentation. He said that it may be necessary to refer the matter back to ISAC for further consideration should it be determined that the justification is inadequate and that it might jeopardize the success of the 1952 legislative program.2

6. Mr. Willis 3 said that the Latin American countries are in a strong financial position and in general will continue in this position. He believed that the Administration should not be expected to present adequate justification to Congress based on the inability of Latin American countries to pay. This does not mean that Treasury objects to the program since there are no doubt many reasons why we do not request the Latin American countries to pay. He said the decision in this respect should be with State and Defense because of strategic and other reasons. Treasury will approve the decision to grant aid to Latin America subject to the same reservation stated by Mr. Cabot.

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7. General Burns said he interpreted this to mean the green light for Defense but that the case is subject to later review.

8. Mr. Gordon said Mr. Harriman agreed on the matter. He added that there are two appropriate points in this connection: (1) the Latin American countries should have a low priority in all programs the JCS recommend; and (2) the amount of aid should be small and contingent upon some quid pro quo since it is fairly obvious that Latin America does not need the grant. The program is being proposed in order to achieve certain U.S. objectives. Mr. Gordon said that Task Force I of the Foreign Aid Steering Group should consider, in working out the legislative program, whether the Latin American program could be made more appealing by having the legislation include the following: (1) that assistance be given only in relation to the recipients’ participation in an agreed Western Hemisphere defense plan; (2) that the grant aid be associated with commitments outside the recipient countries with relation either to hemispheric defense or in support of UN actions outside the hemisphere; and (3) that grants be made only pursuant to bilateral agreements that provide for maximum self-help and mutual aid.

9. Mr. Halaby remarked that ECA had no direct interest in this program and did not expect to be called upon to defend it. On a personal basis, he asked whether the legislation could be drafted so that the aid would be given on a reimbursable basis (rather than on a grant basis) in return for payment either in cash or strategic materials. He questioned the desirability of our giving aid to countries that are building up dollar reserves when we are “squeezing” the European countries on their dollar reserves, or giving grant aid to those who can pay. He said that with regard to legislative strategy it might be better to place this request in a separate title.

10. Mr. Cabot asked Mr. Gordon to include his points and those raised by Mr. Halaby in a paper to be presented to Task Force I. He remarked that the action of ISAC in approving the program would make it hard to resist requests for aid from all other countries.

11. There was additional discussion whether ability to pay is a criteria in determining grant aid programs. It was agreed that ISAC was not deciding the over-all relation of end-item programs with ability to pay.

[Here follows discussion of additional matters unrelated to the question of grant aid to Latin America.]

  1. No representative from the Bureau of Inter-American Affairs was present at this meeting.
  2. The Department of State was informed by the Department of Defense, in a memorandum by Maj. Gen. S. L. Scott, Director, Office of Military Assistance, to Mr. Cabot, dated February 22, 1951, that the upper limit for the proposed military grant aid program had been reduced to $80,000,000; the Department of State’s acceptance of the Defense Department’s recommendation was communicated in a letter from the Acting Secretary of State (Webb) to Secretary of Defense Marshall, dated March 9, 1951, not printed (720.5–MAP/3–951).
  3. George H. Willis, Director, Office of International Finance, Department of the Treasury.