Memorandum by the Regional Planning Adviser of the Bureau of Inter-American Affairs ( Halle ) to the Assistant Secretary of State for Inter-American Affairs ( Miller )1


Subject: Policy on Assistance to Latin America.

There has been general agreement that our foreign aid programs should tend to make the recipient countries less dependent rather than more dependent on outside assistance. This has been the understanding of Congress in supporting the IIAA programs as well as such other programs as those of the ECA.

The IIAA policy has, accordingly, been one of helping Latin American governments to initiate programs of development and then gradually transferring to those governments the burden of continuing them. At a meeting of the IIAA Board of Directors on July 1, 1949, “it was the consensus of the meeting that any case in which it was proposed to increase the ratio of the Institute’s contribution to Servicio program funds above the ratio that prevailed in the preceding year was to be submitted to the Board or to the Executive Committee for consideration and approval, except that this would not apply to very minor increases in ratio not exceeding 1% or 2%”.

Another basic feature of the IIAA programs is that they are programs of “technical cooperation”, not programs of grant aid. The IIAA contributions of project funds have always been explained as being quite incidental to the technical contributions and in support of them.

Through the medium of the IIAA we could, if we were not careful, decrease rather than increase the self-reliance of the Latin American countries. We could do this by building up their governmental services with our funds to an extent that was beyond the capacity of their economies to support. By augmenting our project contributions we could also convert the IIAA programs into programs in which grant assistance played a more dominant role.

To illustrate: I suppose it is true today, as it was a couple of years ago, that there was no prospect of the Costa Rican Government’s being able to pay, in the foreseeable future, more than about 50% of the project costs of the cooperative food production program. This raised [Page 1062] the question whether that excellent program was not, in fact, too large and expensive for the scale of the Costa Rican economy—whether it could ever be turned over entirely to the Costa Ricans. However, subject to the agreement of our Embassy in San José, $58,000 of TCA funds is now to be allocated to supplement the $125,000 of regular program funds for the program for F.Y. 1951. Point Four funds are also to be made available to supplement the regular project contributions in other programs—in some cases on a very large scale.

In the past few years we have repeatedly faced situations in which cooperating governments have complained that they could not afford to sustain their share of the cost of particular programs. At the same time, IIAA chiefs of field party have urged the expansion of those same programs with increased contributions of U.S. project funds.

I raise the policy question involved here without at the moment being prepared to offer a considered answer. My disposition is to suggest that we should regard our IIAA programs as long-range programs that may be continued with our participation over an indefinite number of years with the objective of eventually building something that the other countries can permanently support. In order words, I would not propose that on all of these programs we aim at turning them over entirely to local support by a definite date in the foreseeable future. I think we should, however, resist the pressures for indiscriminate enlargement generated by (a) the availability of funds and (b) the zeal of those who are in command of the field operations. The Board did, in July of 1949, draw a rough sort of line to limit our assistance under ordinary circumstances. This may not have been the best solution and, in any case, it may not be taken seriously today.

We ought, I think, to work out a policy that would govern operations to the end of increasing the self-reliance of the Latin American peoples.

Louis J. Halle, Jr.
  1. Addressed also to Mr. Mann, Mr. Ivan B. White, Director, Office of Regional American Affairs; Mr. Albert F. Nufer, Director, Office of Middle American Affairs; and Mr. Fletcher Warren, Director, Office of South American Affairs.