700.5 MSP/12–1054

Paper Prepared by the Special Assistant to the Secretary of State for Mutual Security Affairs (Nolting) for the Secretary of State 1

secret

Proposed Organizational Arrangements for Carrying on the Mutual Security Program in FY 1956

The Mutual Security Act of 1954 requires that the Foreign Operations Administration “shall cease to exist” by June 30, 1955. Therefore, it is necessary that a decision be reached on arrangements for carrying on those functions of the FOA which are deemed essential to U.S. security. The Mutual Security Program should be reorganized in a manner which will disrupt as little as possible the functioning of its several parts. To achieve the maximum of Congressional support and good-will for the Mutual Security [Page 805] Program, the President may wish to make known to Congressional leaders his basic decision in this matter promptly.

The following suggestions for reorganization are based upon a distinction between the operating functions under the Mutual Security Programs on the one hand, and the functions of planning, policy direction, overall supervision, and operational coordination, on the other. Since the basic purpose of the Mutual Security Act is to promote the foreign policy and security of the United States, it is essential that the Secretary of State should exercise a large measure of overall responsibility over it. However, in order to keep the Secretary of State free of over-burdening operational duties, it is desirable, and is believed feasible, to decentralize the operating functions under the Mutual Security Program and to distribute them among the regular departments of the government. The exact distribution and placement of these functions should be the subject of a careful study and recommendation to the President, and no fixed pattern should be adopted in advance of such a study and recommendation. However, as an example of the way in which the present Mutual Security functions might be fitted into the operations of the regular departments of government, the following is suggested.

A. Military Assistance: (Military end items, training, infrastructure, etc.).

Department of Defense should develop and administer programs as at present.

B. Direct Forces Support: (Common-use items, financial support for military forces).

1.
Department of Defense should develop and administer programs;
2.
Department of Defense should present programs to Congress;
3.
Special arrangements should be made for foreign policy guidance by the Secretary of State to assure coordination with other programs.
4.
In the field, the Chief of Diplomatic Mission should be responsible for assuring development and execution of programs in support of U.S. objectives.

C. Defense Support: (Budget support for agreed level of forces and economic improvement).

1.
Since this category of aid covers a variety of purposes, the programs should be reexamined for their primary purpose;
2.
Those programs undertaken for support of forces should be administered by Defense as a part of Direct Forces Support;
3.
Those programs directed at improving economy of country should be made a part of Development Assistance.

D. Development Assistance: (Commodity, material and financial assistance for economic development).

1.
Programs should be on a loan basis—repayable in local currencies, long-term and low-interest;
2.
Program to be supervised by Treasury with actual loans administered by Export-Import Bank or special organization in Treasury;
3.
Treasury will make loans at request of Secretary of State when he deems it necessary in interests of U.S.;
4.
Authority for program should provide for several years’ duration, possibly three to five years.

E. Technical Cooperation: (Technical assistance and supplies for demonstration purposes).

1.
Programs should be developed, directed and coordinated by State;
2.
State should present programs to Congress with assistance by other government agencies;
3.
Operations should be decentralized to permit carrying out through private foundations and institutions, colleges and universities, and appropriate government agencies. For example, technical cooperation projects in the field of public health might be carried out by the Department of Health, Education and Welfare; in the field of agriculture, by the Department of Agriculture; and in the field of highway construction irrigation, etc., by the Interior Department.

F. Multilateral Organization: (Contributions to UN specialized agencies and other international organizations).

1.
Should be administered and presented to Congress by Department of State.

G. Escapee Program: (Aid to Iron Curtain and other refugees).

1.
To be administered and presented to Congress by Department of State.
2.
Scope of program to be reexamined for possible transfer of certain activities to international or other U.S. agencies.

H. Voluntary Private Relief Agency Programs: (Ocean freight subsidies).

1.
Activities relating to ocean freight costs of surplus agricultural commodities to be administered by Department of Agriculture.
2.
Activities relating to ocean freight costs of regular relief shipments to be administered by Department of Health, Education and Welfare. The need for continuing this activity should be reviewed.

I. Battle Act: (East-West trade controls).

1.
To be administered by Department of Commerce;
2.
Special arrangements should be made to assure foreign policy guidance by and coordination with Secretary of State.

J. Title II, PL. 480: (Emergency and disaster relief using surplus agricultural commodities).

1. Program to be administered by Department of Agriculture after determination by Secretary of State that aid should be furnished.

K. Field Organization:

1. Agency representatives in the field should function as members of staff of the Embassy, subject to the direction and control of the Ambassador. This would consolidate U.S. representation abroad, and eliminate unnecessary personnel, and expense.

  1. A covering memorandum from Nolting to Secretary Dulles through Under Secretary Hoover reads: “Pursuant to your request, there is attached a paper on possible organizational arrangements for carrying on the Mutual Security Program in fiscal year 1956.”