85. Memorandum of a Conversation, Department of State, Washington, April 26, 19561

SUBJECT

  • Title II Relief Program; Peruvian Drought

PARTICIPANTS

  • Mr. Holland, Assistant Secretary of State
  • Mr. FitzGerald, ICA
  • Mr. Bernbaum, OSA
  • Mr. Atwood, ICA
  • Mr. Armstrong, IRD
  • Mr. Neale, ICA
  • Mr. McGinnis, OSA
  • Mr. Lynn, ED
  • Mr. White, ICA
  • Mr. Holmgreen, ICA

Mr. Holland said that, with reference to the Peruvian drought, he wanted to be informed how Title II of PL 480 was now administered. He raised the following specific questions: (1) What criteria is employed in determining when Title II is used instead of Title I; (2) Should we use Title II if the recipient country is willing to pay; (3) Would not the use of Title II for such natural disasters as droughts, floods, etc., create dangerous precedents.

Mr. FitzGerald stated that, in general, Title II would be used in the case of natural disasters or calamities where the afflicted country could not afford to pay for the relief. He stated that if the afflicted country was ready and able to pay for food required for relief purposes, Title II aid should not be extended unless there were political reasons to the contrary. He made the observation that, in general, Title II was usually the best way to render disaster aid when there was an emergency—where time was an important factor in giving relief assistance. He said also that Title II food should preferably be a gift to the afflicted people and that the food should go directly to the victims of the disaster.

Mr. White stated that in hearings on the Hill, Title II aid which generated work relief funds so that the victims could buy food were regarded favorably; e.g., programs in Libya and Pakistan. He said also that the current Congressional sentiment favored the use of Title I sales as a substitute for some types of foreign aid, and that if in Title II programs the victims buy the food (instead of receiving it gratis), Congress will expect us to take that fact into consideration in establishing our foreign aid programs. Mr. White said that in the [Page 379]case of Haitian hurricane relief the food was given direct to the victims. Later on, work relief projects were developed. He asserted that the House Foreign Affairs Committee liked the Haitian type of Title II relief operation. In explanation of the Haitian type of relief agreement, he said that money generated by the sale of Title II food was the same as counterpart funds. These funds are deposited to the credit of the local government and used by mutual agreement (with the U.S.). In further discussions regarding the use of Title II for relief or disaster purposes, Mr. White indicated that Title II was so worded as to give ICA extremely wide latitude in judging the type of situation where aid could be rendered. For example, he said, Title II aid could be made available in situations where for political reasons we wished to render aid and mentioned that under this category it could probably be applied to relieve balance of payments problems.

Mr. White said that Title II aid amounted to $109 million in 1955 and $77 million so far in 1956. He observed at this point that there were various “repeat” programs under Title II, that is, that relief recipients “always came back”.

Mr. Armstrong observed that Title II and III relief made available by the U.S. to European countries afflicted by the severe winter of 1955–1956 came to $67 million. He mentioned that this assistance was voluntarily offered by the U.S. in the form of an announcement by the President. He likened this program to the aid given to the victims of the Danube floods.

Mr. Holland then stated that he was puzzled as to why Peru should be given Title II aid under the criteria discussed. He stated that the case of Peru stood out in sharp contrast with that of Haiti. Peru, it seemed, had not asked for Title II aid, but would receive it; while Haiti, which had asked for such additional aid and could not buy food, would not receive it. ICA officials, in response, contended that Peru could not pay for all the food required to cope with the emergency without dangerous inflation, and that since Title II aid could be worked out much faster than Title I aid it was desirable to use the former. ICA also pointed to political factors such as the pending elections and the migration of needy Indians to Bolivia, which has already been in evidence. Peru was constantly fearful of an Indian revolt such as had occurred in previous years, and Indians goaded by need and in the knowledge of the violent land reform that had taken place in Bolivia, would be difficult to deal with if they had able leadership.

Mr. Holland then summed up the Peruvian situation as it appeared to him: Peru should receive Title II aid, not because it had requested it, but because Title I aid could not be rendered sufficiently quickly. Title I aid would be slow in arriving because Peru had not yet signed the Title I program that had been pending since [Page 380]February. He recounted that the reasons that Peru had not yet signed this agreement were that they had been reluctant to commit themselves to purchase the “usual commercial marketings”. He said that it did not seem logical to base a Title II grant upon this reasoning since Peru had it within its power to remove the obstacles to a Title I program. In short, we should not reward Peru for refusing to fulfill commitments to buy food from us, which was sorely needed, by giving them food under Title II. In terms of actual figures, Mr. Holland felt that we might furnish Peru 45,000 tons of grain (based upon political considerations and not inability to pay or other factors) with the understanding that Peru would buy from us the 40,000 tons under the uncompleted Title I agreement and the additional 90,000 tons, also under Title I, that it was believed that Peru required to meet the minimum requirements of the drought emergency.

Mr. Holland then summarized the general principles that were agreed upon with respect to Title II programs. Title II aid should be granted where neither the victims of the disaster nor the local government can afford to pay for relief supplies. In the case of the government, this means that the government can’t pay without causing dangerous inflation or incurring an excessive debt. Other general principles were: (1) Where the local government is willing to pay for relief supplies, we would ordinarily want them to do so. (2) When Title II is used, we prefer to give the food direct to the people concerned. (3) Where food is given to a local government under Title II and the food is sold internally, the proceeds should be used for the benefit of the disaster victims in agreement with us.

  1. Source: Department of State, Central Files, 411.2341/4–2656. Confidential. Drafted by McGinnis.