Office of the Historian

238. Report of an Inter-Agency Special Study Group to the Director of the International Cooperation Agency (Hollister)1

Washington, May 24, 1956.

Dear Mr. Hollister: At your request, a special study group composed of representatives of ICA, State, and the Defense Department and an observer from CINCPAC were assigned to work with the Country Teams of Cambodia and Laos.

Our instructions were clear that our primary operation was to function as a working party, and so far as possible, to settle problems either at the Country Team level, or else through Country Team recommendations to Washington.

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These instructions were closely followed through constant conferences with the Country Teams and joint meetings with host government officials. However, many policy problems were encountered which require serious consideration at a high administration level. These can best be brought to your attention through detailed discussion in our report.

Our findings and recommendations for both countries are briefly summarized below:

[Here follow findings and recommendations on Laos.]

CAMBODIA

Findings:

1.
If Cambodia were to fall completely under Communist influence, her geographic position would endanger the security of friendly Southeast Asian countries.
2.
Cambodian suspicions of U.S. motives and Norodom Sihanouk’s attitude have greatly impeded implementation of the aid program.
3.
A large U.S. aid program was started in Cambodia without adequate planning, and a sound program has not yet been developed.
4.
Country Team cooperation has been inadequate in many respects.
5.
The Cambodian government has proposed a two-year plan without USOM’s participation. Nevertheless, this plan must be used, at least in part, as a framework for U.S. economic assistance.
6.
Cambodia’s problems have intensified because of difficulties with her neighbors.
7.
Present armed forces, under French training, are badly organized, poorly trained, and lack proper logistic support.
8.
There is no serious threat of inflation.
9.
In spite of an excessive commercial import program, financed largely by U.S. aid, the Government has been able to build up substantial dollar reserves.
10.
If harmonious relations are maintained with her neighbors, and if she has sound economic management, her economy can become viable in due course.

Recommendations:

We recommend that:

1.
For the present, Communist aid to Cambodia should not be a deterrent to continued U.S. assistance. However, unless the aid program can be placed on an amicable cooperative basis, it will be necessary to review our policies with regard to aid to Cambodia.
2.
A positive program should be adopted to acquaint the Cambodian people with the need for, and extent of, U.S. aid.
3.
Cambodia should be encouraged to think regionally and contribute to the solidarity of Southeast Asia.
4.
The U.S. should attempt to assume the training responsibilities of the Cambodian armed forces.
5.
The U.S.-financed import program should be geared to the needs of the economy for imports, and not to cover local currency requirements.
6.
The balance of the Cambodian budget deficit not covered by counterpart-generating U.S.-financed commercial imports should be financed by their own means.
7.
Cash grants should not be used further as a means of generating local currency.
8.
The Economic Development and Technical Assistance programs should be recast.
9.
The USOM should find a more effective means of working out programs with the Cambodians.

We believe that the total aid program could be reduced from approximately $50 million in FY 1956 to $37 million in FY 1957.

All members of the Study Group concur in the major findings and recommendations.

[Here follows the 58-page “Special Study Group Report on Cambodia”.]

Very truly yours,

  • E.O. Sessions
  • Milton J. Esman2
  • H.S. Hyde3
  • C. William Kontos4
  • Marvin C. McFeaters5
  • Hoyt Price
  • Walter F. Stettner6
  1. Source: Department of State, Embassy Files: Lot 62 F 30, 500 Econ. Aid etc., Cambodia-U.S., 1956. Secret. The report came to be called the Sessions Report after its Chairman Edson O. Sessions, former Director of USOM in Thailand. It was also submitted to the Chief of MAAG in Cambodia.↩
  2. Esman was the Cambodia-Laos officer in ICA.↩
  3. Commander Hyde was from the Office of the Assistant Secretary of Defense for International Security Affairs.↩
  4. Kontos was an administrative officer in ICA.↩
  5. McFeaters was a business economist with ICA.↩
  6. Stettner was a Far East Regional Economist from ICA. Printed from a copy that bears these typed signatures.↩