174. Memorandum of Discussion at the 408th Meeting of the National Security Council0
[Here follow a paragraph listing the participants at the meeting and agenda item 1.]
2. U.S. Policy Toward South Asia
[Here follow a list of references and discussion of unrelated matters.]
[Page 331]Secretary Dillon replied that in its essentials the problem was simple. It was a matter of finding the means of financing aid to these nations without doing violence to our financial traditions and principles. He feared that the Treasury Department was strongly opposed to providing aid on a multi-year basis.
Secretary McElroy inquired whether the Soviet economic assistance to India took the form of loans or of grant aid? Secretary Dillon replied that most of the assistance provided by the Soviet Union to India was in the form of loans but he warned that the Soviet Government could be flexible if need be, as had been demonstrated by its grant aid to Nepal.
Mr. Gray inquired whether it would be possible for the U.S. to undertake to provide aid to India on a multi-year basis without being obliged to use similar methods in other areas of the world and most particularly in Latin America. Secretary Dillon replied that such a course of action was possible and seemed to imply a preference for the provision of aid on a multi-year basis as opposed to providing aid on a year by year basis.
Mr. Gray then suggested that it was perhaps unwise for the Council to pursue this issue in the absence of the President and said he would try to undertake to have the Planning Board frame the issue in clearer form.
Secretary Dillon warned that we needed a decision in the matter of legislative authority for provision of aid on a multi-year basis in order to respond to Senator Fulbright’s position on the Hill. Mr. Stans, however, insisted that there was more to the problem than a simple decision as to whether the U.S. was going to provide assistance to other nations on a year by year basis or over a longer range of time. The fundamental problem in Mr. Stans’ view was whether we would resort to “backdoor financing.” This, said Mr. Stans, is what Senator Fulbright was advocating. He would authorize extension of aid on a multi-year basis but Congress would appropriate money only on a year by year basis with the results, said Mr. Stans, that we would have to go to the Treasury to get the money needed to carry out our commitments. In short, how do we commit ourselves to a long-range aid program without at the same time getting from Congress long-range appropriations? This was the major problem that had to be resolved.
Mr. Stans also said that there was yet another problem in connection with the extension of long-range aid. Were we to deal with multi-year programs through the medium of existing institutions or were we to create other institutions for this purpose? He felt that a discussion of these problems in the NSC Planning Board or elsewhere should be used to develop these points before they are brought back to the NSC.
[Page 332]Mr. Gray expressed the opinion that the kind of questions posed by Mr. Stans were not appropriate for solution in the Planning Board or in the NSC itself. These questions involved techniques rather than policy. The real problem, as it appeared to Mr. Gray, was what policy differences existed with respect to South Asia.
Mr. Scribner said he assumed that Mr. Gray would bring these matters up at a later meeting. Mr. Gray replied that he intended to do so but not in the form of further consideration of the Discussion Paper but as part of a revised statement of policy on South Asia which would presumably contain split views.
Mr. Scribner said he had a question to put to Secretary Dillon. Was it Secretary Dillon’s thought that we should now depart from our policy, with respect to foreign aid, of trying to find aid projects which seemed promising, and instead shift to some kind of general assistance project which really amounted to nothing more than pumping a certain amount of money into a country like India regardless of how it was to be spent? Secretary Dillon denied any intention to move in this latter direction and said he fully agreed with the Treasury on the need to come to an agreement with India with respect to the projects for which the U.S. would provide financial assistance.
[Here follow NSC Action No. 2094 on South Asia and the remaining agenda items.]
- Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason.↩