Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

7. Memorandum From the President’s Special Assistant for National Security Affairs (Cutler) to the Chairman of the Council on Foreign Economic Policy (Randall)⁰

March 17, 1958.

SUBJECT

• Soviet Economic Penetration

Although the question of government organization for dealing with Soviet economic penetration did not come up in the CFEP meeting on Thursday,¹ I thought it might be useful to reaffirm and clarify my views on this subject.

As indicated by my concurrence in Mr. Dearborn’s memorandum of January 9,² I believe that the problem of policy (as opposed to operations) in this area can best be handled by reexamination of existing national security and foreign economic policy decisions rather than by the preparation of a new policy paper dealing exclusively with this subject. I agree with the comments of Mr. Dearborn and Mr. Brundage³ that Soviet economic penetration needs to be considered in the total context of all our policies and programs.

More specifically, the current Planning Board review of basic national security policy can furnish a means for providing new general policy guidance. This review will be based primarily upon the new Estimate of the World Situation (NIE 100–58)⁴ scheduled for preliminary discussion in the National Security Council this week.⁵ This estimate makes it clear (pars. 18, 50, 53 and 73) that, under conditions of mutual deterrence, the Soviet bloc will wage increasingly vigorous and effective economic and political offensives.

I also continue to subscribe to Mr. Dearborn’s view that we should not establish entirely new governmental machinery to deal with this problem, and that it can best be handled through the Operations Coordinating Board. I believe a special committee of the OCB should be established, probably under the chairmanship of a high-level person from Douglas Dillon’s office, with functions along the lines of those proposed in par. 4 of Mr. Dearborn’s memorandum of January 9. Administrative and legal restrictions on our aid and other economic programs constitute one general problem area with which such a committee might concern itself. Because Mr. Dillon has responsibility for a number of the relevant operational programs, such a committee could also be very useful to him in providing interdepartmental coordination and action. The committee should include representation from your staff.

An alternative to a formal OCB committee would be a less formal arrangement along lines of the attached proposal which has been suggested to me.⁶

I am not clear, however, about how all of this relates to the work of the study committee that the Vice President will establish under the Cabinet action of January 14.⁷

Bobby

0. Source: Eisenhower Library, CFEP Records, Policy Papers, CFEP 560. Secret.
1. March 13. The minutes of the meeting state that CIA Deputy Director for Intelligence Robert Amory briefed the Council on recent Soviet economic activities in underdeveloped areas and that Dillon briefed it on U.S. actions to counter such activities. (Ibid.)
2. The memorandum from Special Assistant to the President Frederick M. Dearborn, Jr., to Randall recommended an OCB interagency committee to collect information on Soviet economic penetration and make policy proposals for CFEP or NSC action. (Filed with the February 20 memorandum cited in the source note, Document 4)
3. The letter of January 29 from Percival Brundage, Director of the Bureau of the Budget, noted that Vice President Nixon was considering the establishment of a study committee and recommended against the creation of yet another interagency group. (Filed with the February 3 memorandum cited in footnote 1, Document 4)
4. “Estimate of the World Situation,” dated February 26. (Department of State, INR–NIE Files)
5. The Council discussed NIE 100–58 on March 20. An extract from the memorandum of discussion is scheduled for publication in volume III.
6. The attachment, unsigned and undated, suggested that the Department of State, CIA, and ICA should each designate one person with responsibility for conveying information on Soviet economic efforts in other countries to that agency’s OCB Board member.
7. See footnote 3, Document 1.