104. Memorandum of Conversation Between President Kennedy and Foreign Minister von Brentano 0

ADENAUER VISIT

Washington April 12-13, 1961

SUBJECT

  • Aid to Underdeveloped Countries

PARTICIPANTS

  • (See attached list)1

In opening the discussion on aid to underdeveloped countries, the President stated that useful discussions had taken place with Foreign Minister von Brentano in February,2 and that more recently Mr. Ball had held equally useful talks in Bonn on this subject.3

The President added that it is in the common interest of all of us to provide for a stable economy for the underdeveloped countries, so that they will see some hope in solving their problem through a non-communist system. He cited one example of German aid efforts for which the US is particularly grateful—what they are doing in Bolivia. The President stated that this is most helpful. The US has been carrying a very heavy aid burden for the past few years, and the needs are growing rather than diminishing. Therefore the US will appreciate anything the Federal Republic can do to help.

The President added that the US feels that the Atlantic Community is the key and the anchor to free world security. If the world to the south becomes unstable and insecure, then the Atlantic Community will be insecure. Therefore all these aid efforts should be coordinated. The US aid program is now to be more efficiently coordinated. There should be continuing consultation between countries so that each country knows what is being done by other countries in the aid field. Foreign aid should be a multi-national and not a national effort.

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The President noted that there are presently four areas offering possibilities for cooperative efforts:

Bolivia—Bolivia is a most critical problem, both politically and economically. This would be the worst time for the Castro regime to get a foothold in another Latin American country; this would add momentum to the Communist movement at a time when the momentum is going down.

Turkey—Here is a NATO ally which has vigorously opposed the Soviet Union and which is maintaining a large military program, assisted by substantial US grant aid. Turkey has a critical economic problem, resulting in considerable measure from its military effort.

India and Pakistan—Both countries have broad long-range economic development plans which call for continuing and large-scale external assistance.

The President then called on Under Secretary Ball to comment on aid to underdeveloped countries. Mr. Ball noted that steps are being taken within the forum of the DAG and OECD to expand and improve the areas of cooperation for providing assistance to underdeveloped countries. As to India, Mr. Ball noted that meeting with the consortium of nations responsible for financing the third 5-year plan would be taking place in the next two to three days to discuss the next economic plan for India. He hoped that the Federal Republic could commit substantial amounts toward the fulfillment of that plan, extending over the next two to three years. Both Pakistan and India require financing for longer than a one-year period. Pakistan also is being examined by a consortium of nations meeting soon. The US is entering into a sizable burden of commitments, and it is hoped that Germany can do likewise. Both countries need long-term loans at low interest rates. Turkey too has a balance of payments problem. It has taken on tremendous military burdens under its NATO commitments. The US has given $90 million in grant aid over the past three years. We hope that the Federal Republic can help now by providing long-term loans as well as grant assistance, so as to not add further to Turkey’s short-term capital debt problem. On COMIBOL, Mr. Ball noted that we have a representative in Bonn for discussions on Bolivia, and that the Federal Republic has been very helpful in cooperating with us. We hope that in view of the political situation, the Federal Republic will continue to provide assistance to Bolivia, jointly with the United States program.

Foreign Minister von Brentano said that there was a question whether in the case of Bolivia, the problem was simply one of reviving COMIBOL. Preliminary reports on the German side indicated that a much broader program of economic reconstruction would be required, costing a minimum of $150 million.

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Turning to Turkey, the Foreign Minister reported that bilateral talks will begin tomorrow in Bonn on the 1961 financial needs of that country. The Federal Republic plans to make DM 100 million available for Turkey in 1961/62 and will also consider extending long-term 3% loans for economic infrastructure purposes.

Minister Etzel recently visited India and tentatively pledged DM 400 million in assistance for first year of India’s third 5-year plan. The Federal Republic will participate in the consortium for the India and Pakistan programs along with the World Bank.

As to Pakistan, the Federal Republic is prepared to make available DM 75 million annually for 1961/62 and also through the coordinated efforts of the consortium discuss possibilities for further financial assist-ance.

The Foreign Minister then reverted to Turkey and stressed the Chancellor’s special interest in that country, which he regarded as a particular responsibility of the Federal Republic to assist. A total of DM 1.5 billion has been made available up to the present time, and the Federal Republic is prepared to undertake whatever may be necessary in further meas-ures.

The Foreign Minister summed up by stating that the Germans are prepared to do their share with the US on foreign aid through the DAG and OECD, and within this framework to determine what program should be undertaken bilaterally and multilaterally.

Mr. Ball stated that he was grateful for von Brentano’s statement. It shows there is general agreement on the problem of foreign aid. He then commented briefly that the US is prepared to extend substantial assist-ance to India and Pakistan and hopes that in the consortium talks the Federal Republic will contribute in proportionately substantial measure. Mr. Ball stressed the need for long-term assistance to Turkey rather than short-term or even medium-term loans, in view of their balance of payments situation. In conclusion, the US would be pleased to discuss Bolivia with the German Government representatives when they come to Washington in May for that purpose.

The President expressed his gratification that progress is being made in aid planning. The problem will continue for years to come. The US is now trying to provide aid on a longer term basis. This is a difficult political problem domestically, just as it must be for the Chancellor.

  1. Source: Department of State, Presidential Memoranda of Conversation: Lot 66 D 149, January-April 1961. Confidential. No drafting information appears on the source text. Approved in B on April 24, in S on April 25, and at the White House on May 11. The meeting was held at the White House.
  2. Not printed. The list included Chancellor Adenauer, but he apparently did not take part in this part of the conversation. For a memorandum of Adenauer’s conversation with President Kennedy on the balance-of-payments problem on April 13, see Document 44.
  3. See footnote 1, Document 91.
  4. See Document 99.