Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

139. Memorandum From the Administrator of the Agency for International Development (Gaud) to President Johnson ¹

Washington, July 26, 1967.

SUBJECT

• Annual Meeting of the Development Assistance Committee

Last week the Development Assistance Committee of the OECD held its annual meeting in Paris.² The purpose of the meeting was to review last year’s aid activities and discuss plans for the future.

These are some of the highlights of the Chairman’s report on aid activities for Calendar Year 1966:³

• —The total net flow of resources, public and private, from DAC members to developing countries declined from $10.3 billion in 1965 to $9.9 billion in 1966;
• —This decline was due to a drop of some $600 million in private investment (from $4.0 billion to $3.4 billion) which was partially offset by a rise of about $200 million in government aid (from $6.2 billion to $6.4 billion);
• —The U.S. is primarily responsible for the decline in the 1966 overall figure. Our government aid was $3.6 billion in each year. But U.S. private investment in the developing countries dropped from $1.9 billion in 1965 to $1.0 billion in 1966;
• —If we go back to 1963 instead of just to 1965, we find that the total amount of government aid from DAC members has increased by $300 million—due to a doubting of the aid programs of six small countries (Austria, Canada, Denmark, Japan, the Netherlands and Sweden). By contrast, the four big countries which accounted for 84% of the total government aid in 1966—the U.S., France, the U.K. and Germany—together gave $55 million less in 1966 than in 1963;
• —While the U.S. ranks well ahead of all other aid donors in per capita national income, it ranks fifth in terms of the percentage of its national income devoted to government aid, and eighth in terms of the percentage of its national income devoted to both government aid and private investment in the developing countries. Our aid, public and private, as a percent of national income dropped from .99 percent in 1965 to .76 percent in 1966;
• —The debt of developing countries rose faster in 1966 than in any previous year. This has serious implications also for the terms of new aid. At present, several countries are offering aid at more generous terms than we, including the U.K., Canada, Sweden, Denmark and Belgium.

(Note: Do not try to match the above figures with those we use here in the U.S. The DAC deals in calendar years, whereas we deal in fiscal years. It also has its own definition of aid, which for the U.S. includes the A.I.D. program, PL 480, the Peace Corps, Contributions to International Organizations and certain loans made by the ExIm Bank.)

The Committee agreed that its biggest task is to persuade its members to increase the volume and quality of their aid. Considerable attention was devoted to such other matters as how to cope with the increasing debt burdens of the developing countries, how to improve the volume of private investment in those countries and how best to tackle the world food and population problem.

The U.S. Delegation laid particular stress on the last item. We distributed to the other delegations copies of the report on the world food problem recently prepared by your Science Advisory Committee,⁴ and urged them to study it fully and carefully.

We also urged the Committee to undertake a study of how to inform public opinion more fully on the need for increasing the aid effort, and of how to overcome existing obstacles to securing greater support for aid budgets. This the Committee agreed to do.

We will keep pushing the other donors to increase their aid effort. However, as the above figures show, we no longer have the leverage which comes from being the front runner.

WSG

1. Source: Johnson Library, National Security File, Agency File, AID, Vol. IV [2], Box 2. Limited Official Use. An attached July 26 note from Walt Rostow to the President briefly summarized Gaud’s report as follows: “the small countries are doing better; the bigger countries are doing relatively less; as a world community they all agree aid is inadequate.”
2. The sixth High-Level DAC meeting met July 19–20. AID Administrator Gaud led the U.S. Delegation, and Phillip H. Trezise served as Alternate Representative. (Memorandum from William G. Jones (IO/OIC) to Joseph J. Sisco (IO), June 27; Department of State, Central Files, AID 1)
3. See footnote 2, Document 138.
4. Panel on the World Food Supply, The World Food Problem: A Report (3 vols., Washington: Government Printing Office, 1967). Volume I is a summary of the world food problem and recommendations for policy and action, volume II is subpanel reports, and volume III publishes the resource papers. For text of a White House announcement accompanying the release of volume I, see American Foreign Policy: Current Documents, 1967, pp. 134–135. For a summary of volume III, see Department of State Bulletin, December 25, 1967, p. 874. A summary and analysis of the full report is in Current Economic Developments, Issue No. 786, August 15, 1967, pp. 10–13. (Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248, Current Economic Developments)