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

27. Memorandum From the Administrator of the Agency for International Development (Bell) to Secretary of State Rusk¹

Washington, December 30, 1964.

This responds to your request for advice on the possibility of asking for supplemental funds for Fiscal Year 1965 for economic and military assistance.

There will be a need for additional funds for military assistance to Vietnam, if agreement is reached with the Vietnamese Government on the force expansion plans along the lines Ambassador Taylor was authorized to pursue. Rough initial estimates by DOD staff indicated possible add-on fund requirements on the order of $100 million for FY ’65 and a similar amount for FY ’66. Secretary McNamara has asked that these figures be reviewed and refined, and they may well be reduced in the process.

Whether to base a supplemental MAP request on this requirement raises two issues:

1. Does the present state of affairs in Vietnam offer a sufficiently firm base of policy and program to call forth quick and solid Congressional action? Would the situation in Saigon at present be helped by a public request by the President for additional MAP funds for Vietnam?

These questions require political judgments which I am not well informed enough to make with any confidence. I was impressed by the fact that the Vietnam supplemental we requested last spring was accepted easily in the Congress in part because Secretary McNamara and I had just been to Vietnam;² the position of the U.S. Government was clear; we had a firm and uncomplicated understanding with the Vietnamese Government. It does not seem to me we are in as good a position today.

2. Secretary McNamara has thus far been willing to seek a supplemental for MAP this year. The question arose first two or three months ago when it became evident that MAP requirements for FY ’65 would exceed available funds—even though the Congress provided the full amount which the Administration had requested. As I understand it, Secretary McNamara was reluctant to return to the Congress and ask for additional funds, since he had opposed the move by Broomfield, Frelinghuysen, and others in the House Foreign Affairs Committee last spring to raise the Administration’s request for MAP. For this reason we worked out the arrangement with which you are familiar—to plan on a transfer of up to $50 million of the Contingency Fund to MAP should that prove necessary later in the year.

The question arose again recently in relation to the add-on requirement for MAP described above. This time it was Secretary McNamara’s proposal to use the “drawdown” authority he has under the foreign aid legislation, which permits him to draw upon DOD stocks, to be replenished by funds appropriated in the next fiscal year. At present, therefore, it is Secretary McNamara’s intention, as I understand it, to meet the add-on requirements for FY 1965 by drawing on DOD stocks, recognizing that this will require a supplemental appropriation over and above the budget in FY 1966.

These questions might point to the desirability of holding off a decision on a 1965 MAP supplemental for a few weeks, and if at that time the situation in Vietnam is somewhat more stable and the requirements are still firm, ask Secretary McNamara to reconsider his opposition to requesting a supplemental in the present fiscal year.

There is no strong case for a supplemental in FY ’65 for economic assistance. Any economic supporting assistance that may be needed in connection with a force build-up in Vietnam would not be required before FY 1966. Apart from Southeast Asia, the only potential requirement is in Latin America. It now appears likely that we will want to make development loans in Latin America totaling about $50 million more than the available appropriations for the Alliance would support. We expect, however, to be able to finance these loans either by using worldwide development loan funds or by drawing on the Contingency Fund.

I have communicated the substance of this memorandum to Mr. Gordon and McGeorge Bundy. Nevertheless, you might wish to pass it along to the President.

DEB

1. Source: Johnson Library, National Security File, Agency File, AID 11/63–12/64, Vol. 1 [1]. Confidential.
2. Secretary McNamara, Bell, and other members of the McNamara-Taylor Mission arrived in Saigon on March 8 and returned to Washington on March 12. For documentation on this trip, see Foreign Relations, 1964–1968, vol. I, pp. 129 ff.