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

39. Memorandum From the Administrator of the Agency for International Development (Bell) to the President’s Special Assistant for National Security Affairs (Bundy) and the Director of the Bureau of the Budget (Schultze)¹

Washington, September 17, 1965.

This memorandum proposes a concept, a procedure, and a time schedule for this fall’s review of the foreign aid program.

In summary, I suggest:

• —a rapid but thorough re-examination of the program, which will put before the President, by November 1st, sharply focused statements of the alternatives and the arguments concerning foreign aid in each major geographic area and with respect to each major aspect of the program (economic, military, P.L. 480);
• —this work to be done under the supervision of a steering committee, with Bundy as executive secretary and coordinating staff work, and aiming at documents which, with appropriate redrafting and polishing, can be usefully put before the Congress as background for considering aid legislation next spring;
• —the November 1st date being set both in the light of the budget schedule and in the expectation that the President would wish, after his own preliminary consideration, to have the issues discussed with appropriate Congressional leaders prior to sending his foreign aid message to the Congress early next year.

Concept

Both the Congress and the President have called for a review of the aid program this fall, preparatory to next year’s legislative recommendations. Neither has specified in any detail the nature or extent of the review. The Conference Committee on the Foreign Aid Authorization Bill recommended “a review of the aid program as presently constituted, seeking to direct it more effectively toward the solution of the problems of the developing countries.”² The President quoted this recommendation in his signing statement and said, “the Executive Branch will, this fall, undertake appropriate studies of the program” to “provide the basis for recommendations as to the future course of U.S. assistance policy.”³

Secretary Rusk added certain elements of specificity in testimony before the Senate Foreign Relations Committee on August 12th. The Secretary said that in conducting the review we will give “particular attention to the issues raised by this Committee: the number of countries receiving assistance; the requirements for assistance and the prospects for achieving our objectives and terminating assistance; the contribution of other developed countries; and the appropriate relationships between bilateral and multilateral asssitance.”⁴

Beyond this, the President has made one commitment with respect to next year’s program. In his signing statement on the authorizing bill, he said, “I expect to request that the multi-year principle approved by the Congress in 1961 and 1962 for development loans be extended to the other categories of assistance.”

We have, therefore, a fairly clean slate to write on in determining what kind of review to make. I suggest that the following consideration should be controlling.

1. The fundamental question that should be addressed is: what kind of foreign aid program makes sense in terms of U.S. foreign policy as it is today and as it will be in the future. I think what is troubling the Congress (and the President?) most is whether our present foreign aid policy is in large part an anachronistic holdover from prior and different circumstances. We should meet this point head on, not by trying to defend what we have now, but by facing the question: what do U.S. interests require of us in the way of aid programs for the future.

There are in addition other questions that trouble the Congress and the President, some of which are simply reflections of the main question identified above, but others raise additional issues of method or objective: why do we need aid programs in so many countries? could we not accomplish more, at less cost in foreign and domestic criticism, by put-ting our aid through multilateral agencies? does it make sense in today’s world for the U.S. to provide military aid against external aggression, as distinct from internal subversion? how can we better harness private efforts (here and in the developing countries) to the development effort? And so on.

2. These are primarily issues of policy, which need to be answered by the President this fall, in determining his budget and legislative recommendations and by the Congress next spring in reviewing same. We have little time for external research, although there may be aspects of the problem on which research should be undertaken for later benefit. At present, we need the best thinking that can be put together for the President’s use this fall—and if possible the same materials, appropriately revised, should be made available to the Congress next spring.

3. Accordingly, I believe that what we want from this fall’s aid review are analytical papers addressed to fundamental issues—as few papers as possible, and as little encumbered as possible with detail, with standard formulations and with clearances. Nevertheless, the subject is necessarily complex and many-sided. Subject to review by the steering committee suggested below, I suggest assigning preparation of the following papers:

• —a general overview, addressing the question how far is an aid program necessary to U.S. foreign policy, what should it objectives be, and roughly how soon can they be realized. This paper should concentrate on the relationships between aid and U.S. foreign policy, and undoubtedly should be organized on a regional basis (Latin America, Africa, the Middle East, Asia from Afghanistan to Korea), with brief annexes on the eight or ten key countries. It should cover all forms of concessional aid, and suggest the main outlines of a five-year forward program;
• —a paper on military aid,⁵ summarizing the valuable recent work of Townsend Hoopes, addressing among others the question of arms against external aggression v. arms against internal subversion, and proposing the main outlines of a five-year forward program;
• —a paper on the development problem, outlining what we have learned about self-help requirements, widespread private and local participation, and the nature and limits of our influence, addressing the question how rapidly could we expect progress toward self-sustaining growth, indicating the implications for trade and monetary policy, and suggesting the outlines of a five-year forward program;
• —a paper on the world food problem (primarily a sub-category of the development problem, but warranting special treatment), summarizing the valuable recent work of the USDA-AID-BOB task force,5 and proposing the outlines of a five-year forward program (“The War Against Hunger”);
• —a paper on the number of countries problem—that is, primarily, the question of what to do about the fact of so many small countries—indicating the policy and administrative alternatives and proposing a course of action;
• —a paper on multilateral versus bilateral aid, summarizing what we know about the relative efficiency of each, the Congressional attitudes thereon, and other considerations affecting our policy choices, and outlining a five-year forward program;
• — a paper on the aid programs of other donor countries, summarizing recent trends and forward intentions so far as they are known, and proposing a U.S. policy position toward other donors both as a group and, for major donors, individually.

Procedure

I have suggested an ambitious objective and a tight timetable. Moreover several government agencies are necessarily involved. I suggest the following means for moving ahead:

1. The President to approve the establishment of an informal steering group consisting of: Secretary Rusk (with Mr. Mann acting for him as desired); Secretary McNamara (with Mr. McNaughton acting); Secretary Fowler (with Mr. Barr acting); Secretary Freeman; Mr. Schultze, Mr. Bell, and Mr. McGeorge Bundy as executive secretary and coordinator of staff work. The function of this steering group would be to lay out the work to be done, and to review and discuss the initial products before putting them to the President.

2. The steering group to assign the preparation of papers to individuals in one or another agency. I suggest this method as the most rapid way to obtain clear, hard-hitting issue papers, and not simply mushy institutional products. Individuals so assigned should have the help of people designated from other agencies as may be appropriate, and draw on outside consultants if that can usefully be done in the time available.

3. The main ideas in each paper should be discussed, at such time and in such form as may be convenient, with existing advisory groups such as the General Advisory Committee on Foreign Assistance Programs (Perkins Committee),⁶ and the Advisory Committee on Economic Development (Mason Committee).⁷ Moreover, preliminary discussions should be held with key Members of Congress and Congressional committee staffs to make sure all the issues they consider important are being addressed. All this would be done in confidence, however; I believe any broad discussions with Congress or any public testing to ideas should only occur after the President has had an opportunity to consider the results of the work outlined above.

David E. Bell

1. Source: Johnson Library, National Security File, Agency File, AID, Vol. II [2], Box 1. Limited Official Use.
2. N ot further identified.
3. President Johnson made this statement on September 6 on signing the Foreign Assistance Act of 1965. For full text, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1965, Book II, pp. 978–979.
4. No record of this testimony has been found.
5. Not further identified.
6. See Document 32.
7. Not further identified.