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

42. Minutes of Meeting¹

GAC 3.8

Washington, October 12, 1965, 2 p.m.

SUBJECT

• Meeting with Mr. McGeorge Bundy—White House 2 P.M., October 12

PRESENT

• Members of the Committee:
• Dr. James A. Perkins, Chairman
• Mr. Dwayne O. Andreas
• Mr. Eugene R. Black
• Mrs. Everett N. Case
• Dr. Luther H. Foster
• Gen. Alfred M. Gruenther
• Mr. William R. Hewlett
• Dr. Franklin D. Murphy
• Dr. Samuel M. Nabrit
• Mr. David Rockefeller
• Mr. William J. Zellerbach
• A.I.D.
• Mr. David E. Bell
• Mr. William S. Gaud
• Mr. C. Tyler Wood

Mr. Buddy began by saying that he would very much appreciate having the views of the Members as to the kind of problems which should receive priority attention in the review of the Foreign Assistance Programs which the President had ordered to be undertaken. He went on to say that the President was eager to have the review made promptly and did not want to have a long drawn out operation. He remarked that there have been some interesting and instructive developments bearing on foreign assistance policies recently. For one thing the developments in the Indian sub-continent should give us new light on how to handle military aid.

The review of the program is being made in the light of indications that many members of Congress feel a searching revision of the program is necessary and also because of the grave concern of President Johnson himself about some aspects of the program. It is important that the task be done in such a way as to be responsive to the views of Members of the GAC and others like them. Those responsible for having the review made are working in a tight time framework.

It is planned to lay before the President material which will enable him to consider clear-cut choices between possible courses of action and permit him to assess the various opportunities, hazards and costs involved in such choices. The President will not want to “try the case in the newspapers”. He will wish to know what the Members of the General Advisory Committee think should be our courses of action and he will also wish to consult other knowledgeable people to obtain their views. The question will be asked frequently—is there any fresh way of carrying out the foreign assistance programs and of avoiding some of the risks involved in our present methods? The more competent advice that can be obtained, the better the product of the review will be.

Mr. Buddy said his own view is a very simple one. There is not enough foreign aid; he is aware of the powerful forces tending to limit the size of the program; there is a wide gap between requirements and avail-abilities; there is no particular virtue in filling this gap for its own sake, but it would be dangerous to allow it to get much worse and we should not be willing to accept any further deterioration.

Dr. Perkins said he agrees that the growing gap between the rich and the poor nations of the world constitutes a dangerous situation for the U.S., which has to be corrected, and the U.S. should do all it can to help correct this situation.

He said he would attempt to summarize the present views of the Committee as to the items which should be considered in the forthcoming review of the program and some of the changes which should be made:

1. We should increase the use of the leverage at our disposal. We should find a way to force the less developed countries for their own good, to take measures to improve their performance which they would not otherwise take. Even our food programs should be so used—e.g., to force India to increase her agricultural productivity. Any such use of our power must be done cautiously. Such a policy has hazards and the powerful and rich cannot do this sort of thing too publicly.

2. The Committee generally agrees with Senator Fulbright that we should move further in the direction of multilateralism in our aid programs. Among other advantages this course would tend to keep the heat off the U.S. and to make aid more acceptable to recipient countries. Technical assistance, particularly in such areas as education, should remain on a bilateral basis. There are, and probably should be, some brakes on too rapid a movement in the direction of multilateralism. It is felt that we should not go to a point where the U.S. is providing more than 50% of the resources of a multilateral agency. We are now over 40% in the case of some programs. One complicating factor is that any assistance we put through multilateral organizations can not be tied to purchases in the U.S. If the shift to multilateralism were to involve a large sum of money, its effect on our balance of payments would have to be carefully considered.

3. The Committee takes a very negative view of any proposals to support and finance Government-owned and operated industrial enterprises in aided countries. There are different shades of opinion on this point within the Committee but the consensus is that we should not look with favor on promoting the development of government-owned industrial enterprises, largely because of the fact that these are generally inefficient and badly managed and that they inhibit the effectiveness of the activities of private initiative.

4. The Committee does not look favorably upon setting any arbitrary limit on the number of countries we should aid. Senator Fulbright, at dinner on Monday evening, had stated his view that the number should be substantially reduced and that the “presence” of the U.S. in so many countries was not necessary and, in fact, not desirable.² Messrs. Foster and Rockefeller were especially concerned that we not take an inflexible position on this question. They pointed out that small programs could be vital in certain countries where developments might be important to U.S. interests. The proposition that the number of countries should be substantially reduced should be examined very carefully before being accepted.

5. There should be a careful examination as to how assistance programs can best fit into U.S. domestic programs. Aid programs will suffer if they are out of phase with domestic agricultural or budgetary programs.

6. Among the most important elements in our assistance programs are education, population control, agriculture and health. The President has demonstrated a deep interest in education overseas, evidenced in his speech of September 16, 1965, at the Smithsonian Institute.³ The AID program is already doing a great deal in education. The Committee, whose Members have eminent qualifications in the educational field, is greatly interested in how the initiative of the President can be brought into close rapport with the existing programs in AID. These programs may perhaps not pay off immediately, but if we carry them out, we can not lose in the long run. The Committee is impressed with the President’s proposal and will probably want to place the subject of overseas educational programs on the agenda for its next meeting.

Population control affects almost every aspect of our attempts to assist in improving conditions of life in the developing countries.

The Committee was appalled at the statistics the Secretary of Agriculture presented to it on the world food problem. It is shocking to learn that in the year 1980, additional grain requirements (compared with 1960 requirements) of the less developed world will be 4 times the increased amount, over and above present production, which the U.S. could make available,⁴ even if all diverted grain acreage were used.

The Committee would be greatly concerned if the review by the President did not take the above subjects into account.

Mr. Black reminded Dr. Perkins that he had not mentioned the subject of the separation of the military and economic assistance programs.

Mr. Buddy asked whether the Committee had had an opportunity to hear the views of Dr. Morgan, Chairman of the House Foreign Affairs Committee, on this subject. Dr. Perkins replied that the Committee had tried to meet with Dr. Morgan and Senator Morse but had been unsuccessful in these attempts. He went on to say that there is not much to be done in the Executive Branch on this subject since the Administration apparently does not much care whether the two programs are separated or not and is ready to accept either of these alternatives.

Mr. Buddy thought it important for the Committee to see Dr. Morgan and also Mr. Mahon, Chairman of the House Appropriations Committee. Anything the Committee could do to make it easier for Dr. Morgan to turn around on this issue would be all to the good and would simplify life. Dr. Perkins said he had come to the conclusion that this is purely a political problem and the focus of it is in the House of Representatives.

Dr. Perkins advanced the thought that it is imperative to re-establish the sense of high public purpose which had, in the past, characterized the assistance programs. Only if such a point of view and atmosphere could be re-created, would the vast effort, hard work and wide-spread support necessary to achieve success be forthcoming. Tactical questions like multilateral vs. bilateral aid and separation of economic programs from military programs do not really constitute the essence of the problem. Dr. Perkins is gravely concerned when he considers the amount of energy it takes to get the legislation through the Congress. There is a great need to make the purpose and importance of foreign assistance programs clear to those upon whose support its continuation at an effective level depends. These programs have no special interest groups to fight for them, such as the group that stands behind the appropriation for the agricultural university at Cornell.

Mr. Hewlett said he feels the case for aid could be presented more effectively. He thinks it harmful to make a great point of the magnanimity of the U.S. and the great credit we should receive and expect to receive because of our generosity and desire to help the world. It would be far better to be less flamboyant and more honest about our objectives. These can be stated better, more simply and more convincingly, as our desires to assist others to become strong and stand on their own feet because this would be better for us.

Mr. Buddy said there is one question which consistently arises concerning our aid and how we administer it. Aid becomes visible and attracts attention in the U.S. when it is being made available to some country which has just burned one of our libraries. Immediately a chorus arises and people shout “Why do we give that country any money?” He cited the example of Nasser. Then again great attention is attracted when countries receiving 1/3 of our aid suddenly take weapons in their hands and start fighting each other over Kashmir. The question which we have to deal with is whether we can ignore this sort of behavior. Perhaps we should try to find a way of insulating our aid programs from this kind of occurrence. George Woods, President of the IBRD, does not seem to be affected quite so directly by incidents of this kind—nobody seems to think of bankers as people engaged in wars.

Mr. Buddy said there seem to be alternatives in handling such cases:

1. We could stop our aid if our clients are behaving badly, or,

2. We could ignore their bad behavior and keep on helping with food and other aid required for their continued economic development.

Dr. Perkins said it seemed there should be at least some connection between the purposes we are trying to serve and the actions we take.

Mr. Buddy commented that Mr. Nasser is behaving much better since the “push-me-pull-me” episode. The pressure applied in this case would never have been applied if all food aid were being handled multilaterally through an international food bank. The IBRD does a good job of tying aid to economic performance, but does not tie it to political performance.

Mr. Bell said that the broad question seemed to be as to how best and most effectively and when to attach political conditions to our aid.

Mr. Buddy told the Committee that the Administration had not made the decision yet as to how far aid should be used as a political tool. He thinks the President would say that we do not want to make a hard bargain, but also we do not wish India, for example, to assume our food is their property no matter how badly they behave.

Dr. Murphy asked where the myth had started that the U.S. Government gives aid without strings. The Government certainly does not give public funds to American universities without strings. He would hope we can sweep the idea of philanthropy out of the thinking about aid, not only in the U.S. but in the recipient countries. We should take the position that our aid involves our own money; we don’t want to conquer the world or seize power; but it is our money and we give it on certain conditions that seem fair and proper to us.

Mr. Bell said he felt that Dr. Murphy’s statement indicated a goal on which there is general agreement. The problem that Mr. Buddy sets forth, however, is more difficult to solve—the immediate and specific political conditions that should be attached to our aid.

Mr. Buddy agreed and said the question arises in some such form as: How far are we going to require Nasser to back out of Yemen in return for continuing our food aid to him? We suspended economic assistance to India and Pakistan and put our food aid to them on a short-term basis. Both countries obtain their aid from us and others through a consortium, but that consortium depends very substantially on aid from the U.S. Both countries would prefer to have no aid if we placed conditions on them such as, India must give Kashmir to Pakistan or Pakistan must make no deal with the Chinese. To return to the main question: In the U.S. national interest is it wiser to separate entirely the basic economic part of our aid from political issues, like Kashmir, or to connect them. We and India and Pakistan have been ambiguous on this issue. Pakistan thinks that if we withheld all aid from the sub-continent the Kashmir issue would be settled. We have been inclined to think that it is more to our interest to have useful relations with India than to do justice in Kashmir, but Mr. Buddy said he is not sure whether we would not be better off if we would separate and, as it were, sterilize our economic programs from political considerations.

Mr. Rockefeller asked whether the real test in this particular instance as to which policy should be followed is not whether it would be effective to tie our economic aid to political circumstances—whether we think we would get a solution of the Kashmir problem by such means.

Dr. Murphy remarked he felt that Senator Fulbright was too romantic on this subject. His own view is that there are appropriate times when leverage is important and should be applied. To give all our aid through multilateral organizations, or to sterilize our economic aid so that it would have no relationship to political issues, would be naive. We will need to use our aid at times, and it is proper to do so, to advance the legitimate interests of the U.S. No doctrinaire or rigid position undertaking to avoid such action would be advisable. He feels Mr. Rockefeller is right when he indicates the issue often is primarily a pragmatic one. Our sins have not been those related to being too tough or to being arrogant. On the contrary we have exhibited too much timidity and caution, we have been influenced by a feeling of guilt which is self-generated. Mr. Black said he is skeptical about the political advantages we can get out of our aid. Our attempts to do so have not paid off, in his opinion.

Mr. Bell remarked that our Congress does regard aid as a political instrument and objects (whether rightly or wrongly) because they do not think it has been used effectively in this respect often enough. They are enthusiastic about what has been accomplished in Greece, Turkey and Taiwan. The Congress does accept the premise that political elements should constitute an important part of the aid philosophy.

Mr. Black remarked that if George Woods, President of the IBRD, were making the decisions, he would probably resume economic development aid to India and Pakistan sooner than AID would.

Mr. Buddy said he feels that if we were to insist that the Kashmir question be settled as a condition of resumption of and, instead of being ready to accept for this purpose a start on the process of discussion between the two contestants, such a policy would break down our relations with India.

Dr. Perkins commented that we cannot completely divorce large spending of aid funds from political purposes. There are times when aid should be viewed in a political context.

1. Source: Washington National Records Center, RG 286, Perkins Committee—President’s General Advisory Committee on Foreign Assistance Programs—C. Tyler Wood Files—CY 66 thru CY 70: FRC 73 A 159, GAC Minutes (1st-4th Meetings). Secret. No drafting information appears on the source text. The General Advisory Committee on Foreign Assistance Programs met for the third time October 11–12./1/
2. Senator Fulbright’s statement at the dinner on October 11 has not been further identified.
3. On September 16, President Johnson spoke on the Mall in front of the Smithsonian Institution to mark the 200th anniversary of the birth of James Smithson (for whom the Institution is named). In the course of his remarks, President Johnson announced the formation of a special task force, chaired by Secretary of State Rusk, which would “recommend a broad and long range plan of worldwide educational endeavor.” For text of the address, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1965, Book II, p. 1005. The recommendations of this special task force were later embodied in the President’s message to Congress of February 2, 1966, on international education and health programs. For text of his message, see ibid., 1966, Book I, pp. 128–136.
4. This is the amount which the U.S. could make available on concessional terms after providing for its domestic and commercial export requirements. See also the Minutes of the meeting with Secretary Freeman for elaboration on this point. [Footnote in the source text.]