Office of the Historian

501. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1

Washington, June 21, 1967, 4:45 p.m.

SUBJECT

  • 17 Million Loan to the Congo

In the attached, Messrs. Gaud and Schultze recommend approval of a $17 million loan to the Congo. Schultze’s memorandum (Tab A)2 gives you a concise summary of the proposal, the self-help conditions, and the economic outlook. Gaud’s memorandum (Tab B) provides greater detail. At Tab C is a summary of the economic stabilization program of which this loan would be a part.

This loan is proposed in the following policy framework:

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1. Having helped to achieve a reasonably stable and unified Congo, we are now gradually shifting from a very close paternal connection with the GOC to a more standard relation between independent nations. This makes very good sense for the interests of both countries.

2. A major part of this shift is a trend away from slush funds and toward genuine development aid. In 1962 and 1963, we were making huge grants to the Congo. We later shifted to loans. We are now making the loans smaller (this is $2 million smaller than last year’s). Within two years, we plan to eliminate supporting assistance loans altogether.

3. As the loans grow smaller, the self-help terms grow tougher. This loan is conditioned on a complete monetary and economic stabilization program, administered by the IMF. With luck, it will put the basically-strong Congolese economy back into self-sustaining shape.

4. We are a minority financier in the Congo. Even including food, we are providing less than one-fourth of her aid. The great bulk of it comes from the Belgians, the Italians and the EEC, along with the IMF.

Despite these trends, and the very real economic progress the Congo has achieved during the past two years, we should not give you the impression that the sailing is smooth. The Congo survives more perils every week than Pauline ever dreamed of. Mobutu is particularly susceptible to the urge to cut his own throat by finding new ways to kick the Belgians. Thus, the Congolese stability we talk about is very fragile.

It is fair to say, however, that this loan is necessary for any stability, and that, whatever its weaknesses, the present situation is the most stable in recent history. Therefore, I recommend that you approve.

All government agencies, including Treasury, join in the Schultze/Gaud recommendation.

Walt

Approve loan3

Disapprove

Speak to me

  1. Source: Johnson Library, National Security File, Country File, Congo, Vol. XIII, Memos & Miscellaneous, 11/66–8/67. No classification marking.↩
  2. Neither tab is attached. Copies of these memoranda are ibid., Memos to the President, Walt Rostow, Vol. 32.↩
  3. This option is checked.↩