349. Telegram From the Embassy in the Philippines to the Department of State 1

10813. Subject: USAID multi-year strategy paper. Ref: Aidto Circ XA 2031.2 Country Team message.

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We have carefully reviewed the proposed USAID multi-year strategy paper (MYSP) full text of which being pouched3 and strongly endorse it. This paper directly addresses the problems facing the US in the Philippines and the fundamental issues associated with Philippine economic development; and proposes a plan of action through FY1975, along with priorities, that we believe is both realistic and necessary. Highlights follow:
Major emphasis. The MYSP has four main points of emphasis as follows. It emphasizes (1) the development and support of local governments and private institutions as viable alternatives for total dependence on central government agencies, and as vehicles through which economic development programs and projects can be executed: (2) that as the Philippine agricultural program gains momentum there should be a decrease in social unrest in rural areas with unabated social unrest in urban areas, requiring a balanced socio-economic program to offset both; (3) the postponement, to the extent possible of major US capital and large-scale conventional technical assistance projects until later in the planning period and after appropriate institutions have been developed and are functioning; and (4) a recognition of the advisory role of USAID technicians who perform catalytic and promotional functions in the private sector and at both the central and local levels of government, particularly the latter (which already extensively done by number of USAID staff).
Consequences of this approach. In order to make the plan effective we see a need to increase the USAID staff from its present level; a need for local currency, in part to be derived from PL480 sources; and probably a need for closer cooperation among all US agencies at the working level. Staffing and peso requirements have as yet not been worked out, in terms of magnitude and timing over the eight year planning period. Likewise organizational requirements for the US Mission have not been thought out. Before we proceed with these details we need general agreement on the proposed overall approach which, we repeat again, is in our judgment realistic and necessary.

USAID goals. In view of the US objectives in the Philippines and in Southeast Asia, the problems the US faces in realizing these objectives, and the approach set forth in the USAID MYSP to enable progress to be made, the following six goals are proposed as ones which will govern USAID activities over the planning period, subject of course to modification if and when basic conditions in the Philippine setting change, e.g., stepped up Communist activity in the Philippines [Page 774]emanating from outside the Philippines, failure of agricultural program, etc.

Demonstrating to the Filipino elite, nationalist and other, the advantages of pursuing a vigorous economic development policy that is outside partisan politics, and ultimately identifying nationalism with growth and prosperity;
Denying potential Communist or other subversive exploitation of those Philippine socio-economic problems most susceptible to exploitation, and thus preventing diversion of Philippine energies from the task of economic development;
Creating for the Filipino elite and GOP policy makers an expanded reservoir of patriotic Filipinos who are capable of viewing objectively the socio-economic problems of their country;
Improving, on a modest scale, Philippine health, education and public administration, in preparation for the time when economic development becomes a national policy;
Developing private Philippine institutions and local governments, where possible, to become viable alternatives for central government bureaucracy, and through which programs and projects can be executed;
Encouraging non-US assistance in financing and executing foreign aid projects in order to gradually focus Filipino attention away from the United States, and particularly within the Southeast Asia region itself.

The specific program components associated with the achieve- ment of each goal, along with priorities over time, are identified in the MYSP.

The foregoing outline of the new approach proposed in the MYSP was reviewed by the Ambassador and USAID director prior to their departure for Washington and approved in principle. It reflects a growing view within this Mission that more vigorous steps and new departures are essential in the general thrust of our aid programs in the Philippines if we are to assist the present administration in halting the downward internal spiral which has characterized the past several years and in effecting a reasonable turn-around.
In its early phases it will represent a concentration of effort in those areas which in our judgment appear to offer the greatest present hope of success; i.e. a selective concentration on those provincial or local activities which bear continued promise of producing immediate though initially small-scale results at the grass roots level, in the expectation that these may spread more generally to other areas of the country and take hold. It represents, moreover, a deliberate effort to identify [Page 775]ourselves progressively and to the extent possible with the common man, whose restiveness is increasing.
It would bypass in many places the central national bureaucracy and to this extent would admittedly constitute a greater US involvement in the internal affairs and political habits of the country. It cannot, on the other hand, be accomplished without the wholehearted support of the Marcos administration and must accordingly be sold to the President and his immediate advisors in such a way as to enlist their full support. Given Marcos’ continued determination to effect major internal improvements, however, and his enthusiasm for earlier efforts along these lines, we are optimistic that he can be persuaded.
This does not imply that the projected policy would entirely neglect efforts at the national level. Some elements of the program would continue to be directed specifically in that direction, and toward the end of the project it would be our hope that progressively more of our joint effort could be channeled in that direction as the overall situation improved. But the major thrust of our assistance and advisory efforts during the early stages would clearly involve a new emphasis on local administration, building hopefully on our experience and success in the immediate past with the US supported rural development program.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, AID (US) 1 PHIL. Confidential; Priority.
  2. Aidto Circular XA–2031, February 2, provided guidance for implementation of AID’s Planning-Programming-Budgeting system. (Ibid., POL 1 US)
  3. In airgram Aidto A–840, April 25. (Ibid., AID (US) 1 PHIL)