Foreign Relations of the United States, 1964–1968, Volume XXVII, Mainland Southeast Asia; Regional Affairs

91. Letter From Secretary of State Rusk to the Chairman of the Senate Foreign Relations Committee (Fulbright)¹

Washington, April 21, 1967.

Dear Bill:

I appreciated the opportunity afforded by your letter of April 12² to give you a full report on the Mekong-Prek Thnot project in Cambodia.

We have supported the Mekong River development program for many years. The first important move we made after the Presidentʼs April 1965 Johns Hopkins speech to show our great interest in the political and economic potentialities of this UN-supported initiative was in May 1965, when we took the lead in offering to provide half the funds for the Committeeʼs top priority project in Laos.

The Committee took as its next priority project the Prek Thnot irrigation and hydroelectric project near Phnom Penh in Cambodia. It was not, however, until last fall that the Mekong Committee managed to produce the economic and technical analysis of the project which was needed for us to determine whether we could justify assistance on economic grounds. While these studies were being carried out we, nevertheless, attempted to induce other donors to take the lead in raising financing for Prek Thnot, so as to permit prompt collective action. Thus, we sent an emissary to Ottawa in November 1965 in an unsuccessful effort to persuade the Canadians to take the lead. We also urged Japan to take the lead. Our idea was then that it would be preferable to finance the Cambodia project from non-U.S. sources but that, if necessary, AID would contribute the residual, minority share. Given Sihanoukʼs attitude towards U.S. aid and the state of U.S-Cambodian relations, it was clearly necessary that another country lead such a consortium and work out administrative arrangements with the Mekong Committee and the Cambodian Government. As a practical matter, it also was necessary that Cambodia agree to the use of an international financial institution such as the World Bank or the Asian Development Bank as the financial agent of the donors.

At the May 1966 ECAFE plenary session our delegate stated that we intended to do our share for Mekong Committee-sponsored projects in all four riparian countries. A few months later, we authorized our Ambassdor in Bangkok to say to Mekong Committee officials that we would sympathetically consider a U.S. contribution to Prek Thnot if the Committee and other donors found the project feasible.

By this time Japan had indicated increased support for various development efforts in Southeast Asia and stood out as the most promising leader for Prek Thnot. We, therefore, indicated both to the UN and to Japan in the spring and summer of 1966 that if Japan or some other country took the lead with the project and could not raise sufficient funds without us, we would be a minor contributor, assuming there was a finding of feasibility, satisfactory arrangements for financial and engineering management, and Cambodian willingess to accept inclusion of U.S. funds in the package.

This was our position when the Congress last October removed the normal Presidential authority to waive on “national interest” grounds the ban on aid to countries which sell, furnish or permit ships under their registry to carry items of economic assistance to North Vietnam. At that time, we reviewed information available on Cambodian official gifts—all of a token character—to North Vietnam or the National Liberation Front and on the increasing use of Cambodian territory and resources by Vietnamese communist military forces en route to or operating in South Vietnam.

A continuing difficulty for us, also, has been uncertainty as to the Cambodian position on the project, including the acceptability of U.S. assistance. Cambodian representatives at the Mekong Committee meetings have consistently sought financing of the full $33 million project without qualification as to donors, and the Mekong Committee was assured by the Cambodian delegation in September 1966 that Sihanouk had given the project top priority. However, Sihanouk in December attacked the idea of Cambodiaʼs accepting U.S. assistance for the Prek Thnot project and criticized the suggestion that Asian Development Bank involvement was needed. Then, in a letter to U Thant in January of this year, Prince Sihanouk explained that he did not want to burden Cambodia with new loans, saying that projects presently under construction would be sufficient for Cambodiaʼs projected electricity needs, and he requested that further consideration of international financing be suspended. Although recently the Cambodian delegate at the ECAFE meeting in Tokyo said Cambodia wanted the full Prek Thnot project and welcomed any assistance given for it, the latest indication of Prince Sihanoukʼs view is his assurance to U Thant that he would review the whole question after his return to Cambodia in early March. He has not as yet communicated the results of his review of the desirability of this project to U Thant.

Responses to paragraphs two through six of your letter are in the following paragraphs corresponding to the numbers of your questions.

2. Our decision not to contribute to the project was made, subject to continuing review, last October and reiterated in November. The decision was made by the Administrator of AID, in consultation with senior officials of the Department of State and others. I subsequently reviewed the decision and joined in the effort to persuade other countries to supplement the Japanese offer of half the foreign exchange costs.

3. The decision was occasioned by the need for Eugene Black, then traveling in East Asia, to inform the Japanese whether or not we would contribute in order that they could decide as to their own participation in light of the U.S. position.

The decision was based on:

a) The Congressional action on the Foreign Assistance Appropriations Act, referred to above, which deleted the Presidential waiver authority on national interest grounds, and reduced the Presidentʼs latitude only to the findings—which would almost certainly have become known and been unacceptable to Sihanouk—of a United States national security interest as the basis for a waiver, and

b) The possibility that provision of United States aid to a project in Cambodia would provoke criticism from the Congress and endanger its support of future foreign aid legislation, if there were to occur some new Camobdian action in support of North Vietnam or expanded use of Cambodian territory by North Vietnamese or Viet Cong forces.

4. With regard to your inquiry concerning a legal finding as to whether Cambodia is engaged in trade or aid within the meaning of Section 107(b) of the Foreign Assistance Appropriations Act, no such finding has been made. However, aside from the question of whether Section 107(b) constitutes a bar in a strict legal sense, consultation with several members of Congress who have inquired into our position has suggested that it would be unwise to interpret narrowly the Congressional intent behind this restrictive language.

5. The reasons which persuaded us not to contribute last fall still militate against U.S. participation in the Prek Thnot project at the present time. However, Prek Thnot is in itself a good project and an integral part of the Mekong scheme. Following up the initiative taken by the Japanese, we have made strong efforts with the Canadians, West Germans, and others to get additional support for the financing of the full project. There also has been some thought of starting with a smaller project for which presently committed financing seems to be sufficient. There is, however, still uncertainty as to Cambodian interest in this possibility. If adequate financing is not found for the full Prek Thnot project this year and Cambodia remains uninterested in anything less, it may be possible for the United States to participate in this project next year through a lump-sum contribution to a general Mekong Development Fund now being considered by the Asian Development Bank as part of its proposed Special Funds.

6. There have been no objections raised by members of the Mekong Committee to the U.S. decision not to participate in the funding of Prek Thnot, although the decision did occasion disappointment within the Committee. The other three members of the Committee have continued to express strong support for the project, and hope that financing can be found. Cambodia has not attended recent meetings of the Mekong Committee. We believe that Cambodia will in time again participate in the Committee and that the achievement of acceptable financing for the project, either through a Japanese led consortium or a special fund of the Asian Development Bank, could hasten its return. As you know, Eugene Black on May 2 will consult with your committee on U.S. contributions to Mekong and other special funds of the Asian Development Bank.

Sincerely yours,

Dean Rusk

1. Source: Department of State, Central Files, E 11–2 MEKONG. Drafted by Thomas C. Niblock, Director, Far Eastern Development Office of AID, and Ewing, cleared by Barnett and in draft with Gaud and Deputy Assistant Secretary of State for Congressional Relations John P. White.
2. Attached, but not printed.