Office of the Historian

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

Washington, November 22, 1968, 6:26 p.m.

SUBJECT

  • Aid to Korea

Attached is a Zwick-Poats-Freeman request2 for your authority to negotiate a $112 million 1969 assistance package with Korea, composed of an $82 million P.L. 480 agreement and $30 million in AID program assistance.

P.L. 480

The P.L. 480 sales agreement would provide approximately 650,000 tons of wheat, 270,000 tons of corn (over a three-year period), 160,000 bales of cotton, 34,000 tons of inedible tallow, and 10,000 tons of lard.

In previous years P.L. 480 Title I sales have been entirely payable in local currency. The present package provides for 60% for local currency sales and 40% for convertible local currency 40-year dollar credit. The credit sale includes a 30% payment the first year. That payment, plus a 29% U.S. uses payment of the local currency sale, will meet one-fourth of our estimated expenditures for Korean currency in 1969.

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AID Program

The proposed AID program includes a $10 million program loan and a $20 million Supporting Assistance grant in support of the economic stabilization program. This is $10 million below the 1968 level. This continued phasedown is possible because of Korea’s dramatic economic growth in recent years.

Congressional Amendments

State/AID reports that Korea continues to satisfy the requirements of both the Symington and the Conte-Long amendments.

The Purcell amendment requires that payment be made at the time of delivery in an amount to cover U.S. needs, except when it would be inconsistent with the purposes of P.L. 480. Our local currency requirement in Korea for next year is estimated at $65 million in excess of the receipts from the local currency sale and other sources. Clearly a payment on that order cannot be expected from Korea, and would indeed be inconsistent with the purposes of P.L. 480. Under the present proposal Korea would make a Purcell payment of $10 million. A higher payment would be difficult to negotiate, and seemingly unwise to attempt, along with the $30 million expected in commercial sales and the $15 million in payment derived from local currency sales.

Balance of Payments

All AID funds would be tied to procurement in the U.S. The list of commodities would be selected to assure additionality.3

Recommendation:

That you authorize negotiation of the proposed AID and P.L. 480 programs.4

Walt
  1. Source: Johnson Library, National Security File, Country File, Korea, Vol. IV. Confidential.↩
  2. Not printed.↩
  3. Next to this statement Rostow added “Joe Fowler concurs.”↩
  4. Following this recommendation President Johnson wrote “OK L.”↩