Foreign Relations of the United States, 1964–1968, Volume XXXII, Dominican Republic; Cuba; Haiti; Guyana

222. Memorandum From the Presidentʼs Special Assistant (Rostow) to President Johnson¹

Washington, December 31, 1968, 10:10 a.m.

SUBJECT

• PL 480 Program for the Dominican Republic

Orville Freeman and Bill Gaud are requesting your authorization to negotiate a $9.6 million PL 480 agreement with the Dominican Republic—for wheat, soybean oil, tallow, and tobacco. (Tab B)² Covey Oliver urges your approval, citing important political arguments for prompt action to support President Balaguer. (Tab C)³ Charlie Zwick recommends deferral until the new Administration takes office. (Tab A)⁴

Zwickʼs memorandum stresses:

• —less than satisfactory self-help performance under last yearʼs Assistance package ($16 million supporting assistance plus $14 million PL 480);⁵
• —current negotiations aimed at improving performance before the final $8 million of the Supporting Assistance Loan is released;
• —desirability of “leaving something tangible for the new Administration to demonstrate continued U.S. support for the Balaguer Government.”

Zwick agrees the $9 million is needed for balance of payments support—but fears that authorization now will take the pressure off for better performance on the Supporting Assistance Loan.⁶

Ambassador Crimmins and Covey Oliver argue that:

• —Balaguer has been counting since September on this PL 480 package in explaining publicly his tight balance of payments program for 1969.
• —Further delay would be interpreted by both Balaguer and his opposition as a deliberate U.S. decision to draw back from full support for his government.
• —Political storm clouds have been gathering in the Dominican Republic as we approach the Presidential election—plotting against Balaguer has been growing. The political climate will be especially volatile during the period of transition in the U.S.
• —Steady U.S. support for Balaguer has been one of his few solid bases; his chances of completing the constitutional term are relatively favorable so long as our support is unquestioned;
• —Balaguer is more likely to be able to improve performance under the Supporting Assistance loan if he is reassured that PL 480 support will be forthcoming.

Charlie Zwick says that if you wish to take more fully into account the political judgment of Oliver and Crimmins, he would then recommend authorization with subsequent releases of food contingent on better self-help performance.

He would release the food in three equal installments contingent on the meeting of special commitments which parallel those involved in the Supporting Assistance loan.

I believe that a more flexible version of this option would meet the minimum political requirement—that we demonstrate prompt, continued support for Balaguerʼs program. Ambassador Crimmins should have enough negotiating leeway to insure that this objective is met. Specifying now the number or size of the installments, or tying the self-help criteria rigidly to other loans, would not be wise. These are issues better left to the negotiation.

I recommend that you approve negotiation of this PL 480 agreement as recommended in the Freeman/Gaud memorandum, with the additional stipulation that commodities be released in installments after special reviews of Dominican performance.

Walt

Approve, make releases in installments contingent on special performance reviews⁷

Approve, without special installment review procedure

Defer to New Administration

Disapprove

Call me

1. Source: Johnson Library, National Security File, Country File, Dominican Republic, Vol. XVIII. Confidential.
2. Attached, but not printed is Tab B, a December 13 memorandum to President Johnson from Gaud and Freeman who wrote that P.L. 480 assistance was needed “(1) to ease the Dominican Republicʼs balance of payment deficit; (2) to generate local currency to finance increased investments in the agricultural sector; and (3) to supplement local production which has not fully regained its normal level due to damage caused by the severe 1967–68 drought.” They also stated that the Departments of State and the Treasury concurred in their recommendation to negotiate the P.L. 480 agreement.
3. Not attached and not found.
4. Attached but not printed is Tab A, a December 27 memorandum to President Johnson from Bureau of the Budget Director Zwick.
5. The memorandum cited as examples of “unsatisfactory performance” on the part of the Dominican Republic in 1967: erratic budget allocations for agricultural development agencies, price support programs not expanded and no action taken to divest the Agricultural Bank of its non-banking functions, and the unwillingness of the Dominican Republic Government to increase funding for education and health.
6. Zwickʼs memorandum explained that $8 million in supporting assistance was withheld because of the Dominican Republic Governmentʼs less than satisfactory performance under the previous yearʼs assistance package, and that it therefore made little economic sense to go forward with the P.L. 480 agreement since the two forms of assistance were equivalent resources. In concluding Zwick wrote: “I cannot judge whether or not a delay in authorizing this P.L. 480 agreement would seriously influence the decisions or capability of anyone planning to overthrow Balaguer. But in the absence of explicit evidence I recommend deferral of this agreement. This course would enable the new Administration to demonstrate continuity of policy, and it would put some teeth into our self-help requirements.”
7. This option is checked.