147. Memorandum From the Director of the Planning Group, National Security Council (Kennedy) to the President’s Assistant for National Security Affairs (Kissinger)1
- NSC Staff and CIEP Staff Responsibilities
A review of the terms of reference of the CIEP and its subsidiary bodies (including the Operations Group)2 evidences a clear overlap with the responsibilities of the NSC Staff and the NSC subsidiary bodies (including the Under Secretaries Committee). Specifically:
- —The CIEP is to “Provide a clear top-level focus for the full range of international economic policy issues; deal with international economic policies—including trade, investment, balance of payments, finance—as a coherent whole; and consider the international economic aspects of essentially foreign policy issues, such as foreign aid and defense, under the general policy guidance of the National Security Council.”
- —The Operations Group is responsible for follow up of decisions reached, coordination where necessary of government actions, and review of problems arising from actions of other governments or outstanding economic developments. The Operations Group “insofar as international economic policy is concerned” replaces the work of the Under Secretaries Committee.
Clearly it will be difficult in many instances to separate those issues which are specifically the responsibility of the CIEP and those which have implications of concern within the NSC structure. Many issues, which on their face would seem to be primarily “international economic policy” questions, will have a high political or strategic interest. And many will have to be sorted out on an “Ad Hoc” basis.
It should not be too difficult, however, to distinguish from the outset between those issues which have a broad policy character and thus are essentially NSC issues and those which are more narrowly focused on trade and investment policies with an important but not overriding political content and thus are essentially CIEP issues. But there are a variety of economic issues, particularly those involving (1) cases in which the economic issue provides leverage in our relations with a country in respect to other issues, and (2) foreign aid and defense matters, which will be less easy to resolve unless there is a clear understanding from the beginning.
The Current Situation
Mr. Peterson has assumed responsibility for a broad range of issues clearly falling within the CIEP terms of reference. Even here, however, there are questionable areas which need to be examined:
- —Specific commodity areas including textiles, shoes, sugar (and possibly the movie industry).
- —International monetary problems.
- —Trade and legislative strategy.
- —Foreign investment policy (both by the U.S. abroad and by others in the U.S.).
None of the foregoing would seem to be of primary interest to the NSC though obviously each has a foreign policy content and impact.
- —Preferences—this one obviously has a high foreign policy impact as to our relations with Latin America and our relationships with the Europeans vis-à-vis their arrangements with third countries (e.g. Spain, the French, and others with North Africa, etc.).
- —East-West Trade—the question here could be as much political as economic and within the government a strong strategic argument will be raised inevitably by Defense and probably CIA.
- —Balance of Payments—this issue may be one of the most knotty we will have to face in the next couple of years. Clearly it transcends military and purely foreign policy issues but it cannot help but involve to a major extent foreign aid (both military and economic), offset arrangements, and the costs of military deployments overseas. Moreover, the whole question of military sales (already raised by Mr. Laird with you) will impact heavily in this area. There is a highly important security content to this issue.
- —Plans for major international initiatives (in international economic policy)—until one sees the nature of the initiatives the relationship with NSC actions cannot be defined.
There are a number of ongoing studies within the NSC structure which have economic content of varying degrees (Tab A).3 None of these, however, is primarily an economic study. Most fall within the range of broad policy studies in which there is an important economic element. Only three would seem suitable for transfer to the primary concern of the CIEP:
- —USC Study of Caribbean Bauxite (this study was initiated primarily because of Defense’s interests in the strategic implications of nationalization of assets in the area).
- —USC Study of the Pan American Highway (this one is of direct interest to the President, has some security interest, and has a high political content).
- —USC Study of the Ecuador–Chile–Peru Fisheries problem (this study is completed and is of course directly related to the entire Law of Sea and Oceans Policy question).
Thus none of the ongoing studies would seem appropriate for “turnover to the CIEP.” We should initiate coordination, however, to assure that the CIEP staff’s interests are appropriately reflected (as has been done in the case of NSSM 122—Japan Study).
The choices for dealing with the basic issues seem to boil down to:[Page 309]
For Broad Policy Studies
- —Make the CIEP responsible for all economic issues to be dealt with in separate papers and merged at the White House level, or
- —Continue to have these studies done through the NSC–IG process with discussion of economic issues prepared with Mr. Peterson’s participation.
- —The first option would put the CIEP staff in on the ground floor in a controlling way on economic issues. (Presumably Mr. Peterson would not wish to become involved himself at the working level.) But it would have the serious disadvantage that (as in the case of the Japan study) a rational look at the political and security questions can hardly be taken in isolation from the economic issues. Moreover, even if a way could be found to reasonably separate these interrelated matters in the study, the task of integrating the study at the White House level would be far more complicated (and thus unsatisfactory) than would a joint review performed by the NSC staff and the CIEP staff of a single coherent paper. The second option would keep control within the NSC framework but would involve Mr. Peterson in three ways:
- —He would be represented in the development of the paper as to the economic issues, and
- —The economic section would be developed primarily by the State Economic Bureau which provides the support now for the CIEP Operations Group (the CIEP Operations Group chairman is Nat Samuels; Phil Trezise acts for him in his absence.)
- —Mr. Peterson could participate in the SRG meeting on the subject.
- —The second option seems clearly preferable.
For AID and Defense Matters
- —Here the issue is more complicated. We need now a clear understanding as to the extent to which the CIEP will involve itself in AID (both military and economic) and Defense matters.
- —Economic aid is more complicated because of the formation of the two corporations. One of their prime objectives will be to complement the multilateralizing of most of our programs for development assistance. The difficulty will be in getting consideration of important foreign policy aspects.
- —Security assistance has both economic and military components. Both certainly must continue to be primarily the responsibility of the NSC structure.
- —MASF, and military programs involving major balance of payments questions (e.g. forces in Europe, offset, overseas bases), all clearly should continue to be the responsibility of the NSC structure but the CIEP charter gives them a major interest.
The choices are:
- Retain primary responsibility for all aid (both development and security assistance) and defense issues with the NSC, coordinating appropriately at the White House level with the CIEP staff.
- Retain the security assistance programs including both the economic and military components (and possibly also the humanitarian assistance program because it includes disaster relief) as the responsibility of the NSC structure, and make the development assistance program the responsibility of the CIEP.
- Retain the security assistance program and all major country development programs (at least where these also involve security assistance as well) in the NSC structure, and make development policy the responsibility of the CIEP.
There is no simple and wholly satisfactory way to deal with this problem. The third option, however, seems to make the most reasonable division. Each of the options would require the closest of cooperation at the White House level but the third retains for the NSC structure the essentially security oriented issues and most of those with a high foreign policy content. It also would retain for you the flexibility to develop country program budgets in some selected cases if you later wish to do so (Option 2 also would do this but only in cases where both security and development assistance were involved—India would not be included, for example). Mr. Peterson would be responsible for broad development policy but not for specific country programs.
In any case there will have to be CIEP representation during the program formulation process within the NSC structure and this should be manageable. A close liaison must be established between the CIEP staff and your regional operators in order that foreign policy guidance will be fed in on each issue. On aid matters this will be important in the case of either Option 3, and especially so in the case of Option 2.
- Source: Library of Congress, Manuscript Division, Kissinger Papers, Box CL 316, Reorganization of the NSC System. Secret. Concurred in by Bergsten. Haig wrote a note to Kennedy at the top of page 1, “where do we stand.” The memorandum is unsigned. An initialed copy is in the Ford Library, National Security Adviser, Kissinger–Scowcroft West Wing Office Files, 1969–77, Box 40, Administrative Files, National Security Council Organization (6), 3/30/70–4/21/71.↩
- See Foreign Relations, 1969–1976, volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972, Document 49.↩
- Attached but not printed. With the exception of one added item, the list is the same as that referenced in footnote 2, Document 146. ↩