368. Memorandum From the Counselor of the Department of State (Pedersen) to Secretary of State Rogers 1

FOREIGN ECONOMIC POLICY

A substantially increased integration of economic foreign policy with political and strategic foreign policy is of such importance to improving the country’s diplomacy and world position that it would be desirable for you to discuss the matter with the President in San Clemente. This is particularly true as there are substantial tendencies to treat foreign economic policies in a different framework and because decisions will have to be made in the near future.

Substantially increased emphasis on economic (including trade and commercial) policy is also needed for the healthiest and most effective development of the Department and Foreign Service’s contribution to the nation, as you have frequently urged. The more we can develop this concept the better will be our contribution to the nation, here and abroad.

What is needed, I believe, is three things: A close integration in the White House of foreign economic policy with political and strategic policy within the NSC system. An emphasis upon State Department leadership in developing interdepartmental policy recommendations short of the NSC, along the lines of the current NSC system. And an assignment of supervisory authority to the Department over the implementation of foreign assistance.

In April you recommended to the President2 that in putting long-term development into a banking-type institution it be made subject to policy guidance and coordination with other assistance through a board chaired by the Secretary of State. A single security program would be established under State Department authority. A contingency fund, to include disaster and unforseen public order matters, would be appropriated to the President and assigned to you. You stressed that your chairmanship of the Bank Board would help assure firm coordination here and in our missions in the field and that it would be prefer [Page 798]able to put such operational and supervisory authority in the State Department to putting it in the White House.

Whatever the exact details may ultimately be, and we do not know what is being proposed to the President, a system which keeps the operational and day-to-day policy supervision of foreign assistance programs under the Secretary of State will ensure the closest day-to-day integration of foreign economic and aid policy with other policy and help hasten the improvement of the economic capabilities of the Foreign Service as a whole, which will also benefit the government.

We also understand that the Ash Committee3 may recommend establishment of new machinery in the White House for foreign economic policy outside the NSC machinery. I concur in the view that foreign economic policy should remain in the NSC itself, and believe the NSC staff should be augmented for that purpose if necessary. This also will help integrate economic policy rather than separate it.

Short of the NSC itself the leadership in developing policies and recommendations should be in the State Department for the same reasons as cited above. The preferable approach is through the economic Interdepartmental Group and the Under Secretaries Committee, where detailed matters can be ironed out within Presidential decisions as they now are. If a more specific high level structure were desired a second Under Secretaries Committee chaired by the Under Secretary and in which Mr. Samuels would participate (as Mr. Johnson does in the present one) would be a good approach. It seems to me that a Council on Foreign Economic Policy, within the NSC system and chaired by you, would be somewhat awkward and would meet substantial resistance. If it were necessary to move in this direction it might be better to call it an NSC Sub-Committee on Foreign Economic Policy, chaired by the Secretary of State.

(International fiscal policy is separate from all this, having been handled for years under a National Advisory Council and the Secretary of the Treasury.)

The key elements, in short, regardless of the system, are to assure coordination in the White House of policy decisions on all foreign diplomatic, strategic and economic policy through a single NSC mechanism, and to establish in the Department of State day-to-day leadership in policy preparation and implementation through (a) our supervision of the administration of foreign aid and (b) our chairmanship of inter-departmental preparations of proposed foreign economic policies and of detailed elaborations following Presidential decisions.

RFP
  1. Source: National Archives, RG 59, Pedersen Files: Lot 75 D 229, Chron File. Confidential. Rogers initialed the memorandum, indicating that he saw it.
  2. For text of Rogers’ April 17 memorandum to the President, see Foreign Relations, 1969–1976, volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972, Document 133.
  3. See footnote 2, Document 370.