113. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1
- Application of A.I.D. Country Restrictions to New Overseas Private Investment Corporation
An issue has arisen with reference to the Aid Bill. It is whether all the country prohibitions which now apply to A.I.D.’s own operations should also apply to the proposed Overseas Private Investment Corporation (OPIC). A.I.D. and all other agencies take the position that only the restrictions applying to Communist countries, countries to which the U.S. has no diplomatic relations and the Hickenlooper Amendment should apply to the corporation. (Hannah’s memorandum to you on this is at Tab A.)
Arthur Burns feels that all the other restrictions should apply to the corporation as well.
The arguments for limiting the number of prohibitions applying to the OPIC are: [Page 266]
- —The major new feature of your aid program for FY 1970 is the Overseas Private Investment Corporation. The main objective of the corporation is to induce increased participation by private enterprise in the development process by reducing government interference and bureaucratic red tape from their activities.
- —The application of all of the country restrictions would run directly counter to that objective.
- —Under these restrictions, U.S. firms could not be sure that their OPIC guarantees and insurance would not be withdrawn as a result of such (for them) fortuitous events as mob attacks on U.S. embassies, delinquencies of payment of UN dues, and non-repayment of debts owed to the U.S. Government or U.S. private citizens by the government of the country involved. Furthermore, the tightened provisions which prohibit aid to countries trading with Cuba, as well as those shipping to Cuba, could circumscribe seriously the area of potential U.S. private investments.
- —At present, application of these restrictions would prohibit extension of guarantees or insurance only to a few relatively minor countries. The main problem is their potential extension to numerous developing countries, such as Guinea (on repayment of A.I.D. loans), Ecuador (on government debts to private citizens) and even Mexico (due to trading with Cuba).
The Burns arguments are (Tab B):2
- —The OPIC is, in effect, a Government agency with virtually the same lending authority as AID. To exempt the Corporation from the restrictions would be the same as exempting that part of the AID program that will be transferred to the OPIC.
- —The political risks that apply to trying to reduce or remove the restrictions on AID in Section 620 would be the same should you decide to remove them from the OPIC.
On balance, I think Hannah is right on this issue.
Apply all country prohibitions to the OPIC 3
Limit the application of country prohibitions as proposed by AID[Page 267]
- Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 193, AID, Volume I 1969. Confidential.↩
- Not found, but see Document 9.↩
- This option was checked, apparently by Kissinger. A marginal notation indicates that AID was notified on May 29 at 3 p.m.↩
- Limited Official Use.↩
- President Nixon signed the Approved option.↩
- The President signed the Disapproved option.↩
- See footnote 5, Document 8, and Document 10.↩
- Printed here in italics.↩