127. Editorial Note

On February 25, 1970, Henry Kissinger sent a memorandum to Secretary of State Rogers, Secretary of the Treasury Kennedy, and AID Administrator Hannah requesting a study of worldwide untying of aid. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 193, AID, Volume II 1/70-8/10/70) The genesis of Kissinger’s memorandum was a January 29 memorandum from Acting AID Administrator Poats to Kissinger proposing that a January 16 memorandum from Kissinger mandating a study of untying program loans to Indonesia be broadened to include untying for all counties. In his February 25 memorandum Kissinger instructed that the study should be regarded as a follow-on to the President’s October 31 Latin American speech, which he quoted: “I am ordering that all other onerous conditions and restrictions on U.S. assistance loans be reviewed, with the objective or modifying or eliminating them.” Kissinger also noted that the study should consider the recommendations of the Peterson Task Force (see Document 128) and a preliminary report should be submitted by March 20. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 193, AID, Volume II 1/70-8/10/70)

[Page 308]

On April 15 Elliot Richardson, in his capacity as Chairman of the NSC Under Secretaries Committee, sent a memorandum to President Nixon informing him that the untying issue had been summarized in his March 25 memorandum on foreign assistance ( Document 131), but that he was now providing a more detailed staff study of this issue. (National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 45) This April 15 untying study reviewed the emergence of tying practices between 1960 and 1969, which had arisen partly in recognition of balance-of-payments difficulties and partly to bolster lagging Congressional support for the program. The report suggested that if the balance of payments could be liberalized, other restrictions such as the foreign investment program could also be considered. The study looked at complete untying on a free world basis, in concert with other donor countries, and examined several options for untying with respect to procurement in developing countries only. With respect to the latter, the study estimated the balance-of-payments loss would be from $50 million to $125 million for the four options for which statistical estimates were made. (Ibid.)