130. Memorandum From C. Fred Bergsten of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Staffing of Peterson Proposals on Aid: Under Secretaries Committee Meeting on March 20 at 3:00 p.m.

The Under Secretaries Committee will have two papers before it at the March 20 meeting:2

  • —A draft memorandum for the President which treats the fundamental issues underlying the entire approach proposed by the Peterson Report. This will be the focus of the meeting.
  • —A long issues paper, detailing the options on the fifty-two specific issues raised by Peterson and others, responding to the President’s directive which transmitted the Peterson Report to the agencies.3 We have tried to clear away all comments on it separately, but a few parochial interests may come up at the USC because this is some agencies’ only shot at the process.

Present Situation

Before I outline the basic issues, you should have the following background:

  • —All agencies have been fully on board the President’s approach, based on Peterson’s proposals, throughout the staffing process. State, AID, and Treasury have been particularly cooperative.
  • —Three problems may arise at the Cabinet level, however: Secretary Rogers may fight to put the new International Development Council in State instead of the White House, although he may no longer fight separation of the basic lending institutions from State; Secretary Laird may want the proposed new Office of Security Assistance, which will run all security-related programs, in Defense instead of in State; and Secretary Kennedy may resist some of the financial innovations proposed for the new U.S. Development Bank (guarantees for LDC borrowings in DC capital markets) and some of the proposals which would hurt our balance of payments (partial unilateral untying, relaxation of restrictions on private U.S. investment in LDCs).
  • —All agencies assume there will be an NSC meeting and the NSC paper urges that it be held. I have told no one that there is any doubt about the April 1 date, although you rejected my recommendation to firm it up. An early deadline is necessary to keep up the pressure on the agencies. More basically, failure to have an NSC meeting would cause problems because of the possibility of Cabinet-level dissent just noted and because we plan to keep open all options through the USC meeting, to preserve full flexibility for the President’s decisions.4 If the USC learned that there would be no NSC meeting, they would probably want to make recommendations instead of present options; in any event, no NSC meeting would mean that we would have to get agency positions somehow—and the three Secretaries might feel strongly enough to want to present them orally anyway.
  • —The only other problem is that some agencies may want to delay decisions which affect them. It is true that we have set a killing pace for this exercise, but we must maintain it (a) to avoid slipping the President’s message too far beyond the March 31 legislative deadline5 and (b) to button up most of the specifics so that the agencies cannot subsequently gut the new approach.
  • —The issues paper is unmanageable for the President, and we will have to staff it as we did the IA-ECOSOC memorandum. Most of the fifty-two issues must be decided now, however, so that (a) the President can make his proposals sufficiently comprehensive, and (b) we will be in a position to answer when asked about the specifics behind any proposals which he may leave general in his message. (At State’s request, I circulated a purely personal draft—attached at Tab A6—outlining my views on what might be included in the President’s message. No one has challenged its comprehensiveness, though as noted above some agencies may try to delay decisions affecting them.)
  • —Jim Keogh has been working on the draft of the President’s statement since Monday, when I talked to him after you approved my recommendation to do so. Herb Klein’s people, with whom I have also talked, are working out a publicity scenario—featuring Peterson and other members of the Task Force, on the assumption that the President’s proposals will largely encompass their recommendations.

[Page 315]

Specific Issues

The USC draft first summarizes the general conclusions of the Peterson Task Force, and recommends that the NSC endorse them:

1.
The U.S. has a profound national interest in cooperating with the LDCs for development purposes.
2.
We must clearly define the rationale and objectives of our assistance program.
3.
We should seek an international development effort involving (a) true partnership with the LDCs, (b) greater responsibility for the international organizations, and (c) other DCs.
4.
The downward trend in U.S. appropriations for development should be reversed.
5.
Our increased resources should be primarily channeled through international institutions.
6.
The U.S. should provide a fair share of the international resources aimed at development.
7.
Our assistance program should broaden the use of private initiative.
8.
Development is more than economic growth; popular participation and equitable income distribution are equally important.
9.
We should continue to provide security assistance to help individual countries and move them toward greater self-reliance.

The USC draft then flags the major issues on which it recommends that the NSC focus its primary attention:

  • —Whether we should clearly distinguish among our security, humanitarian and development programs.
  • —Whether we should turn over primary responsibility to international organizations.
  • —How to reconcile the development focus of our residual bilateral program and the basic foreign policy objectives, which prompt us to retain a bilateral effort. (My answer here is that our bilateral program would select countries and programs—such as Latin American and agricultural development—in light of our unique national interests, but avoid political influence determining their short-run operation.)
  • —Whether and how to pull all of our security assistance program under one roof. (This was the weakest part of the Peterson Report and the internal staffing is not much better so far. You may wish to look particularly at the options under issue 8 on pages 25 28 of the long paper.
  • —Whether we should decide on annual aid levels or leave the issue open la Peterson. This relates closely to whether we should endorse [Page 316]the targets for assistance previously agreed and recommended by the Pearson Commission. (The President has really rejected targetry already, but State rightly notes that such rejection will cause foreign policy problems for us. It must thus be aired at the NSC although I think it can be quickly disposed of.)
  • —How to coordinate the separate aspects of the new development approach. (This issue is critical for the President and for us, and I analyze it separately in the next section.)
  • —How to relate the Peterson program to our Latin American policy. (The Peterson approach is completely global and provides nothing special for Latin America. It may thus raise questions about whether we are still serious about a “special relationship” in the Hemisphere.)
  • —Organizational recommendations for the new International Development Bank, International Development Institute, Overseas Private Investment Corporation (already legislated), Office of Security Affairs in State, and International Development Council. (The basic decisions on these flow from the fundamental decision on separation of rationales, and you need not bother about the details.)

Coordinating Council

There is one issue on which I particularly need your approval on the specifics of my approach, or guidance to do otherwise: how to set up the International Development Council recommended by Peterson.

The Council is a crucial part of the Peterson proposals. It would pull together, for the first time, all U.S. government programs relating to economic development. It would thereby implement a key aspect of the new approach: integration of all U.S. economic policies which affect the LDCs. The creation of a White House coordinator, to chair the Council, would also bring new stature to our over-all aid effort and provide for Presidential leadership of the program.

The President agreed, at the meeting with Peterson,7 that the coordinator should be located in the White House. This raises the issue of how the Council relates to the NSC, and makes the issue particularly delicate for us. And Secretary Rogers may push hard to coordinate it from State.

The long issues paper lists six options ( pages 72 79). I strongly prefer Option 1 (page 75), as recommended by Peterson: [Page 317]

  • —the coordinator in the White House;
  • —chairing a Cabinet-level Council;
  • —not formally integrated into the NSC system.

In practice, the coordinator would be closely linked to you (I use “you” as shorthand for your position). Under the present regime, recommendations would go to the President through you—as do memoranda from other Presidential assistants, such as the Special Trade Representative and the Chairman of the Council of Economic Advisers (on international matters). Close staff cooperation would provide daily coordination and prevent conflicts from developing. In short, I see no problems if it is played properly and the people are chosen carefully. I recommend that we choose this option.

The other options all have serious flaws:

  • —Option 2 would have a White House coordinator chair the Council as an NSC subcommittee at the Under Secretary level, like the present USC. This would probably preclude getting a coordinator of the stature needed to both do the job effectively and portray the desired new image; by linking the Council formally to the NSC, it would also blur the disaggregation between our development and security assistance programs, which is fundamental to the new approach.
  • —Option 3 would have the Under Secretary of State chair an NSC Subcommittee, which would simply be the present USC discussing development. It would gain nothing, conveying precisely the political overtones for development assistance which the new approach tries to eliminate and failing to eliminate the need for Presidential reconciliation of agency difference.
  • —Options 4-6 would give the coordination responsibilities to the new Development Bank or State. Any of them would essentially replicate AID and the entire status quo.

Recommendations: (for points to raise or support during USC discussion)

1.
That you be ready to comment on the certainty and date of an NSC meeting to consider this issue. (Our schedule still carries an April 1 date as tentative.)
2.
That you strongly support the USC draft’s support of the overall Peterson approach, mentioning if appropriate that the President greatly appreciates the cooperative vein in which the agencies have been carrying forward his wishes.
3.
That you help blunt any effort to slow down the momentum of staffing these issues, in view of the President’s commitment to announce his new assistance program comprehensively in his response to the Javits Amendment. (The Javits Amendment sets a March 31 deadline, and at best we will slip that by a couple of weeks. The Congressional people feel strongly that we should not slip more than that.)
4.
Blunt any efforts to keep the detailed issues of the longer paper from being submitted at this time, because many of them are needed to round out the President’s initial statement and many more are needed to provide backup for questions that will immediately be raised on issues which he treats generally in his statement.
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 193, AID Task Forces on AID. Confidential. Attached to a March 20 memorandum from Bergsten to Kissinger with Bergsten’s additional recommendations for the Under Secretaries Committee meeting that day.
  2. See Document 131.
  3. Document 128.
  4. No NSC meeting on the foreign assistance program was held.
  5. The Javits Amendment to Section 501 of the Foreign Assistance Act of 1968 required a comprehensive review of U.S. foreign assistance programs and a report to Congress by March 31, 1970.
  6. Not printed; entitled “Minimum Components of Presidential Proposals in Response to Javits Amendment.”
  7. See Document 125.