Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

140. Memorandum From Secretary of the Treasury Connally to President Nixon¹

Washington, June 9, 1971.

SUBJECT

• Aid Untying

A year ago you approved an initiative to negotiate a multilateral agreement on untying of bilateral and multilateral development assistance.² An effort is being made to push the negotiations to a point where an agreement can be reached shortly after the OECD Ministerial meeting in June.

I realize that we have gone quite a ways toward an agreement. However, my reading of the mood of Congress is that it would be most unwise to rush into final agreement on aid untying. To do so would mean taking serious political risks for our multilateral and bilateral aid legislation. We may also be entering into an agreement which Congress may force us to breach in the not too distant future.

Several events this month have led me to this conclusion:

• First, Treasury’s Congressional sounding on the multilateral institutions indicates that balance of payments safeguards on the IDA legislation (which I recently transmitted to Congress) will become a major issue.
• Second, for the first time ever Congress has failed to appropriate authorized contributions to the multilateral lending institutions—clearly a sign of Congressional malaise in this area.
• Third, the proposals for reorganization of the bilateral aid program have not been well received on the Hill.
• Fourth, the foregoing three problems have been intensified by the mounting Congressional concern about our international position, accelerated by the recent international monetary disturbances.

Furthermore, there are complex legal and legislative questions arising from entering into a multilateral untying agreement without Congressional approval. We were promised that deep Congressional soundings would take place before making international agreements in this area. I understand that little if anything has been done to take the Congressional pulse on the proposed agreement.³

The legal questions and their political implications should be clarified. Consideration might be given to a request for an Attorney General’s opinion.

In the meantime, our negotiators should receive very clear instructions that we are re-examining those aspects of the untying exercise that have to do with the authority and the timing for implementing an agreement.

John B. Connally

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID, 1/1/71-12/31/71. No classification marking. Another copy of this memorandum bears a handwritten note that reads: “Sent via Special Messenger 6/9/71–11:30 am.” (Washington National Records Center, Department of the Treasury, Secretary’s Memos: FRC 56 74 A 17, Memo to the President May-August 1971)
2. Not further identified.
3. The President marked this paragraph (the last one on the first page) and wrote below it: “Peterson & K—I believe the changed Congressional mood bears out the need to slow down this [illegible] Latins won’t like [illegible].” In a June 16 memorandum to Kissinger and Peterson, transmitting a copy of Connally’s June 9 memorandum, Jon M. Huntsman wrote: “With reference to the last paragraph on the first page, it was suggested that the changed Congressional mood bears out the need to slow down this initiative. It was recognized that the Latins would not like such a move, but it was pointed out that they are doing little for the Administration.” On Huntsman’s memorandum Kissinger wrote: “Ernie [Johnston]—is that feasible? HK.” (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID 1/1/71-12/31/71)