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

142. Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)¹

Washington, July 19, 1971.

SUBJECT

• Aid Untying

On June 9 Secretary Connally sent the President a memorandum (Tab A)² stating that “the changed Congressional mood bears out the need to slow down” our aid untying initiative in the OECD. In response to this the President indicated (Tab B)³ that he agreed that we should “slow down this initiative” recognizing that the Latins “would not like such a move” but “are doing little for the Administration.” On that you asked Ernie Johnston whether such a move was possible. Both Ernie and I agree that it is possible, though it would be costly in foreign policy terms. The main point, however, is that it is not necessary at this time.⁴

Pete Peterson, who insisted that he have complete charge of this subject, has neither directed the bureaucracy to “slow down” nor sent a memorandum to the President urging against our doing so now. I have been promised by his staff that he would do the latter, but he has been sitting on a draft memorandum from his staff, in which I concurred, for over two weeks. Unless Peterson decides on one of the two above-mentioned courses in the next week, I shall propose that you suggest that he respond to the President’s note. Even should we wish to go slow, no U.S. reversal is called for now, since at present untying negotiations in the OECD are moving very slowly—with a number of nations, led by France, remaining quite negative. No one expects an untying scheme to be worked out within the next few months.⁵ We therefore have time to study the Congressional and legal implications raised by Secretary Connally before changing our negotiating strategy.

Moreover, a public “slowing down” gesture by us would mean our backing down from an important initiative which we have taken in conjunction with the Europeans and Japanese, and add further to the doubts of the lower income countries, especially in Latin America, that we are planning to do anything for them in the economic area. (Multilateral untying will increase the value of aid by twenty percent or more to many lower income countries as well as reduce political friction caused by tying. The Latins, Pakistanis, Indians, and Indonesians would particularly benefit from this.)

Thus, without questioning Connally’s assertion that there is strong feeling in certain quarters of the American business community and Congress against our untying aid, it is not now necessary to change our negotiating strategy. An examination of the legal and legislative questions arising from our entry into a multilateral aid untying agreement could be made within the next month, and a report sent to the President so that he may direct a change in our negotiating strategy at that time if he so desires.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID 1/1/71-12/31/71. Confidential; Sensitive.
2. Document 140.
3. See footnote 3, Document 140.
4. At the top of Hormats’ memorandum Kissinger wrote: “I agree that no move is necessary. It is our job to slow down Presidential hip shooting by emphasizing consequences of hasty notes.”
5. On July 22 the Department of State sent a message to the Mission to OECD regarding aid untying that referred to the negligible chances of agreement during the current negotiating session. The telegram informed the Mission that the U.S. position concerning multilateral agencies was under interagency review and requested that DAC Chairman Martin be informed privately that some revisions might be required when talks resumed in September. The telegram concluded that since negotiations were not completed and were at a delicate stage, discretion was especially called for. (Telegram 133107; National Archives, RG 59, Central Files 1970-73, AID 1)