83. Memorandum From the Office of Management and Budget to President Nixon 1

SUBJECT

  • Enrolled Bill S. 2819—Foreign Assistance Act of 1971
  • Sponsor—Sen. Fulbright (D) Arkansas

Last Day for Action

February 7, 1972—Monday (recommend action on the last day)

Purpose

(a) Authorizes appropriations for foreign assistance for fiscal year 1972 of $2,752 million, of which $1,204 million is for Development Assistance, $1,518 million is for Security Assistance, and $30 million is for the President’s Foreign Assistance Contingency Fund; (b) authorizes appropriations for 1973 of $984 million, of which $954 million is for Development Assistance and $30 million is for the Contingency Fund; (c) adds restrictions and limitations to the foreign assistance programs; (d) requires release of certain impounded domestic funds before foreign aid funds can be used; (e) requires periodic appropriation authorizations for the Department of State and the United States Information Agency; and (f) requires State to keep the Foreign Relations and Foreign Affairs Committees “fully and currently informed” on matters within their jurisdiction.

Agency Recommendations

Office of Management and Budget: Approval (Signing statement attached)2

Department of State: Approval

Agency for International Development: Approval

Overseas Private Investment Corporation: Approval

National Security Council: Approval (informally)

United States Information Agency: Does not recommend disapproval

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Department of Defense: Let bill become law without signature

Department of Agriculture: No recommendation

Department of the Treasury: No objection

Department of Justice: Defers to other agencies

Inter-American Social Development Institute: No comment

Council on International Economic Policy: No comment (informally)

Discussion

The total authorization provided in S. 2819 for 1972 is $802 million less than that requested by the Administration and $484 million below the authorization provided in 1971. The major reductions in the request are:

  • —$178 million in development lending from the $635 million requested;
  • —$99 million in technical assistance from the $363 million requested;
  • —$147 million in economic supporting assistance from the $765 million requested;
  • —$205 million in military assistance grants from the $705 million requested;
  • —$110 million in foreign military sales from the $510 million requested; and
  • —$70 million in the President’s Foreign Assistance Contingency Fund from the $100 million requested.

Details of the reductions are contained in the attached table.

In addition to the substantially reduced authorization levels, the 1972 appropriations will be even lower. The House-passed appropriation bill is $115 million below the authorization levels contained in the enrolled bill, while the unenacted Senate committee bill is $604 million below the authorization levels. The bulk of these additional reductions is in supporting assistance and military assistance.

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The Administration had proposed a major organizational restructuring of the foreign assistance programs and separate authorizing bills for security assistance and development assistance.3 In addition, the Administration proposed deletion of a number of restrictive amendments. With some exceptions (e.g., provision of an Executive Level III in the State Department for a Security Assistance Coordinator), the bill passed by the Congress does not respond to these recommendations, continues the basic authorities contained in the Foreign Assistance Act of 1961, and adds a long list of new restrictive amendments, discussed below.

The Administration also proposed new provisions dealing with international narcotics control; the enrolled provisions differ somewhat from those proposed but in intent and effect are basically the same. The new provisions (section 109, page 4):

(1)
Authorize the President (a) to enter into agreements with other countries for the control of illicit trafficking in narcotics, and (b) to furnish assistance for this purpose to countries and international organizations, using any foreign assistance funds available.
(2)
Require suspension of foreign aid to a country which the President determines has not taken adequate steps to prevent narcotics from illegally entering the United States, and permit lifting the suspension when the President determines that such steps have been taken.

The only significant substantive changes from or additions to the Administration proposal pertaining only to development assistance are (a) denial of requested authority to use approximately $60 million in dollar receipts from loans made by AID’s predecessor agencies for relending to less developed countries, and (b) a statement that the President should reduce the amount of development loans to a level of $100 million by 1975. (Section 101 (c) (2), page 1)

Significant substantive changes from or additions to the Administration proposal pertaining to security assistance are:

(1)
A requirement that by September 30, 1972, the numbers of U.S. military personnel assigned to military assistance advisory groups or military missions abroad (excluding South Vietnam) be reduced at least 15% from the levels of September 30, 1971. This requirement is coupled with an expression of congressional intent that every effort should be made to effect a 25% reduction. (Section 201(f), page 5)
(2)
A requirement that military grants to Thailand be financed under the Foreign Assistance Act rather than in the Defense budget under the Defense Procurement Act as has been the case since 1968. The 1973 Budget provides for this shift in funding. (Section 201(f), page 5)
(3)
A requirement that any government receiving grant military assistance and excess defense articles deposit local currency equal to 10% of such assistance, such deposit to be used by the United States to pay its official costs payable in the local currency. Certain exceptions are provided: South Vietnam, Cambodia, Laos, countries where the United States holds local currencies in excess of its needs, and countries to which military assistance is explicitly given in return for base rights (Spain). This requirement, where applicable, will have the effect of converting a portion (10%) of grant military aid into a local currency sales program. It will also result in some budgetary and balance-of-payments savings to the United States. (Section 201(f), page 6)
(4)

A prohibition on military and economic assistance to Greece, subject to a Presidential waiver (and report to the Congress) on grounds [Page 200]of overriding requirements of national security, and an annual ceiling on assistance equal to that provided in 1971 (about $73 million).

The ceiling will permit adequate levels of military grants and sales, should the prohibition be waived. Greece does not receive economic assistance. (Section 301, page 7)

(5)
An increase from $75 million to $100 million in the ceiling on military assistance to Latin America, including sales but excluding training, with a Presidential waiver up to $150 million on grounds of overriding requirements of national security. The Administration requested an increase in the ceiling to $150 million, with a waiver unlimited in amount. The $150 million maximum should be sufficient to meet all sales requests unless the Latin Americans wish to buy substantial numbers of high cost items such as aircraft. (Section 401(c) and (d), page 12)

In addition to the preceding, the bill contains a number of general provisions pertaining both to development and security assistance:

(1)
A suspension of all assistance, except humanitarian, to Pakistan until the President reports to the Congress that Pakistan is “cooperating fully in allowing the situation in East Pakistan to return to stability and that refugees from East Pakistan in India have been allowed” to return to their homes. Because Pakistan is no longer in a position to facilitate or impede stability in East Pakistan and the return of refugees, the practical effect of this provision is unclear. (Section 301, pages 7-8)
(2)
A requirement that the President notify the Congress prior to the use of certain authorities to transfer funds or waive statutory restrictions. Current law permits notification of the Congress after such transfers or waivers. (Section 304(a), page 8)
(3)
A requirement that the President furnish Congress a list of recipients to which the United States intends to furnish assistance, and the amounts of such assistance, 30 days after the effective date of any foreign assistance appropriation. In the case of countries receiving military or support assistance, the amendment prohibits an increase in the level of assistance in excess of 10% of the levels reported. Waiver authorities contained elsewhere in the Act may not be used to exceed the 10% limitation; however, it may be waived pursuant to (a) Presidential determination that the increase is in the “security interests of the United States,” and (b) a report to the Congress on each such determination and the justification for it at least 10 days prior to the effective date of the increase. (Section 304(b), page 8)
(4)
A requirement that in any case in which the President is required to make a report to Congress concerning a finding or determination under this Act, the Foreign Assistance Appropriations Act or the Foreign Military Sales Act, the finding or determination must be (a) [Page 201]reduced to writing and signed by the President, (b) acted upon only after it has been reduced to writing and signed, and (c) published in the Federal Register in full, unless the President concludes that such publication would be harmful to national security, in which case only a statement that a determination has been made and the Act under which it was made need be published. Additionally, this provision states that no committee or officer of Congress shall be denied requested information relating to any such Presidential finding or determination even though the request is made prior to the time the President is legally required to make the appropriate report to the Congress. (The President, of course, retains his right to claim executive privilege.) (Section 304(b), page 9)
(5)
A ceiling of $341 million on obligations for all U.S. assistance to Cambodia (except for U.S. Air Force and South Vietnamese operations) and ceilings on U S.-paid U.S. citizens of 200 and U.S.-paid third-country nationals of 85 inside Cambodia. These limitations do not now constitute a practical constraint. (Section 304(b), page 9)

Finally, the bill contains provisions not directly related to foreign assistance:

(1)
A prohibition on the use of any funds appropriated under the Foreign Assistance Act or the Foreign Military Sales Act until the Comptroller General certifies that all funds appropriated but impounded during fiscal year 1971 for programs of the Departments of Agriculture, Housing and Urban Development, and Health, Education, and Welfare have been released. The deadline for release of these funds is April 30, 1972. Because of the inappropriateness of this rider, we have included a critical comment on it in our signing statement.
(2)
A requirement for periodic authorizations of appropriations for the State Department and the United States Information Agency. With minor exceptions, the appropriations for these agencies have been provided under permanent authorization since their inception. The process of annual authorization review is time-consuming and burdensome both to Congress and the executive agencies and tends to delay timely appropriation of funds. The amendment gives Congress discretion in determining whether to require annual or multiyear authorizations. Because annual authorizations should be discouraged, we have incorporated explicit mention of this amendment in our draft signing statement, urging cautious application of this requirement. (Section 407(a), (c), and (d), page 15)
(3)
A requirement that the State Department keep the Foreign Affairs and Foreign Relations Committees “fully and currently informed with respect to all activities and responsibilities within the jurisdiction of these committees.” This amendment raises a fundamental issue regarding separation of powers and the prerogative of the [Page 202]President to conduct foreign affairs without premature disclosure of privileged information to Congress. Because of the ambiguity of the language of the amendment, we have included in our draft signing statement a clarification which reiterates the basic policy of keeping Congress informed but which reserves the right to withhold information which would impair the effective functioning of the executive branch. (Section 407(b), page 15)
(4)
A statement urging the President to undertake negotiations to implement the Lodge Commission recommendation that the U.S. share of assessed costs of the United Nations be reduced to 25%. (Section 410, page 16)

Although the bill severely cuts the appropriation authorizations requested and adds a large number of objectionable amendments, we recommend approval of the bill as necessary to permit completion of appropriation action by the Congress, thus insuring continuation of the foreign assistance programs through the remainder of this fiscal year. The alternatives—disapproval of the bill and a request for reconsideration or disapproval coupled with a request for extension of the continuing resolution through the reminder of this fiscal year—are not, in our opinion, viable and could, in addition, compromise your budget request for 1973.

The Departments of State and Defense recommend that the bill become law at the latest possible time (i.e., Monday, February 7) in order to delay as long as possible the effective dates of several restrictive provisions, in particular the requirement that countries receiving military assistance grants agree to deposit to the credit of the United States local currency equal in value to 10 percent of the assistance.

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Attachment

FOREIGN ASSISTANCE ACT OF 1971

Analysis of Congressional Changes
(dollars in millions)

Authorization Request 1 Enrolled Bill Difference
Development Assistance
Development Loans 635.01 456.5 -178.5
Technical Cooperation 362.6 263.5 -99.1
International Organizations and Programs 156.02 154.0 -2.0
American Schools and Hospitals 10.2 30.0 -19.8
Administrative Expenses 60.23 50.0 -10.2
Refugee Relief Assistance 250.0 250.0
Total Development Assis.4 1,474.0 1,204.0 -270.0
Security Assistance
Economic Supporting Assistance 764.6 618.0 -146.6
of which Israel (—) (50.0) (150.0)
Military Assistance 705.0 500.0 -205.0
Foreign Military Sales 510.0 400.0 -110.0
Total Security Assistance 1,979.6 1,518.0 -461.6
President’s Foreign Assistance Contingency Fund 100.0 30.0 -70.0
Total 1972 Authorization 3,553.6 2,752.0 -801.6
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, AID, Volume II 1972. No classification marking. Attached as Tab B to a February 7 memorandum from Kissinger to the President summarizing briefly the Foreign Aid Authorization bill, which the President had signed that morning, and recommending that he approve a signing statement that would set the stage for efforts to restore the program through a supplemental or a budget amendment later in the year. The President initialed his approval. The February 7 signing statement is printed in Public Papers of the Presidents of the United States: Richard Nixon, 1972, pp. 166-167.
  2. Not printed.
  3. Reference is to the President’s April 21, 1971, message to Congress.
  4. Excludes $1 billion borrowing authority over the period 1972, 1974.
  5. Excludes Indus loans authorized in the Foreign Assistance Act of 1967.
  6. Excludes Administrative expenses, State, which has permanent authorization of necessary amounts.
  7. In addition, the Act authorizes appropriation of amounts as may be necessary for reserves of the Overseas Private Investment Corporation.