143. Memorandum From Secretary of State Kissinger to President Ford 1

SUBJECT

  • Foreign Assistance Legislation

In response to your request,2 I have prepared a report on the Administration’s foreign assistance requirements and the adequacy of pending legislation for meeting these requirements.

As you know, Congressional support for foreign aid has eroded steadily over the past ten years. In the 93rd Congress, there has been a confluence of forces—competing demands for funds at home and continuing anti-Vietnam sentiment—that together have made the prospect for acceptable legislation very poor. The opposition is broadly based and includes both liberals and conservatives.

Military assistance for Vietnam is included in the DOD appropriations legislation (MASF). Authorization legislation is complete and the appropriations bill is now in conference.

The Foreign Assistance Authorization bill has been reported by the Senate Foreign Relations Committee. It will probably be taken up on the Floor during the week of September 23. When the House returns on Wednesday,3 mark-up will continue in the Foreign Affairs Committee. It is doubtful, however, that Chairman Morgan will take the bill to the floor until after the election.

The foreign aid bill poses serious problems in two areas: (1) insufficient funding levels, and (2) unprecedented restrictions on your flexibility for administering the overall program. Between the two areas, I consider the restrictive amendments to be the most damaging.

Indo-China Military Assistance

Vietnam

In FY 74, we provided approximately $1 billion of military aid to Vietnam. For FY 75, we requested $1.45 billion. This increase was primarily [Page 557]to offset inflation and to permit the necessary replacement of equipment on a one-for-one basis as provided in the Paris agreement. The Congress authorized $1 billion for FY 1975; however, the appropriation bill now in conference as passed by both Houses contains only $700 million.

A $700 million level of military assistance will drastically reduce the effectiveness of South Vietnam’s forces. It will result in an overall reduction of ARVN capabilities to 40% of the FY 74 level and Vietnamese air force capabilities to 50%. In addition, even assuming the most stringent rationing and no increase in the level of violence, the following will occur during FY 75:

  • —There will be an approximate 50% overall reduction in aircraft utilization. The Air Force has already grounded 11 squadrons of aircraft and reduced flying time by 36%.
  • —Operations by sea-going vessels will be reduced by 30% and by riverine vessels by 82%.
  • —Medical supplies will be completely expended by the end of May 1975.
  • —Fuel for ground forces will be exhausted by late April 1975.
  • —By the end of FY 75, the ARVN will have only one-quarter of the minimum ammunition reserve necessary to meet a major offensive.
  • —Unutilized aircraft and ground equipment will deteriorate rapidly.4

The Defense Department has already taken several steps to economize where possible. It has curtailed the purchase of F5–E aircraft and has reduced the cost of maintaining the ammunition pipeline. DOD will continue to explore other avenues for saving money; however, it is believed that technical and bookkeeping adjustments will not suffice to recoup the amount of funds necessary to maintain adequate security in Vietnam. Both Defense and Embassy Saigon insist that Vietnam must receive at least $1 billion in military assistance this fiscal year to defend itself adequately; therefore, it will probably be necessary to request a supplemental appropriation to bring the current appropriation level of $700 million up to the $1 billion level authorized by Congress. Defense also is exploring the alternative of reprogramming funds from other Defense accounts to provide the full $1 billion. We do not yet know whether this will prove to be a feasible course of action. Even should reprogramming be possible, however, it would necessarily have to come at the expense of other defense programs.

[Page 558]

Cambodia

Military aid to Cambodia is provided under the military assistance program funded by the foreign aid bill. In FY 74, Cambodia received $375 million. We requested $362.5 million for FY 75. The Senate Foreign Relations Committee has placed a ceiling of $347 million for all types of assistance to Cambodia, with a ceiling of $200 million on military aid. The Defense Department estimates that this would provide ammunition until about February 1975, the normal commencement of the dry season, which is the period of heaviest combat activity. In past years, we were able to supplement the appropriated amount by exercising your authority to draw down on stocks of U.S. ammunition, for transfer to Cambodia with later repayment from subsequent year appropriations. Both Committee bills have eliminated this authority for FY 75, however. In addition, they have eliminated your authority to transfer funds from one Cambodian account to another.5

Laos

The $55 million in military authorization for Laos is adequate under present circumstances.

Indo-China Economic Assistance

Vietnam

Economic assistance is provided to Vietnam for the purpose of rebuilding the economic infrastructure and restoring the agricultural base to a self-sustaining level. Without it, shortages and inflation create destabilizing pressures on the internal political stability of the country. The level of economic support for Vietnam provided in both the House and Senate bills ($420–450 million) will not be sufficient to halt the current serious downward trend of the economy. Ambassador Martin believes, and I concur, that the minimum level of economic aid required to maintain stability in South Vietnam is about $600 million.6

A $600 million level of aid is required to produce the necessary economic expansion and development. It will provide:

  • —funds to purchase sufficient amounts of POL and fertilizer, without which agricultural production would decrease;
  • —the commodities necessary to increase industrial production from its present level of 55% of capacity;
  • —money necessary to expand industrial and rural credit;
  • —the financing of an export zone and an industrial zone in Central Vietnam; and
  • —funds to begin the “city to farm” resettlement program in which unemployed urban workers (many of whom were idled by the U.S. withdrawal) will be staked to land in rural areas.

At an aid level of $420 million, none of the above can take place, and the economy will continue to contract: there will be a continued reduction of real imports; industrial and agricultural production will decline; exports will decrease; and unemployment will continue unrelieved in the cities. Even though this level is greater than that of FY 74 it will not buy as much, due to inflation which has doubled the price of some critical commodities—POL, fertilizer—and increased almost all others.

Cambodia

For FY 75, we requested $135 million in economic assistance to Cambodia. This was considered a survival level, and included no funds for new investment. The Senate bill contains $70 million for Cambodia. This amount would be barely sufficient to pay the freight on rice shipped under the PL–480 program. There would be no money for refugee relief, POL, and other basic commodities.

Laos

The $45 million authorized for Laos is adequate under current circumstances.

[Omitted here is information unrelated to Indochina.]

Restrictive Amendments

Apart from the serious impact on our security assistance programs created by the reductions in funding levels discussed above, the Senate bill contains a number of restrictive amendments which seriously limit your flexibility for administering the overall foreign aid program. These are summarized in a series of tables at Tab B.7 They would, among other things, eliminate your authority to provide aid to countries to meet unforeseen contingencies when it serves US interests to do so; would restrict your authority to transfer funds between aid accounts; and would arbitrarily reduce the number of persons in the field administering the programs. In addition, the Senate bill establishes ceilings on the aggregate amount of all forms of aid that may be provided to Vietnam, Laos, Cambodia and Chile. It would also terminate the military assistance program in 1977, transfer military assistance to South Vietnam from the jurisdiction of the Armed Services Committees to the Foreign Relations/Affairs Committees, and prohibit military sales to developed countries of items available in commercial channels (except [Page 560]for Israel). I believe that each of these amendments represents a serious intrusion upon your prerogatives for conducting United States foreign policy and should be opposed.

When the mark-up continues in the House, we anticipate a number of restrictive amendments similar to those in the Senate bill that will seek to limit your authority (Tab C).8

Discussion

As outlined above, we are faced with legislation which, on the one hand, fails to fund necessary programs adequately and, on the other, seriously restricts your ability to administer the overall program.9 While we would, of course, prefer to eliminate the restrictive amendments and restore at least part of the losses in funding, an assessment of the strength of the opposition, particularly in the Senate, makes it clearly unrealistic to expect great likelihood of success. With regard to the funding levels, in the current pre-election climate, it is the unanimous position of the leadership that any effort to restore funds on the Senate floor would be unsuccessful; nevertheless, we should probably try in order to establish a case for a supplemental in the next Congress.

It will, as well, be difficult to gain the necessary support for overturning the many restrictive amendments. We should, however, make a strong effort in the Senate and in addition should urge Chairman Morgan to work for a clean House bill free of restrictions in order to improve the possibility of obtaining an acceptable bill in conference. It now appears that we will not have a House bill before the elections. In the event that the Congress returns for a lameduck session following the election, the bill would probably be passed by the House and be taken to Conference. At that point, should efforts by the House conferees fail to produce an acceptable bill, we should prevail upon Morgan to let the bill die and try for a better one in the next Congress.

At present, there appear to be two options:

(1)
Accept the authorization levels recommended by the Senate Foreign Relations Committee, thus avoiding a floor fight on funding levels. We would, however, seek to eliminate the restrictive amendments on your authority contained in the Senate bill. This option contemplates a request for a supplemental appropriation in January. Since our continuing resolution authority (CRA) for the first quarter of FY 75 will end on September 30, we will need another CRA. After the Senate has passed its bill, we would hope to incorporate those into the CRA.
(2)
Seek on the Senate floor to eliminate restrictive amendments (as in Option (1) above) and to restore Indochina economic assistance from $550 million to $750 million and the military assistance authorization from $550 million to $700 million.

Under either option, if the effort to remove the restrictive amendments fails, I believe we should seek to delay the bill through adjournment sine die.

To pursue any of the above options with reasonable hope of success it will be necessary for you to become personally involved with key Senators. The support of Senators Sparkman, Scott, Case and Humphrey will be key to any hope of success. Senators Humphrey and Allen at this time prefer Option (1).

  1. Source: Ford Library, National Security Adviser, Subject Files, Box 6, Foreign Assistance, Military Assistance Fund (1). Administratively Confidential. Sent for information. A stamped notation at the top of the page reads: “The President Has Seen.” According to the attached correspondence profile, Ford noted the memorandum on September 12.
  2. Not further identified.
  3. September 11.
  4. Ford highlighted all these points.
  5. Ford highlighted the last three sentences of this paragraph.
  6. Ford highlighted the last two sentences of this paragraph.
  7. “Restrictions on Presidential Authority,” undated, attached but not printed.
  8. “List of Amendments Not Yet Acted Upon by HFAC,” undated, attached but not printed.
  9. Ford highlighted this sentence.