45. Memorandum From Secretary of State Rogers to President Nixon 1

SUBJECT

  • Economic Assistance to Thailand—FY 1970

I. Recommendation:

That you approve the continuation in FY 1970 of the A.I.D. program in Thailand, consisting primarily of advisory and financial support of Thai police and developmental measures to prevent the growth of Communist insurgency in the North and Northeast, at a total obligational level of approximately $30 million of grant funds. No PL 480 assistance is proposed.2

II. Issue: Political Interpretation of Reduced FY 1970 Program Level

Discussion:

We are nearing the time in our discussion with the Royal Thai Government when we will be ready to make the major FY 1970 commitments in the A.I.D. program for Thailand. Prior to this agreement, we are submitting this Country Memorandum describing the program and the major policy issue for your consideration.

As shown in the table below, our obligations in the Thailand program rose to a peak of $53.3 million in FY 1967, fell slightly to $46.7 million in FY 1968, and last year were only $35.5 million.

FY 1964 FY 1965 FY 1966 FY 1967 FY 1968 FY 1969
Grant 12.7 19.0 43.3 49.8 46.7 35.5
Loan ___ ___3 ___ 3.53 ___ ___
Total 12.7 19.0 43.3 53.3 46.7 35.5

Our FY 1970 Congressional Request for the Thailand program was $45 million. Due to Congressional action on our request for funds, [Page 101]A.I.D. expects to reduce many of its country programs this year. Because Thailand competes with Vietnam for scarce supporting assistance funds, we will not be able to provide the full FY 1970 amount originally proposed. Taking into account funds still in the pipeline from prior year obligations, we believe our FY 1970 program requirements can be satisfied with up to $30.0 million: $22 million supporting assistance, and $8.0 million technical assistance, including family planning. Our assistance to Thailand plays a three-fold role by: (1) providing actual resources to help carry out Thailand’s counterinsurgency effort; (2) promoting greater Thai attention and resource allocation to counterinsurgency measures and providing us an opportunity to influence the direction of this Thai effort—the primary aim of our program; (3) demonstrating continuing high-level interest in Thailand.

With respect to the above, we believe a program level of about $30.0 million essentially is adequate for the first two considerations. However, a $30.0 million program will not completely satisfy the third.

The Thais have become increasingly concerned that a Vietnam settlement will affect adversely their own security. At the same time, they have a growing doubt about the nature and extent of U.S. interest in Southeast Asia in general and Thailand in particular. A.I.D. obligations for the Thailand program are considered by the Thais as one indication of this interest. Thus, anything less than last year’s obligation level of about $35.5 million will raise questions in their minds about our commitment. However, since a program of about $30.0 million is all our projects usefully can absorb, a consideration understood by the Thais, we believe adverse political reaction can be minimized and therefore are recommending this program level for Presidential approval.

III. U.S. A.I.D. Objectives and Strategy:

Thailand’s importance to the U.S. lies in its key position in Southeast Asia, its key role in the economic and political development of the region, and its close cooperation with the U.S., particularly in support of our Vietnam effort. The basic U.S. assistance objective is to improve the Thai capacity for dealing with a Communist-supported insurgency threat.

The primary purpose of our program is to try to get the Thais to devote greater attention and allocate more resources to the security problem than they would in the absence of our program. Since the Thais contribute about $2 from their own budget for every U.S. dollar of support to our joint projects, we exert influence not only through our advisory assistance, but also directly upon their budget allocation itself.

Both U.S. and Thai governments recognize that the fundamental responsibility for countering this insurgency belongs to the Thais. We [Page 102]have concentrated our assistance in the North and Northeast of Thailand where incident rates have been highest and conditions conducive to insurgency are most acute. In combating the insurgency in other areas, the Royal Thai Government is using the strategy developed in our joint programs in the North and Northeast.

In dealing with the pressures of insurgency, Thailand has a number of strengths—its history of national independence, a widely-respected Royal Family, its well-established structure of government, and its strong economy. However, its highly-centralized government does not yet provide adequate channels for responding to local needs. Awareness and understanding on the part of Thai Government officials of the needs and aspirations of rural people and the increased commitment of resources are essential to the solution of Thailand’s security problem. This weakness, even more than limitations of Thai manpower and fiscal resources, has been the greatest restraint on Thai Government efforts. It is this problem which is the principal focus of the A.I.D. program.

IV. Nature of Program:

Within the FY 1970 program, supporting assistance funds will be used primarily to facilitate Thai efforts to improve security in rural areas and to support Thai rural development programs. Technical assistance will be used to assist in more broadly developmental programs such as agriculture research and training, a river basin survey, private sector development, and improvements in Thai administration in civil service.

A. Rural Security

Against a $30.0 million program level, about $7.0 million of supporting assistance is proposed in FY 1970 for rural public safety programs. Our primary objective will be to help develop a rural security capacity of sufficient strength and efficiency to counter anticipated threats of communist terror and subversion to the rural populace. A.I.D. will continue to equip the new township police stations and vehicles and ammunition will be provided to the expanding police forces in the villages and to the mobile backup units now being manned.

B. Rural Development

The FY 1970 A.I.D. program includes about $9.0 million for a number of rural development projects aimed primarily at increasing the government’s responsiveness to village needs. This is a major part of our counterinsurgency strategy and is accomplished by providing advisory services and construction equipment to provincial authorities for impact programs such as feeder roads and small ponds.

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C. Education and Health

A.I.D. also will help the Thais expand and improve their education and health services in the North and Northeast as an important part of our security-related program, and we are planning to provide about $9.0 million for these purposes. We will continue to support mobile training units which provide vocational training to villagers as well as provide advisory services to a major Thai and International Bank for Reconstruction and Development (IBRD) financed vocational education project. Similarly, A.I.D. will provide commodities, advisory services, and participant training support to Thailand’s rural health centers as well as its family planning program.

D. Government Administration

Consistent with our aim of narrowing the gap between the villager and government officials, A.I.D. support to in-service training will devote particular attention to provincial and local officials, as well as involve villagers in local self-government and project planning techniques. Our program includes about $1.0 million for this purpose.

E. Longer-Range Regional Development

To establish a more rational framework for allocating Thai and U.S. resources to the development of the security-sensitive Northeast, we are providing advisory assistance to the Thai Economic Planning Agency and operating ministries in developing a plan for that area, and among other activities also are helping finance a study of a river basin in Northeast Thailand. We are planning to obligate about $4.0 million for these activities, as well as for a few other projects such as private sector development.

V. Planning for the Future:

While our program rationale has been under continual review, this year the Agency will need to examine our program objectives and strategy for Thailand even more closely to determine if they will be valid in the near future. Our recent experience indicates the internal security problem in Thailand, while real, is a longer-range problem than was believed a few years ago. It does not pose an immediate threat to Thailand’s political stability. This suggests that we should devote increased attention to identifying and bringing about fundamental changes in the political, social and economic conditions that foster insurgency, while stressing less short-run impact activities. Our strategy of concentrating our assistance in the North and Northeast of Thailand also must be reconsidered in this context.

Further, the situation in Thailand is being examined to determine the program implications of your statements at Guam and in the capitals of Southeast Asia, as well as the Administration’s new Vietnam [Page 104]policy. We will need to consider the program consequences of a postwar Vietnam settlement, with emphasis on the proper balance between the Agency’s bilateral and regional assistance programs.

The National Security Council study on Thailand, now in the final stage of preparation, will address the major options open to the U.S. in our relations to Thailand, as well as the program implications of these options. This study will prove particularly useful to A.I.D. in conducting our review of the Thailand program.

Our current year program will not be affected by these examinations. Some program adjustments will be possible in FY 1971 and the FY 1972 presentation will take into full account the results of the current examination.

WPR
  1. Source: National Archives, RG 59, Central Files 1970–73, AID (US) THAI. Confidential. A covering January 13 memorandum from Hannah to Rogers, attached but not printed, indicates that both memoranda were drafted by George K. Pierson, Office Director for Southeast Asia, Bureau of East Asia, Agency for International Development, and were cleared by Green and Dexter, among others.
  2. The approve option was checked and a typewritten notation at the top of the first page reads: “The President approved (Jack Murphy to jmj, 3/10/70).”
  3. A $20.3 million loan was authorized in 1965 and then deobligated in 1967 and therefore is not shown in these figures. [Footnote in the source text.]
  4. A $20.3 million loan was authorized in 1965 and then deobligated in 1967 and therefore is not shown in these figures. [Footnote in the source text.]