Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

277. Paper Prepared by the National Security Council Staff¹

Washington, undated

ISSUES PAPER

PRC MEETING

October 11, 1977, 3:30 p.m.

Situation Room

Introduction

On October 11, the PRC will review two studies on US foreign assistance policies: the DCC report on foreign assistance (summarized at Tab A) and an interim report by the Brookings Institution which assesses development assistance strategies (summarized at Tab B).² In addition, the PRC has before it a section of PRM 8-Track III (pp. 14–23) which presents options for basic human needs policies.³

The purpose of this issues paper is to set out for PRC review the principal options for the orientation of US foreign assistance which emerge from the studies. The need for the presentation of sharply defined policy options to the President and for a Presidential Directive on the purpose and size of US foreign assistance underlie the concentration of this paper on the main foreign assistance policy options.

It is suggested that, after its review of the various development assistance strategies, the PRC establish a high-level interagency working group to prepare a final options paper for Presidential review. If established, the PRC working group should examine the relationships of the different strategies to alternative funding levels, as well as the implications of each strategy for the organization of US assistance programs, achievement of US foreign policy objectives, Congressional attitudes and possible changes in legislation, the relative emphasis given to bilateral and multilateral assistance, and ways of evaluating the effectiveness of US development assistance. The working group should complete the options paper and circulate it for PRC comment in time for its transmittal to the President by October 31. Submission of the paper by that date would enable the President to take decisions which could then be fully reflected in the budget review process.

The Effectiveness of Development Assistance

There is growing concern over whether bilateral and multilateral assistance programs effectively meet the needs of poor individuals. The basic human needs strategy—which by general consensus will be a major part of any strategy for US foreign assistance—is in essence a response to the judgment that development assistance can reach poor people more effectively. PRM 8-Track III (pp. 14–23), the DCC study (Part III, pp. 12–19), and the Brookings report (pp. 1–16) review BHN issues and policy choices which are relevant to the PRC’s consideration of the alternative strategies for US assistance.

The problems affecting the administration of US aid programs cited by the DCC and the critique found in the Brookings Institution report amount to a judgment that the current US bilateral program and its legislative framework as well as multilateral programs need improvement. For example, the DCC’s study suggests that administrative changes within AID and improvements in the Foreign Assistance Act would make the US bilateral program more effective. The Brookings report argues for a major reorganization and restructuring of the US development assistance effort.

Concessional Development Assistance Strategies

Given the general support for an intermediate BHN approach, and setting aside for the moment SSA and hard loans by international development lending institutions (IDLI), various strategies for concessional development assistance—by IDLI soft windows, UN programs, bilateral development assistance, and PL 480—can promote US interests. It should be noted that the ability of the US to influence multilateral programs is relatively limited, compared to bilateral programs.

Options

(1) Concentrate on key developing countries, regions, or problems of importance to the US, regardless of the level of development of recipient countries.

Under this option, the programs would emphasize, but not be limited to, a relatively small number of key countries. These countries would range from the poor (India, Philippines) through middle and higher income (Caribbean nations, Brazil, Mexico). Criteria would not be limited to a country’s income levels or its commitment to growth with equity programs, but rather would emphasize its economic or political significance to the US (e.g., raw materials, non-proliferation, regional stability, human rights, illegal migration).

(2) Concentrate on global problems.

Under this approach, the US would focus its development assistance programs on two or three critical global economic or social problems. World hunger, health, and family planning are possible target areas. Activities in other fields would be sharply cut back. These global efforts would be undertaken in areas, in low or middle-income countries, and institutions whose policies would contribute most to the solution of these problems.

(3) Concentrate on poor countries in support of growth with equity/BHN.

Under this option, priority would be placed on the poor countries. The objective would be to improve production and employment as well as the basic services for the poor majorities in these countries. Funding would be concentrated on countries with domestic policies favorable to equitable growth. The sectors of concentration could be more numerous than the possibilities under Option (2) and more directed toward poor countries. Under this option traditional concessional assistance would be limited to the poorest countries, complemented perhaps by reimbursable technical assistance to middle-income countries.

(4) Concentrate on poor people.

Under this option, basic human needs objectives are stated in terms of poor people rather than poor countries. This means attempting to meet basic needs in middle-income as well as low-income countries, giving less attention to political considerations, and less emphasis to macroeconomic performance criteria relative to Option (2).

(5) Multiple objectives.

Under this option the main emphasis would be on assisting the development of poor countries, with allowance for programs based on economic, political or security objectives where development assistance was judged to be an appropriate tool.⁴

Country allocations would be based on multiple criteria (e.g., human rights performance, economic importance) rather than on development policies and performance alone. It would be possible under this option to launch global campaigns against particular development problems.

1. Source: Carter Library, National Security Council, Institutional Files, Box 65, PRC–039 Foreign Aid 10/11/77. Confidential. Sent to Brzezinski under cover of an October 7 memorandum from Owen and Erb. (Ibid.)
2. Tabs A and B are not attached; they are attached to another copy of this paper ibid. See also Tabs A and B to the Attachment to Document 282. For Carter’s June 27 request for the DCC study, see Document 268. Gilligan circulated it, along with a summary of its findings, to PRC members under cover of an October 6 memorandum. (Carter Library, National Security Council, Institutional Files, Box 26, PRM–08 3 of 3 [1]) For the request that Brookings undertake a study of U.S. development assistance, see Document 264.
3. See Document 274. Dodson sent a copy of the September 13 paper, “PRM 8-Track III, US Relations with the Developing Countries, The Next Twelve Months,” as well as an undated summary, to the Secretary of Defense, the AID Administrator, the JCS Chairman, the DCI, the President’s Assistant for Domestic Affairs and Policy, and the President’s Special Assistant for Health Issues under cover of an October 7 memorandum, in which she noted that the paper would be discussed at an October 11 PRC meeting. (Carter Library, National Security Council, Institutional Files, Box 26, PRM–08 3 of 3 [1])
4. Brzezinski wrote several comments at the bottom of this page (page 3) of the memorandum: “US [illegible]: growth, development; US Bilateral Policy: [illegible]; and BHN: 1) poor (people + countries), 2) selective global problems, 3) key countries (if not covered by above).”