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

322. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, November 30, 1978

SUBJECT

• Your Aid Query

At last week’s budget meeting,² you asked what the increases in US concessional economic assistance had been from FY 1977 to FY 1978, and from FY 1978 to FY 1979—and how this related to our published outyear aid goals.

1. Increases. In FY 1977 the Congress provided concessional economic assistance programs totalling $5,718 million and in FY 1978 $6,524 million—an increase of about 14% in nominal terms, or about 7% in real terms. In FY 1979 the Congress provided $6,945 million in concessional economic assistance, or an increase of 7% in nominal terms, which means no increase in real terms.

2. Goals. In November 1977, you decided that total concessional aid should rise by one-third in real terms between FY 1978 and FY 1982.³ As you can see, we achieved none of this rise from FY 1978 to FY 1979.

3. Policy. I do not argue that FY 1980 should see a large aid increase. Having been one of the first to press for deep budget cuts in the EPG, I would be embarrassed to do so. But I do want us to be able to explain our position effectively at the Tokyo Summit. Simply saying that we had to cut aid to fight inflation will not meet this need. The three other main Summit aid donors achieved substantial aid increases when they were following restrictive fiscal policies (See Tab A).⁴ To sell your position at Tokyo, I believe we will need to do three things, in descending order of importance:

—Go forward to the Congress with an aid reorganization, so that FY 1980 can be portrayed as a year of qualitative improvement rather than quantitative expansion.

—Keep the outyear aid goals at present levels, but let them slip one year.

—Avoid identical FY 1979 and FY 1980 AID figures, by having a modest increase in bilateral development aid.

I checked the US aid figures in this memo with OMB.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 93, Foreign Assistance: 7–12/78. Confidential. Sent for information. Both Carter and Brzezinski initialed at the top of the page.
2. Carter held a meeting on the 1980 budget on November 21. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation was found.
3. See Document 282.
4. Tab A, attached but not printed, is an undated paper that notes that over the period 1973 to 1975, France increased its aid by 34 percent; from 1973 to 1976, West Germany had a 36 percent increase in aid; and from 1975 to 1976, Japan increased its aid by 23 percent. (All figures are nominal.) The paper also indicates that “the UK and Canada said that they would exempt aid from the deep current cuts being made in their overall budgets.” The Tokyo G–7 Summit was scheduled for June 28–29, 1979.