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355. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1

SUBJECT

  • Your Last Aid Budget (U)

The FY 1982 AID budget will be your legacy in a field in which you have demonstrated effective leadership. This memo deals with the few areas in which I believe that a change in the OMB mark is needed to strengthen this legacy. (U)

1. Agriculture and Energy. One of your main accomplishments has been to focus bilateral development aid on helping LDCs produce more food and energy. Increases in our aid for these purposes should be a main feature of your FY 1982 aid budget. These increases are needed to meet urgent problems; they will leave a clear signal to the Congress, the public, and our successors that this is the right direction for the future. There is also a good chance they would be approved by the Congress: Support in America for aid for food production is widespread, spearheaded by your Hunger Commission and explicitly reaffirmed by spokesmen of the new Administration. The benefits of helping LDCs increase energy production are coming increasingly to be recognized on the Hill, as a means of reducing pressure on global prices. (C)

a. Agriculture. The AID program for assisting food production within the OMB mark involves an increase of $74 million over our FY 1981 aid request to the Congress. IDCA’s “leadership proposal”, supported by State, recommends an additional increase of $380 million.2 This commitment would, if continued, significantly reduce the number of malnourished people in the world. It would enable AID to give enough aid to certain key countries, e.g., Bangladesh, to enable them soon to attain food self-sufficiency. I support this proposal. If it is not fiscally feasible to provide the full $380 million, I propose a more [Page 1114]modest add-on, either of $140 million for the African part of the program (since Africa is where the food problem is worst) or of the $80 million that IDCA proposes for increased support of agricultural research in LDCs. Our most important contribution to LDCs since World War II has been the research aid which has enabled these countries to develop new rice and wheat strains; we might achieve equally important breakthroughs for hundreds of millions of poor people by a modest additional effort. (See Frank Press’ attached memo.)3 (C)

b. Energy. Within the OMB mark the FY 1982 aid program for helping LDCs produce energy is an increase of $30 million over FY 1981. IDCA and State propose an additional $100 million, to carry out the recommendations of an interagency task force chaired by Ed Fried, whom you may remember from Brookings. Ed’s report calls for increased bilateral aid in a vital area that will not be adequately addressed by the proposed World Bank energy affiliate: increased production of fuelwood, which is the main energy source for many LDCs. If continued for four years, the $100 million fuelwood aid program that Fried’s task force proposes, coupled with action by other donors, should produce a big increase in LDC energy production, which involves a much more favorable rate of return than projected for most intended energy investments, at home and abroad. Through exten-sive reforestation, this program will also yield large environmental benefits. (C)

2. Science and Technology; Population. In addition to the food and energy, I recommend:

a. $6 million for the central AID program of scientific and technological cooperation with LDCs. The Congress appropriated $12 million for this program in FY 1981. A 50% increase for FY 1982 seems modest by comparison with the $35 million we had proposed for the ISTC, whose purposes the Congress instructed us to achieve within AID. (C)

b. Additional funds for family planning. IDCA and State propose an increase of $133 million for family planning over the OMB mark. They point out that FY 1981 is the first year in which demand for US family planning services in LDCs has exceeded supply. They estimate that the proposed extra aid will elicit a comparable increased effort from other donors and LDCs that could mean a billion less people forty years from now. If fiscal considerations preclude such a large add-on, we could fall back to the additional $55 million OMB wants to add by means of reducing other development programs now proposed by IDCA and State [Page 1115]within the OMB mark. Nothing that has happened in the Third World in the last twelve months justifies such a reduction in these country programs; any increase in aid for family planning should be an add-on to the OMB mark. (C)

Summary. The IDCA-State proposals for increased aid (over the OMB mark) for agriculture, energy, and population add up to $613 million. A more modest package that included $140 million (Africa) for agriculture, $100 million for energy, $55 million for family planning, and $6 million for science and technology would total $301 million. This could be reduced to $241 million by including only research ($80 million) in the agriculture portion. A cut in the energy program to the amount ($50 million) needed for Africa would bring the total down further to $191 million. At this point, however, the add-on would probably be too small to generate increased effort by others. I would argue for at least $241 million. (C)

3. PL–480. OMB is proposing $1.680 billion for PL–480. This is the mark that you approved this spring, with the understanding that it would be reviewed, as necessary, in light of price increases. It turns out that we would now need $1.850 billion to secure the 6 million tons that you envisaged in approving the $1.68 billion figure. State is seeking $1.8 billion, which would bring us close to the 6 billion ton figure (5.8 MT). To go below this figure would be irresponsible, in light of the very bad world food situation that crop estimates suggest will confront us next year. IDCA wants $1.875 billion. (C)

4. Conclusion. Jim McIntyre said at one of your past aid budget meetings that the hard-core constituency for foreign aid was one person: you. While there is more support for foreign aid than Jim’s remark suggests, in a sense he is right: Foreign aid serves the general national interest, rather than specific interests of the local and occupational groups that support domestic programs. McGeorge Bundy4 voiced the same thought when he said that one can judge how presidential a White House occupant is by how he acts about foreign aid. By this criteria, you have a good record. (C)

This budget will cap and symbolize that record. US interests in the Third World, and in overcoming the global food and energy problems, will be well served if the budget includes an adequate attack on these problems. Whether the budget is cut or accepted by the next Administration, you will be leaving a legacy of which you can be proud. (C)

  1. Source: Carter Library, National Security Affairs, Staff Material, Special Proj-ects, Henry Owen, Box 1, Budget Appeals Session 1982: 12/80. Confidential. Sent for information.
  2. On December 4, Muskie sent McIntyre a proposal for “a significant increase in our development assistance programs.” In his cover letter, Muskie argued for the proposal, which expanded on a “leadership proposal” advanced by the IDCA, on the basis that it was “essential to protect increasing American interests in the Third World, to capture the initiative for our policies there, and to gain additional efforts by other industrial nations.” (National Archives, RG 59, Office of the Secretariat Staff, Official Working Papers of S/P Director Anthony Lake, 1977–January 1981, Lot 82D298, Box 7, S/P-Lake Papers—12/1–15/80)
  3. Not attached; however, a December 5 memorandum from Press to Carter entitled “Foreign AID Budget: Science and Technology” is in the Carter Library, National Security Affairs, Staff Material, Special Projects, Henry Owen, Box 1, Budget Appeals Session 1982: 12/80.
  4. McGeorge Bundy, the President’s Assistant for National Security Affairs from 1961 until 1966, was the President of the Ford Foundation until 1979.