352. Memorandum From the Under Secretary of State for Economic Affairs (Cooper) to Secretary of State Vance1
FY–79 Foreign Assistance for the Caribbean
I am uneasy about the attached proposal2 to increase FY–79 foreign assistance to the Caribbean to $153 million, up from about $65 million this year. The underlying assumption is that to assure political stability we should pump money into the Caribbean at an annual rate over [Page 873] twice what we are now doing, together with attempts to get the Caribbean nations (1) to work together regionally and (2) to adopt sensible economic programs. Both of these latter conditions are familiar from the 1960’s. They resulted then in a mixture of successes and failures, but also in an almost universal reaction against “outside interference” in the domestic policies of recipient countries. Furthermore, there is only an outside chance of ultimate reduction from aid levels on the new scale. A more likely prospect is that we will find political difficulties in the Caribbean in four years time similar to those that we find now, and with pleas for additional help from the U.S.
I also share Governor Gilligan’s concern about the violation which the proposed program would do to the coherence which he hopes to give the entire aid program, but I believe that we can legitimately make a special exception for the Caribbean because of its geographic proximity.
However, given the predominantly political (rather than economic development) motivation for this assistance, I wonder whether we should not start with a smaller increase in FY–79—$120 million, for instance, rather than the $153 million urged by ARA and EB. The lower amount would represent a large enough increase to demonstrate our bona fide interest in the area and to bring other countries to the “Consultative Group” conference table. But it would represent a lower use of scarce aid money and it would provide room, should that prove desirable in the light of our first year’s experience, for subsequent increases. The $120 million could be made up of $80 million in normal AID program money (reduced from AID’s proposed $93 million, in line with your decision on overall AID levels), plus $40 million for a start on the new programs—encouragement to investment and agricultural development—outlined in the attached memorandum (reduced from $60 million proposed by ARA and EB), to be used in conjunction with aid from other participants in the Consultative Group.