Part XII

THE FOREIGN ASSISTANCE AND RELATED AID PROGRAMS

A. The Foreign Assistance Program

Document XII-1

A.I.D. and the Universities: REPORT TO THE ADMINISTRATOR OF THE AGENCY FOR INTERNATIONAL DEVELOPMENT (BELL) FROM THE PRESIDENT OF THE CARNEGIE CORPORATION OF NEW YORK (GARDNER), MARCH 2, 19641

Document XII-2

Request for Appropriations for the Foreign Assistance Program for Fiscal Year 1965: MESSAGE FROM THE PRESIDENT (JOHNSON) TO THE CONGRESS, MARCH 19, 1964 2

The most important ingredient in the development of a nation is neither the amount nor the nature of foreign assistance. It is the will and commitment of the government and people directly involved.

To those nations which do commit themselves to progress under freedom, help from us and from others can provide the margin of difference between failure and success.

1A.I.D. and the Universities: Report to the Administrator of the Agency for International Development by John W. Gardner, President, Carnegie Corp. of New York (Washington: Agency for International Development, Apr. 1964). Mr. Gardner's recommendations included the following: (1) establishment of a semiautonomous government institute to be called the National Institute for Educational and Technical Cooperation; (2) formation of a new unit within A.I.D. devoted to educational and human resource development; (3) development of a career service "compatible' in all respects with the Foreign Service"; and (4) measures to improve university contract research and participant training. 'H. Doc. 250, 88th Cong., pp. 1-6; also, the Department of State Bulletin, Apr. 6, 1964, pp. 518–522.

This is the heart of the matter.

The proposals contained in this message express our self-interest at the same time that they proclaim our national ideals. We will be laying up a harvest of woe for us and our children if we shrink from the task of grappling in the world community with poverty and ignorance. These are the grim recruiting sergeants of communism. They flourish wherever we falter. If we default on our obligations, communism will expand its ambitions.

That is the stern equation which dominates our age, and from which there can be no escape in logic or in honor.

NO WASTE, NO RETREAT

It is against our national interest to tolerate waste or inefficiency or extravagance in any of these programs. But it is equally repugnant to our national interest to retreat from our obligations and commitments while freedom remains under siege.

We recognize that the United States cannot and should not sustain the burden of these programs alone.

Other nations are needed in this enterprise of mutual help. Encouraging signs exist that the process of sharing the burden is steadily growing.

The best way for the United States to stimulate this growth and to broaden this partnership in freedom is to make our own example an incentive to our friends and allies.

We need the assurance of stability and progress in a world restless with many dangers and anxieties.

PRUDENT AND RESPONSIBLE PROGRAMS

In this program we do not seek to cover the whole world. Aid on a worldwide scale is no part of our purpose. We seek instead, through prudent and responsible programs, to help carefully selected countries whose survival in freedom is essential, and whose collapse would bring new opportunities for Communist expansion.

There are no easy victories in this campaign. But there can be sudden disasters. We cannot ask for a reprieve from responsibility while freedom is in danger. The vital interests of the United States require us to stay in the battle. We dare not desert.

Economic and military assistance, used at the right time and in the right way, can provide indispensable help to our foreign policy in enabling the United States to influence events instead of merely reacting to them. By committing a small part of our resources before crises actually occur, we reduce the danger and frequency of those crises.

Our foresight becomes a shield against misfortune.

The recommendations contained in this program for fiscal year 1965 are designed to move the aid program in that direction. They reflect views and experience of the Congress, of the executive branch, and of informed private citizens.

FIVE FUNDAMENTAL CONCEPTS FOR A SUCCESSFUL PROGRAM

FIRST: The request for funds must be realistic.

For economic assistance, new authorizations of $917 million for fiscal 1965 are recommended. Specifically, I recommend $335 million for supporting assistance, $225 million for technical cooperation, $134 million for contributions to international organizations, $150 million for the President's contingency fund, and $73 million for administrative and miscellaneous expenses.

For military assistance, I recommend that the Congress provide a continuing authorization, subject to an annual review of each year's proposals by the authorizing committees in both Houses.

For fiscal 1965, I recommend no additional authorizations for the Alliance for Progress 3 or for development lending assistance in Asia or Africa. Existing authorizations for these programs are adequate.

The appropriations recommended for fiscal 1965 total $1 billion for military assistance and $2.4 billion for economic assistance. In fiscal 1964, the initial request was $4.9 billion, later reduced to $4.5 billion.* This fiscal year, the request of $3.4 billion is $1.1 billion less than last year's request, although about the same as was available last year, taking into consideration the unexpended balance from the year before. Moreover, more than 80 percent of aid funds will be spent in the United States. The impact of the program on our balance of payments will be less than ever before."

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INSURANCE TO AVOID COMMITTING AMERICAN MEN TO WAR

These requests reflect a determination to continue to improve the aid program both in concept and administration. The overall request represents a great deal of money-but it is an amount which we should, in all prudence, provide to serve essential U.S. interests and commitments throughout the world.

More than 1 million American men in uniform are now stationed outside the United States. As insurance to avoid involving them and the Nation in a major conflict, we propose to spend through aid programs less than 4 cents out of every tax dollar.

If there is any alternative insurance against war, it might be found in an increase in the defense budget. But that would require not only many times more than $3.4 billion, for a military budget which already takes more than 50 cents out of every tax dollar, but also a several fold increase in our own military manpower.

The foreign assistance requested will provide

the crucial assistance we have promised the people of Latin America who are committed to programs of economic and social progress;

4 See American Foreign Policy: Current Documents, 1963, pp. 8-15 and 11641173.

5 See ibid., pp. 1253-1259 and p. 1261, footnote 16. President Johnson subsequently increased the request for foreign assistance appropriations by $125 million (ante, doc. IX-117).

6 See ante, docs. XI-2-9.

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continued economic development in India, Pakistan, and Turkey under the major international aid consortia to which we are a party; the U.S. share of voluntary contributions to the United Nations technical cooperation programs and to such special international programs as the work of the United Nations Children's Fund, and the development of the Indus Basin; 1o and

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funds to meet our commitments to the freedom of the people of South Vietnam,11 Korea,12 and for the other obligations we have undertaken in Asia and Africa.

SECOND: The funds I am requesting will be concentrated where they will produce the best results, and speed the transition from U.S. assistance to self-support wherever possible.

Two-thirds of the proposed military assistance will go to 11 nations along the periphery of the Sino-Soviet bloc, from Greece and Turkey through Thailand and Vietnam to the Republic of China and Korea.is These funds are a key to the maintenance of over 3.5 million men under arms, raised and supported in large measure by the countries receiving the assistance.

The need for supporting assistance-funds used primarily in countries facing defense or security emergencies will continue to be reduced. Fourteen countries which received supporting assistance 3 years ago will receive none in fiscal year 1965. Four-fifths of the present request will go to four countries: Korea, Vietnam, Laos, and Jordan. Two-thirds of the development lending proposed for fiscal 1965 (including Alliance for Progress lending) will be concentrated in six countries: Chile, Colombia, Nigeria, Turkey, Pakistan, and India.14

Funds for educational and technical cooperation-to help start schools, health centers, agricultural experiment stations, credit services, and dozens of other institutions-are not concentrated in a few countries. But they will be used for selected projects to raise the ability of less fortunate peoples to meet their own needs. To carry out these projects we are seeking the best personnel available in the United States-in private agencies, in universities, in State and local governments, and throughout the Federal Government. Wherever possible, we will speed up the transition from reliance on aid to self-support.

7 See ante, docs. II-46-47.

8 See ante, doc. II-37.

9 See post, doc. XIV-8.

10

See ibid.; and American Foreign Policy: Current Documents, 1960, pp. 492– 496. Under the Indus Basin Development Fund, (Supplemental) Agreement, 1964, signed at Washington by representatives of the United States and the International Bank for Reconstruction and Development, Mar. 31, 1964, and by representatives of six other governments, Apr. 6, 1964, the U.S. supplemental dollar contribution, subject to congressional action, consisted of a grant of $118,590,000 and a dollar loan to Pakistan of $51,220,000 (TIAS 5570; 15 UST 396).

In 17 nations, the transition has been completed and economic aid has ended. Fourteen countries are approaching the point where soft economic loans and grants will no longer be needed. New funds for military equipment grants are being requested for seven fewer countries for fiscal 1965 than for the present year.

THIRD: We must do more to utilize private initiative in the United States and in the developing countries-to promote economic development abroad.

During the past year—

The first new houses financed by U.S. private funds protected by Aid guarantees were completed in Lima, Peru;

The first rural electrification surveys, conducted by the National Rural Electric Cooperative Association under contract to AID, were completed and the first rural electrification loan-in Nicaragua—was approved; and

The first arrangement linking the public and private resources of one of our States to a developing country was established, between California and Chile.

This effort must be expanded.

Accordingly, we are encouraging the establishment of an Executive Service Corps.15 It will provide American businessmen with an opportunity to furnish, on request, technical and managerial advice to businessmen in developing countries.

During the present year, the possibilities for mobilizing increased private resources for the development task will be developed by the Advisory Committee on Private Enterprise in Foreign Aid established under the Foreign Assistance Act of 1963.16

In this connection, two specific legislative steps are recommended: One, legislation to provide a special tax credit for private investment by U.S. businessmen in less-developed countries.17

Two, additional authority for a final installment of the pilot program of guaranteeing private U.S. housing investments in Latin America.1 18

FOURTH: We will continue to seek greater international participation in aid.

Other free world industrial countries have increased their aid commitments since the early 1950's. There are indications that further increases are in store. Canada recently announced that it expects to increase its aid expenditures by 50 percent next year.19 A 1963 British white paper and a French official report published in January

See post, doc. XII-6.

16 See American Foreign Policy: Current Documents, 1963, pp. 1196-1244. "For the text of a draft bill "To amend the Internal Revenue Code of 1954 to allow a credit against tax for certain investment in less developed countries, and for other purposes," see pp. 6-19 of the source text. This proposed legislation was not enacted during 1964.

18

This proposal was enacted by Secs. 103 (a) (1), 103 (a) (2), and 103 (b) of the Foreign Assistance Act of 1964 (post, doc. XII-9).

19

The Canadian Government planned a $180 million-$190 million program during fiscal year 1965 (The New York Times, Feb. 17, 1964).