CONCLUSION This concludes our rather broad ranging response to the committee's request. While many of the Agency's activities have been touched upon, in a subject this vast it is not possible to be certain that we have explored all matters of interest to the committe. We are hopeful that the committee will find this effort the candid, useful and functional document we intend it to be. We are, of course, prepared at any time to review in detail with members of the committee and its staff this report and AID's effort to implement the reforms of the Foreign Assistance Act of 1973. (34) APPENDIX 1 U.S. FOREIGN ASSISTANCE PROGRAM AND WORLD PEACE U.S. foreign policy seeks international stability within which nations are able to pursue their own social, political, and economic goals. U.S. foreign assistance programs support policy by contributing to a pattern of worldwide growth and stability within which our own Nation can protect itself and prosper. Foreign assistance must be a flexible tool. The world is undergoing remarkably swift and profound changes. The new and urgent problems affecting world peace and U.S. self-interest in particular areas underscore the need for continuing adaptability to: -strengthen our ability to influence peaceful solutions in situations of international tension and potential conflict. Economic, humanitarian, and supporting assistance to peoples and countries facing the prospect or the consequences of war provides resources to alleviate suffering from conflicts and to seek peaceful solutions when international peace and stability are threatened and when U.S. national interests are involved. -help improve the lives of masses of people who live under conditions of extreme poverty, malnutrition, disease, and ignorance, through assistance to their long-term development objectives so that they—and we can continue to work in an interdependent world for peace and progress for ourselves and our children. -alleviate human suffering, foreign assistance has provided a vehicle for prompt help in time of natural or man-made disasters. The proud tradition of American generosity and humanitarianism is reflected in our foreign assistance program. Americans have always responded to the needs of the hungry, the homeless, the sick, and the oppressed. The challenge of increasing interdependence among the nations of the world has come fast upon us. The era has passed in which our size, our strength, our technology and our resources posed no limits to our economic expansion and rising living standards. Our destiny and that of the rest of the world are inextricably bound together: -We depend increasingly on the developing countries for: Raw material imports to meet the needs of American industry and American consumers. Almost 40 percent of U.S. import requirements for strategic commodities come from developing countries. Markets in which to sell the products of American enterprise, creating jobs for American workers. Developing countries now buy nearly onethird of U.S. exports. Opportunities for productive and profitable investment of U.S. capital and technology. One-fourth of U.S. foreign investment in 1973 went into developing countries. Cooperation in finding international solutions to complex world problems-monetary, food, energy, population, and environment. -The developing countries need American skills and capital resources to: Develop their human resources and assure their people an equitable participation in the benefits of growth; Exploit their natural resources in environmentally sound ways; Strengthen their cooperation in building a peaceful, stable world community. It is not in our power nor in our self-interest to cut ourselves off from the world and attend only to our own problems. Few important problems are either solely domestic or solely international: -The temporary oil embargo and the fourfold increase in oil prices substantially aggravated inflation in the United States. -The increased cost of oil and phosphate increased the cost of fertilizer, resulting in less food production in developing countries and higher food prices in the United States. -Our inflation increased the cost of our exports which developing countries must buy, thus fueling their demand for higher prices for their goods. -When the fish catch off the coast of Peru dropped because of the vagaries of the Humboldt current, the higher cost of fishmeal for animal feed increased the cost of meat and poultry. The crucial issue for most countries of the world is development. In the interdependent world in which we live, their development depends on our prosperity, just as our prosperity depends on their development. Now is the time for mature reflection on how we intend to go forward, for our greatness as a nation depends on our willingness to participate with the developing countries in building a better and more prosperous world community. Many developing countries have made tangible progress. Some former aid recipients are now able to pursue their development goals using their own resources, without concessional U.S. assistance. Others are moving in that direction-but many still need our help in technology and resources. THE FOOD AND ENERGY CRISES Much of the developing world now faces the most serious challenge to development and stability since World War II. The food and energy crises also seriously affect the United States and other industrial nations-dramatically illustrating and reinforcing the interdependence of rich and poor countries. The former world food surplus has become a precarious, minimum food reserve. Food production increases of 20 years have been offset by population growth, leaving only minimal increases in food per person; further increases in food production have been hampered by the worldwide shortage of fertilizer, aggravated by the energy crisis. Global cooperation to find permanent solutions to food shortages is essential. Innovative, imaginative work is needed to: -improve agricultural technology; expand agricultural research; extend the Green Revolution to new high-yielding crops; improve water conservation and utilization; expand dry land agriculture. -involve small farmers in developing countries in high productivity agriculture. The benefits of development must reach the poor and needy in rural areas the landless laborers, the small farmer; -carry out the U.S.-supported proposals at the World Food Conferencedevelop grain reserve arrangements; create a permanent international Consultative Group on Food Production and Investment; -continue and expand efforts to reduce rapid population growth. Cooperative international efforts are needed to deal with the energy crisis brought on by sharp oil price rises. The energy crisis has had differing effects on the developing countries: -A few low-population developing countries with financial surpluses have become aid-providing countries; -Other oil-exporting countries with large, poor populations have brighter prospects for rapid economic development without reliance on highly concessional aid; -But, a large group, dependent on high-priced oil imports, unable to quickly expand offsetting export earnings, with limited access to commercial borrowing, are in urgent need. Their development efforts of the past two decades are imperiled; they face the possibility of further reductions in the already low living standards of their people. Assistance efforts must be directed to the countries most seriously affected by the crises in food, energy, and population growth. Our development assistance programs are increasingly focused on helping these countries with their problems: -The need to reduce population growth becomes ever more urgent. -Education and skills are essential if the poor are to use modern agricultural methods more effectively. -Women and minorities must share in the opportunities offered. These actions are part of the answer to the challenge of despair and poverty for nearly one billion rural and urban poor in the developing countries. DEVELOPMENT ASSISTANCE The food, population and energy crises reaffirm the urgency and thrust of the new directions of our development assistance programs. Earlier development strategies assumed that economic growth would soon "trickle down" to the poor masses. In fact, while the large mass of the poor in some countries benefited from development to some degree, many of the very poorest were either no better, or even worse off, than a decade earlier. Recognition of these trends and their serious implications has led to a shift in our development assistance strategy for the developing countries: -Congress restructured foreign assistance legislation 2 years ago to focus our development assistance program on the fundamental problems of the poorest majority: food and nutrition; population and health; education and human resource development. -The age-old problems of poverty are complex and cannot be quickly and easily solved. Effective attacks will require: difficult self-help efforts by the developing countries; sustained, imaginative, and innovative assistance programs; sufficient resources in manpower, technology, and capital to fill the critical gap. Rural development is a central problem for developing countries. It requires a combination of: -economic incentives; farming must be a profitable business if small farmers are to double and treble their production; -institutional improvements; farmers must be able to obtain credit, buy fertilizer, learn and apply modern technology, and have the distribution and marketing systems needed to sell their increased production. This requires building and improving institutions: Cooperatives, small business groups, local government agencies, market information systems; -improved and adapted technology; four-fifths of the farms in developing countries are 12 acres or less; most are family farms. The technology needed for these tiny enterprises must be: appropriate to the size of the enterprise; cheap enough to be afforded by the farmer: simple enough to be useful at low levels of skill and education. -producer and consumer links; rural and urban populations, agriculture and industry, must become mutually supporting: farmers must be linked to market towns; effective demand must come from consumers in urban areas; this requires jobs and incomes to buy the farmer's product; communications systems are needed so that producer and consumer are aware of needs and opportunities; distribution and storage systems are required to minimize price fluctuations, avoid "boom and bust" cycles. Innovations and new initiatives are demanded to meet the challenges of development for the rural and urban poor majority. Our foreign assistance program is proposing new and strengthened emphasis on : agricultural research keyed to the problems of the small farmer in developing countries; -higher yielding crop varieties, more efficient soil and water systems, new and cheaper fertilizing methods, and less dependence on high-cost energy sources; -improved livestock management. Combating malnutrition requires a coordinated effort in agriculture, health, education, family planning, food for peace, and food technology. To assist developing countries meet this complex set of problems, our development assistance techniques help increase the capacity to: -analyze the nature, extent, and cause of malnutrition; -identify effective ways-within available resources to strike at the root causes of malnutrition; -plan, implement, and evaluate cost-effective nutrition programs reaching the most vulnerable groups: preschool children; pregnant and lactating mothers. High population growth rates in many developing countries continue to erode development gains in per capita terms. Curtailing population growth is essential to the improvement of individual well-being in overpopulated countries. For a decade, our development assistance program has worked to: -promote understanding of the population crisis; -encourage others to support the worldwide population effort; -create and maintain family planning systems and services, concentrating largely on the delivery of contraceptives and related services. Despite this |