ADDITIONAL VIEWS OF MEMBERS OF THE PRESIDENT S TASK FORCE ON INTERNATIONAL PRIVATE ENTERPRISE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00528R000100070009-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: January 4, 2017
• Document Release Date: April 17, 2008
• Sequence Number: 9
• Publication Date: December 14, 1984
• Content Type: REPORT

Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
? ?
THE DIRECTOR OF
CENTRAL INTELLIGENCE
National Intelligence Council 14 Dec 1984
NOTE FOR: Director of Central Intelligence
FROM: Herbert E. Meyer, Vice Chairman
National Intelligence Council
1. As you requested, here is the final
report of the President's Task Force on In-
ternational Private Enterprise. Also at-
tached is a letter that Butch Otter is
sending out along with copies of the Report.
Also signing Otter's letter are those mem-
bers of the Task Force whose names are
checked on Pages VIII and IX of the blue
book.
2. After you have read this, I recom-
mend you set a time for Butch Otter to come
by for a chat.
3. Our own paper is set for publication
next week.
Herbert E. Meyer
Atts: a/s
Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
 Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
a 1P
Additional Views of Members of the President's
Task Force on International Private Enterprise
We, as signatories to the full Task Force report, endorse it as a valuable
contribution to the delineation of U. S. policy with respect to the role
of private enterprise in the process of economic development of developing
countries.
The President charged the Task Force to study and recommend what the U. S.
government could, through it's foreign assistance program and official
policy, do to promote the growth of the private sector in developing
countries, both through the direct involvement of the U. S. private sector
as well as through public programs aimed at supporting growth of the private
sector.
The role of private enterprise in economic development has been a contentious
issue laden with much ideological weight and suspicion. As we look today at
the Third World, we see that there are profound economic shifts now taking
place in a number of developing countries and come to believe that this change
will accelerate and expand. If we accept the premise that the economic system
of a country can define it's politics over the long term, it follows that there
is the possibility of significant political realignment in the Third World. The
key is that these economic shifts be made successfully which we believe to be
the primary challenge to U. S. foreign assistance efforts in just the next few
years. It is this challenge which prompts us to go beyond the report submitted
by the full Task Force.
We offer these additional comments to both clarify and amplify points of sub-
stance, as well as emphasis, that are contained in the report. Our comments
can be broken down into three separate areas; our concern with 1) the budgetary
and developmental implications of certain recommendations dealing with subsidies;
2) the emphasis of some recommendations; and, 3) deferring the resolution of
several key issues.
Subsidy
We recognize that foreign assistance is, essentially, a subsidy of one sort or
another. The question that we have grappled with is not whether to have
subsidies, but which subsidies would appear to offer the greatest chance of
achieving privately driven, self-sustaining economic growth in developing
countries.
This report contains recommendations of multi-billion dollar commitments to
new subsideis in the form of expanded mixed credits and increased PL-480 sales.
As businessmen we recognize that subsidies, either directly funded or in the
form of risk reduction measures, will distort any private economy. Further,
subsidies have the insidious habit of becoming institutionalized and creating
economic dependencies in both the donor and recipient countries.
Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
 Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
Ile
We do not see mixed credits or PL-480 as important factors in the stimulation
of indigenous private sectors in developing countries. However, this observa-
tion does not diminish the validity of those recommendations as drafted in the
report. Thus, we support the recommendations of the majority of the Task Force
on these points with the proviso that;
1) they be clearly seen as interim measures and that neither
become a permanent part of the economic landscape nor a source
of interference in needed structural readjustments in domestic
U. S. policy for agriculture or trade;
2) that the authorizing legislation for mixed credits should state
that those credits only be used on a dollar-for-dollar match
of other countries' subsidized credits and never as standard
programs for developmental or export purposes; and,
3) that while expansion of PL-480 may well be justified in domestic
economic terms when evaluated against the costs of other methods
of controlling grain surplus, we must establish sufficient controls
on the program that will assure us that subsidized food does not
ultimately harm the recipient country's agricultural sector nor
allow us to avoid facing the dilemma of our own agricultural policies.
Growth of the Private Sector in Developing Countries
We recognize that by its very nature, the promotion of private enterprise in
economic development cannt be force-fed by the U. S. government. There are
limited things that the U. S. government can, and should, properly do in this
field. Private enterprise will participate in the development process if the
environment is sufficiently congenial and the entrepreneurs have access to
sufficient resources.
Traditionally, the policy environment in a majority of the developing world
has been unsupportive of, even hostile to, the private economy. While opposi-
tion to private enterprise has abated dramatically in the last year, the
existing high level of debt compounded by reduced capital flows has deprived
companies of the resources needed to take advantage of this changed environment.
This highlights the urgent need for an infusion of debt and equity capital to
the private sector as opposed to additional debt for-the public sector.
Therefore, the policies pursued by the developing countries themselves, and the
ability of the private sector to obtain and productively use capital are the
two most crucial elements to the developing economies generally, and their
private sectors specifically. Under your administration, A. I. D. recognized
these problems by making "policy dialogue" and support for the private sector
cornerstones of their policy.
Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
 Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
The Task Force reviewed all foreign assistance efforts over the last 18
months and strongly supports these efforts, but identified a number of
problems and suggested solutions. The Task Force also noted reservations
about the appropriateness of AID's role in implementing these solutions,
however, the report only suggests further study.
We feel that the Task Force has had sufficient exposure to the problems to
suggest specific solutions in several areas. The three primary problems of
greatest concern to us are noted in the main report, but are not adequately
emphasized, nor do the proposed solutions go far enough.
Policy Dialogue: This is the key, perhaps single most important
undertaking of foreign assistance. But the U. S. government now
has insufficient leverage to effect enough of. the desired changes.
The thrust of our humanitarian assistance should not be altered,
but assistance which is for economic development should be clearly
made conditional upon policy changes which will allow those funds
to work, not be wasted. Future foreign assistance programs should
be designed to provide our policy makers with the necessary leverage
to direct and support-policy change.
Private Sector Support: The funds earmarked in our foreign assistance
budget that will go directly to the private sector of less developed
countroies are, we all agree, totally insufficient. While the main
report suggests that the "bulk" of foreign assistance funds be re-
directed to the private sector, it does not offer adequate guidance
on the institutional arrangements that would be necessary to manage
these funds other than noting that present arrangements are inadequate,
but only recommending a different emphasis within existing programs.
There are, however, a number of successful. and acceptable public models
that can and should be examined immediately, such as World Bank's
International Finance Corporation and Britain's Commonwealth Develop-
ment Corporation.
Institutional Arrangements: AID has done a good job of providing
humanitarian assistance and disaster relief. Clearly Congress and
the employees of AID are more comfortable with this role. By their
own admission, the private sector efforts of AID have not been strongly
supported internally. However, the main report defers consideration
of institutional changes to the proposed Economic Security Advisor.
While we strongly support the recommendation suggesting the creation
of this position, we feel that the evidence; 1) clearly suggests AID
should not be forced into an uncomfortable and secondary private sector
role; 2) that there are more viable institutional alternatives; and,
3) establishing these alternatives is of such importance that they
should not be deferred to a person whose position has not be created.
Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
 Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6
Thus, we question whether A. I. D. is the appropriate institution to
carry out the private sector mandate of our foreign assistance efforts,
especially in view of the historic changes underway. An enhanced charter
and the portion of the foreign assistance budget earmarked for the private
sector should be given to the Overseas Private Investment Corporation or
some new organization. This is clearly the appropriate policy decision in
our opinion and one which echoes a previous Presidential Task Force which
examined this subject (Peterson Commission, 1972) and your own transition
committee report on this subject.
Signatories:
Approved For Release 2008/04/17: CIA-RDP88T00528R000100070009-6