FOREIGN ASSISTANCE ACT OF 1971

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000400170006-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 58
• Document Creation Date: December 9, 2016
• Document Release Date: September 7, 2000
• Sequence Number: 6
• Publication Date: July 26, 1971
• Content Type: REPORT

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FOREIGN ASSISTANCE ACT OF 1971
REPORT
COMMITTEE ON FOREIGN AFFAIRS
ON
H.R. 9910
TO AMEND THE FOREIGN ASSISTANCE ACT
OF 1961, AND FOR OTHER PURPOSES,
TOGETHER WITH MINORITY VIEWS
JULY 26, 1971.-Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
65-1870 WASHINGTON : 1971
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COMMITTEE ON FOREIGN AFFAIRS
THOMAS E. MORGAN, Pennsylvania, Chairman
CLEMENT J. ZABLOCKI, Wisconsin WILLIAM S. MAILLIARD, California
WAYNE L. HAYS, Ohio PETER H. B. FRELINGHUYSEN, New Jersey
L. H. FOUNTAIN, North Carolina WILLIAM S. BROOMFIELD, Michigan
DANTE B. FASCELL, Florida J. IRVING WHALLEY, Pennsylvania
CHARLES C. DIGGS, JR., Michigan H. R. GROSS, Iowa
CORNELIUS E. GALLAGHER, New Jersey EDWARD J. DERWINSKI, Illinois
ROBERT N. C. NIX, Pennsylvania F. BRADFORD MORSE, Massachusetts
JOHN S. MONAGAN, Connecticut VERNON W. THOMSON, Wisconsin
DONALD M. FRASER, Minnesota JAMES G. FULTON, Pennsylvania
BENJAMIN S. ROSENTHAL, New York PAUL FINDLEY, Illinois
JOHN C. CULVER, Iowa JOHN BUCHANAN, Alabama
LEE H. HAMILTON, Indiana SHERMAN P. LLOYD, Utah
ABRAHAM KAZEN, JR., Texas J. HERBERT BURKE, Florida
LESTER L. WOLFF, New York SEYMOUR HALPERN, New York
JONATHAN B. BINGIIAM, New York GUY VANDER JAGT, Michigan
GUS YATRON, Pennsylvania ROBERT H. STEELE, Connecticut
ROY A. TAYLOR, North Carolina PIERRE S. Dv PONT, Delaware
JOHN W. DAVIS, Georgia
MORGAN F. MURPHY, Illinois
RONALD V. DELLUMS, California
RAY S. BULLOCK, Staff Administrator
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CONTENTS
'Page
Committee action-------------------------------------------------
3
Purposes of the bill------------------------------------------------
5
Cost estimates----------------------------------------------------
Extent of U.S. foreign assistance------------------------------------
5
8
Foreign assistance and the U.S. -----------------------------
assistance and the U.S. balance of payments-------------------
10
The pipeline ------------------------------------------------------
1
2
of the bill:
Part I-Economic assistance :
Sec. 101-Development loans:
Sec. 101(a)(1)-Authorization---------------------------
14
Sec. 101(a)(2)-Promotion of free enterprise--------------
14
101(b)(1)-Fiscal provisions relating to repayments----
Sec
14
.
Sec. 101(b)(2)-Limitation--------------- -----------------------------
t
1
5
s:
102-Technical cooperation and development gran
15
See. 102(a) -Authorization -------------- -- -------
Sec. 102(b) -American schools and hospitals abroad-------
15
Sec. 102(c)-Suez Canal-------------------------------
Sec. 103-Housing ti
16
16
Sec. 103(a)-Worldwide housing guaranties---------------
16 16
See. 103(b)-General provisions--------------------------
17
Sec. 104-Alliance for Progress-----------------------------
Sec. 105-Programs relating to population growth-------------
17
Sec. 106-International organizations and programs:
i
20
on------------------------------
Sec. 106(a)-Authorizat
20
Sec. 106(b)-Indus Basin project-------------------- ------------------------
106(e)-Technical and vocational training of Arab
20
refugees --------------------------------------------
106(d)-Egyptian pounds--------------------------
21
Sec. 107-Contingency fund--------------------------------
Relief
f
d R
21
ugee
e
Sec. 108-International Narcotics Control an
22
Assistance ---------------- ----- -------------
Now Chapter 8-International Narcotics Control---------- 22
New Chapter 9-Refugee Relief Assistance---------------22
Part II-Military assistance:
Sec. 201-Military assistance------------------------------- 23
Sec. 201(a)-Authorization----------------------------- 23
Sec. 201(b) -Conditions of eligibility--------------------- 24 24
Sec. 201(c)-Special authority--------------------------
Sec. 201(d)-Repeal of section 510----------------------- 24
Sec. 201(e)-Considerations in furnishing military assistance- 25
Sec. 202-Security supporting assistance:
Sec. 202(a)-Reenactment and authorization-------------- 25 25
Sec. 202(b)-Repeal-----------------
Investment insurance and guaranty authority in Southeast 26
Asia-----------------------------------------------
Part III-General and administrative provisions:
Sec. 301. Local currency utilization-------------------------- 27
Sec. 302. Amendments to section 620 prohibitions- - - - -- - - - - - - - 27
New subsection (v)-Prohibition on aid to Greece--------- 277
New subsection (w)-Suspension of aid to Pakistan-------- 29
See. 303-Statutory officers --------------------------------30
Sec. 304-Administrative expenses--------------------------- 30
Sec. 305-Carryover authorizations-------------------------
(III)
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Provisions of the bill-Continued
Part IV-Amendments to other laws:
Sec. 401-Foreign Military Sales Act:
Page
Sec. 401(a)--Credit sales terms--------------------------
30
Sec. 401 (b) -----------------------------
31
Sec. 401(c)--Aggregate ceiling---------------------------
31
Sec. 401(d)?--Limitation on military assistance and sales to
Latin America--------------------------------------
31
Sec. 401(e)--Waiver authority--------------------------
31
Sec. 401(f)-Considerations in making sales---------------
31
See. 402-Excess defense articles----------------------------
32
Sec. 403-Amendment to title 5-----------------------------
32
Sec. 404-Interparliamentary Union-------------------------
32
Sec. 405-Parliamentary conferences of the North Atlantic Treaty
Organization--------------------------------------------
32
Sec. 406-Inter-American Foundation:
Paragraphs (1), (2), and (3)-New name-----------------
33
Paragraph (4)-Representation-------------------------
33
Paragraph (.5)-Chief executive officer-------------------
33
Paragraph (5)-Experts and consultants------------------
33
Paragraph (5)-Dual compensation----------------------
33
Changes in existing law made by the bill, as reported------------------
35
Minority views of Hon. Ronald V. Dellums---------------------------
53
Minority views of Hon. H. R. Gross, Hon. Edward J. Derwinski, and Hon.
Vernon W. Thomson---------------------------------------------
54
Supplemental minority of Hon. Edward J. Derwinski------------------
56
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1st Session No. 92-380
.IULY 26, 11171.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. MORGAN, from the Committee on Foreign Affairs,
submitted the following
The Committee on Foreign kffairs, to whom was referred the bill
(I LII. 9910) to amend the Foreign Assistance Act of 1961, and for
other purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
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On April 21, 1971, the President sent to the Congress a foreign aid
message (H. Doe. 92-94) accompanied by two draft bills that totaled
138 pages. These bills would restructure the foreign aid program and
provide new approaches and authorities for the administration of the
program. The changes proposed by the President stemmed from a
study made by a Presidential task force that he had appointed on
September 24, 1969, and that had reported to him on March 4, 1970,
about 14 months before his message to the Congress.
Less than a week after receipt of the President's message and draft
bills, the committee began hearings on the foreign aid program. It soon
became evident that the far-reaching proposals submitted by the
President would require much more lengthy hearings, followed by
careful and extensive analysis, by the committee. At the earliest, all
the legislative steps could not be completed before next year.
The committee hearings, which began on April 27 and were sus-
pended on June 2, were followed by the introduction by the chairman
on Tune 7 of ILR. 8961. With a few exceptions, the bill was limited to
authorizations for appropriations for fiscal year 1972 for the existing
foreign assistance programs. During the markup of the bill, the com-
mittee decided that a 2-year authorization would enable the legislative
branch to approach the problems of foreign aid reorganization with
greater deliberation without jeopardizing the continuation of the
program.
The committee was also mindful that, should the changes requested
by the President be adopted, there would undoubtedly be a long inter-
val in implementing them. In 1969 Congress created two new institu-
tions-the Overseas Private Investment Corporation (OPIC) and the
Inter-American Social Development Institute (ISDI). In the case of
OPIC, all that was involved was the transfer of an existing AID pro-
gram to a new corporate body. Yet neither institution was made oper-
ational until early 1971. The sweeping changes proposed by the Presi-
dent, if accepted by the Congress, would take even longer to effect.
Upon conclusion of the markup sessions, the chairman introduced
II.R. 9910 on July 20. This bill included adjustments in the authoriza-
tions made by the committee as well as a few substantive changes in
existing law. On July 21, the committee reported the bill favorably
by a vote of 30 to 6.
The principal purpose of H.R. 9910 is to authorize funds to permit
the foreign assistance programs to continue through June 30, 1973.
The bill authorizes appropriations of $3,444,350,000 for fiscal year
1972 and $3,494,350,000 for fiscal year 1973. Direct comparison of the
Executive authorization request with the sums contained in this bill
is not possible since the former included a number of authorizations
extending over more than 1 year.
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Following are the fiscal details of the 2 year programs recommended
by the committee :
Committee recommendation
Appropriations
Fiscal year 1971
Fiscal year 1972
Fiscal year 1973
_
Development loans
-----------------------
$420, 000, 000
r $400, 000, 000
2$450,000,000
______
____
Technical cooperation ----- _---------------------------
166,750,000
183,500,000
183 500,000
American schools and hospitals abroad_________________
12,895,000
30,000,000
30,000,000
Alliance for Progress ----------------------------------
370,375,000
378,250,000
428,250,000
Loans --------------------- ---------------------
(281,500,000
)
(
,
00
)
,
(
Grants --------------------- ------------------
(82,875,000
750,000
(90
0
(90
750,0
Population programs ---------- ______..________-_______
(8)
+ 100,000,000
4 125, 000, 000
International organizations ----- ------------------------
103,810,000
143,000,000
143,000,000
Indus Basin:
Grants_
________________ -----------------------
4,925,000
5,000,000
10,000,000
__
Loans__________ _
_------
-
---
--
--
--
----
----
-----
6,980,000
(a)
(a
-
A)
-
-
-
--
-
-
-
-
Arab Refugees(UNRW__ ___
1,000,000
1,000,0
00
1,000,00
Egyptian Pounds ----------------- ---------------
a 1, 000, 000
a 1:000,000
Contingencyfund ------------- ----- ------------------
722,500,000
30,000,000
50,000,000
-
-
---
-----------------
East Pakistan relief assistance assistance
-
-
---
-------------
100,000,000 ____________-___
-------------------
-
-
-
-
-
-
Overseas ----------------
Private Investment Corp. (OPIC)--------------- 18 750,000
(8)
(8)
security.supporangassisrance__------------------------ 569,600,000
800,000,000
800,000,000
Part III
Administrative expenses:
AID ---------------------- .---- ..----------------- 51,000,000
57,600,000
57,600,000
State-------------------- ----- _----------------- 4,100,000
(8)
(8)
Part IV
Foreign military credit sales ---------- _----------------- 200,000,000
510,000,000
510,000,000
Israel (supplemental)-____ -__________ 500,000,000
------------------------------------
-
Total --------
-________________--_-_________--_-_______ 3, 142, 685, 000 3,444,350,000 3,494,350,000
+ As of the beginning of fiscal year 1972, authorizations of $230,000,000 for development loans covering the period fiscal
years 1967 through 1971 have not been appropriated under sec. 202(a) of the act and are available for appropriations in
FY 1972.
2 Such sums as have been authorized but not appropriated during the period fiscal years 1967 through 1972 under
sec. 202(9) of the act will be available for appropriations in FY 1973.
8 Authorizes the use of $100,000,000 of pt. I funds for this purpose.
+ Also authorizes the use of additional pt. I funds for this purpose.
$51,200,000 authorized in 1967 for use beginning in 1969.
To provide technical and vocational training and other assistance to Arab refugees.
l As a result of cyclone damage in East Pakistan $7,500,000 was earmarked for relief, rehabilitation, and reconstruction
assistance.
Permanent authorization in existing law.
Excluding the appropriations for the Overseas Private Investment Corporation, State Department administrative ex-
penses, a- d military credit sales to Israel which are not contained in this authorization bill, the appropriation com-
parable to programs in this bill is $2,642,685,000.
In addition to the authorizations detailed above, the bill proposes
;t major step in t11e direction of unifying all international security
authorizations and distin ;wishing them from long;-term dcvelopmeut
assistance. Within the new framework, the security portion of the au-
thorizations for fiscal year 1972 is $2,015,000,000; the development
portion, $1,429,350,000; for fiscal year 1973, the security portion is
$2,015,000,000, the development portion is $1,479,350,000.
The committee also recommends a number of substantive amend-
ments which are explained in the section analysis of the bill. Among
the principal changes are :
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1. Use of Egyptian pounds owned by the United States to
assist in reopening the Suez Canal.
2. A separate authorization for population control programs.
3. Authorization to the President to use foreign assistance funds
to assist nations to control the production and traffic in narcotic
drugs and to deny such funds to countries which do not take
adequate steps to prevent drugs from entering the United States
unlawfully.
4. Relief assistance to East Pakistan refugees.
5. Prohibition of assistance to Greece and Pakistan.
COST ESTIMATES
Pursuant to clause 7 of rule XIII of the House rules the committee
has examined the requests submitted by the President to carry out the
various programs authorized by this bill. It has made adjustments in
the requests and recommends 3,444.350,000 for fiscal year 1972 and
$3,494,350,000 for fiscal year 1973. The entire program is under re-
view by the legislative and executive branches. Hence any projection of
costs beyond fiscal year 1973 is not possible.
The $3,444,350,000 authorized in this bill for fiscal 1972 is only a
portion of our total foreign assistance efforts. Other principal parts
of foreign aid for fiscal year 1972 include the Food for Peace (Public
Law 480), the Peace Corps, subscriptions and contributions to multi-
lateral lending agencies, and military assistance.
Programs such as those carried out by the Export-Import Bank
through loans, guaranties, and credits are in a somewhat different cate-
gory from foreign assistance. Rather they encourage the sale of U.S.
products abroad on terms not available from private financial sources.
They are another resource available to promote foreign policy ob-
jectives of the United States.
For fiscal year 1972 all U.S. foreign economic aid is less than one-
half of 1 percent of our gross national product. This compares to about
3 percent -%v, lien the Marshall plan was inaugurated more than 20 years
ago. Although our GNP is greater than that of all the other principal
developed countries, the United States now contributes less than half
the economic aid going to the less developed countries. Using the yard-
stick of "official development assistance", which emphasizes the per-
centage of GNP devoted to this purpose, devised by the 1-6 members
(including the United States) of the Development Assistance Commit-
tee, the United States ranks in 11th place.
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FY 1972 DEVELOPMENT ASSISTANCE BY REGION
Latin Near Fast
America & So Asia
FOREIGN ASSISTANCE AND THE U.S. ECONOMY
t ritics of the foreign assistance program oftt+n make the charge that
Ole, United State is sending funds abroad for the program. This is
,tot the situation For the most part. the United States sends goods and
services abroad. AID dollars buy goods from over 4,000 American
companies and l,ay some 1,000 private institutions, firms, and in-
dividuals in all :.0 States for technical and professional services to
r'arr?v out project- overseas.