PLANS FOR THE REORGANIZATION OF FOREIGN ASSISTANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00268R000700090001-7
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 82
• Document Creation Date: December 27, 2016
• Document Release Date: June 6, 2013
• Sequence Number: 1
• Publication Date: March 4, 1961
• Content Type: REPORT

Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
PLANS FOR THE REORGANIZATION
OF FOREIGN ASSISTANCE
March 4, 1961
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
C ONFIDENT IA L
PLANS FOR THE REORGANIZATION OF FOREIGN ASSISTANCE
TABLE OF CONTENTS
Scope and Objective of Proposal Introduction
c.o....06604'00 coo0o0o0oo
I. The Present Foreign Aid
A. Present Institutional Structure ... ......I-1
Chart on Present Aid Organization...facing p. I-1
1. The Export-Import Bank
2. The Development Loan Fund .Il
3. The State Department. ....... ......I-1
)4. International Cooperation
Administration oese???0**000.000000 000001".2
5. The Department of Defense 00,4004
6. The Department of Agriculture...
7. The Treasury Department
B. Arrangements for Coordinating
Separate Aid Agencies.00000000,00000000000600001.'3
00**,0-0004
.I-2
0****-00,00I".3
Deficiencies of Present Arrangements... goo. 00I
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-2-
Conceptual Requirements of a New Program II-1
A. Changing ObjeCtives for Foreign Assistance II-1
B. The Modern Objective.-..... II-1
C. Aid Must be Tailored to Differing Stages
of Development 11-2
D. Development Requires an Assured Continuity
of Aid Resources 11-2
E. Development 'Planning- Should Emphasize a Coordinated
National Program Rather than a Project Approach 11-2
F. An Effective Aid Program Requires Central
Control and Direction
Chart on Proposed Organization facing page 11-3
G. The "Growth for Freedom Administration" must
be subject to the Foreign Policy Control of
the Secretary of State
H. Military Assistance should be kept Distinct
from Economic Assistance 11-5
I. Aid Must Continue to be Available for Other
National Objectives 11-5
J. To the Extent Possible our Aid Program should
be coordinated with the Programs of-other
Industrialized Countries 11 -6
K. The proposal for Legislation 11-6
The Growth for Freedom Act 11-7
1, Purposes 11-7
2, Administration 11-7
3. Development Planning 11-7
4.. Fund for Economic Growth 11,7
a. Single Development Lending Agency 11-7
b. Use of Public Debt Authority 11-8
C. Currency of Loan Repayment 11-8
d. Legislation on Lending 11-8
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
C ONFILiEINTIAL
-3-
5.
Education and Human Resources Fund
11-9
6.
Food for Peace
11-9
7.
Surpluses for Development
11-9
8,
Transitional; Sustaining and Emergency Aid
Assistance
11-9
9.
Contributions to Multilateral Organizations
II-10
10.
Personnel
II-10
a. Development Career Service OOOOOOOOOOO
e...
II-10
b. Peace Corps
II-11
C ONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
- Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
PLANS FOR THE REORGANIZATION OF FOREIGN ASSISTANCE
Scope and Objective of Proposal
This memorandum outlines a proposal for a completely fresh
approach to one of the major problems facing the Western World -- how
to assist the less-developed countries to achieve the economic,
social and political strength they need to grow and develop in
freedom.
It is appropriate that this fresh approach be undertaken at
the beginning of the decade of the sixties--a period that may properly
be known as the Decade of Development".
In this decade, the industrialized nations of the free world
can, by their assistance, enable many of the less-developed countries
in Asia, Africa, and Latin America, including India, Pakistan, Turkey,
Brazil, and Taiwan, to achieve self-sustained growth. This is a
realizable goal if the United States, Western Europe, and Japan
together provide increased resources for development and
extend such aid on the basis of criteria essential to the effective
achievement of development. This is a decade of opportunity --
opportunity to get many of the nations now in a trarrsitional status
over the hump and away from continued dependence on extraordinary
ternal assistance.
The foreign policy advantages for the United States of such a
result are apparent. The existence of an enlarged community of
self-reliant, free, and well-developed nations will significantly
improve the free world security outlook and reduce international
tensions.
This objective cannot be achieved unless we can command both
the will and the remources. If we are to succeed in this great
endeavor the next ten years must be a time of concentrated effort.
Quite obviously we must mobilize the resources of the industrialized
nations of the entire free world and coordinate these multi-nation
efforts for maximum effectiveness. We must be liberal in our aid
programs but at the same time insist upon hard criteria.
One should not underestimate either the magnitude or the
complexities of the task before. us. For this task our present
foreign assistance programs and operations are whollyinadequate.
They are based on obsolete, poorly articulated, and oftep mutually
inconsistent objectives. They are administered within a9:phazard
and irrational organizational structure. They have been authorized
by Congress in bits and pieces of legislation, enacted at different times,
and serving -disparate purposes. Today, the entire structure of foreign
aid legislation is encrusted with barnacles which impair flexibility
and impede progress.
This memorandum outlines the essential elements that must
enter into a complete revision of the scope, objectives, and
organization
CONFIDENTIAL
npdassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Decfassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 2 -
organization of foreign assistance. The memorandum consists of
four parts:
I - Present Foreign Aid Programs
II - Conceptual Requirements for a Coherent Program
III - Financial Requirements
IV - Questions for Decision
There are, in addition, three annexes:
A. Congressional Emphasis on State Department
Control of Foreign Aid.
B. The Organization Proposed.
C. A Financial Plan for Speeding the Growth
_di' the Less-Developed Areas.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CT
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
III. Financial Requirements 000000000000000 OOOOOOOOOOOOOO III-1
A. Current Levels of Economic
Assistance 000 OOOOOOOOOOOOO 00000000000 OOOOOOOOOO IID"1
?
B. The Dimension of Economic Assistance
Required for Speeding Economic Growth III-1
C. Bases for Estimates of Requirements for
U.S. Economic Assistance O OO OOO 0?0?0 OOOOOO 0 000 111-2
D. The Estimates
1. Commitments Required 00.0. OOOOO owe* OOOOOOO 111-3
2. Authorizations Required .. 000 000 OOOOOOOOOO 00 111'.3
0
3. Appropriations - 111-4
4. Expenditures OOOOOOOO .000000000000 00 0 000 0000 111-5
5. Budgetary Impact 000000000090000000 OOOOO 0000 III 5
E. Component Arrangements 111-6
1. Development Planning and Research 111-6
2. Fund for Economic Growth III6
3. Education and Human Resources
Development 0 OOOOOOOOOOOOOOOOOOOOOOOOOOOO 111-6
4. Contributions to Multilateral
Institutions 111-6
5. Transitional, Sustaining and
Contingency Aid ...0000 OOOOOO 000900000000000 111-7
6. Food for Peace 9000 OOOOOOO 000000000000000000 111-7
7. Peace Corps . OOOOO 00,0 00 OOOOO 9 OOOOOOO .9 0 0 0 0 0 0 0 111-7
8. Administration 111-7
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
C;UNYIDENTIAL
- 5 -
.. iv-i.
AQuestions for Decision .. ..... ................... ....
A. Borrowing Authority .... ...................... .... .. IV -1
1. Need for Long-Term Authority . ............. ...... IV-1
a. Achievement of Development Emphasis .. ? ? ,.. .. IV-1
b. Relatiop to Burden Sharing .. sitood000dooeto *4 IV-1
c. Alternative Arrangements .... 1,410.0 0.00
0.00 .. IV-2
d. Need to Lead ............................... IV-2
B. Export-Import Bank . .... eoos00000000000doodo 00,io e. IV-2
1. Transfer of Authority . 0..0.0.0..00.0000W 0 0 0 0 .. IV-2
2, Limiting Export-Import Bank Role . 000s00000 0000 .. IV-2
C. Public Law 480 .yoos000fesoeftoo omoos000edooeseo 000 .6 IV-3
1. In or Out of Aid Legislation .................. .. IV-3
2, Role of Department of Agriculture ......... .060 0. IT''.3
3. Case for Inclusion .... c00000p00000dooss000 000too 1v-3
4. Farm Support ...... 000*6 ooec0000 000000000,000000 O. IIT-3
5. Case against Inclusion ....................... . IV-4
ANNEXES:
A. Congressional Emphasis on State
Department Control of Foreign Aid
?B. The Organization Proposed
C. A Financial Plan for Speeding the
Growth of the Less-Developed Areas
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
1
i
1
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7 /
NATIONAL ADVISM
COU1,1CM ON IN
NATIONAL KOlaTAPI
An FINANCIAL
PROLIZ:3 .
Instructs/
U.S. REPPS77TAS
TO .TF;?n, L2,37.
BOARD OF DIRECTMS
PRESIDENT
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Present
ORGANIZATION FOR FOREIGN Assigntics-
? Inspector General
and Controller
.PPaSIDENT
-1
Supervisei--7/7-777-77Supervises
Directs_,- .8t Directs
SECRETARY'
UNDML SECRET=
KANAGING,DIRECTOR
?
BANK Ths.1111.01--14E,NT.TICialk- -
LOANS
ACCOUNTS
ENCITITNG ;
ASSISTANT SECRETARIES ?CR:
MOGRAPHIC REGIONS
ECONOlaC AFFAIRS
PUBLIC AFFAIRS
CONGRESSIONAL RELATIONS.
INTERNATIONAL ORGANIZATIONS
PLANNING AID
EGO/JOCS 4
PRIVATE
ENTERPRISE
1 AD1aNISTRATION
2Utual Security
Coordination
DIFECTQI
INTERNATIONAL
COOPERATION
MakaSTRATION
CaIarrEa.
AMICULTILRAL
SURPLUS DISPOSAL
(P.L. ASO)
ASSISTANT Slaaisi'ARY O?.
DEFENSE FOR ISA
DIRECTOR
. _
10/ITARY ASSISTANCE
PROGRAMaNG i GENERAL OPERATIONS11A.11=2.1,NT . :PRIVATE ? ',-...01:71:EZSIONAL
tENTMIPR.ISSI RM.:Wit:NS
AND PLANNING 1.COUNSM.
ICA REGIONAL
OFFICES
Advises
ICA TECHNICAL
SWIMS
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
- - -Serves as member
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDRNTIAL
I. THE PRESENT FOREIGN AID- PROGRAM
A Present InstIut1gnalru?re
The present organizatio4I,etructure for the administration of
foreign assistance is shown on the chart tieing this page.
As this chart:diSe1Oses;-toreign asslsta*ee programs are
Presently being pawided through a nUmber of government agencies and
departments.
? ? .
..... ,
1. The Export-Import ,Bank,
The Export-Import ?1411.1c Yes created in 1934 as an instrument
tor premeting the export trade of the UnitedStates. Its loans are
generally for specifie purposes.and otter reasonable assurance of
repayment. Increasingly, In the last decade, its leans have been
for specific development projects and on long (10-20 years) terms.
Its loans are repayable in dollars. , It is organized as a cerperatien
and-is,:Controlled by a Board 07 Directors appointed by the President.
It Is not subject to the control of the Secretary of State ether than
by periVision. Its legislation specitipallrprovides that the Bank
/ Shall be an independent agency and that none of Its funetions,
powers, or duties Shall be transferred to any Other agency Of the
Government unless Congress shallso.provide by liw.
2. The'DeVelePment Loan Fund
This Fund, established by t. Congress 1n l97, Is organized
as a cerperation. It is administered by a Manaiing OireCtor'but is
Subject to the control of a Board of Dirietoie. The Board functions
pursuant to the foreign policy guidance of the Secretary of Stateand
Is Under the chairmanshipof the Under SeQretary of State for Economic
Affairs. ,The Development Loan Fund has stsmail Staff consisting of
155 people which processes applications for loans for development
projects and administers those loans. Its loans maybe repayable
In dollars or the currency of the borrower. The Fund maintains no
personnel Overseas but relies instead on the overseas missions of the
ICA. It has become the principal development lending arm of the
United States Government.
-,-,..,. ...
3. The 8iiii biTaiitient
The Department, by virtue of delegation of authority from
the President, ls'respopsible for coordinating all aspects of the
Mutual
CONFIDENTIAL
nms-Imccifipri and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
gO,NTIMENTIAL
-2 -
Mutual Security Program and assuri*g its compatability with foreign
policy objectives. In addition, various bureaus of the State Depart-
ment have jurisdiction over contributions to international aid
programs subject to approval of the Under Secretary of State for
Economia Affairs. .The00 programs include those of the United Nations?
the Organization of AMerican:Staies0.and the International Commission
for European Migration.
. .
4. the International Cooperation Administration (ICA)
The ICA was established within the State Department in 1955
pursuant to the authority of the lolutual Security Act of 1954. It has
a staff of 14,400 people (this includes foreign nationals employed
locally in field missions. It employs 19900 people in Washington,
and presently maintains 66 overseas field missions. Fifteen more
missions are being established. It is administered by a Director
and is subject to the direction and control of the Under Secretary
Of State for Economic Affairs. The ICA conducts programs in the
following categories:
(a) Defense support
(b) Special assistance
(c) Technical assistance
(d) Aid to certain programs conducted
by multilateral agencies
In addition, the ICA administers certain aspects of the
Agricultural Trade and Development Assistance Act (Public Law 480):
Principal responsibility for this Act, however, rests with the
Department of Agriculture.
5. The Department of Defense.
This Department administers military assistance through the
Military services, unified commands abro do and military assistance
advisory groups(MAAGS) stationed in recipient countries. Programs
of military assistance are subject to the approval of the Secretary
of State through tho office of the Under Secretary of State for
Economic Affairs.
6. The
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 3 -
6. The Department of Agriculture.
The Agriculture Department administers the disposal of
agricultural commodities nnderPublic'Law 400. These commodities
are made available principally for sale for local currency to under-
developed countries and constitute an important part of our foreign
assistance effort. The terms _and conditions of such transactions
Are flied ,by an inter-agency committee chaired by Agriculture. The
negotiation of sales agreements, however,- is conducted by the
Department of State.
7. The Treasury Department,
This Department chairs the National Advisory Council on
International Monetary and Financial Problems (NAO. Other members
of theCouncil are State Commerce, Export-Import Bank, and the
Federal-Reserve Board. The Council coordinates the policies and
operations of all agencies of the U.S. Government which make or
partioipate in the making of foreign loans or .engage in foreign
financial, exchange; or monetary transactions. Through this
cmechanism Treasury has direct contact with the aid program.
B. Arrangements for Coordinating Separate Aid 4:gencies
1. A. substantial part of or fereign,aiii-stance,offort - although
not all - is coordgmated by the lq.nderSecretaryjtf'State for Economic
Affairs Who serves as the Mutual Security Coordinator. Those powers
are derived from the President by delegated authority through the
Secretary of State.
2. As Mutual Security Coordinator, the Under Secretary exercises
directionand control over the International. Cooperation Administration
and the Development toafi Pawl, as well as he areign assistance
operations of the Department of State, and assures their coordination
. with programs of military assistance.
3. The Mutual:Security,Coordinator carries out his responsibilities
through a small staff of approximately twenty-five officers. This
staff assists him in performing the following functions
(a) Determining
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- -
( a ) Determining the overall amount of aid funds to be
presented to the Bureau of the Budget each year;
(b) Allocating appropriated resources among aid categories
and functions in the light of planned requirements;
reviewing and approving proposed programs;
(c) Preparing and conducting the annual presentation to the
Congress;
(d) Coordinating the carrying out of the annual programs
under the Mutual Security Program.
4. The Under Secretary of State does not have policy control
over the development lending ?X the Export-Import Bank. He has
only negative control of activities with respect to the provision
of agricultural commodities under Public Law 480 administered by
the Secretary of Agriculture.
5. Coordination of the financial terms and conditions
attached to aid is the responsibility of the Treasury Department
operating through the NAC,
CC. Deficiencies of Present Arrangements
Present aid arrangements are deficient because:
1. Diffusion of responsibility
The multiplicity of aid programs and diffusion of adminis-
trative responsibility inhibit concentration on a single coherent
objective.
2. Legislative patchwork
The various programs depend upon a patchwork of legislation
which contains disparate and sometimes conflicting criteria.
3. Ineffective policy control
The limited extent of control and direction of foreign
assistance vested in the Secretary of State makes it difficult
to employ foreign assistance as a completely effective tool of
foreign policy.
4. Short-term funding
The dependence of the programs on annual appropriations
makesit impossible to assure the Tldw,of resources over an adequate
period and inhibits effective development planning. At the same
time, the
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 5 -
time, the inability of the United States to provide assurances
of the availability of future aid makes it difficult for us to
apply, and for redipients to conform to, the tough criteria
essential to serious development.
5. Administrative barnacles
The flexibility and effectiveness of the programs are
impaired by complicated and time-consuming administrative
practices and legal procedures developed over more than a decade.
6. Loss of public gupport
The complexity and lack of coherence in the organization
and administration of the program, together with the staleness and
pedestrianism of the present approach, have greatly diminished
public support.
7. Lowered morale
The morale of those administering the programs has been
eroded by inadequate leadership and lack of coherent programs in
past years. Existing agencies have suffered a loss of prestige and
can no longer attract competent personnel.
8. Confusion abroad
The conflicting jurisdiction of the individual agencies
leads to confusion in the field missions. It results in delaying
needed decisions and actions and creates a sense of frustration
and futility. Because the faeld missions cannot be assured of
adequate support from Washington they cannot exert the necessary
leverage on the recipient governments.
9. Adequate concepts
Under existing legislation aid is available for categories
of assistance which do not respond to present-day aid concepts.
In addition, the terminology employed in the aid legislation is
obsolete.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
II. CONCEPTUAL REQUIREMENTS OF A NEW PROGRAM
A. Changing Objectives for Foreign Assistance
1. The disparity in objectives between different aspects of
our foreign assistance activities reflects historical responses
to a shifting world scene.
2. Our approach to foreign assistance has gone through
several phases:
(a) In the immediate post-war period the United
States was concerned with the rehabilitation
Of the major countries of Europe in order to
assist them to resist Communist subversion.
(b) With the enunciation of the Point Four Program
in 1949 we undertook to provide technical
assistance to under-developed countries on an
expanded basis.
(c)
In the immediate post-Korean war period the
United States, under Secretary Dulles, under-
took the construction of an elaborate system
of alliance to contain Soviet power. Foreign
assistance programs were designed and employed
primarily to secure and strengthen those
alliances. Such programs bore a strong
military emphasis
B. The Modern Objective
1. In recent years we have learned that limiting our aid
programs principally, to the narrow purpose of securing military
alliances does not necessarily advance U.S. security and political
Interests, The rapid crumbling of colonial structures has pre-
sented the industrialized world with the urgent need to help
newly emerging peoples. We now recognize that our security is
related closely to the ability of these countries to develop and
grow in freedom.
2, A new concept of foreign assistance has thus developed.
We must provide assistance to aid the new nations to develop the
hope and reality of economic, political and social advancement.
Only in this way can we create an environment in which their
energies can be devoted to constructive purposes.
3. The United States should no longer insist that the newly
emerging nations become active partisans of the West. It is
enough
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
I' ?'?'
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-2-
enough that they attain the strength, self-respect and independence
to resist being drawn helplessly into the Soviet orbit.
4. To attain those goals"they' must be enabled to develop their
economies and institutions at a' sufficiently rapid pace to provide
the promise that they may ultimately become self-reliant members
of the community of nations.
C. Aid Mast be Tailored to Differiu Stages of Development
1. Countries requiring aid differ widely not only in their
present stages of development but also in their possibilities
of development. Our foreign assistance tools must be sufficiently
adaptable to take this into account.
2. Certain countries, for example, do not have the indigenous
resources to achieve economic viability. Nevertheless, it may be
necessary for the United States to continue to provide assistance
to sustain such countries for strategic reasons. An example of
such a situation is Jordan.
3. Other nations, such as many in Africa, are not yet ready
for substantial economic development. They have not yet reached
the point where they can absorb a large infusion of external
resources. Their primary need at the moment is for aid in the
development of human and institutional resources, particularly
in education and in planning, together with resources to establish
basic infrastructure facilities.
4. A third category includes nations like the Republic of
China which have the potential capacity within the foreseeable
future effectively to mobilize their own resources, and thus be
able to use additional external developmental resources. In the
interim, they will require transitional assistance to move their
economies to a more advanced state.
5. The final category includes nations such as India which
have the capacity to absorb a substantial resource input and which,
with adequate aid effectively utilized, can move rapidly towards
the development of a self-sustaining economy. Their principal
requirements are for development assistance.
D. Development Requires an Assured Continuity of Aid Resources.
1. To be able to bring about an adequate pace of development
for countries which are capable of more rapid growth, the United
States must be able to provide not only adequate resources but a
sustained input of resources. This is necessary for two reasons:
(a) Countries can plan development only on the basis
of a predictable input of resources over a span
of years.
(b) The
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
Proposed Growth for Freedom Administration
SECRETARY OF STATE
UNDER SECRETARY/ECONOMIC
Policy Direction & Control
, ADMINISTRATOR
1 DEPUTY ADMINISTRATOR I
STAFF SERVICES
Economic Development
Research
Congressional Liaison
and Presentation
Information......
Plans, Programs and Directs
REG.
DIR.
/4^,
Executive Secretariat_J ./e?
.74
j'ocv
/
STATE DEPT.
BUREAUS
REG. 1 Fsa. I REG. 1,71.LTIL.
DM. I ,- DLR. i I I DIR. DIR.
i ?
..Reports to resoectiv6 regional director
FIELD STAFF
Pr:gra.-.3
PE5C77.:=3
F2ACE
r,^7;=qi
?-?
PR3,17.A.Y: SER.71CzS
* Organized as a corporation which utilizes personnel and facilities of the Fund and other staff and program services in
administration of the corporate programs. Board of Directors: Administrator, Deputy Administrator, Director, Food for Peace,
Director,- Education & Human Resources, Managing Director, Fund for Economic Growth.
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
'
\._
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
(b) The assurance of a substantial input of resources
is also necessary to induce or enable governments
of under-developed countries to impose the disci-
pline prereqdiSite to'ecejnomic and social development.
2. Tbe present Mutual Security Program lacks the requisite
authority and funds to provide the assurance of sustained aid
input which is needed.
E. Development Planning Should Emphasize a Coordinated National
PrograltRather'Than a Project Approach
1. Most of our present developmental assistance is provided
for specific projects. In many cases these projects are not
carefully considered with a view to their total effect upon
economic development for the recipient nations as a whole.
2. Most recipient nations do not have either the will or the
technical ability to make national plans on a systematic and
scientific basis. They must be encouraged to undertake planning
by the promise of future assistance. Moreover, they must be
guided in this effort by competent experts in our country missions.
Unfortunately, in most cases such experts are not now available.
The chaotic state of our mutual security programs and the dis-
jointed administration of those programs have made it impossible
to attract such experts in sufficient numbers.
F. An Effective Aid Program Requires Central Control and
Direction
1. At the moment there is no single United States agency
providing foreign assistance to which representatives of under-
developed countries may apply for aid. As a result, such
representatives tend to be confused when seeking assistance
from this country.
2. Our foreign assistance programs should be centrally
controlled and administered. Effective planning and careful
administration of resources are possible only if all major
aspects of assistance, planning, and operations are subject to
central direction.
3. This requires the creation of a single agency for foreign
economic assistance. The organizational structure of the proposed
single agency is shown in the chart on the facing page. In order
that the purposes of this agency will be identified with the
modern objectives of development, it is proposed that it be
called the "Growth for Freedom Administration."
G. The "Growth
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
tv-
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-4-
G. The "Growth for Freedom Administration" Must be Subject to
the Foreign Policy Codtrol'of the Secretary of State.
A_
1. Our foreign assistance programs must be administered in
support of the foreign po14cy objectives of the United States.
This means that there are only two Men under our constitutional
system who properly have the authority to determine the uses
and application of foreign assistance. They are the President
and the Secretary of State.
2. Suggestions have sometimes been made that tbe complete
control of foreign assistance should be entrusted to an adminis-
trator directly responsible to the President. Secretary Dulles
was originally a strong proponent of this view. However, this
position was repudiated by the Congress in 1954 when it insisted
that the President abolish the Foreign Operations Administration
and transfer its functions to the .State Department. The conviction
that the foreign aid function should be subject to the control of
the Secretary of State has been repeatedly expressed by Congress
ever since, as shown in Annex A.
3. Since foreign assistance is a major instrument of our
foreign policy, to place its control outside of the State
Department would -mean that the President had two competing
agencies conducting foreign policy. Since the ability to
dispense resources is an important foreign policy tool the
Secretary of State would be udder an almost fatal disability in
conducting our foreign policy effectively if he could not control
the use of this tool.
4. An aid organization outside the control of the Secretary
of State would moan further that. all differences of opinion
between him and the aid administrator would have to be appealed
directly to the President9 unless it were decided to establish
a First Secretary in the White House superior to the Secretary
of State.
5. This problem has largely been avoided under the existing
arrangements. The Secretary of State through his designess, the
Under Secretary for Economic Affairs, now has the power to make
decisions in disputes between the regional bureaus of the State
Department and the principal agencies administering aid programs.
The Under Secretary, acting for the Secretary, can in this way
bring foreign policy considerations to bear on the administration
of aid programs while at the same time preventing the use of
aid resources to serve short-term purposes at the risk of
defeating longer-range political objectives.
6. On the
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
--
6, On the basis of these considerations it is recommended that
a Growth for Freedom Administration be establisized as follows.
(a) Operational responsibility for the program woUld
be entrusted to an Administrator.
(b) The Administrator would conduct the Growth for
Freedom program subject to policy direction and
control of the Secretary of State who would
exercise this authority through the Under Secretary
for Economic Affairs.
(c) The economic planning and programming functions
presently entrutted to the Mutual Security
Coordinator would be transferred to the
Administrator.
The exact manner in whIch-the organization would function
is described in Annex B.
H. Military Assistance Should be Kept Distinct from Economic Assistance
1. The authority for military assistance is contained in the
utual Security Act. In order to deMonstrate clearly the peaceful
purposes of economic assistance, it is recommended that military
assistance hereafter be covered in separate legislation providing for
permanent authorization and inclusion in the Defense budget.
2. At the same time programs for military assistance should
continue to be subject to foreign policy control and approval by
the Secretary of State even though administered by the Department
of Defense. Military assistance programs supply us with a major
instrument of foreign policy.
3. The policies underlying military assistance should be
subjected to critical review and reappraisal looking toward more
realistic levels of military forces in recipient nations. We
should avoid building up excessive military establishments. The
training and utilization of military forces to contribute to the
civic and economic welfare and growth of the nation should be
emphasized.
The establishment of a State-Defense task force for the
purpose of such review is already underway.
I. Aid Must Continue to be Available for Other National Objectives
1. Economic assistance is required for other than development
curposes. Such aid may be needed to enable the recipient nation to
upport defense forces as in Korea. In other cases the United States
may employ the offer of economic aid as an inducement for the
CONFIDENTIAL
enjoyment
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIAIRDP86T00268R000700090001-7
the enjoyment enjoyment of strategic facilities or privileges as in Libya.
In still other cases it may benecessary to prevent political or
economic consequences inimical to our national interests as in
Bolivia.
2. While recognizing the necessity, of employing aid for such
strategic purposes, emphasis should be placed on the limiting f
such aid as severely as possible.
To the Extent Possible Our Aid Program Should be Coordinated
With theJrkagrams of Other Industrialized Countries.
1. The coming into being of the OECD should Make possible a
much greater degree of coordination between the major supplying
nations in assisting the development of under-developed countries.
2. The extent to which increased aid efforts can be enlisted
from other industrialized countries depends to a large extent upon
the establishment of our foreign assistance programs on a continu-
ing basis and upon our willingness to increase our own aid efforts.
K. The Proposal for Legislation - The Growth for Freedom Act
The legislation would cover the following major provisions:
1. A declaration of purposes.
2. Establishment of Growth for Freedom Administration
3. Development planning
a. Economic Development Office
b. Development Research program
Fund for Economic Growth
S. Education and Haman Resources Development Fund
6. Food for Peace
7. Surpluses for Development
8, Transitional, Sustaining, and Emergency Aid
9. Contributions to Multilateral Organization
10. Personnel
EL Development Career Service
b. Peace Corps
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved ForRelease2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 7 -
The Growth for Freedom Act would contain the following major
provisions:
1. Purposes
(i) To join with other developed countries in using our
common economic strength to further the growth of human and material 1
resources of less developed countries under free institutions. ----
(ii) To cooperate in developing and financing workable
long-term programs for achieving such growth along lines that are
responsive to the vital long-term economic, political and social
concerns of the peoples of the less developed countries.
(iii) To maintain and promote the political and economic
stability of friendly countries.
2. Administration
(i) To establish a new Growth for Freedom Administration,
subject to the foreign policy direction and control of the Secretary
of State, to administer all U.S. assistance intended to further the
above purposes,
(ii) To authorize the administrative expenses of the agency.
3. Development Planning
(i) To authorize the establishment of an Economic Develop-
ment Office designed to assist less-developed countries in establishing
well-conceived programs for the economic, educational and social
growth of the country. The office would be authorized to furnish
such assistance to foreign countries either directly or through
private or multilateral institutions.
(ii) To authorize the establishment of a research and
development program, It would be authorized to undertake, in
cooperation with private and international institutions, research
programs on ways and means of fostering more effectively the growth
of free and independent societies in the less-developed areas.
4. Fund for Economic Growth
a. Single Development Lending Agency
This Fund is intended to meet the needs for loans to
promote growth in less-developed countries which have little or no
capacity to service loans from normal lending institutions.
It would be
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-8-
It would be the principal development lending organization of the
U.S. Government. The Export-Import Bank would continue as an
independent lending agency stressing the promotion of U.S.
exports, It would, subject to foreign policy guidance, make
development loans particularly in those countries capable of
servicing dollar loans on normal terms and conditions.
b. Use of Public Debt Authority
The Fund would be financed primarily through public debt
authority, but such authority would not be used to finance loans
repayable in local currency. A relatively small annual appropria-
tion will be required to finance those loans that are to continue
to be issued on a local currency repayment basis.
c. Currency of Loan Repayment
For the most part, it is believed that more effective
multilateral action in development lending will result if all
nations accent loans repayable in their own currencies, 41though
the terms of the loans may otherwise be as generous as circum-
stances warrant. Moreover, local currency payment will, if
continued at current levels, give rise to accumulations in U.S.
hands of such large quantities of local currencies from repayments
of development loans and from PL 480 sales as to give rise to
serious political and economic problems.
d. Legislation on Lending
The Act would thus require the following provisions:
(i) To authorize dollar repayment loans on terms as
\fhard as circumstances of the recipient country will permit,
to finance programs for the development of the physical
resources of less developed countries. Such loans could be
used to finance either specific projects or programs for
importing commodities essential for implementing such development.
(ii) To authorize borrowing from the Treasury up to
$8 billion, an amount deemed adequate to cover requirements
over a four-year period.
(iii) To authorize annual appropriations ($500 million
in four years) for lending repayable in local currencies.
(iv) To authorize guaranty of extraordinary risks of
private investment by U.S. citizens in less-developed countries.
5. Education
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-9-
5. Education and Human Resources Fund
(i) To authorize the provision of technicians, demon-
stration equipment and related supplies; to help construct,
organize and support public and private institutions in the
fields of education, agriculture, government administration and
health, et al., to support and stimulate policies and programs
designed to encourage and promote the establishment of more
progressive political, economic and social practices and
institutions.
(ii) To authorize commitments and appropriations of
525 million, an amount deemed adequate to meet the requirements
for such commitments over the next two years.
6. Food-for-Peace
(i) To provide authority for furnishing U.S. surplus
agricultural commodities to friendly nations through sales for
local currency and grants for famine relief voluntary agency
programs, and other grants of such commodities in support of
the general purposes of the Act.
(ii) To provide authorization without limit for
reimbursing the Commodity Credit Corporation for commodities
to be supplied for this purpose over a four-year period.
(iii) To provide appropriation for $1.5 billion required
for such reimbursement in FY 1962.
7. Surpluses for Development
To authorize the utilization of non-agricultural commodi-
ties or equipment (military equipment and stockpile holdings)
owned by U.S. Government entities which are surplus to their
requirements but which would contribute to the programs and
purposes of the Growth for Freedom Act. Such surpluses would
be contributed to recipient countries on a grant, local currency
sales, or dollar repayable loan basis. The Act would authorize
annual appropriation to reimburse the U.S. Government entities
owning such surpluses.
8. Transitional, Sustaining and Emergency Aid Assistance
Aid in these categories is envisaged as being primarily
on a grant basis, annually authorized and appropriated.
a. Transitional
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-10-
a. Transitional Assistance
Would be provided as required to assure political and
economic stability of friehdiy. nations not yet able to qualify for
development lending in adequate dimension to satisfy their basic
needs, but which can achieve Such ability in the foreseeable
future. Concept envisagesIJrOgreASive reduction and eventual
elimination this category of aid. Appropriations for FY 1962
would be about $213 million.
b. Sustaining Assistance
Would be provided to those countries to which such
assistance is essential for the maintenance of political and
economic stability and lacking prospects for early development,
and to those nations requiring continued help to provide forces
or facilities of importance to U.S. security. Appropriations
for FY 1962 would be about $487 million.
c. Emergency Aid
Would be available as at present through Contingency
Funds to meet em rgency'situations for Which other resources are
inadequate. Appropriation for FY 1962 would be $250 million.
9. Contributions to Multilateral Organizations
To authorize grants to international organizations whose
activities promote the purposes of the Growth for Freedom Act.
Such grants would be financed through annual authorization and
appropriation. For FY 1962 appropriations of $175 million would
be needed.
10. Personnel
a. Development Career Service
(i) To authorize an officer complement adequate
to staff both field and Washington requirements for
administering programs authorized under the Att.
(ii) To authorize a reserve complement adequate
to meet the requirements of the Act for technicians
and specialists.
This Career Service should either be within, or
closely allied to, the regular Foreign Service of the
United States. However, its establishment would not
preclude the employment on other bases of Specialized
personnel.
CONFIDENTIAL
b. Peace Corp
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
14
CONFIDENTIAL
-11-
b. Peace Corps
To authorize the establishment of a Peace Corps
to facilitate the utilization of American citizens
who wish to participate directly in contributing to
the growth of less developed societies. To authorize
provision of funds to finance the expenses of such
volunteers.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
f7 CONFIDENTIAL
V;
III. FINANCIAL REQUIREMENTS
A. Current Levels of Economic Assistance.
1. The United States and other nations of the free world are
currently providing economic assistance to less-developed nations
in an amount aggregating about $5.5 million per year.
2. Of the S2.2 billion of appropriations sought in the last
Eisenhower budget for economic assistance under the Mutual Security
Program, between $1.5 billion and $1.75 billion was to be used to
secure national objectives, such as base rights, the maintenance of
military forces, or the avoidance of political or economic instability.
Thus, promotion of economic growth engendered by these resource trans-
fers was an incidental effect.
3. In th.e case of the other developed countries, their assistance
has been overwhelthingia,ydirected toward maintaining stability in their
colonies, cushioning their transition from colonial status, promoting
export markets or paying reparations.
L. This dimension of assi,stance is seriously inadequate to meet
the needs of the less-developed countries. The result is to encourage
/? competition for larger allocations by recipient countries through
__,dramatizing short-term politica1 problems and avoiding the task of
long-term planning.
B. The Dimension of Economic Assistance Required for Speeding
Economio Growth.
1. It is proposed that the industrialized countries of the free
world cooperating through the pECD commit approximately $30 billion
during the four years beginning July 1961 in the form of economic
assistance to the less-developed areas.
2. This should represent an increase in commitments of $8 billion
over the four-year period above the rate of current commitments for
economic assistance. It is proposed that this increase be shared
equally between the United States and its associates.
3. This proposal reflects a conviction that a significantly
enhanced availability of resources over a period of years is
essential.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
% CONFIDENTIAL
-2 -
essential. Aid must be directed primarily toward attaining constructive
and realistic objectivess toward ameliorating the basic problems of
less-developed societies and toward establishing a sense of economic
and social progress. Less-developed countries need well-defined and
realistic development goals adapted to their individual situations and
capacities. To achieve these purposes requires an environment in which
more generous access to resources is accorded those who demonstrate
an ability to employ them toward constructive ends.
4, TheIrerequisites of an effective redirection of aid to promote
development are the following:
(a) An increased dimension of resources,
(b) An ability to make long-term commitments to higher
levels of assistance.
(t-\
V
An emphasis on declining availabilities of assistance
for purposes ether than len.4ermrowth.
(d) An initiative by aid-giving countries in undertaking
the formulations organization and execution of 1 ng-
term programs in partnership with lesser-developed
countries.
C. Bases for EstiMates of Requirements for U.S. Economic Assistance.
1. The estimates shown in the tables in Annex C are rough
approximations designed-to provide the basis for a Presidential
decision regarding the order of magnitude of foreign economic
astistande. They are based in part on an elaborate review last
fall of estimates prepared by field missions last summer.
2. If theta estimates are accepted as orders of magnitudes they
must be subjected to a critical analysis and review before the details
can be presented or defended before the Congress.
3. The estimates do not contain any provision for anticipating
Congressional cuts. ICA and DLI' officers believe them dangerously
low.
4. The estimates
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
5 Billion
4 Billion
3 Billion
Declassified and Approved For Release 2013/10/29 :.CIA7RDP86T00268R000700090001-7
Commitments, FY 1962-65
(millions of dollars)
FY 1962 FY 1963
Total*
4,475
2 Billion 1,965
1 Billion
4,905
FY 1964
5,340
3,160
FY 1965
5,275
3,190
Develo
?257'
1,010
Non-
Devel
FY 1962
FY 1963
FY 1964
FY 1965
Total includes estimated $1.5 billion per year
of agricultural surpluses under the Food-for-Peace
Program which may be used for both development and
non-development. Cumulative totals are rounded.
Cumulative
FY 1962-65
$ 20,000
$ 10,900
$ 3,100
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-3-
4. The estimates for other DAG members are based on their official
expenditures in 1959. They should be expected to undertake commit-
ments at a rate $1 billion higher than the current rate.
5. The estimates assume (probably incorrectly) that the $500 million
Latin American supplemental appropriation for FY 1961 will meet social
development needs in Latin America for the 4 year period,
D. The Estimates.
Commitments Required.
1. The proposal calls for the commitment of resources by the
United States over the next four years in an amount totalling $20
billion, of which S6 billion would be used to reimburse the Commodity
Credit Corporation for agricultural commodities.
2. Commitments of resources required by these proposals are:
F.Y. 1962
F.Y. 1963
f'.Y. 1964
F.Y. 1965
TOTALS
$4.475 billion
4.905
5.340
5.275
Commitments under the Eisenhower budget would have totalled
$4.202 in FY 1962. Thus, an increase of commitments in FY 1962 of
approximately $275 million is proposed.
Authorizations Required.
1. In order to meet the need for an increased availability
of resources and the capacity to make long-term commitments the
burden of authorization requirement would vary sharply from the
commitment pattern.
2. Authorizations required by these proposals are:
CONFIDENTIAL
F.Y. 1962
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
,
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
FY 1962 $10.255 billion ($8.0 billion
in public debt authority)
FY 1963 1.130 billion
FY 1964 1.690 billion
FY 1965 .925 billion
$14.000 billion
3. In addition, authority would be sought in the legislation for the
COMm dity Credit Corporation to acquire agricultural products for
tale abroad to be reimbursed out of subsequent annual appropriations.
at World market prices. No limit in this authority would be proposed.
This proposal assumes a utiliZation of that authority in the amount
of $6 billion over the four-year period.
4. Of the $10.255 billion of new authorization to be sought for
Fiscal Year 1962, $8 billion would be in the form of authority to
borrow funds from the Treasury. to inance long-term dollar repayable
Cpans. If it were necessary to restrict thei.use._Of this authority
n order to satisfy Congress, the limitation should permit the use
of at least $2 billion by the end of Fiscal Year 1962, an additional
$2.5 billion by the end of Fiscal Year 1963, and an additional $2
billion by the end of Fiscal Year 1964.
Appropriations.
1, The pattern of appropriations requested to meet the commit
-
Merits prOposed would be different from both the pattern of commitment
and the pattern of authorization.
2. Assuming that $8 billion is made available through the use
of Public ,Debt Authority, the total of appropriations required for
the four-year period would total $12 billion.
3. Th. appropriations required by these proposals aro:
FY 1962
FY 1963
FY 1964
FY 1965
$ 3.755 billion
2.630 billion
3.190 billion
2.425 billion
$12.000 billion
CONFIDENTIAL
Of this
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
. Reimbursements
to CCC(Agricultural
commodities)
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
GROWTH-FOR-FREEDOM PROGRAM
BUDGETARY IMPACT(Expenditures)
(in billions of dollars)
FY 1962
3.9
FY 1963
4.2
FY 1964
4.6
Proposed Growth-for-Freedom Program
Eisenhower budget(Expenditures projecemsNon the assumption
of annual appropriations and commitmeMmreat the FY 1962_
bu 'Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Cum..jative
FY 1362-65
.$1746
$15.6 billion
FIGURES ROUNDED
? Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDEKTIAL
- 5 -
Of this $12.0 billion, half or $6.0 billion would be used to
reimburse the Commodity Credit Corporation.
Expenditures.
1. The pattern of expenditures required for the program would
similarly be different from the patterns of coMmitment, authorization,
and appropristions. Expenditures over the four-year period would total
approximately $17.6 billion. This compares with a total expenditure
of some $15.6 billion which would result from an extrapolation of the
Eisenhower budget.
2. The expenditures required by this proposal are:
F.Y. 1962
F.Y. 1963
F.Y. 1964
F.Y. 1965
$3.900 billion
4.200
4.600
4.900
$ 17.600 billion
30 For Fiscal Year 1962, expenditures under this proposal would
total about $3.9 billion as compared with $3.6 billion in the
Eisenhower budget.
Budgetary Impact
1. The impact of the program on the Federal Budget is measured
by expenditures. The modest increase in expenditures proposed by
this program should not represent more than a mall proportion of
the increase in government revenues which may be expected with a
resumption of an adequate rate of economic growth in this country.
The amount of increased expenditures involved over the four-year
period is estimated at $2 billion. Half of this amount would
consist of expenditures for agricultural commodities and represent
reimbursements of the Commodity Credit Corporation.
E. Component
CONFININTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 6 -
E. Component Elements
1. Development Planning and Research.
A four-year $100 million program is proposed to be used for
three purposes:
a. Research in the problems of economic and social growth.
b. Assistance to less-developed countries in preparing long-
range programs appropriate to their stage of development
and capacity for execution.
c. Financing engineering and economic feasibility studies of
specific projects that are required before financing of
such projects can be finalized.
2. Fund for ECOnorilic Growth
A fOtryear $8.5 billion program is proposed to finance,
through both project and program loans, long-range development
objeCtives that meet strict criteria with respect to both recipient
Country Self-help efforts and the feasibility and economic merit
of the particular project or program to be financed. ,
$500 million of this program would be in the form of an
appropriation to be used for lending against local currency repayments
In situations where dollar repayment is not practicable.
,
3. Education and Human Resources Development
A four-year program of $1.2 billion is envisaged. It is
recommended that an appropriation of $525 million be requested to
cover the needs of the first two years. Only $250 million would need
to be made available for obligation during Fiscal Year 1962. These
figures do not provide for the Social Development Program in Latin
America, for which separate appropriations are currently being sought.
4. Contribution to Multilateral Institutions
A four-year program of $900 million is envisaged with
annual authorization and appropriations. $175 million would be
requested for appropriation for Fiscal Year 1962.
5, Transitional
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
0017FIDENTIAL
- 7
5. Transitional Sustainin and Contin enc
The plan ,envisages a requirement for annual authorization
and appropriations totalling P.8 14114* over the four year period.
Of this amount, $945 million would be required for Fiscal Year 1962,
and progressively smaller amounts in each of the next three years.
6. Food for Peace,
The estimate here is for a program of $6 billion over the
four-year period, evenly divided in each of the four years.
7, Peace Corps.
-$200 million is asiupod as the four-year cost of the
Peace Corps although these figures lack firm foundation.
8. AdMiniatration.
Administrative costs or $300 million over the four
year period are envisaged with an estimated $65 million requested
C(?for Fiscal Year 1962, These, estimates also lack adequate foundation
but appear reasonable orders of magnitude.
Annex d discusses the financial plan in greater detail.
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
1
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
IV. QUESTIONS FOR DECISION
A. Borrowing Authority
The proposed legislation set forth earlier in this paper would
seek to finance the Fund for Economic Growth through public debt
authority. Opposition to this proposal exists both on grounds of
principle and of practicalit7. It is argued that public debt
authority should not be used for loans on the generous terms pro-
posed since there is doubt'as to the dependability of repayment.
In addition, there would be a cost to the government to the extent that
deferral or waiver of interest payments was involved. It is also
contended that the Executive should not attempt to delay the
appropriations process in the Congress.
There are set forth below the considerations which warrant seeking
long-term commitment authority. Some alternatives to the use of
Public Debt Authority are also indicated. The question is clearly
one for Presidential decision.
1. Need for Long-Term Authority
The need for long-term commitment authority is based on
two quite different sets of considerations.
a. Achievement of Development Emphasis
The first relates to achieving a turn-around in the
.,attitudes of less-developed countries toward their economic develop-
ment problems and toward foreign assistance. Our objective is to
focus their attention increasingly on establishing long-term
development objectives. More particularly, they need to adopt the
politically difficult domestic decisions necessary to provide better
assurance of efficient use of both domestic resources and foreign
aid. To achieve this, the total dimension of available aid will
have to be increased significantly if aid recipient governments
are to believe that more generous treatment will, in fact, be
accorded to those who orient themselves toward long-term objectives.
Once substantial commitments are made to countries preparing such
plans and showing evidence of determination and capacity to carry
them, an effective example will be set for others.
b. Relation to Burden Sharing
The second set of 'considerations relates to the need to
have an orderly sharing of the burden of foreign assistance with
other developed countries. The Government of the United States must
be prepared to offer more than its willingness to ask the Congress
for increased appropriations if the Governments of Western Europe
and Japan are to be induced to make available to the less-developed
countries a larger dimension of resources over a period of years.
The expectations of our partners must be that our Congress will
provide less than the Administration seeks, and perhaps substantially
(-less.
c. Alternative
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- -
c. Alternative Arrangements
Public debt authority, which avoids the need for the
Executive Branch to seek further Congressional action, would
certainly demonstrate to other aid donors our interest in increased
development. Contract authorization, which would bind the Congress
to appropriate at a subsequent session the funds needed to meet
payments required by use of the contract authorization, would be
equally satisfactory if the contract authority is large enough.
Annual appropriations might well make as large a
dimension of resources available, but it would lack the dramatic
impact on the expectations of the less-developed countries. It
would not produce the dramatic change in past attitudes toward long-
range development planning and towards United States assistance.
d. Need to Lead
We cannot expect a drastic turn-around in the
attitudes and actions of other governments unless we ourselves are
prepared to give the lead by dramatizing the change in authority
available to the Executive Branch of the United States Government.
B. Export-Import Bank
1. Transfer of Authority
It has been suggested that perhaps half of the unused
borrowing authority presently possessed by the Export-Import Bank
and the portfolio of development loans issued in the past, together
with the borrowing authority used to finance them, be transferred to
the proposed Fund for Economic Growth. Under these proposals, this
would provide the Fund with a capability to lend perhaps a billion
dollars plus the capacity to use repayments of several hundred million
a year.
The general conclusion has been that this would be unwise
since it would ensure opposition from many members of the Congress,
would not satisfy the need for commitment authority required by
the Fund for Economic Growth, and would run an unnecessary risk
of losing an existing asset.
2. Future Export-Import Bank Role
The proposal in the draft legislation envisages
concentrating development lending in the new aid agency. The
Export-Import Bank would continue as an independent agency. While
its
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved ForRelease2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 3 -
its essential function would be its historic one of providing credits
for U.S. exports, it also would continue to provide development loans
in those couttries, such as Mexico and Japan, which have the capacity
to service dollar loans on normal terms and conditions. Its development
lending would, to assure compatibility with the activities of the new
agency, be subject to foreign policy guidance.
Some may feel that the Export-Import Bank may conflict with the
lending activities of the new agency and present the prospect of two
competing U.S. lending organizations. This possibility can be avoided
by the careful coordination, through foreign policy guidance, envisaged
above. This, it is believed, would not be inconsistent with the Bank's
legislative mandate.
However, there is considerable opinion to the effect that to
obtain public debt authority for the Fund for Economic Growth will
require confining all development lending to that organization. The
President, in considering the arrangements suggested above, should
take into account their impact on the chances of obtaining borrowing
authority.
C. P.L. 480
1. P.L. 480--in or out of aid legislation
gThe question of a replacement of Public Law 480 by a
rovision in the new aid legislation involves primarily questions of
Congressional reaction. It is believed, however, that improvements in
existing arrangements for administration could be effected by Executive
action. Thus, the question becomes one of whether the proposal would
strengthen or weaken the case for the new foreign aid bill.
2. Role of Department of Agriculture
It is presumed that under any arrangements, the Secretary
of Agriculture would retain responsibility for determining the
commodities and the quantities thereof which would be available for
transfer to foreign recipients.
3. Case for Inclusion
The value of the proposal is the fact that it would enable
this important foreign aid resource to be administered under the same
policies and administrative arrangements as other resources provided for
foreign assistance. This would clearly simplify administration. The
direct control of this major resource instrument would significantly aid
the Administration to encourage or induce adequate self-help measures.
It would not only save time in administration but would permit better
planned and coordinated programs in support of foreign policy objectives.
4. Farm Support
The proposal might also engender the support of the farm
O0 oc who would welcome attribution of the cost of surplus production
foreign aid rather than agricultural programs.
CONFIDENTIAL
5. case
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 4 -
S. Case Against Inclusion
In opposition to the proposition, it is contended that
the Agricultural Committees of the Congress would object to
passing jurisdiction over this legislation to the Foreign Affairs
And Foreign Relations Committees. It is also contended that
incorporating PL 480 And-foreign aid legislation would have the effect
of substantially reducing total resources available for foreign aid.
There Might be a tendency to reduce dollar appropriations for non-
agricultural commodities on-the theory that surplus agricultural
commodities could substitute therefor. It would also result in
making foreign aid look much more expensive to the Congress and to
the public, and increase pressure for reduction.
This would seem to be a matter requiring careful check
Of Congressional attitudes. Certainly, if there was agreement on
their part, and if in their opinion the aggregate resources available
for foreign aid would net be adversely affected, then there is every
reason to support the proposal.
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONGRESSIONAL EMPHASIS ON
STATE DEPARTMENT CUTROL OF FOREIGN AID
ANNEX A
For at least the last eight years the Foreign Relations Committee
and, to a somewhat lesser degree, the Foreign Affairs Committee have
repeatedly emphasized their belief that the ptate Department should
exercise direct control over the foreign economic aid programs and
policy guidance over the military assistance:program. A brief summary
of developments and statements biT the two committees follOws:
1953
In 1953 the new Eisenhower Administration issued Reorganization
Plan,7 which removed the Technical Cooperation Administration from
the Department of State and consolidated it with the ,old independent
Mutual Security Administration to create the Foreign Operations
Administration (FOA). Senator Mansfield said at that time: (CR
July 314,a953, p. 10899 and 10900)
"If Reorganitation Plan No. 7 went one step further,
(Th if it placed the new Foreign Operations Administration
actually in the Department of State under a Deputy
Secretary or the equivalent, then, I believe, the
President might reach the objectives he seeks."
"It seems to me that this whole problem could be
eliminated by the pimple act of giving the StatelDepart-
ment real, not theOretioal, control of the foreign
aid programs, by the simple act of moving Mr. Stassents
household, so to speak, into Mr. Dulles' household."
1954
,In 1954 as part of the major revision of the Mutual Security. Act
inthat year, the House'Foreign Affairs Committee removed from FOA the
authOrity for continuous supervision and general direction of the
military assistance program. The Senate directed that in one more
year the military 'and economic programs should come to an end so far
as their basis for the continuation of an independent, agency was
concerned. If they were to be continued thereafter, they must be
presented to the congress by the regular agencies of the Government.
The Foreign Relations Committee said: (Report No. 1799, July 13,
1954, p. 83)
... It believed also that as a general rule it is unwise
for foreign economic programs and the coordination of
foreign military assistance programs to be undertaken
outside the immediate purview of the Department of State."
ZrEh.e Committee7 "also had in mind that foreign-aid programs,
if they
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
2
if they are to be continued,, must be put on a basis requiring
presentation by permanent agencies of this Government, the
Departments of State and Defense, and not an independent
agency."
The House-Senate Conference on the two differing bills agreed
that FOA should end in a year, saying: (Conf. Rept. No. 2637,
Aug. 5, 1954, P. 45)
:
"It. is not desirable to maintain -a special agency
devoted to developing and administering assistance programs
throughout the world. Under the circumstances such programs
tend to become an en4 in themselves. Instead, the
regular departments of Government responsible for foreign
policy and for defense should exercise the legislative
authority which this bill provides to make available necessary
aid when an emergency justifies such action. There. should
be no incentive, however, for those responsible for such
action to perpetuate these aid programs.
"For these reasons the 'committee Of conference agreed
to a provision specifically terminating the Foreign Operations
(I) Administration on June 30, 1955, and providing for the
transfer of its remaining functions to appropriate departments
of the executive branch'."
1955
Pursuant to this direction, the President abolished FOA and
transferred its economic functions and its coordinating functions into
the Department of State in a semi-autonomous agency, the International
Cooperation Administration. The Foreign Relations Committee commended
this action. It quoted the above statement from the 1954 Conference
Report and said: (Rept. No. 383, May 27, 1955, p. 36)
"The time has come for the foreign aid organization to
reflect the fact that this program is an essential and impor-
tant part of American foreign policy,, The committee
expressed in its report last year i.6s desire 'to make it clear
that such programs as may be necessary in the future should
be presented to the Congress by the regular agencies of the
Government and should not serve as the basis for the
continuation of an independent agency of Government.***'
"The Committee still holds this view and is gratified that
the non-military programs are to be shifted to the State
Department, Under the umbrella of a permanent department,
the organization for foreign aid should find more stability
and continuity - which have been impaired by successive
reorganizations."
1957
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
3
1957
The Foreign Relations Committee recommended repeal of the first
sentence of Sec. 525 which placedin the Director of ICA certain
coordinating powers once vested in the former director of,FOA The
committee further modified the Act "In order that the Department of
State should have clear and unquestioned responsibility for coordina-
ting.military and other aid programs With felleign policy." The Report
said: (No. 417, June 7, 1957, p. 24)
"The Committee believes the Secretary of State should
assume greater responsibility in carrying out the coordi-
nation functions discussed above. To this end the
committee bill would clearly place such responsibilities
in him, under the direction of the President."
'This was the year the Development Loan Fund was created and the
Conference Committee said (Report No. 1042, August 8, 1957, p. 5):
"In accepting the provisions for administering the
Development Loan Fund.contained in the House bill the view
was expressed among the conferees that authority and
responsibility for the.economic aspect of the program
Should be, integrated more closely within the State Depart-
rent."
The Conference Report pointed out that the Manager of the DLF was
to be in the ICA as a deputy to the ICA Director and would be guided by
a loan committee. "In carrying out its functions the loan committee
would operate under foreign policy guidance laid down by the Secretary
of State..."
?
1958
In this year the Office of Under Secretary of State for Economic
Affairs was reestablished, upgrading the existing Deputy Under
Secretary for Economic Affairs, The Foreftgn Relations Committee
said. (Report No. 1627, May 26,. 1958, p. 29):
"... This upgrading is desirable, inthe committee's view,
tn order to assert further the authority of the Department of
State over the activities Of th*: International Cooperation
Administration. This action is in line with the long-estab-
lished policy of the Congress, reflecte&An many provisions
of existing law, that the mutual security program is an
integral part of the foreign policy of the United States and,
as such, should be directed and controlled by the Department
of State."
The Conference
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
' Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
- 4 -
The Conference Committee said of this change (Report No. 2038,
June 26, 1958, p, 21-22):
The new position will give further emphasis to congres-
sional insistence that the mutual security program is an
integral part of United States foreign policy and, as such,
is under the immediate direction of the Department of State."
1959
In preceding years, the Foreign Relations Committee had consoli-
dated the coordination of all the economic and military aid programs
in the Secretary of State. It now went beyond this. It repeated the
statutory language concerning coordination and substituted the follow-
ing:
"Under the direction of the President, the Secretary
of State shall be responsible for the continuous super-
vision and general direction of the assistance programs
authorized by this act, including but not limited to
determining whether there shall be a military assistance
program for a country and the value thereof, to the end
that such programs are effectively integrated both at
home and abroad and the foreign policy of the United
States is best served thereby."
The Committee said of its change (Report No. 412, June 22, 1959,
p. 36):
"The language speaks for itself. It emphasizes the
committee's view that the mutual security program, in its
separate parts and in .its totality, is a tool of American
foreign policy and its use should be directed by the
officials responsible for American foreign policy - namely,
the President and the Secretary of State."
The Conference Report approving this amendment noted that it
was "to make the Secretary of State responsible for the continuous
supervision and general direction of the mutual security program".
(Report No. 695, July 21, 1959, p. 31).
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
AP- CONFIDENTIAL
ANNEX B
THE ORGANIZATION PROPOSED
A. Foreign Policy Control and Coordination
The administrative proposals envisage a retention by the
Under Secretary of State for Economic Affairs of authority,
delegated from the President and the Secretary of State, to
coordinate all foreign assistance, even though the legislative
proposals envisage separate legislative enactments with regard
to military and non-military activities. Thus, the Under
Secretary of State for Economic Affairs would serve to give
policy guidance and direction to the operating agencies in the
foreign assistance field and to reconcile political, military,
economic and other differences of opinion arising with respect
to the composition and conduct of foreign assistance.
His responsibility with respect to the military assistance
program would necessarily be shared with the Secretary of Defense
who would be responsible for the administration of approved
programs. The relationship envisaged is one which would assure
and strengthen the capacity of the Secretary of State, or his
delegatee? to require that programs of military assistance be
responsive to foreign policy guidance, control and direction,
eak and harmonious with other foreign assistance programs.
The Under Secretary of State for Economic Affairs would
continue to exercise authority over the political and functional
bureaus of .the Department of State in so far as their interests
relate to matters of economic policy or foreign assistance.
He would have available to him such staff assistance as he
determined to be necessary but such staff would not be interposed
in the chain of command between him and the operating agencies or
the various bureaus of the Department of State.
B. The Growth for Freedom Administration
A Single Agency
This administration would be established within the Department
of State and have full operational responsibility for the planning,
programming and administration of all foreign economic aid author-
ized by the new legislation. It would also participate in the
development of U.S. policy and instructions to U.S. representatives
in multilateral
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
'\?tv&I,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
in multilateral institutions and agencies engaged in lending or
other activities related to the achievement of the purposes of
the legislation.
Caliber of Staff
The Administrator and his senior staff at home and abroad should
be men of recognized stature and ability, able to attract and to
lead the ablest of our citizens to effective service in this program.
Their salaries, emoluments and status in the bureaucratic hierarchy
should clearly reflect Executive Branch trust and confidence and
engender respect and confidence both in the United States (Congress
and the public) and abroad. There are few more difficult tasks
than those involved in this program. Men and women of the highest
caliber are essential.
Field Staff
The administration must create and develop strong and competent
field staff. The field staff must be responsible to the Ambassador
of the United States in the country and the Ambassador must be made
cognizant of his responsibility to guide and to support the field
staff. The field staff should be headed by men skilled in the
problems of development and in the employment of U.S. resources
as an inducement to progress. It is the field staff which is in
the most favorable location for effective analysis of country
problems and potentials, for the formulation of plans of aid
action, for effective encouragement of country efforts and for
administering U.S. operations. These are the focal points for
the application of our capacities to achieve progress toward our
goals.
Organizational Requirement
There must be a clear line of command and communication running
between the Administrator and the field staff. The Administrator
must be able to issue policy guidance and direction to the field
staff; he must approve or disapprove the program proposals of the
field staff; he must assure the field staff that approved plans
and programs will get rapid and effective implementation at the
U.S. end of the line; he must be apprised by the field staff of
progress or failures. For these purposes the Administrator must
have a Washington staff which is organized to deal effectively
with policies plans. programs and operations in both functional
contexts and in their appiicationtb country situations. The
organization must also possess competence to formulate and process
legislative
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
* Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
73-
legislative and appropriation proposals, to keep the Congress and
the public informed and satisfied, to manage public funds prudently,
and to administer not only A substantial staff in Washington but
staffs in hundreds of locations in scores of countries around the
globe. There is no simple Or single organizational pattern which
can do this job; no organizational pattern can work unless there
is recognition of the need for unusual competence in all parts of
it and of the need for a continuous interplay between all parts
in a flexible way to permit a variety of differing and changing
situations and needs to be met in consistent but not identical
fashion. Thus the goegraphically oriented staff member must
recognize, appreciate and utilize the particular skill and
competence of functionally-minded staff members and vice-versa.
With these rather obvious but none-the-less valid observations,
the organization for Washington envisaged is described as follows.
Fund for Economic Growth
There would be established within the Administration a corpora-
tion known as the Fund for Economic Growth. Its Board of Directors
would include the Administrator as Chairman, the Deputy Administra-
Ctor, the Director, Food-for-Peace, the Director, Education and
.,Human Resources, and the Managing Director of the Fund. It would
establish policies and review major lending proposals.
Deputy Administrator
The Administrator of the Agency would have a principal Deputy
in charge of planning and programming of aid operations. This
Deputy would have an immediately supporting small staff with two
principal functions: (1) the development and promulgation of
general policy guidance for the program as a whole, and (2) the
comparative evaluation of proposed plans and programs for
consistency with such guidance and to assist the Deputy in
determining or recommending the allocation of resources among
a variety of competing needs.
Regional Directors
Reporting to the Deputy Administrator would be several Regional
Directors to whom countries would be assigned on a combined regional
workload basis. These regional officers, with supporting staffs,
would be responsible (1) for such additional guidance for planning
and programming by the field staffs as the requirements of the
particular region or country warranted; (2) for eliciting planning
and programming recommendations from field staffs; and, utilizing
for this
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-4-
for this purpose its own skills and competence, that of other members
of the organization having a contribution to make and that of inter-
ested other agencies (including political bureaus of the State
Department) evolving by exchanges with field staff, plans and
programs for review by the Deputy Administrator; (3) for assigning
to operational units programs and projects for execution; (4) for
monitoring and expediting the implementation of the programs; and
(5) for periodic, but no less often than annually, reappraising and
revising country plans and programs.
Director - Multilateral Programs
Also reporting to the Deputy Administrator would be a Director
who would be principally concerned with formulating programs for
U.S. participation in multilateral activities related to growth
for freedom. These would include participation in the development
of instructions to U.S, representatives in such bodies, stimulating
and catalyzing general and specific consortia for aid, the provision
of U.S. contributions to UN agencies and the like. In these
functions, he and his staff would work in close cooperation with
the Regional officers and other interested persons inside and
outside the administration.
Economic Development - Research Staff
Attached to the office of the Administrator as a separate unit
would be a small Economic Development Staff. The functions of this
staff would be to work in close collaboration with the academic and
intellectual community at home and abroad and with the domestic and
field staffs of the administration to stimulate and foster research
in the field of development and to assist other governments and
foreign groups in formulating and establishing development goals
and ptans for resource management to achieve such goals. The use
of this Staff would be directed towards selective high priority
targets where the opportunity to use such help effectively exists
and_ would best promote U,S, interests.
For the execution of approved programs issuing from the Adminis-
trator or Deputy Administrator (based on regional proposals) there
wo_uld be several operating organizations.
Food-for-Peace Director
Where the approved program called for the provision of Agricul-
tural commodities from U.S. sources, it would become the task of the
Food-for-Peace Directkr to assure the conclusion of all necessary
arrangements to effect .the delivery of these commodities. This
office would work in close conjunction with the Department of
Agriculture
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
-5-
Agriculture which would continue to handle the physical movement
of the goods. The Food-for-Peace Director would also have
responsibility for general coordination with the Department of
Agriculture to assure that U.S. agricultural policy decisions
accurately and adequately took into account the needs of the Growth
for Freedom program for agricultural products. He would also seek
to develop opportunities for more effective use of our produce to
achieve our goal and would work in close conjunction with field
staffs and regional officers to this end. He would also be
responsible for the Title 3 programs and for coordinating them
with field staffs and regional officers to assure they were not
inconsistent with but served U.S. interests.
Assistant Administrator - Program Services
Where the approved program called for the funding of commodity
imports, or for the provision of cash grants, responsibility would
rest with the Office of Program Services headed by an Assistant
Administrator. This officer would not only be responsible for
these implementing services, but would also have other officers
who serviced the entire administration in the fields of personnel,
fiscal, housekeeping and contractual matters. Essentially this
office woUId provide general management services. Unless and
until experience indicated a need for special arrangements, this
office would also execute programs calling for use of non-
agricultural U.S. surpluses.
Director - Peace Corps
Where the approved program called for the provision of operative
personnel to do specific tasks abroad, the responsibility for
assuring that the program requirement is met would rest with the
Director of the Peace Corps. As in the case of the Food-for-Peace
Director, he would have a positive function not only to execute
approved programs but in conjunction with field staff and regional
officers to explore and develop opportunities for use of this
resource to promote U.S. policy objectives. He would also be
responsible for the administration of the Peace Corps. The precise
relationship between the Peace Corps, its Director, and the regular
services of the Administration and the Assistant Director for
Management would be evolved depending on decisions yet to be made
regarding this new concept.
Managing Director - Fund for Economic Growth
Where the approved program called for development lending to
finance a capital project or a program loan (or for a capital
project funded from grant funds) responsibility for effecting the
loan
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
loan would would be assigned to the 'Managing Director, Fund for Economic
Growth. This officer wouldnot bnly,be responsible for executing
approved programs, but wodld-also-participate in the process of
program development in conjunction with the field staffs and
regional officers. He would be reSponsible for negotiating loan
agreements and working out with field staffs acceptable project
terms and conditions. He would Identify and report projects which
failed to meet lending standards and suggest or develop others
which more effectively served our goals. He would also be
responsible for handling the guarantee program and for developing
joint private and public investment proposals. These proposals
would require concurrende and approval of field and regional
officers.
Director - Education and Human Resource
Defelopment
Where the approved program called for grant or loan assistance
in the provision of technical assistance for the development of
human or institutional resources, responsibility for execution
would be vested in a Director for Education and Haman Resource
Development. As in the case of the Managing Director; Fund for
"Economic Growth, this officer and his staff would participate in
the formulation of programs. He would identify and report projects
which were impractical or ineffective, and suggest or develop others
which would more effectively secure our objectives. He would work
in close conjunction not only with field staffs and regional
officers, but with the Director of the Peace Corps for matters of
related interest; and with the Managing Director, Fund for Economic
Growth, where capital projects related to human resource and
institutional development projects were being undertaken. He
would provide field missions with technical advice and support
with regard to specialized fields of human or institutional
development. His staff would include such technical staff groups
as were necessary.
Staff Services
Servicing the entire Administration but administratively
attached to the office of the Director would be an Executive
Secretariat, a Legal Staff, and Information Staff and a Congressional
Mations/Presentation Staff. The relationship of these units to
similar State Department officers would have to be evolved.
The concept envisages the creation of a new agency not the
retitling of old ones, While it is assumed that all of the
C ompetent
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
.7.
competent present staff will have opportunity for posts in the new
organization a fresh a/tart and freedom in selection of staff is
proposed. This paper does not deal with the problems of legisla-
tion and administration involved in effecting this purpose.
Charts are attached showing the present organizational
structures and the proposed new organization for economic aid.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
cp
NATIONAL ADVISM
COUNCIL ON INTER-
NATIONAL YONETAPI
AND FINANCIAL
PROBLE:13 .
Instructs
U.S. P.EPP=NTAlit-vzS
TO URD,LT,ET,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
jet.n-u
ORGANIZATION FOR FOREIGN ASSISTANCE
PRE,,-.SIDEN
Inspector General
\and nCo troller
SECRETARY
UNDER MCRETARY
Supervise S 2J--iT_Supe rvi se s
Dire ct s & Directs
2utua3. Security
Coordination
INTER-A=ICY
C=ITTEE ON
_
AGRICULTURAL
? SURPLUS DISPOSAL
(F.L. 480)
BO--.RD OF DIRECTORS
BOARD OF DIRECTORS
ASSISTANT SECRETARIES FOR:
DIRECTOR
ASSISTANT'SaktLiARY
MOGRAPHIC REGIONS
_
DEFENSE FOR ISA
PRESIDENT
KANAGING OR
INTERNATIONAL
ECONOMC AFFAIRS
,DIRECT
, puBLic AFFAIRS
CONGRESSIONAL RELATIONS
INTERNATIONAL ORGANIZATIONS
COOPERATION
! ADMNISTRATION
DIRECTOR
_
zaLITAR/ ASSISTANCE
.t..%.1-3R-T-11TORT BANK
DzP.L.LOPIENT
- - ?
I-
LOA1,S
1 ACCOUNTS
EIM-1=1G
OPERATIONS
PLANNING AND
ECONCEICS
PRIVATE
ENTERPRISE
ADataSTRATIal
FROCR/A1,2-aNG GE- ,AL OPERATIONS ViANAMENT 'PRIVATE C.',ONM.ESSIONAL
COL-11SM ,ENIMPRISERELATIONS-
.
AND PLANNING
ICA REGIONAL
OFFICES
....????
Advises
ICA TECHNICAL
SERVICES
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Oa OW Oar MI
-Serves as member
O Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Proposed Growth for FrE.Pom Administration
SECRETARY OF STATE
UNDER SECRETARY/ECONOMIC
Policy Direction & Control
ADMINISTRATOR
DEPUTY ADMINISTRATOR
STAFF SERVICES
Economic Development
Research
Congressional Liaison
and Presentation
Informatio
Executive Secretariat?I ../e-
/4Y
yJb-
STATE DEPT.
BUREAUS
Plans, Programs and Directs
REG.
DIR.
r
REG. I REG.:: 1 REG.
DIR. i DIR.
MUITM.
DLR..
. Reports to respectiv6 regional director
FIELD STAFF
7r:Era7_3
I ?-7=',G771:23
COP:=S!
1C;CD FCH PEACE
?4 FROa71,M SEav
* Organized as a corporation which utilizes personnel and facilities of the Fund and other staff and program services
administration of the corporate programs. Board of Directors: Administrator, Deputy Administrator, Director, Food
Director, Education & Human Resources, Managing Director, Fund for Economic Growth.
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
in
for Peace,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
/
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
- Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
ANNEX C
A FINANCIAL PLAN FOR SPEEDING
THE GROWTH OF TRE LESS-DEVELOPED 'AREAS
The Proposal
The proposal is for an undertaking by the more prosperous
countries of the free world., working together Under the OECD, to
commit approximately $30 billion during the four years beginning
July 1961 in the form of ecanomic assistance to,the less-developed
areas. This sum would represent an increase of some $8 billion
over the four-year period above the rate at which such assistance
Is currently being committed (abjit five and 'one-half billion per
year). The increase would be shared equally ($4 billion each)
between the United States and its associates, (see Table I). The
budgetary burden on the :United States over the same four years
would be about $2 billion arger than if the pr_grams were continued
at the same level proposed in the last Eisenirtwer budget. About
half of this $2 billion weuld be in the form of agricultural products
and Should reduce correspondingly, amounts that peed to be budgeted
cior domestic agricultural price supports.
The proposal should inaugurate a transferMation in the relation-
ship of the less-developed countries to the Mere prosperous free
societies. Effective use of such a dimension of roSources would
seriously test the cap cities of the governments of'theless developed
countries; if they were to employ it fruitfully, their talents' for
organization and leadership in their countries would be'seriouSly
strained. Yet a commitment of this magnitude would'mako,both
tenable and credible the insistence of donors on applying strict
criteria with respect to the use of their assistance. The bulk of
the resources would be made available on the basisyof leans, With
the duration and terms of repayment as generous:and flexible ke the
debt service of the recipient country requires0,44eint effort to
develop constructive programs would be required of:den is and '
recipients. Such programs, were they t be meaningful:, would require
concrete long-range goals, adapted to the particular problems and
capabilities of each recipient country.
The donor countries would, perhaps for the first time, be called
upon to contribute to a common constructive eff rt,'in which the share
of each would possess a defined and significant relationship both to
the contributions of others and to the problems, programs and policies
of the less-developed'areas.
C.
CONFIDENTIAL
The Turn-Around
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CON
TA r
-
The Turn-Around
The keystone to the success of the program must be a sharp turn-
around in the orientation of both donor and recipient countries to the
economic assistance relationship. or the $2.2 billion sought in the
last Eisenhower budget in appropriations for economic assistance under
the Mutual Security Programp.between.one and one-half and one and three-
fourths was to be used in connection with some limited national security
objective -- to assure military base rights, to support military forces,
to avoid political or economic instability. Much of the resources thus
provided would undoubtedly promote economic growth, but such a result
would be indidental to the primary purpose for which it was given.
As for the other developed countries, their assistance is overwhelmingly
directed toward maintaining stability in their colonies, easing the
transition from colonial status, promoting export markets or paying
reparations. The total volume of assistance thus provided aggregates
A large aim - about $5.5 billipp_in reeent.yearse However, the needs
and problems Of the less-develepe4,areas are, such that this dimension
is seriously inadequate - and each is_led,to compete for a larger
allocation by dramatizing its short-term political problems and its
own instability. The immediate preblems Inevitably command prior
ettention.
What it needed is for aid to be directed primarily toward
attaining constructive and realistic objectives, toward ameliorating
the basic problems of the less-developed modietios toward establishing
a sense of economic and social progress, toward making credible the
assertion that such progress can be attained within'the framework
of Western society. The less-developed countries need well-defined
realistic charts for their progress, adapted to their individual
problems and capacities; foreign assistance should be directed toward
helping translate such charts into reality.
However, such an approach to foreign asiiitahoe requires an
environment in which more generous access to resources is accorded
those who can demonstrate an ability to employ them toward constructive
ends. With a substantial increase in the dimension of available
resources, it should be possible to confine the increase strictly to
those who demonstrate such an ability and to wean the others
progressively toward the new approach.
Thus an
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
9CEFIDENTJAL
- -
Thus an essential prerequisite for tho "t -around" is a
significantly enhanced availability of resources over.a perioclof
years in the hands of the administrators of:foreign:aisistance. An
increased availability must be held up as the prize ferthose who .
demonstrate a capacity to meet strict orite,rWtor'acoeso.,to
assistance.
The turn-around can hardly be rapid or abrupt. The preparation
of realistic long-range programs will take time and will require help.
Meanwhile, the short-term problems, toward which assistance is now
primarily.directeci, continuo andmay-even be exacerbated. The ?
national interests of the donor 'countries can be jeopardized today
and tomorrow, just as-yesterday, _Iwe:Assidtance to.be.dinied in
.suah situations.. ?
Achieving the Turn-Around
The turn-around will thus require the ,following:
(A) an increased dimensien pi' Aid resources
? (b) a long-term commitment to a higher level of assistance
on the part of the donors
(c) a presentation of the long-terkprogram Which emphasizes.
declining availabilities for ptirposes other than long-
term growth ,
? (d) assumption of joint responsibilitr:.by the donors for
helping formulate, organize, and execute long-term
programs in partnership with the 104.6developed.
countries.
Financialliesponsibilitrof the United States
The leadership for such a turnaround can only come. frOMthe
United States. .It must take the Witiative, and.iteelfbe porth;-?
doming, with respect to each of the preceding'prereqUielt040
success is to be athieved.
Yet the very circumatance that the new Growth for Freedom
program requires a. "turn.-around" in the programming of U.S. foreign
eeonemic
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
economic assistance means that no significant additional financial
burden would be placed on the United States in its first phase.
The requirement is for a substantially enlarged Congressional
authorization to commit funds over a period of years; neither the
physical resources to be delivered to the less-deVeloped countries
nor the cash expenditures of the United States Government will be
augmented significantly above previous intentions during the next
year or so.
The estimates that follow are rough approximations designed to
provide the basis for a Presidential decision concerning the gross
magnitude of foreign economic assistance to be provided less developed
areas. They are based on an elaborate review last fall of estimates
prepared by field missions last summer. The estimates have been
adjusted and roughly adapted to the new proposals, but have not been
subjected to detailed review by country political and economic
experts, whether in Washington or the field. If these estimates are
acceptable as orders of magnitude, they must be subjected to a more
elborate review process before the details can be presented and
defended before the Congress. Morever4 the estimates are manifestly
rninimal, aggregating substantially leas for fiscal year 1962 than
he Coordinator's November request to the Bureau of theBudget.
If Congressional cuts must be anticipated, donsideration should be
given to increasing the estimates prior to Congressional presentation.
The plan herein proposed would involve an increase In U.S,
commitments of resources over the next foUr years, totalling about
$4 billion more than the rate foreseen for the current fiscal year in
the January 16 budget. The Eisenhower budget for fiscal year 1962
envisioned an increase of some $200 million over the current year.
The present proposal is unlikely to involve an increase of as much
as $300 million above the January 16 budget 'virtually all in the
form of agricultural commodities.
Because commitments have been rising in recent years, the
Eisenhower budget provided for an increase of more than $400 million
in expenditures in fiscal year 1962 above the level of the past three
years, (see Table II). Expenditures would have continued to increase
even if future commitments were kept at the $4.2 billion level proposed
in the fiscal year 1962 budget of January 16, At that level, total
expenditures over the next four years may be estimated at $15.6 billion.
Because
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 5 -
Because of both the time required for the "turn-around" and the
long lead-time between programming, translation into fully engineered
projects and delivery of finished goods, expenditures out of the
increased commitments are unlikely to exceed $2 billion during the
sa790 four years. Moreover, half of the increase would consist of
exenditures for agricultural commodities. Since such commodities
wo:CA probably have had to be financed by the government under the
prime support program, it is doubtful if an increase in their use
for foreign assistance involves any meaningful increase in the total
budgetary expenditures of the U.S. Government.
Assuming a reasonably rapid recovery of the United States
economy and the maintenance of a high rate of economic growth over
the four-year period, expenditures of this magnitude should not
pre-empt more than a small proportion of the expected increase in
government revenues. Expenditures would, of course, continue to rise
after fiscal year 1965 as unexpended balances were disbursed.
It is the expenditure figures that measure the impact of the
program on the federal budget - and indeed that control its impact
cn our balance of payments.
The requirement for Congressional action at its current session
appears more onerous than the real budgetary burden, for the program
cannot really begin until the Congress has, by legislation, endorsed
Administration preparedness to enter into commitments of the magnitude
indicated,
Tho authorization bill to be introduced before the present
session would ask for up to $10,250 million of authority, $8,000
million in the f rm of authority to borrow funds from the Treasury
to finance long-term, dollar repayable loans. It would be preferable
to have this authority with the same freedom from that limitation
as to use now possessed by the Export-Import Bank. However, some
restriction may be necessary to provide the Congress with assurance
that the Administration will not exhaust the authority in two or
three years and return for more funds. In that event, the $8 billion
of public debt authority might be limited as fellows: No more than
$2.0 billion by the end of FY 1962; no more than $4.5 billion by the
end of FY 1963; no more than $6.5 billion by the end of FY 1964.
[Should
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 6 .
[Should it be desired to transfer that part of the Export-Import
Bank's public debt authority that has hitherto been used to finance
development projects and emergency' trade total would be
reduced by $1.5 to $2 billion.]: A further $?00,0 Million would be
, . . _ _ .
implicit in the proposed request for unlimited _authority for the
COmmedity Credit Corporation. to acqOire agrieUltural products to be
reimbursed out of subsequent annual:appropriations.
The 1961 appropriations bill would total some $3,750 million;
proviso should be incorporated that4275'millien for the Education
and HumanResources Development pril(Oltm would net be available for
obligation before the beginning of fiscal year 1963. In view of the
$500 million appropriation to be sought for social development in
Latin America under the Latin American ,Assistance _Act of 1960, no
prevision for Latin America is made IpadOr t40 '0,4pation and Human
Resources title. It may be necessary_to.supplOMent this appropriation
before the end of Fiscal Year 1965.
Succeeding authorization and appropriation bills would be
considerably smaller (see Table ITT). Of the, eight and one-quarter
(-billion dollars in appropriations estimated .to be required airing
' ;he succeeding three years, four and one-half billion would be used
\--to reimburse the Commodity Credit Corporation.
Development Planning and Research
The first step in accelerating the groWth'ilif'the less-developed
areas must be better and longer-range planning for the use of resources,
Whether foreign or domestic. The plans will necesiarily vary considerably
from country to country, as respect4 direction and emphasis. Programming
resources Use in Dahomey will for some tiMe.be quite different from the
task in India. A four-year $100 million program i proposed, to be
used for three purposes:
(a). Research in the problems of economic and-imolai growth
(b) Assistance to less-developed doOntries in Preparing
long-range programs appropriate to their stage of
development and capacity for executor
(c) Financing
CONFIDENTW,
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 7 -
(c) Financing engineeringandoconomic feasibility studies of
apacific projectethatearWrequired before financing of
eech projects can be finalized.
Flene: fee fee-imete growth
The Fund for Economic GroWth would finance, through both project
and program loans, long-range Ovelopment objectives that meet strict -
criteria with respect to both. recipient country self-help efforts and
the feasibEity and economie merit of the particular project or program
to be financed. The resources of the Fund could be used to provide
assurance of support to long-term development programs. Some
financing of individual projects which do not fall within the framework
of an acceptable development program will undoubtedly be required,
particularly in countries where the primary emphasis of growth
programs must, for the preeent, be on education and human resoUrces
development.
The Eisenhower budget provided for some $1450 million in comparable
lending commitmente in FY 1962 through the Export-Import Bank and the ?
Development Loan Fund. Moreover, perhaps $300 million of the assistance
Onvisioned as:grants under the Defense ?Support or Special Assistance
rograms.might be regarded.as suitable for financing through this Fund.
The application of strict criteria and the inauguration of an
increased effort by other DAC countries is likely to make for a
lower rate of commitment of U.S. resources from this Fund in FY 1962
than might otherwise have taken place. Table IV suggests an illustrative
average annual commitment by country over the four-year period, though
actual commitments would have to be rod to the rate at which country
programs can be devolepod, the nature of such programs and the ?
assistance offered Prom other sources, Certainly, the principal
potential users of significant smme out of this Fund should be
identified at an early stage, personnel capable of inducing the
introduction of acceptable programa wsigned to Missions to these
countries as rapidly as ponilblo, and planning ass! stance prevtdod
them on a priority basis whore appropriAte. A ltArgo part of tel/
commitments in Fiscal Year 1962 would probably be di ted to India,
and Pakistan, but other countries might well'establitth their
eligibility for substantial .help before the end of the fiscal year
(e.g., Brazil, Argentina, Taiwan, Nigeria, Tunisia, Iran, Turkey).
The $500
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONPIDESTIAL
- 8 -
The $500 million appropriatblshould be reserved for lending
against local currency repayment in situations where difficulties
emerge in getting programs hitherto reimbursable in local eurrencies
transferred to a dollar repayment basis.
2JA4e4Ion'and Human Resources Develoyment
, .
The Education and Human Resourcee Development Fund will finance
activities for which over $200 million was ,provided in IP! 1961 and again
in the last Eisenhower budget. It is aspdmed that activities in the
American Republics falling within the Scope of this Fund will be
financed out of the current Latin American Apsistanoe Act appropriation
bill. Should it be necessary to supplement this appropriation before
the end of FY 1965, such supplementation might well be included in
a Growth for Freedom appropriation bill.
It is proposed that resources provide4 put of this fund should
also be programmed on a longer-term basis and stricter criteria applied
before they are committed to recipient countries. A turn-around will
be particularly difficult because current projects can not readily be
erminated without incurring continuing expenSee through the next
_local year. It seems likely that $180 million in continuing costs
will be inetirred plus some unspecified amount Or continuation of the
existing Special Program for Tropical Africa.,
It is therefore proposed that an approOriation of $$25 million
be sought in the new. Act, only $250 million of which wodld be available
for obligation before the beginning of FT 1961. Funds would 'be carried
over to the succeeding year if not 64tated.
A major overhaul of the existing programs would be 'inaugurated.
New commitments would be restricted to the field of basic) education,
technological training to complement economic development programs,
and the financing of projects aimed at modernizing social institutions
- land tenure, self-help housing, etc. Such commitments would be
geared to long-range plans for education and use of human resources
in economic development; isolated projects would be terminated as
rapidly as possible. Acceptable programs would not be limited as
to the proportion of total cost available for construction,
demonstration materials, etc.
Contributions
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
(
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIPE:NTIAL,
- 9 -
Contributions to Multilateral Institutions
The multilateral institutions title is intended to fund those
multilateral programs now being financed under the Mutual Security Act .
essentially limited to voluntary rather than assessed contributions
to the programs of multilateral institutions. Some of these programs
might logically be financed outside the Act; other multilateral programs
now funded under other legislation might be incorporate0. The existing
lines of demarcation are arbitrary, but it is not proposed to disturb
them at this time.
These programs would be funded through annual authorization and
appropriations. The proposed level for FY 1962 is essentially unchanged
from the provisions of the Eisenhower budget, A rising level is
provided on the assumption that the responsibilities of multilateral
institutions - particularly in the education and human res)urce
development field - should be increased as rapidly as their capacity
to organize and operate such programs can be built up.
Transitional, Sustaining and Contineencies
Programs classified as "transitional" are those which have been
financed out of defense support or special assistance funds but which
are directed toward countries or programs that can reasonably be phased
out. Such countries would, of course, be eligible for loan assistance
from the Fund for Economic Growth and the Education and Human Resources
Fund if they meet the criteria, and they would havet access to the
Food for Peace program. $213 million in transitional assistance is
proposed for FY 1962, over one-third less than was programmed for these
countries in the January 16 budget. These programs should be amenable
to termination in one to three years time.
The "sustaining" assistance category covers formerdefense
support or special assistance programs which do not now seem to be
terminable during the next four years, The FY 1962 requirements
included in the Eisenhower budget must all be met, though some can
be financed through the delivery of foodstuffs. Moreover, an
additienal requirement of $50 million for Tropical Africa is included
to finance requirements for commodity imports that must be met for
political reasons, though no strict criteria can reasonably be
applied
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
q0NPIUNTI4.L
- 10
applied to the countries in question. Nevertheless, it should be
possible to halve the level of the sustaining assistance program by
FY 1965.
An annual fund of $250 millien would be provided fOr
contingencies.
Food for Peace
The Food for Peace estimate is based on the task force proposal
of a $2 billion program at CCC cost. For both burdeav,sharing purposes
and more accurate accounting, the foreign aid bill should not bear the
difference between world market prices and CCC. cost. All U.S. food-
stuffS provided to less-developed countries within the Program would
be funded under this title. An unlimited authorization is suggested
So that the administrators of the Program would haveevery incentive
to increasethe utilization of foodstuffs. The foodstuffs could be
supplied on a local curreney sale.or:counterpart baiis;: in eit4er
event, the local currencies that can beused for U.S.. uses should be
reserved and tho'remainder returned to the reeipient country aS a
(Thrant for financing agreed local currency requirements of their
rOgrams. The building up of U.S.-owned local currency would be
avoided, beyond reasonable amounts for which future use can be
foreseen.
Peace Corps
The:Peace Corps estimates are.7pluggedw'fig4ris; they will
need to be reviewed as the conception of the function of theCorps
IS Clarified and as experience develops concerning the use Of funds
by the Corps.
Administration
The administrative expense provision is somewhat larger than the
Eisenhower budget provided for the administration of the various seg-
ments of the old program, It is manifestly impossible to develop a
Valid administrative budget estimate in the absence of detailed
organizational charts, experience with the in power, consultants,
travel,
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
- 11
travel, etc. requirements of the "turnaround" and the requirements of
new approach to both recipient and other donor governments. The
? difficulties in getting the new organization underway speedily will
be formidable; it does not seem sensible to handicap it by inadequate
provision of administrative funds. The discretion of the new
? Administrator should be relied upon to assure economical administration.
On the basis of the first year's experience, the FY 1963 administrative
budget should be more firmly founded.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
? Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
CONFIDENTIAL C.-1
Table I. GROWTH FOR FREEDOM PROGRAM
Financial Plan FY 1962 - 1965
A. U.S. Commitments
FY 1262
FY 1963 FY 1964
FY 1965
Total
FY 1962-65
($ millions)
($ billions)
. ,
Development Planning
and Research
20
30
25
25
.1
Fund for Economic Growth
1500
2000
2500
2500
8.5
Education and Human
Resource
250
275
325
350
1.2
Contributions to
Multilateral Institutions
175
225
250
250
.9
Transitional, Sustaining
and Contingency Aid
945
750
600
500
2.8
Food for Peace
1500
1500
1500
1500
6.0
Peace Corps
20
50
60
70
.2
Administration
65
75
80
80
.3
---7---
TOTAL
4475
4905
5340
5275
20.0
(Eisenhower Budget)
(4202)
H.
U.S. Expenditures
With above Commitments
3900
4200
4600
4900
17.6
At Eisenhower Budget level
3663
3800
4000
4200
15.6
C.
Other OECD/DAG Members
Commitments ($ billions)
1.8 2/
2.5
2.9
2.8
10.0
D.
Total Commitments (U.S.
and Other OECD/DAG Members)
($ billions) 6.3 7.4 8.2 8.1 30.0
L.aj Assuming commitments of $1.5 billion in FY 1961. If FY 1961 commitments
planned for in DAG member budgets are larger, the difference should be
added to the plan for these countries in every year beginning in FY 1962.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
Table II. U. S. FOREIGN ECONOMIC ASSISTANCE 12/
Obligations and Expenditures, FYl99.62
(In millions of dollars)
FY 1959 FY 1960
Actual Actual
FY 1961
Estimated
C-ii
FY 1962
November ?
Proposals Eisenhower
to BOB Budget
Mutual Security Program
1.
Obligations
- economic
1933
1895
2131
3055
2200
Export-Import Bank -
development and emergency
805
406
757
752
752
Public Law 480 1000 1200 1100 1250 1250
(I) TOTAL 3738 3501
3988 5057 4202 '
2. Expenditures
Mutual Security Program
- economic 1524 1613 1655 2065 1875
Export-Import Bank -
development and emergency 652. 371 475 538 538 *
Public Law 480 l000 1200 1100 1250 1250
TOTAL 3176 3184 3230 3853 3663
2/ Assistance to be financed henceforth through the Growth for Freedom Program.
* Does not take into account receipts from previous jending.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7
ggEMEK-7)
1-40
Table III. GROWTH FOR FREEDOM PROGRAM
kulslape Action on
Financial.
(millions of dollars)
Y 1962 - 1265
1962 120. 12141 FY 1062 - 190
Auth. Appr. Auth. Appr,
Development Planning
and Research 20 20 30 30 25 25 25 25 100 100
Fund for Economic
Growth 8500 at _WO -- -- -- vase ?????? 8500 500
Education and
Human Resource 525 525 -- ii1=2 675 675 .00..0 -- 1200 1200
Contributions to Multi-
lateral Organizations 175 175 225 225 250 250 250 250 900 900
Transitional, Sustaining
and Contingency Aid
950
950
750
750
600
600
500
500
2800
2800
Food for Peace--
12/
1500
--
1500
--
1500
as,..
1500
--b2
6000
Peace Corps
20
20
50
50
60
60
70
70
200
200
Aiministration
65
65
75
75
80
80
80
80
300
300
TOTAL
10255
3755
1130
2630
1690
3190
925
2425
14000 h/
12000
2/ Consisting of:
$8000 million in public debt authority against dollar repayable loans and
$ 500 million in appropriations to make local currency loans.
t/ To reimburse CCC at world market prices for deliveries of agricultural products
under program in previous year, permanent authority without limit of amount
should be sought. Probably some $6000 million would be used under such authority
during the four-year period.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
" Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL C- iv
Table IV. FUND FOR ECONOMIC GROWTH
($ Millions)
Europe,
Spain
Yugoslavia
Illustrative
Annual Average
Commitment
30
25
Africa
200
Nigeria
-30
Tunisia
30
Libya
15
Morocco
10
Other
115
Near East & S. Asia
920
Greece
35
Turkey
65
India
500
Pakistan
200
Iran
50
Israel
15
UAR
35
Other
20
Far East
300
Taiwan
75
Korea
75
Philippines
50
Thailand
30
Indonesia
4o
Other
30
Latin America
625
Brazil
200
Argentina
200
Other
225
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
" Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
C?v
CONFIDENTIAL
Table V. EDUCATION AND HUMAN RESOURCE DEVELOPMENT
($ Millions)
Bilateral Technical Cooperation
CTC
FY 1961
Fl 1962
Continuing
Costs
New
Program
158.8
125.0
Europe
( 3.6)
( 3.6)
3.6
Africa
(21.8)
(23.9)
75.0
Near East and South Asia
(41.6)
(40.5)
60.0
Far East
(32.5)
(31.5)
51.0
Latin America
(36.7)
Inter-regional expenses
(22.6)
(25.5)
25.4
Support in DS/SA
25.0
20.0
-
Education and Training - Africa
20.4!
-
-
Malaria Eradication
35.0
33.0
33.0
American Schools Abroad
2.0
2.0
2.0
TOTAL
241.2
180.0
250.0
IL/ Programs in Latin America will be funded under the Inter-American
Social and Economic Cooperation Program.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL Page 1 of 2
C -vi
Table VI. CONTRIBUTIONS TO INTERNATIONAL ORGANIZATIONS
($ Millions)
OECD
FY 1961
Program
FY 1962
Nov. 8
Subm.
Budget-
Jan. '61
Revised
0.7
-
2.0
CENTO
1.5
2.0
2.0
2.0
SEATO
3.2
2.5
2.5
2.5
ICEM
9.8
7.0 a/
6.0 2/
7.0 2/
UN High Commissioner for Refugees
1.3
1.2
1.0
1.2
Palestine Refugees (UNRWA)
16.5
17.2 1/
12.2 2/
17.2 12/
NATO Science Program
1.2
2.0
1.5
2.0
UN Children's Fund
12.0
12.0
12.0
12.0
UN-Congo
45.0
100.0
67.0
UN Military Operations
(30.0)
(27.0)
Economic Assistance thru UN
( 5.0)
(4o.o)
UN Fund for the Congo
(10.0)
(DUN-Other Tropical Africa
1.0
Indus Waters
4.6
16.9
16.9
16.9
UN Emergency Force
3.2
3.4
3.4
3.4
UN Technical Assistance and
Special Fund
35.3
40.0
40.0
40.0
International Atomic Energy
Agency
0.6
0.6
0.6
0.6
OAS - Technical Cooperation
1.4
1.5
1.3
1.5
TOTAL
137.3
206.3
99.4
175.3
2/ Includes estimated
12/ Includes estimated
2/ Plus carry-over of
2/ Plus carry-over of
carry-over of $1 million
carry-over of $5 million
$1 million.
$5 million.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL Page '2 of 2
C-Vi
Table VI. CONTRIBUTIONS TO 1NiERNATIONAL ORGANIZATIONS
General. Under this title we have proposed (1) those contributions
to international agencies programs which were listed under "Technical
Cooperation" or "Other Programs" under the Mutual Security Act, each
with their separate authorization and appropriation, and (2) other
programs representing contributions to international organizations which
were under Special Assistance, e.g., CENTO and SEATO projects, voluntary
contributions to the UN for the Emergency Force in the Near East.
OECD. It is assumed that assessed costs for administration of
OECD could be met in Statels.regular budget, but that it May be
desirable to contribute on a voluntary basis to operational programs
instituted under ?EEC, particularly the scientist training program
and assistance to underdeveloped areas in Europe.
CENTO and SEATO. U.S. participation in economic projects of
these organizations is being handled on a project basis, comparable
to ICA procedures for country programs.
UN-CONGO. TO estimates that the total U.S. payment required in
FY 1961 for UN military operations is $75 million, of which $27 million
would represent a voluntary contribution and the remainder an assessed
contribution. It is assumed that the latter will be funded by the
State regular budget.
An estimate of $40 million for budgetary and other economic
assistance is included as a notional figure.
The November 8 submission to BOB included $100 million for
contributions to the UN military and economic operations in the Congo,
and for other UN programs elsewhere in Tropical Africa, as proposed
by President Eisenhower in his UNGA speech. It is now assumed that
there will be no specific requirement for a U.S. contribution for
this purpose but that U.S. contributions to UN Technical Assistance
and Special Fund, which plans operations in Africa, will suffice.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
_
- Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Table VII. TRANSITIONAL,
CONFIDENTIAL
AID
Page 1 of 2
C-vii
SUSTAINING, AND EMERGENCY
FY 1961
A. Transitional
FY 1962
DS/SA-
Trans-
Submiss,
DS/SA-
Trans-
ferred
DS/SA
to BOB
Budget
itional
to
Program
11/8/60
Jan, 61
Aid
FFP
(2)
(3)
(4)
(5)
Spain
35.0
15.0
15.0
15.0
10
Tunisia
20.0
20.0
20.0
10.0
Greece
20.0
20.0
20.0 -
10.0
Iran
22.0
20.0
20.0
15.0
Turkey
90.0
75.0
75.0
75.0
Pakistan
95.6
95.0
95.0
50.0
2
China (Taiwan)
60.0
55.0
55.0
25.0
31
Philippines
10.1
10.0
10.0
__
7
Thailand
19.5
18.0
18.0
Burma
6.0
8.0
8.0
8.0
Indonesia
2.0
3.0
3.0
Central American
Bank
2.0
3.0
3.0
3.0
Other
3.5
2.5
2.5
2.5
TOTAL
385.7 344.5 344.5
213.5 50
Assumes all sales under Section 402 projected for FY 1962
can be provided under Food for Peace Program,
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
Deciassified and Approved For Release 2013/10/29: CIA-RDP86T00268R000700090001-7
CONFIDENTIAL
Page 2 of 2
C-vii
Table VII. TRANSITIONAL, SUSTAINING, AND EMERGENCY AID
B. Sustaining
FY 1962
Libya
Morocco
Tropical Africa
Afghanistan
Jordan
Nepal
Yemen
FY 1961
DS/SA
Subm.
to BOB
Nov. 8
Budget H
Jan.
1961
Sustain-
ing
Aid
Transferred to
FFP
EHRF
14.0
40.0
-
9.2
45.0
2.2
4.0
15.0
40.0
-
28.0
40.0
.8.5
5.0
15.0
40.0
-/
28.0
40.0
8.5
5.0
9.0
35.0
50.0
28,.0
40.0
8.5
5.0
-
5.0
_
_
_
_
-
5.0
_
_
-
_
-
-
Cr-lbodia
17.7
15.0
15.0
10.0
-
1.5
/ ea
Li
190.0
160.0
160.0
120.0
25.0
-
Laos
34.0
35.0
35.0
35.0
-
Vietnam
135.0
135.0
135.0
110.0
20.0
-
Bolivia
23.0
12.0
12.0
11.0
1.0
-
Haiti
10.9
10.0
10.0
10.0
-
-
West Indies
3.5
2.5
2.5
2.5
-
-
LA-Civil Police
& ECU
1.3
2.0
2.0
-
1.0
Escapee Program
3.5
3.0
3.0
3.0
-
_
Atoms for Peace
1.7
4.0
3.5
2.9 a/
-
-
Overseas Freight -
Vol. Relief
2.4
2.6
2.3
2.6
-
-
Inter-Regional
1.0
Other
0.4
0.4
0.4
TOTAL
537.4
518.0
517.2
482.9
-51.0
8.5
IAEA contribution - $0.6 million - under contributions to
international organizations.
CONFIDENTIAL
Declassified and Approved For Release 2013/10/29 : CIA-RDP86T00268R000700090001-7