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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Nixon-Ford Administrations > Volume IV
Foreign Relations, 1969-1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969-1972
Released by the Office of the Historian
Documents 84-105

84. Memorandum From the Under Secretary of State (Irwin) to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, February 10, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Foreign Aid, Volume II 1972. Confidential. Attached to a February 16 summary memorandum from Kennedy to Kissinger recommending that Kissinger and Shultz approve Irwin's recommendations, which Kennedy characterized as a "reasonable division of the limited funds we can anticipate will be appropriated." Also attached is a February 17 memorandum from Kissinger to Irwin noting that Irwin's recommendations were a sound basis for implementing programming actions. Kissinger understood the $385 million of supporting assistance for Vietnam was part of a total support plan of $680 million and that supplementary actions to fulfill the Vietnam program would be addressed shortly. He cautioned that other supporting assistance allocations should be a guide for actions but only urgent obligations should be made until the appropriations bills were completed.

SUBJECT
Security Assistance, Country Allocations for FY 1972

At my direction, an ad hoc Steering Group of the Security Assistance Program Review Committee has been looking into the best possible distribution of grant military and security supporting assistance funds for fiscal year 1972. The Group has used the amount authorized by the Congress of $500 million NOA for military assistance and $575 million voted by the House of Representatives for supporting assistance to guide the obligations under Congressional Resolution Authority. I approve the figures set forth in the attached tables as the basis of implementing programming actions to be taken by the administering agencies within the funds available to them under the CRA.

I am also sending a copy of my approval to Mr. Shultz.

John N. Irwin II

Attachment 1

FY 1972 SECURITY ASSISTANCE PROGRAM

MILITARY ASSISTANCE (MAP) AND FOREIGN MILITARY SALES (FMS)
($ in millions)

 

MAP

FMS

East Asia

   

Cambodia

179.7

--

Indonesia

18.0

--

Korea

150.0

15.0

Philippines

14.0

--

Taiwan

10.9

45.0

Regional/Other

.3

8.0

Near East/South Asia

   

Greece

9.9

45.0

Iran

.9

--

Israel

--

300.0

Jordan

38.0

10.0

Lebanon

.2

10.0

Saudi Arabia

.5

22.0

Turkey

60.0

15.0

Regional/other

.7

--

Europe

   

Portugal

1.0

--

Spain

11.2

--

Regional/Other

.2

--

Africa

   

Ethiopia

9.0

--

Tunisia

1.8

--

Morocco

.9

15.0

Zaire

.5

2.0

Regional/Other

.6

--

Latin America

15.1

63.0

Non Regional

20.9

--

TOA

544.3

550.0

NOA

500.0

400.0

 

Attachment 2

FY 1972 SECURITY ASSISTANCE PROGRAM
FY 1972 SUPPORTING ASSISTANCE PROGRAM
($ in millions)

 

Congressional Presentation

Current Estimates

Fund Availabilities

   

Supporting Assistance

821.4

605.4

NOA

778.0

575.0

Recoveries

47.0

34.0

Transfers

-3.6

-3.6

Contingency Fund Use

0

24.5

Development Loan Fund Use

0

22.4

Total

821.4

652.3

Program Requirements

   

Vietnam

555.0

385.0

Cambodia

110.0

47.5

Laos

50.6

47.0

Thailand

40.0

15.0

Jordan

30.0

45.0

Israel

0

50.0

Malta

0

9.5

Nigeria

4.1

3.8

Haiti

3.0

3.0

Public Safety

5.4

0

Narcotics Control

0

19.0

UNFICYP

4.8

2.4

EA Regional

1.4

0.3

South African Refugees

0.3

0.3

Central AID Costs

16.8

24.4

Administrative Expense

(10.0)

(.0)

Interregional Costs

(6.8)

(23.3)

January 1972 Pay Increase

(.0)

(1.1)

Total

821.4

652.2

 

85. Information Memorandum From Richard T. Kennedy of the National Security Council Staff to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, February 15, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, AID, Volume II 1972. Confidential.

SUBJECT
Foreign Assistance Act, Deposit Requirement

Section 514 of the recently signed fiscal 72 foreign assistance authorizing legislation prohibits any grant military aid under this act unless the recipient country agrees to deposit 10 percent of the value of the assistance in a special account for the official foreign currency use of the USG. (The Administration fought this but was unsuccessful in attempts to have it deleted in conference.)

--The President may waive this requirement if the U.S. can pay all its official costs without having to spend dollars to purchase the local currency. (Covers Tunisia, Morocco, India, Pakistan, and Burma, at present.)

--The section does not apply where grant aid is provided under an agreement in exchange for base rights (applies to Spain; the Philippines and Ethiopia may also qualify).

--No deposits are required from the service funded countries: Vietnam, Cambodia, or Laos.

--The term "under this act" also excludes (1) Thailand for fiscal 72, but would include Thailand beginning with fiscal 73, and (2) Korean forces in Vietnam.

--No country must deposit more than $20M in any one year.

The President may waive the deposit under section 614 (which permits use of FAA authorized funds without regard to the requirements of the Act, if the President determines such use is important to U.S. security). However, Congress imposed two new limitations on 614 in this bill (Congress must be informed in writing of any waiver, its justification, and its extent; and the President must notify Congress ten days before changing any country or organization's allocation by more than 10 percent). If the waiver prerogative were used too freely, new restrictions or even deletion of section 614 could result.

Most Embassies have reacted predictably by pointing to the serious consequences of approaching aid-recipient governments with the unhappy news.

Section 514 was among the provisions of the Senate bill to which we objected most strongly. We provided House conferees an explanation of its serious impact and of our objections; however, we could not get it deleted, though it was softened substantially. Going into conference the Senate bill provided for 25 percent deposits, applied to all countries, and contained no maximum deposit provisions. In conference these were reduced to 10 percent deposits, MASF countries were excluded, and a $20M maximum was inserted.

For minor returns from 10 percent deposits, this provision could cause several states (Philippines, Thailand, Turkey)--which provide us extremely important bases without a specific quid pro quo--to begin charging for them. Such costs could readily amount to very large figures indeed. In small MAP programs in politically sensitive states (for example, Mexico), mistrustful governments may take offense and cancel our programs altogether, ending important contacts and channels of influence.

No single solution seems feasible. Where major base rights are involved, it may be possible to justify MAP as a de facto reimbursement and so exempt a few highly critical states. In a few of the most sensitive countries where our programs are entirely training and very small, a congressional waiver may be possible. Finally, in some cases we may wish to consider presidential waivers.

The preferable solution, of course, is repeal of this provision. Prospects, however, are not bright. Senator Fulbright will probably fight hard for retaining section 514. He had proposed it twice previously and feels he has softened it considerably. Both State and Defense are reviewing the foreign assistance authorization act carefully in order to document fully our opposition to its most objectionable features. (The Authorization Act this year carried an extraordinarily large number of restrictive provisions.) The section 514 deposit requirement is high on the list for deletion from the law.

We will keep you informed as the situation progresses. No action is necessary at present.

 

86. Memorandum From the Under Secretary of State (Irwin) to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, March 6, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Confidential. Attached to a March 20 memorandum from Kissinger to Irwin informing him that he and Shultz agreed that the allocations along the lines of Irwin's March 6 memorandum were "the most effective and least disruptive means of adjusting to the funding limits in the appropriations bill."

SUBJECT
Security Assistance Program: Country Allocations for FY 1972

In my letter of February 10, 1972,/2/ I forwarded to you two tables showing the distribution of FY 1972 military and supporting assistance funds approved as the basis for programming actions under the Continuing Resolution Authority. With the enactment of the appropriation bill for foreign assistance, we have now reviewed those distributions in light of the actual funds appropriated by Congress.

/2/Document 84.

In the case of military assistance there is no need to alter the distribution earlier approved and made available to you. On security supporting assistance, the Congress appropriated $25 million less than the amount that was used for the February 10 program distribution. Consequently I have approved a revised distribution for the use of supporting assistance funds based on Congressional appropriation action.

I am also sending a copy of the revised program to Mr. Shultz.

John N. Irwin II

 

Enclosure

FY 1972 SUPPORTING ASSISTANCE PROGRAM
($ in millions)

 

Congressional Presentation

February 10 Estimates

Current Estimates

Fund Availabilities

     

Supporting Assistance

821.4

605.4

583.1

NOA

(778.0)

(575.0)

(550.0)

Recoveries

(47.0)

(34.0)

(35.5)

Transfers, net

(-3.6)

(-3.6)

(-2.4)

Contingency Fund Use

0

24.5

24.5

Development Loan Fund Use

0

22.4

19.0

Total

821.4

652.3

626.6

Program Requirements

     

Vietnam

555.0

385.0

385.0

Cambodia

110.0

47.5

37.1

Laos

50.6

47.0

47.0

Thailand

40.0

15.0

15.0

Jordan

30.0

45.0

45.0

Israel

0

50.0

50.0

Malta

0

9.5

9.5

Nigeria

4.1

3.8

3.4/*/

Haiti

3.0

3.0

0/*/

Public Safety

5.4

0

0

Narcotics Control

0

19.0

19.0

UNFICYP

4.8

2.4

2.4

EA Regional

1.4

0.3

0.3

South African Refugees

0.3

0.3

0.3

Central AID Costs

16.8

24.4

12.6

Administrative Expense

(10.0)

(.0)

(0.0)

Interregional Costs

(6.8)

(23.3)

(12.6)/**/

January 1972 Pay Increase

(.0)

(1.1)

(.0)/**/

Total

821.4

652.2

626.6

/*/Worldwide technical assistance funds will finance TA activities in the amount of $3.0 million in Haiti and $0.4 million in Nigeria.

/**/New SA Contribution to worldwide fund to finance central program support costs.

 

87. Memorandum From Secretary of State Rogers to President Nixon/1/

Washington, March 14, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret. Attached to Document 91. An advance copy of Rogers' memorandum, which was not cleared by the Secretary, was provided to the NSC under cover of a March 14 memorandum from Deputy Executive Secretary Curran to Davis. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 286, State Volume 16)

SUBJECT
FY 1972 Military Assistance Funds Shortfall

The Congress has severely reduced appropriations for FY 1972 grant military assistance and foreign military sales and, in so doing, has affected the credibility of both the program and the Nixon Doctrine. This Congressional action has compelled us to place budgetary and program constraints on most military assistance recipients, a number of which have received your personal assurances that the United States would do everything possible to bolster their self-defense capabilities. The principal countries affected are: (a) Turkey--reduced from $99.8 million to $60 million; and (b) the Republic of Korea--reduced from $239.4 million to $150 million. In addition, program levels for the Philippines, the Republic of China, and other countries have suffered significant reduction. Our allies will be seriously disturbed by these actions.

You have asked that we provide you by March 10 with information on the major issues that are likely to arise during the visit to Washington of Prime Minister Erim./2/ We have clear indications that the Prime Minister is concerned principally with the proposed reduction of our grant military assistance to Turkey. A cut of 40 percent will likely be regarded by Erim as a weakening of United States support for Turkey's role in NATO; it also threatens to erode support in Turkey for the opium ban. As you recall, in your statement of June 30, 1971, in praise of the Turkish announcement on opium,/3/ you included, at the request of Prime Minister Erim, a statement of continued United States support for Turkey's defense efforts. Since Erim will probably raise the question of the level of U.S. military assistance, you will wish to be in a position to advise him of your intentions.

/2/Erim visited March 21-22. The March 10 request has not been further identified.

/3/Printed in Public Papers of the Presidents of the United States: Richard Nixon, 1971, pp. 788-789.

The proposed allocation for Korea falls $90 million short of the amount requested from the Congress, and is commensurate with funding levels prior to our agreement to support a five-year modernization program for Korea's armed forces. Coming at the time of your China initiative and United States force reductions in this region, this reduction has been greeted with deep disappointment and concern by the Government of President Park, and only a restoration of the funding levels will serve to allay the uncertainties in Seoul. Our efforts in behalf of the Republic of Korea also could influence its future posture on the stationing of Korean forces in Vietnam.

To meet the situation that has resulted from Congressional action, we have four courses of action available to us. They are:

a. FY 1972 Supplemental: The Department of Defense feels that this would be the most appropriate and direct means for dramatizing our needs. Defense would seek an across the board restoration, which would involve a request for approximately $200 million in additional funding for grant aid and $75 million for credit sales. Since this would involve both the Congressional authorization and appropriation committees, the Department of State feels that this approach would seriously prejudice our efforts to expedite Congressional action on the FY 1973 security assistance request and could provoke Congress to introduce crippling amendments.

b. Section 506 Action: Section 506 of the Foreign Assistance Act of 1961, as amended, provides special authority, if you determine it to be "vital to the security of the United States," to order the use of Defense Department stocks and services not to exceed $300 million for grant military assistance, with subsequent reimbursement through a request for supplementary funds. It is possible that a portion of the more urgent requirements for Turkey and Korea could be met by the use of this authority. The State Department believes this to be the preferable course in that: (a) early relief, including a positive statement to Prime Minister Erim, could be provided; (b) reimbursement for the Defense Department would be limited to the appropriation process since Section 506 contains authorization for such reimbursement; and (c) it would provide dramatic underscoring to your statement that the FY 1972 funds voted were below acceptable minimum levels. The Defense Department, however, noting that Section 506 is intended to enable you to meet contingencies that arise from unpredictable events that occur from time-to-time and to provide flexibility in meeting Communist pressure, believes that it should not be invoked. The Defense Department also believes this course could lead the Congress to deduct these funds from the FY 1973 request and to eliminate Section 506 from future legislation.

If Section 506 authority is used for Korea and Turkey, it is possible that the Congress will reduce the FY 1973 appropriations by the amount drawn down for these countries. In addition, we understand that Congressional Committee staff members, in their initial redraft of the basic foreign aid legislation, are dropping Section 506 on the grounds that the Section grants too much authority to the President./4/

/4/This paragraph was not in the advance copy that Curran sent to Davis (see footnote 1 above).

c. Amendment of the FY 1973 Authorization: This approach would amend during this session of Congress the FY 1973 security assistance budget request to increase the overall amount for military assistance. It would simplify the process during this session, an important consideration in view of the tight legislative calendar resulting from an election year, and would enable us to seek the funds we need to fulfill our commitments. The principal deficiencies of this approach are that they do not meet the urgent political needs posed by the Erim visit and our commitment to the five-year Korean force modernization program.

d. No Action at this Time: In view of the high priority assigned to early Congressional passage of the FY 1973 security assistance budget request, it might prove more prudent at this time not to press for relief to meet the FY 1972 reductions during this session of Congress. Instead, the Administration, through its witnesses appearing before Congressional Committees on the FY 1973 program, would stress problems resulting from FY 1972 funding and underline the essentiality of Congressional support for the full FY 1973 program. Depending on the outcome of Congressional action on the FY 1973 fund request, consideration would then be given to seeking supplemental funds later this year or in the January session to offset combined shortfalls in the FY 1972-3 programs. This approach does not meet the foreign policy problems previously described.

The Defense Department supports option (a). The State Department favors option (b). Both agree that the Congress must be consulted and that you should take a strong lead in implementing any decision with the Congress.

Recommendation:

I recommend that you meet on an urgent basis with the Congressional leadership to discuss the problem and to decide on the most appropriate course to be followed.

William P. Rogers

 

88. Memorandum From the President's Assistant for National Security Affairs (Kissinger) to Secretary of Defense Laird/1/

Washington, March 17, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. No classification marking. Forwarded to Kissinger under cover of a March 14 memorandum from Kennedy and Lehman, who noted that "if we allow Laird's interpretation to become the common wisdom then we will pay a heavy bureaucratic price in the future" and recommended Kissinger sign the memorandum to Laird. Also attached is a March 17 memorandum from Haig to General Pursley transmitting the memorandum.

SUBJECT
Transfer of Security Assistance to the Defense Budget

In checking further on the matter that you raised last Thursday/2/ I find that the facts appear to be as follows:

/2/Presumably March 9. In their March 14 memorandum (see footnote 1 above), Kennedy and Lehman provided Kissinger with a copy of a March 3 memorandum from Laird to Kissinger on "Statutory Restraints on Security Assistance," on which, they noted, Laird "scribbled a dig implying that the White House was responsible for the failure of his attempt to shift security assistance to the DOD budget." Laird's handwritten note on his March 3 memorandum reads: "Henry--Regret my recommendations could not be accepted to remove limitations and change administration of MAP and Military Credit Sales--."

During the protracted struggle over the Foreign Assistance Bill in October and November '71, members of the NSC staff encouraged General Counsel OSD, the Assistant to the Secretary of Defense (L.A.) and OASD/ISA to reexamine the option of a shift in funding of security assistance to the Defense bill. They were subsequently informed that actual legislation was being drafted to achieve that shift by the DOD General Counsel.

Your letter of 24 November to Director Shultz proposing the shift was shortly followed by negative recommendations from the Department of State and OMB./3/ Both expressed reservations over the possible loss of management control over the program and a diminution of State's foreign policy role in the program.

/3/See Document 77.

NSC staff then convened a series of meetings in December attended by the DOD General Counsel and OMB to consider the effects of such a switch on management control. It was concluded from that analysis that management control would be enhanced by the shift and that the foreign policy role of State would be fully protected.

Your memorandum for the President of 23 December was presented to him with the comments of State, OMB and the NSC staff./4/

/4/Not found, but see Document 80.

During the period following 23 December, General Counsel, OASD/ISA, and Assistant to the Secretary of Defense (L.A.) were informed that a decision was pending and no action should be taken until the President acted.

On 31 January the President approved your recommendation in principle and directed Clark MacGregor to consult Congressional leadership. On 4 February Chairman Hebert told MacGregor he strongly supported the shift and would fight for it.

On 7 February Bill Timmons and Tom Korologos met with Senator Stennis to enlist his support./5/ He advised them that a shift would now require a separate amendment since DOD had already sent up the procurement bill on 22 January and it had been introduced. He felt that in those circumstances he should not take on the added burden. Timmons and Korologos had gone to the meeting believing that a hold remained on the DOD bill pending the President's decision, and they apologized for their being so ill-informed. There being no possibility of making the shift without Stennis, the matter was therefore dropped.

/5/A February 7 memorandum from Timmons to the President reports on this meeting. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972)

Throughout the period described above the attitude of the NSC staff toward the shift was favorable/6/ and this was reflected in all White House contacts on the Hill. In retrospect there seems to have been a regrettable breakdown in communications between the White House and OSD during the month of January.

/6/In their March 14 memorandum to Kissinger (see footnote 1 above), Kennedy and Lehman noted that everyone at the White House except Shultz favored the shift and that all contacts on the Hill with members and staff had been favorable. In a February 3 memorandum to Kissinger for a February 4 meeting with Irwin, NSC Staff Secretary Davis reminded him of the State Department opposition and the cogent arguments in its favor. If Irwin raised the issue, she suggested that Kissinger point out that the reorganization might be the only way to get favorable treatment of the security assistance program on the Hill and protect the policy roles of the President and Secretary of State. (Ibid., Box 40, HAK/Irwin mtgs October 70)

Henry A. Kissinger

 

89. Action Memorandum From the President's Assistant for National Security Affairs (Kissinger) to President Nixon/1/

Washington, March 18, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret. The notation "The President Has Seen" is stamped on the memorandum, which is attached to an undated, handwritten note from Haig to Kissinger that reads: "This is the hot Laird issue on the supplemental." Kissinger wrote on the note: "Make sure he understands what I recommended."

SUBJECT
FY 1972 Security Assistance Shortfall

Congressional action cut your FY 1972 Security Assistance requests by $205 million for MAP and $75 million for credit sales. We have had to cut back our security assistance programs accordingly. This action has had an especially unfavorable impact given our emphasis on the need for increased self-reliance by our friends and allies and our commitment to help them achieve it.

Of special concern are a $90 million shortfall in funds for our Korea program under the Five Year Modernization Program (Korea will get $150 million rather than the $239 million requested) and a $40 million shortfall in our MAP program for Turkey ($60 million available rather than $100 million requested). We have had clear indications of Turkish concern at this 40% cut.

Secretary Rogers has submitted a memorandum (Tab A)/2/ presenting four options for dealing with the shortfall:

/2/Document 87.

--FY 72 Supplemental. Request for $200 million in MAP grant aid and $75 million for credit sales.

--A Presidential determination under Section 506 of the Foreign Assistance Act that it is "vital to the security of the United States" for you to use up to $300 million of DOD stocks and services for MAP, with reimbursement by a supplemental later.

--Amendment of the FY 73 request.

--FY 73 Supplemental later.

There is no question about the need for more security assistance funds. The issue is how best to obtain them. We have been pushing hard to move the FY 73 authorization and appropriations bills quickly and have support on the Hill for this. We want to complete action, if possible, before the summer recess and to minimize the chance of a major confrontation in the Senate Foreign Relations Committee in this politically charged year. The pros and cons are as follows:

1. FY 72 Supplemental. Secretary Laird strongly favors this course on the grounds that it would be the most appropriate and direct means of dramatizing to both the Congress and our allies our determination to press for an adequate program. He further argues that if we do not request an FY 72 supplemental, it will be charged that we have simply included amounts in your FY 73 request to offset the FY 72 cuts. State opposes because this would involve going back again to both Congressional authorization and appropriation committees, thereby running the risk of damage to our FY 73 request, and increasing the risk of crippling amendments. An FY 72 supplemental would be my preference if it were not for the serious risks in having two bills before the SFRC at the same time. Bill Timmons points out that Fulbright could use the supplemental as an excuse to delay action on our FY 73 request. George Shultz expresses no opinion on legislative strategy but would agree to an FY 72 supplemental only if Defense can guarantee (as it says it can) to manage outlays in a way which would not affect your FY 73 expenditure ceiling.

2. Section 506 Action. State favors this approach on the grounds that it would provide immediate relief from the shortfall, avoid going through the authorization committees, and dramatize your commitment to adequate security assistance. Defense strongly opposes, and I agree, on the grounds that Section 506 was not designed for this purpose and its use to make up past Congressional cuts could provoke Congress to deduct the funds from our FY 73 request, and even to eliminate Section 506 authority altogether from future legislation. Moreover, it would merely be borrowing against the future.

3. Amendment of the FY 73 Request. You could seek an amendment increasing your FY 73 request at an appropriate time during this session of Congress. This tactic would avoid straining a tight legislative calendar and enable us to press hard for quick and affirmative action on your FY 73 request. However, it would offer no immediate relief in the Turkey and Korea contexts, and it would--like an FY 72 supplemental--break the expenditure ceiling unless compensating reductions were made elsewhere.

4. FY 73 Supplemental Later. We could plan to request an FY 73 supplemental later (either just after the November elections or early in January), to make up the combined FY 72-73 shortfalls. This strategy would enhance the likelihood of early favorable action on your FY 73 request. The difference between this and the preceding option is principally in timing--the supplemental request would come later. Either approach would be fully consistent with the legislative strategy of moving the FY 73 legislation as quickly as possible. You could keep open the choice between them until the Congressional climate can be better measured. On the other hand, neither approach would meet Secretary Laird's argument that Congressional critics may act on the assumption that our FY 73 request compensates for the 1972 shortfall. Moreover, neither offers immediate relief in the Turkish and Korean contexts. Bill Timmons favors either an FY 73 amendment or a supplemental. George Shultz prefers that, if you choose this course, you make no commitment as to timing, composition, or amounts at this time, but wait to see how the FY 73 bill fares and what the Congressional climate is later in the year before deciding how to proceed.

Your decisions is between approving Secretary Laird's FY 72 supplemental proposal now or attempting to get the FY 73 program increased later either by a budget amendment or a supplemental. Secretary Rogers and all of your Congressional Relations staff are opposed to Secretary Laird's FY 1972 supplemental proposal. Nevertheless, I am reluctant to recommend that you decide against Mr. Laird's judgment of the realities on the Hill. I believe that before deciding you should convene the Republican leadership to test their reactions. Secretary Rogers recommends that you do this in any event, and George Shultz and Bill Timmons agree. You also should discuss this in your meeting with Senator Stennis.

Recommendation:

That this issue be put on top of your agenda for the next meeting with the Republican leadership, and discussed in your meeting with Stennis./3/

/3/The President met with the Republican Congressional leadership to discuss current legislation on the morning of March 28. No officials from State, Defense, or AID participated; among those present were Shultz, MacGregor, Timmons, and Stein. (National Archives, Nixon Presidential Materials, White House Central Files, President's Daily Diary) No record of the discussion was found.

Approve (discuss with leadership before making decision--Secretary Rogers, Bill Timmons, and my recommendation)/4/
Prefer an FY 1972 supplemental now (Secretary Laird's recommendation)
Other

/4/The President signed this option and wrote: "Inform Laird--Possibly--if they agree we go his way."

 

90. Memorandum From Acting Secretary of State Irwin to President Nixon/1/

Washington, March 27, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret. Attached to a March 28 memorandum from Kennedy and Lehman to Kissinger summarizing the change in the State Department position and recommending he sign a memorandum to the President, Document 91.

SUBJECT
FY 1972 Military Assistance Fund Shortfall

I refer to Secretary Rogers' memorandum of March 14, 1972, presenting four alternative courses of action with respect to FY 1972 MAP shortfall./2/ At that time, the Department of State expressed a preference for the utilization of Section 506 of the Foreign Assistance Act as the best early solution to the problem of meeting the shortfall for Turkey and Korea, particularly in view of the imminent arrival of Turkish Prime Minister Erim.

/2/Document 87.

Under current circumstances, the Department believes that there are only two alternatives for dealing with the MAP shortfall problem: (1) an FY 1972 MAP supplemental; or (2) focus our efforts to obtain our full FY 1973 MAP budget request. There is attached a memorandum summarizing the pros and cons of proceeding with an FY 1972 MAP supplemental,/3/ which I understand is the preferred course of action of Secretary Laird.

/3/Undated paper entitled "FY 1972 Supplemental for MAP," not printed.

The choice is difficult. Within this Department there is support for both alternatives. On balance, however, I recommend that we should not submit an FY 1972 supplemental to the Congress. Instead, I prefer the strategy of maximum effort to secure earliest possible passage of the FY 1973 Security Assistance legislation at the fund levels requested. Following the enactment of the appropriations, we would then consider with Defense the impact of the total fund situation for MAP on our programs and our relationships with our Allies and would then determine whether the shortfall for FY 1972 and FY 1973 justified the submission of an FY 1973 supplemental for MAP to the next session of Congress./4/

/4/On May 17 NSC Staff Secretary Davis sent a memorandum to Executive Secretary of the Department of State Eliot, in reference to this memorandum and the March 14 memorandum from Rogers, confirming her phone message that the President had decided to take no further action on the subject at that time. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972)

John N. Irwin II

 

91. Information Memorandum From the President's Assistant for National Security Affairs (Kissinger) to President Nixon/1/

Washington, March 30, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret. The notation "The President has seen" is stamped on the memorandum.

SUBJECT
FY 1972 Security Assistance Shortfall

In my memorandum of March 18, 1972, I discussed alternatives for addressing the problem of the shortfall in Security Assistance funds resulting from the serious congressional cuts in your FY 1972 requests./2/ The options were: (1) an FY 72 supplemental request now (Secretary Laird's preference); (2) use of Defense funds under Section 506 of the Foreign Assistance Act (State's recommendation);/3/ or (3) an FY 73 supplemental or budget amendment later (the preference of your congressional relations staff).

/2/Document 89.

/3/See Document 87.

Acting Secretary Irwin now advises that State has reconsidered its position (Tab A)./4/ State continues to oppose an FY 72 supplemental because of the serious risks of adverse impact upon your FY 73 requests now before Congress but no longer favors the use of Defense funds.

/4/See Document 90.

The Acting Secretary now favors a maximum effort to secure the earliest possible passage of the FY 1973 Security Assistance legislation at the levels requested. Following enactment of the FY 73 appropriations, he recommends we consider submitting an FY 73 supplemental covering both the 1972 and 1973 shortfalls.

As Secretary Irwin points out and as I noted in my March 18 memorandum, the choice is a difficult one and rests on a judgment as to the approach likely to produce the most favorable results on the Hill./5/

/5/In reference to this, the President wrote: "MacGregor's advice is critical."

You have agreed to discuss this issue with the Republican leadership and Senator Stennis in your next meetings with them./6/

/6/See footnotes 3 and 4, Document 89. Presumably the President did not take it up during his meeting with the Republican leadership on March 28. According to the President's Daily Diary, he did not meet with the Republican leadership or Senator Stennis during the week before that decision was made. (National Archives, Nixon Presidential Materials, White House Central Files)

 

92. Letter From the Director of the Office of Management and Budget (Weinberger) to Secretary of State Rogers/1/

Washington, July 21, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. No classification marking. Attached to an August 14 memorandum from Kissinger to the President agreeing with Laird's position that the FY 1974 security assistance ceilings were too low. See footnote 1, Document 95.

Dear Bill:

This letter provides policy guidance for the preparation of the fiscal year 1974 budget submission for the International Security Assistance Program. The President has spoken at the Cabinet meeting of July 20 of the critical budget situation facing us and emphasized the need for rigorous fiscal restraint, effective program development, and strong agency management in the fiscal year 1974 and the years to follow./2/

/2/There is no record of a Cabinet meeting on July 20. The Cabinet had a breakfast meeting with the Republican Congressional leadership on July 21 and then met separately in the Cabinet Room. Rogers, Laird, and Weinberger attended both these meetings. (National Archives, Nixon Presidential Materials, White House Central Files, President's Daily Diary)

The Administration will continue to apply creative solutions to national problems. However, we simply cannot afford to consider new proposals or enriched programs that are not accompanied by offsetting reductions. Rather, it will be necessary to terminate some ongoing activities, to curtail others severely, to reduce some operations to a Spartan level, and to institute management improvements that will increase productivity and promote greater efficiency and effectiveness in agency activities.

The choices that have to be made will be extremely difficult; it may even seem painful. Of course, the priorities and effective innovations of our Administration should be protected to the maximum extent possible. We stand ready to meet with you and consult on these matters if you would like our help.

As you know, the Administration is actively seeking enactment of a rigid ceiling on 1973 outlays. Firm efforts must therefore be made to hold down 1973 obligations and outlays. Postponements and stretch-outs of 1973 commitments are especially encouraged if they lead to reductions in 1974 outlays. On the other hand, program deferrals in 1973 that lead to increased outlays in 1974 obviously are not acceptable, because they will exacerbate an already difficult 1974 problem.

Enclosed are the specific planning ceilings for budget authority and outlays for the International Security Assistance Program to guide you in developing your 1974 budget submission. The President's decisions on the budget totals require that you submit your budget at or below those figures. Each of us must adhere strictly to the ceiling totals provided, both in the initial submissions and throughout the budget process. It should be understood, however, that subsequent developments may necessitate reducing these planning ceiling amounts; thus, there is no assurance that your final budget allowance will remain at this level.

We will shortly give you the date for an initial submission of budget materials. It is of course essential that this initial submission be carefully prepared, and on time (whether or not congressional action has been completed on the current request), in order to provide the President sufficient time to consider the issues and to transmit the 1974 budget promptly to the next Congress.

I recognize that the task assigned by this letter will be difficult to carry out. But as the President said in Cabinet, it is absolutely essential that we prevent the higher prices and higher taxes that inevitably will result if we do not make severe cuts in Federal spending./3/

/3/On September 19 Deputy Secretary Irwin wrote Weinberger regarding this letter. Irwin noted that the planning ceilings, even if fully authorized by Congress, would require a cutback on projected program requirements for FY 1974. He indicated that Under Secretary Tarr was conducting an interagency review of the security assistance program that would provide the basis for the budget submission in October. (Washington National Records Center, Agency for International Development, AID Administrator Files: FRC 286 75 A 13, Supporting Assistance FY73)

Sincerely,
Cap Weinberger

 

Enclosure

PLANNING CEILINGS FOR 1974 BUDGET
International Security Assistance Programs

 

(in millions)

 

Budget Authority

Outlays

Security Assistance-Military

   

Federal Funds

   

Gross Amounts

   

Grant Military Assistance

580

671

Foreign Military Credit Sales

570

407

Liquidation of Foreign Military Sales

--

-20

Deductions--proprietary receipts

-183

-183

Total, Federal Funds

967

875

Trust Funds (Net) (cash sales)

650

-100

Security Assistance-Economic

   

Federal Funds

   

Security Supporting Assistance

663

682

Total, Net

2,280

1,457

These figures will be adjusted for changes in the trust fund, liquidation of foreign military sales account estimates, or proprietary receipts.

 

93. Paper Prepared by the Administrator of the Agency for International Development (Hannah)/1/

Washington, undated.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID 1972-1973. No classification marking. Attached to a July 25 memorandum from Hannah to Flanigan and Haig sent to them after Hannah's July 25 meeting with the President (see Document 94). Hannah noted that he prepared this informal paper for that meeting and that since both Flanigan and Haig had taken notes during the meeting, it might help them understand what he was trying to say.

Three and one-half years ago, I found myself talking to you in company with Secretary Rogers about the possibility of becoming your Administrator of U.S. A.I.D./2/

/2/Presumably a reference to a meeting on February 6, 1969. (National Archives, Nixon Presidential Materials, White House Central Files, President's Daily Diary) Hannah's nomination as AID Administrator was announced that day.

You indicated support for the basic concept of foreign assistance for the third world and expressed the conviction that to gain the Congressional and public support required to finance it, there needed to be a new or different image for A.I.D.

I think we all recognized that it would be a difficult assignment.

It has been.

I thought then that it was important, and would be worth the effort that would be required.

I still think so.

It was agreed early that in answer to the Congressional mandate calling upon the President for a comprehensive study of foreign assistance in all its parts, with recommendations at an early date to the President and the Congress, that we would go the route of what eventually was the Peterson Task Force--its study and its recommendations./3/

/3/Reference is to the Javits Amendment, which required a report to Congress by March 31, 1970. Regarding the Peterson Report, see Documents 119 ff.

As this operation proceeded it soon became clear to me that, pending the final result, my principal responsibility was a "holding operation" to carry out the various Missions of A.I.D. in Vietnam, in Disaster Relief, in encouraging development in the third world and to keep together as much of the able and competent staff in A.I.D. with as much morale as possible for whatever kind of program would come from this total effort--Peterson Task Force--White House Study--Congressional actions, etc.

If there was time it might be useful to go into detail about what U.S. A.I.D. was like in the Spring of 1969, and how it got that way. But that is another story.

After the Peterson Report there was a very long delay in developing the legislative package and Congressional Message of April 21, 1971.

Having committed myself to you in February 1969, I intended to make an all out effort to help convince the Congress it should approve our recommendations and then depart.

We will jump over the delays and awkwardness in much of this operation and come to last October 30, when after a week of acrimonious debate--having very little to do with Development Assistance--the Senate by a decisive vote killed, at least temporarily, U.S. A.I.D./4/ Until that event, A.I.D. and our people were always on the periphery while others talked, planned, and made the decisions as to what the A.I.D. future was to be. At that point, in general, the rest of the Executive end of Government backed out of the whole matter--and in essence by their actions said, "Here, you take it and see what you can salvage."

/4/See Document 69.

After 31 months as Administrator of A.I.D. for the first time the untrammeled opportunity to plan whatever future A.I.D. was to be was in our hands.

With good help from you, Secretary Rogers, OMB and others--in spite of the Fulbright/Proxmire axis and their colleagues--we salvaged a 1972 appropriation.

Since that Congressional action we have moved vigorously to redirect an A.I.D. program adequate to world conditions as they are now and are likely to be in the future.

We are at mid-passage in the first major reform of A.I.D.'s philosophy and practice since the Agency's inception as A.I.D. in 1961.

Our efforts add up to: (1) a program which responds more effectively to the basic human needs of the developing countries--hunger, overpopulation, illiteracy, unemployment, and ill health; (2) a program which is lower profile and less interventionist; (3) a program which is better integrated with multilateral institutions and other donors; (4) a program which will produce results with fewer staff and less bureaucracy; (5) a program which will truly engage the best scientific and technical institutions, universities and corporations in our country.

We are building a program which will better contribute to the U.S. long-term international interests: (a) the building of self-reliant societies in the developing world; (b) an expanding world economy; (c) trade and access to resources from which all benefit; (d) improved prospects for world peace.

This program is directed to basic human needs, is less interventionist, involves important domestic constituencies, and better meets U.S. interests. We believe it will attract increased support from Congress and the American people.

Our reform program has four goals: (a) Concentrate A.I.D.'s resources--and the best U.S. scientific and technical talent--on a limited group of basic human development problems; (b) improve administration and lower the U.S. profile abroad; (c) develop more collaborative operations with developing countries and other donors; and (d) give greater emphasis to humanitarian assistance.

I will submit to you within a few days a report on where we are as we move into Fiscal Year 1973./5/ We will have this redirection pretty well completed by the end of this calendar year.

/5/Not further identified.

We have reduced our overseas staff by a total of 5,281 persons or 37%--from 14,101 to 8,820.

We have problems in reducing our Washington staff, most of whom have long tenure with Civil Service or the Foreign Service. Our total reduction here is from 3,468 to 2,899--a reduction of 569 or 16%. An amendment now approved by the House Foreign Affairs Committee on the Authorization Bill to be reported in a few days will help if we can get Senate approval./6/ We would like to reduce our Washington staff over a reasonable period of time by another 800 to 1,000 employees.

/6/See footnote 2, Document 94.

For these past three-and-a-half years we have made every effort to keep out of the public eye, to avoid visibility, and public controversy.

The replacement of Senator McGee by Senator Proxmire as Chairman of the Foreign Operations Subcommittee of the Senate Appropriations Committee has required me to spend an inordinate amount of time with Otto Passman and a few others--but it has been worth the effort.

I think in the end we will survive in viable form for Fiscal 1973--provided we can get action before the August 18 recess, which is still possible.

Now--why am I here.

The answer is, "What do you want me to do."

The following eight points are in keeping with your fine statement "The Real Road to Peace" in a recent issue of U.S. News:/7/

/7/Richard M. Nixon, "The Real Road to Peace." U.S. News and World Report, June 26, 1972, pp. 32-41.

1. After November 7 you will have a clear new mandate to concentrate the energies and leadership of your administration on a few already identified goals.

The accomplishment of these goals will be of critical importance to our country and the world and a distinguished and enduring tribute to your stewardship.

2. Foremost among these is the development of international relationships and circumstances which can provide a generation of peace, and a world environment in which the United States (its people, its institutions, and its values) can endure and prosper. Your trips to China and Moscow, your leadership in the Middle East and negotiations with N. Vietnam have already opened dramatic new avenues to this goal.

3. Further progress requires an increasing measure of realistic hope for the two thirds of the world's people who are impoverished almost below U.S. standards of calculation. Their condition is often desperate and their frustrations are great.

Those poor must see in the peaceful structure of the world we seek for our country and our children some clear benefits for their own. If not, any domestic gains we garner to ourselves will avail us little and not for long.

4. That extra measure of hope requires, in turn, increased sharing by the world's wealthy with the world's poor--not as sterile charity, but as a productive investment of funds and confidence in their abilities, their energies, and their determination for advancement.

--a partnership for peace

--hope for a better future

(when some look at the long road we have walked with the LDC's, they say, "It is enough. Let us put this burden down." But it is not a burden we carry, it is our passport to a better future.)

5. While it is proper that other advantaged nations share increasingly in this imperative for survival, the U.S. must maintain a role of leadership--

--U.S. constancy and sense of equity are necessary as an incentive and a standard for others;

--U.S. share of the action will always bulk large;

--U.S. moral precepts will impel us to leadership;

--in any realistic examination of alternatives, the benefiting countries will prefer it that way.

6. An important instrument of U.S. leadership is bilateral assistance. While the U.S. should continue energetic support to the growth and capacity of multilateral organizations, the two channels of assistance have never stood in an either/or relationship. Both are useful and will continue to be needed for our national purposes.

Because of its uniquely American attributes and visibility, its flexibility for more selective determination of development priorities, and its role at the cutting edge of U.S. foreign policy, bilateral assistance merits special concern. Apart from its direct focus on basic human problems and needs, it also serves other purposes of valid U.S. interest, including

--creation or expansion of markets for U.S. exports;

--enhancement of U.S. access to non-US resources.

Not least, AID has assembled and trained over long years the most competent and experienced cadre of development experts in the world. They represent, together, a critical national resource that can be fully utilized in no other way.

7. So that bilateral assistance will accord more clearly with the President's guidelines, we have taken the steps previously referred to:

--to concentrate our resources on a limited range of common human problems where the U.S. can support programs of the developing countries with special U.S. competence;

--to give highest priority to population and humanitarian programs designed to help peoples in the disadvantaged countries help themselves in reducing poverty, hunger and illiteracy;

--to respond more effectively to human disasters wherever they occur;

--to expand the participation of private American organizations, universities, voluntary agencies, and businesses in our programs;

--to engage more effectively the best U.S. scientific technical talent in the solution of chronic development programs;

--to continue staff reductions, lowering of U.S. profile abroad, and general improvement in the administrative efficiency of the Agency;

--to increase public understanding and support of our aid programs through more responsive public information efforts.

8. Certain additional changes, requiring Presidential and, in some cases, Congressional authority would, in our opinion, further enhance the effectiveness of bilateral aid programs in pursuing your peace objectives.

--provide a more realistic time frame for meaningful development performance through multi-year authorization and appropriate legislation. A time frame of 4 years would coincide with the term of your Administration. This would remove the "payday-to-payday" climate which has historically hampered AID purposes and would assure a long-needed stability and continuity on which developing countries could base long range plans for action;

--minimize or eliminate those legislative restrictions (so-called "barnacles") which accomplish little of their own purposes, while seriously hobbling ours.

It is important to avoid any new proposals for more external studies of foreign assistance--but rather that we concentrate in transforming what we have to something much better than it has been.

And that we build on the best of what we have and make U.S. A.I.D. a program the third world can regard as a Partnership for Peace program.

If you think well of the idea, we will continue to think along these lines using our own resources and in consultation with State, OMB, NSC, Agriculture, Treasury, Commerce and others.

I would like someday to be able to turn over to my successor a better A.I.D. program than we inherited so that the good foundation that is here can become something adequate to the better world you are wisely helping to lead.

Secretary Rogers knows of this conference and of the points I am raising with you.

My purpose here today is to seek your advice and counsel.

"What do you want me to do."

 

94. Memorandum for President Nixon's File/1/

Washington, July 25, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID 1972-1973. No classification marking. Prepared by Haig. Kissinger's July 24 briefing memorandum for this meeting emphasized that Hannah had done a fine job under difficult circumstances, especially Congressional efforts to frustrate major portions of the President's foreign assistance program. (Ibid.) Kissinger noted that he and Flanigan would also attend the meeting with Hannah. According to the President's Daily Diary, the meeting lasted from 3:04 to 3:37 p.m., and Flanigan and Haig were present. (Ibid., White House Central Files) See Document 93 for Hannah's intended remarks at the meeting.

SUBJECT
Meeting between the President, AID Director John Hannah, Secretary of Commerce, Peter Peterson and General Alexander M. Haig

DATE

Tuesday, July 25, 1972--3:00 p.m.

Director Hannah opened the meeting by informing the President that he had requested the appointment for a brief exchange of views before the November elections. He had several points that he wished to cover and knew that time between now and November would be at a premium.

The President responded that he welcomed the opportunity for a brief discussion with Director Hannah and wanted to emphasize that while their contact at some times had been indirect, nevertheless he was very much aware of AID's problems. As the two men had discussed at the outset of the Administration, Director Hannah had assumed his responsibilities at a point in history when foreign aid was more unpopular than ever. Consequently, Dr. Hannah's tasks were much more complicated than they had been during any earlier period of U.S. history./2/ Nevertheless, the President was well aware of the remarkable record of achievement that Dr. Hannah had accumulated, and he was very grateful for the splendid job Dr. Hannah had done.

/2/A supplementary note attached to Kissinger's July 24 briefing memorandum (see footnote 1 above) reads: "After a 49 to 46 roll call vote in favor of an end-the-war amendment, the Senate yesterday voted 48 to 42 against the FY 73 authorization bill for Security Assistance, FMS, and MAP. A continuing resolution, however, is in effect through August 18. In the House, Doc Morgan is completing the mark-up, and will report the bill out next week. A determined effort must be made to avoid a similar amendment in the House. If this is successful, the bill can then be sent to the Senate for new consideration."

Dr. Hannah remarked that the task was difficult primarily because AID's position in the bureaucracy was a complex one, with supervision being provided by the Department of State and an excess of policy guidance from middle level bureaucrats in that Department. The problem was further complicated by the host of studies which had been conducted on foreign aid and the excess of free advice and policy guidance that had emerged from all sources. This had been a severe hindrance to him as Director and consequently only after the Peterson report recommendations ran amiss did he finally take hold and take his own counsel, especially on the Hill. This had proven to be the most successful course and for this reason Dr. Hannah had requested the appointment to see the President to emphasize his view that during the campaign no commitments should be made calling for additional studies of an area which had been studied to death.

Dr. Hannah continued by noting that the Peterson recommendations called for increased multilateralism. President Nixon interrupted and stated that that was no longer his view and that in fact our approach to foreign assistance should be concentrated on bilateral arrangements for which the U.S. would receive specific credit and obtain leverage in order to meet its own vital interests. Experience now confirmed that multilateralism frequently deprived us of any credit from the recipient states and in fact frequently found us in an isolated position with other states who were doing less, forcing us to adhere to policy lines which were not consistent with our views. The President's discussions with foreign leaders tended to confirm this in almost every case. For this reason multilateralism was no longer the policy and a major effort should be concentrated on bilateral arrangements. Dr. Hannah agreed, recalling that the World Bank and Mr. McNamara were frequently involved in incentives which ran counter to our policy toward India.

Dr. Hannah then noted that an additional problem he was experiencing involved personnel matters. During the period of his tenure he had reduced AID's overseas complement 37%, but in the U.S. he was still forced to carry some 3,000 AID personnel, many of whom were foreign service officers. Were they working in State they could be retired at the age of 60, but because of current personnel regulations when they were detailed to AID, they were not eligible for retirement until age 70. For this reason he had pressed for new regulations which would provide for parallelism in State personnel regulations, just as they had been broadened to USIA in earlier legislation. This would enable him to reach a new reduction goal of 1,000 additional cuts in the U.S.

Dr. Hannah then again stated that he agreed completely with the President' s view on multilateral aid. The President asked General Haig to talk to Congressman Passman about cutting 30% from the UNDP request for FY 72. Dr. Hannah remarked that World Bank operations frequently proceeded without our Ambassadors even knowing what McNamara and Company were doing. He recalled the case of our Ambassador to Jamaica who could not recite to his host government what the U.S. was doing for Jamaica although we were picking up most of the World Bank tab./3/

/3/The Ambassador to Jamaica was Vincent de Roulet. His remarks have not been further identified.

President Nixon then stated that he wanted to emphasize several things with respect to aid in the future. First, he did not want to short the military assistance program in Latin America or elsewhere. Secondly, he wanted emphasis shifted from multi to bilateral assistance. In this way we would deal laterally with recipient countries and apply the kind of political leverage necessary to achieve our foreign policy objectives.

The President concluded by reassuring Dr. Hannah that he would not launch another study effort of our foreign assistance program but instead expected the Director to conduct a study of his own. He should bring his recommendations to the President after November and hopefully in time for the next budget. Dr. Hannah is in effect the new task force. In preparing the study Dr. Hannah should discuss the approach with John Connally and above all the programs should be designed to achieve our own interests. Dr. Hannah thanked the President for this mandate and added that the PL 480 program which totaled nearly a billion a year was an excellent case in point. Greater coordination was needed and specific policy guidance should be provided to AID in a clearer way. Many times, legislative breakdowns occurred because State legislative liaison people tended to fight for every desk officer's objective and Congressional leaders could only be approached so many times. The trouble with multilateralism was that other nations decided how to spend our money.

 

95. Memorandum From Secretary of Defense Laird to President Nixon/1/

Washington, August 4, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Confidential. Forwarded to the President under cover of an August 14 memorandum from Kissinger. In an August 9 memorandum, Kennedy reminded Kissinger he had discussed Laird's concern with Weinberger and Laird on August 7, and they had "agreed that programs would be developed to meet our essential security needs following which consideration will be given to what adjustments in the ceilings would be necessary." Kennedy recommended that Kissinger sign a memorandum to the President informing him of Laird's concern and that programs to meet security needs would be developed within the basic limits of the Defense expenditure ceiling. (Ibid.) Regarding the August 7 meeting, see Document 96. The August 14 memorandum to the President noted that Laird and Rogers would develop programs within the limits of the Defense Department expenditure ceilings and concurred with Laird's view that the Security Assistance ceilings were too low. The memorandum indicated that Laird and Weinberger would make recommendations on adjusting the expenditure levels.

SUBJECT
Planning Guidance for the FY74 Security Assistance Program

Cap Weinberger has sent me a copy of his letter to Bill Rogers giving planning ceilings for the 1974 Budget for Security Assistance Programs./2/ He has stated that your decisions on the budget totals require that the budget for the Military Assistance Program and Foreign Military Sales Program be at or below $580M and $570M respectively.

/2/Document 92. Weinberger's letter to Laird providing a copy of the letter to Rogers is also dated July 21. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972)

In combination with the low level of Congressional appropriations for FY72 and the levels which can be realistically expected from the Congress for FY73, a FY74 budget for MAP/FMS at the levels prescribed by the Director, OMB, would severely impede the transition of our friends and allies toward greater self-reliance against internal and sub-theater conventional military threats. We could not meet the objectives of the bilaterally established Korean Modernization Program and the objectives of the Cambodian and Thai programs, nor could we provide essential assistance to Turkey or sustain, within the OMB ceiling, other smaller but vitally important programs such as Indonesia and Jordan, in a manner consistent with your previous decisions.

With respect to Foreign Military Sales Credits, we will be constrained in satisfying adequately the requirements of several countries in the Middle East where an arms balance is essential; in providing funds for several Latin American countries where modernization of obsolete equipment is needed; and in providing funds for those countries like Turkey and Taiwan that are transitioning from military grant aid to more self-supporting sales basis. If we are not able to be forthcoming with FMS credit, which is paid back in full plus interest, it will certainly not be to the overall U.S. interest, particularly from a national security and economic point of view.

As you are aware, the FY72 appropriations for MAP and FMS were $500M and $400M NOA, which was $205M and $110M below your

budget The Senate Foreign Relations Committee has recommended cuts of $180M for MAP and $127M for FMS credit. The levels given by the OMB for FY74 MAP are comparable to the very low levels appropriated by the Congress in FY72. levels given by the OMB for FY74 MAP are comparable to the very low levels appropriated by the Congress in FY72.

Unless you direct otherwise, I intend, in consultation with Bill Rogers, to recommend a MAP and FMS budget for FY74 at levels derived in consideration of the total allied and U.S. efforts necessary to maintain the security of the United States and sustain the foreign policy and collective security objectives of the Nixon Doctrine. I would expect to fund the MAP and FMS levels within the FY74 budget levels you ultimately establish for the Department of Defense after full consideration of the necessary balance between Military Assistance and Military Functions Programs.

Melvin R. Laird

 

96. Information Memorandum From Richard T. Kennedy of the National Security Council Staff to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, August 5, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 230, Department of Defense, Volume 18 8-12/72. Secret. Concurred in by Philip Odeen.

SUBJECT
Your Meeting with Secretary Laird and Mr. Weinberger on the Defense Budget Monday, August 7, 1972

In addition to the subjects raised in Phil Odeen's memo, OMB's Security Assistance ceilings for FY 74 should be raised./2/

/2/Odeen's memorandum has not been identified. For the OMB's ceilings, see Document 92.

Secretary Laird has protested that the OMB ceiling on FY 74 Security Assistance requests is inadequate (Tab A)./3/ The ceilings were announced by Weinberger in a letter to Secretary Rogers immediately after the July 20th Cabinet meeting on the budget (Tab B)./4/ The ceilings were never discussed with the NSC staff nor were we aware of the letter until after it had been sent.

/3/See Document 95.

/4/See Document 92 and footnote 2 thereto.

We share Mr. Laird's view. The ceilings are entirely too low and approach the low levels of congressional appropriations of FY 1972 which the President is on record as considering insufficient to meet our security needs./5/ Comparison of the OMB FY 74 ceilings with previous years is as follows:

/5/The President's June 10 letters to Senators Mansfield and Scott regarding the Foreign Assistance Authorization Bill are printed in Public Papers of the Presidents of the United States: Richard Nixon, 1972, pp. 669-670.

 

FY 74 OMB

FY 73 Request

FY 72 Approp.

FY 72 Request

MAP

580

780

500

705

FMS

570

527

400

510

Supporting Assistance

663

844

601

763

Total

1813

2151

1501

1978

The cuts we know will be made by Congress in the FY 73 requests will compound the problems caused by the deep FY 72 cuts. We have planned to look at a supplemental after November to restore some of the combined FY 72-73 cuts. The OMB FY 74 levels would merely perpetuate the problem and invite even deeper cuts by Congress. They are inconsistent with the thrust of the Nixon doctrine.

The OMB FY 74 levels would require major cuts in the Cambodia, Turkey, and Korea programs and would not enable us to meet our minimum supporting assistance needs. Moreover, they are predicated on a more rapid shift from grant MAP to FMS than we believe is either possible or desirable for most of our key recipients.

 

97. Memorandum From the Director of the Office of Management and Budget (Weinberger) to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, August 15, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. No classification marking. Attached to an August 16 memorandum from Kennedy to Kissinger suggesting the memorandum was a follow-up to Kissinger's budget discussion with Laird. Kennedy called Kissinger's attention to Weinberger's focus on the total level of the program and noted that some countries could not afford additional debt and that most had limited abilities to replace MAP grants with FMS loans. He thought the increase in FMS at the expense of MAP could be problematic and also doubted that the unusually large recoupments and reimbursements in MAP and private credit in FMS could be realized. Regarding Kissinger's budget discussion with Laird, see footnote 1, Document 95 and Document 96.

SUBJECT
1974 Planning Ceiling for Military Assistance

I believe it useful to remove any misunderstanding about the 1974 planning ceiling for the Military Assistance Program (MAP) and the Foreign Military Sales Program (FMS).

Mel Laird refers to the budget authority amounts of $580 million for MAP and $570 million for FMS as inadequate./2/ The appropriate measure is program level; budget authority is a derivative number arrived at by subtracting from the program level estimates of financing items such as receipts, reimbursements, and recoupments of prior-year obligations. Program level figures were not transmitted officially to State and Defense along with the figures for budget authority and outlays.

/2/Document 95.

Using the proper measure of program level gives this picture:

 

1973
1972

1974 Budget

Ceiling

 

($ millions)

MAP

552

820

658

FMS

550

629

773

Total

1102

1449

1431

A total program level in 1974 which is $329 million higher than the actual level in 1972 and about the same as that in the President's 1973 Budget is not, on the face of it, inadequate. Moreover, the implication in Mel Laird's August 4 memorandum to the President that amounts equal to prior congressional cuts should be added to budget requests for future years is a novel, not to say disturbing, approach to budgeting.

Whether or not the planning ceiling, and more particularly the allocation between MAP and FMS, will meet the President's foreign policy needs will best be determined during this fall's budget review process. Obviously, much depends on the situation and prospects in Southeast Asia and the Middle East.

As I am sure you know, Curtis Tarr will be conducting detailed and extensive country-by-country reviews during September and early October, in which Defense, AID, and NSC and OMB staffs will be involved. Full participation and cooperation by Defense will be essential, for these reviews will form the basis of the Secretary of State's budget recommendations for the 1974 Security Assistance programs.

Cap

 

98. Memorandum From Secretary of State Rogers to President Nixon/1/

Washington, October 27, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret.

SUBJECT
Security Assistance

Today I forwarded to the Director, Office of Management and Budget, my recommendations for the FY 1974 Security Assistance budget as well as certain proposals on the reorganization and restructuring of that program./2/ These proposals support the Security Assistance legislation that you transmitted to the Congress in April, 1971.

/2/Not found.

Narrow victories and the frustration of indecision in the Congress this year have convinced me that we must make fundamental changes in the Security Assistance Program or the Congress may fail to reenact it. In order to rally new support, I propose three rather dramatic changes in the FY 1974 program.

First, I recommend legislation to place our Military Education and Training Program on a permanent basis and apart from regular grant military assistance. This legislation, the "International Military Education and Training Program," would be a separate chapter of the Foreign Assistance Act. Heretofore we have financed training through our grant military assistance program. Nearly fifty nations participate, and only half of these also receive materiel grants; yet when we place both types of assistance in one military grant category, Members of Congress and the public gain the impression that we are providing materiel support to many more nations than in fact we do. This new legislation should remove the chance for misunderstanding while it places military training on the same legislative basis as its civilian counterpart, the Mutual Education and Cultural Exchange Act of 1961.

Second, I propose to reduce the number of nations currently receiving materiel grants. Consistently we have justified this assistance on the logic that we give help to friendly nations which do not have the economic resources to support their own defense requirements. By the same reasoning, we no longer should provide grant materiel support to a nation whose economy has grown to the point where grant assistance no longer is required.

Greece and the Republic of China are the two most important nations that I propose to eliminate from the grant program. Both have made gratifying economic progress, and our military materiel contributions to their defense costs are small. In FY 1972, after Congressional cuts, we provided $11 million to the Republic of China and $10 million to Greece. We probably will not be able to do as well in FY 1973 because of the constraints imposed by the continuing resolution authority.

The Department of Defense has reservations about abruptly terminating materiel aid to Greece, notwithstanding the reasons presented above, because of the potential impact on home-porting arrangements now being negotiated by the United States Navy. I believe, however, that adverse impact can be avoided through careful diplomatic preparation for the announcement, and by expanding the credit arrangements we make available to Greece for the purchase of military equipment, which we estimate will be $70 million in FY 1974. Likewise the Department of Defense would rather not terminate abruptly our grant military assistance to the Republic of China in FY 1974 because of the psychological blows that these, our friends, have received of late, the assistance they have given to our military forces, and the essential role the Republic of China plays in our western Pacific and Asian strategy. These are valid arguments. But I believe we can explain to the Republic of China through careful diplomatic consultation that our action does not represent any change in policy toward them but is dictated by Congressional considerations that affect the Security Assistance Program as a whole. We would provide greater credits for the sale of military equipment, estimated to be $75 million in FY 1974, continue to help them with the assembly on Taiwan of military equipment that they purchase from us, and give evidence of interest and co-operation such as we expressed recently in the transfer of two training submarines and as we contemplate in the transfer of a rather large number of medium tanks. Furthermore, we will continue to offer education and training programs to military people from both Greece and Taiwan on a grant basis, and we also will make available to them excess military equipment.

I propose further to terminate the military aid program to Liberia and to six Latin American nations. Each program involves less than a million dollars; in all cases we propose to continue training and excess defense article transfers. In Latin America we would continue to provide grant military assistance to Bolivia, Guatemala, Panama, and Uruguay, and we would establish a small regional fund to furnish emergency assistance to the other Latin American nations.

I feel certain that this reduction in the number of nations to which we would give grant military assistance will encourage Congressional support for the FY 1974 program.

Finally, I recommend that we eliminate Spain and Portugal from the grant military aid program. In both cases our grant assistance is justified not because of the economic necessity to help either nation finance its defense expenditures, but as a consequence of a defense base right requirement. Congressional leaders often criticize us for not explaining these programs as a payment for our right to use certain bases, but if we do so then we bring into question the logic of grant programs in general. It appears to me that the more reasonable alternative is to let the Department of Defense finance such rent. The Secretary of Defense concurs in doing so. We both recognize difficulties that may result. This action would transfer consideration of authorizations to other committees, and we must work with key committee chairmen in Congress to explain what we seek to do, particularly before public announcement of such a proposal. We also would invite questioning about other nations, particularly Ethiopia, where our aid partly is compensation for a defense base right requirement and partly a more traditional kind of military assistance. I feel we can handle these difficulties and thereby defend the program more easily than we do now.

I seek your support for these recommendations. I would welcome an opportunity for Curtis Tarr and myself to discuss the FY 1974 Security Assistance Program and these proposals with you.

William P. Rogers

 

99. Letter From the Under Secretary of State for Security Assistance (Tarr) to the President's Assistant for National Security Affairs (Kissinger)/1/

Washington, November 14, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret; Exdis. Attached to Document 104. The position of Under Secretary of State for Security Assistance was authorized in the Foreign Assistance Act of 1971 that President Nixon signed on February 7, 1972. Curtis Tarr, the first to encumber the position, entered on duty on May 2, 1972.

Dear Dr. Kissinger,

Attached are the country allocations of funds under PL 92-571 for the several components of the Security Assistance Programs, which I have approved following interagency discussions./2/

/2/Nine pages of tables giving actual levels for FY 1972, proposed levels in the FY 1973 Congressional Presentation, and Tarr's proposals under the continuing resolution are not printed. Two pages of text summarizing by country anticipated difficulties under the funding limits are also not printed.

In arriving at these allocations, the following major considerations were taken into account: (a) Presidential commitments and assurances, including those for Indonesia, Jordan and Turkey; (b) combat and economic requirements such as those that exist in Vietnam, Laos and Cambodia; (c) Congressional intentions, specifically those covering Israel and the Philippines; (d) force modernization plans of our allies which we have undertaken to support, such as the Republic of Korea; and (e) financing, as an emergency measure, the costs involved in providing on an urgent basis certain equipment and services to strengthen the armed forces of the GVN.

On the last point, I have set up a special fund allocation in MAP to meet certain costs we foresee for Vietnam transfers (Tab A)./3/ I expect that further requirements for equipment and services will develop that will have to be satisfied on an urgent basis. As a temporary financing measure, we plan to use MAP funds for these purposes. We will have to consider in the very near future the ultimate means of financing these "ceasefire" requirements and to effect reimbursement to MAP.

/3/Not printed.

The attached country allocations should enable us to meet minimal grant military assistance requirements and essential needs for supporting assistance. As you are aware, new FY 1973 programs, such as Malta and Thailand which were previously funded from other appropriations, are now being funded from security assistance funds. While the funding I have approved for FY 1973 is to permit orderly programming, I have asked DOD and AID to assure that actual expenditures are made on a quarterly basis in accordance with OMB instructions. Finally, because of the fluid situation in Southeast Asia and other uncertainties which could have a bearing on Security Assistance Programs, I plan to keep the country allocations under continuing review and will advise you should any significant changes be made.

I am sending a letter and the attachments reflecting the foregoing to Mr. Weinberger for his attention and to the appropriate agencies for action./4/

/4/None of these letters has been found.

Sincerely,
Curtis W. Tarr

 

100. Editorial Note

The Nixon administration had agreed in April 1970 to contribute $1 billion over 3 years ($100 million in 1971, and $450 million each of the following two years) to replenish the funds of the Inter-American Development Bank (IDB). Regarding this decision, see Document 25. The administration submitted legislation to authorize the $1 billion in 1970, but this was cut to $100 million. The administration requested the appropriation of the initial $100 million authorized by Congress, but in May 1971 Congress reduced the appropriation to $50 million.

After Congress passed legislation authorizing the remaining $900 million in March 1972, the administration requested $450 million for the second installment. The Senate approved the full amount, but the House approved only one-half of it. When conferees were unable to reach agreement on the 1973 Foreign Aid Authorization bill, the Appropriations Committee passed a Continuing Resolution (to expire on February 28, 1973), which limited payments to the IDB's Fund for Special Operations (FSO) to $225 million. The IDB proposed that members make commitments to a replenishment resolution by December 31, 1972, and that the first two installments ($550 million for the United States) be made by that date. By late 1972 it was reported that funds for the FSO would run out by the end of 1972 without further payment by the United States. A summary of these developments, as well as possible options that would allow the United States to meet its commitments to the IDB, is in a memorandum from Under Secretary of the Treasury Charls Walker to Secretary of the Treasury Shultz, November 22, 1972. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, Inter-American Development Bank) An earlier report is in a memorandum from Hormats to Haig, October 10. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 333, IADB)

Secretary Shultz discussed these problems with Ortiz Mena, IDB President, on November 28. At the conclusion of their frank discussion, Shultz commented that "the efforts of the Treasury and the Bank staffs should be aimed at finding the means to minimize and dampen any adverse psychological reactions to a postponement by the U.S. of the replenishment. He recognized that there was a cost in terms presented by Mr. Ortiz Mena, but that the Bank should continue to operate, recognizing that the U.S. had $275 million available. Final U.S. action would be based on the completion of the Congressional process." (Memorandum of conversation; Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, Inter-American Development Bank)

Following Congressional consultations by Treasury officials in mid-December 1972, Gene A. Knorr in the Treasury Department recommended that Shultz call Congressman Passman and tell him that the President wanted to adhere to the $1 billion IDB replenishment and that the administration would agree to the replenishment resolution, subject to appropriations, and pay in $162.5 million of the available $275 million. Knorr further proposed that after talking to Passman, Shultz or Volcker should discuss the matter with Chairman Mahon on December 18 or 19 for transmittal of the U.S. position to the meeting of the IDB Executive Directors on December 21. (Memorandum from Knorr to Shultz, December 18; ibid.) These additional Congressional consultations apparently took place, but no record of them has been found. On December 20 Shultz signed a letter to President Ortiz Mena informing him of the U.S. payment into a special account at the Federal Reserve Bank of New York of $275 million for the IDB. He assured him of his best efforts to obtain the additional appropriations. (Ibid.)

No further decisions on IDB replenishment were made during 1972.

 

101. Memorandum From Secretary of Defense Laird to President Nixon/1/

Washington, November 28, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Secret. Attached to a January 4, 1973, memorandum from Kissinger to Laird informing him that the President had decided not to pursue Laird's proposal to transfer security assistance to the Defense Department budget at that time.

SUBJECT
Security Assistance

The Secretary of State has forwarded to you a memorandum outlining certain proposals to reorganize and restructure the Security Assistance Program in FY 1974./2/ The purpose of these initiatives is to strengthen the rationale for the program and to permit Congress to concentrate on priority Security Assistance requirements.

/2/Document 98.

I support the Secretary of State in his objectives. I am convinced, however, that more sweeping changes are required in order to carry out the concepts of the new course in foreign policy upon which we have embarked under your leadership. I remain convinced of the need to transfer Security Assistance to the Defense Budget and consider that now is the time to act. Our experience with the 1973 program is further evidence of the continued hostility in Congress to this program, particularly in the Senate Foreign Relations Committee. I believe that we must make the attempt to change the initial referral of the authorizing legislation to the Armed Services Committee and place the burden to change the initial referral on the Foreign Relations Committee. I refer you to my memorandum of 23 December 1971 which outlines the details and rationale of my proposed approach./3/

/3/See Document 88 for the disposition of Laird's earlier proposal.

In the event of a negotiated settlement in Southeast Asia, Congress has clearly indicated the Military Assistance Service Funded (MASF) for Southeast Asian countries will not be authorized beyond FY 1973. This makes it even more critical to secure an adequate level of funding and a more flexible Security Assistance Program in the next few years. A piecemeal approach, such as moving two of the most controversial elements--aid to Spain and Portugal--to the Defense Budget as proposed by the Secretary of State, will probably incur as much opposition as a total reformation of the program. The potential for successfully moving and restructuring Security Assistance is better in the coming Congressional session than it would appear to be in subsequent years of your Administration.

The Secretary of State proposes to reduce the number of nations receiving grant military aid. I cannot agree that our grant aid programs to Greece and the Republic of China should be terminated as of FY 1974. Neither can I agree with the proposal to strike six of ten recommended recipients in Latin America. The abruptness of terminating materiel grant aid in FY 1974 could cause the Chinese severe problems for support of their armed forces and could well endanger our military relationships with the Chinese, thus affecting our military posture in the Western Pacific. Greek reaction to the abrupt elimination of grant aid could imperil support of our CVA home-porting initiatives in Greece, as well as overflight and base rights in that country. Further, in consideration of Greek contributions to NATO and Greek assistance to the maintenance of our military posture in the Mediterranean, I feel that we will need to continue a modest grant aid program to Greece for the next several years. Similarly, in Latin America I believe that we should continue to provide modest programs consistent with your decision concerning FY 1972 grant materiel assistance and the considerations raised in the Military Presence Study of which you are aware. Such programs advance our ability to pre-empt third power military influence in Latin America and, by establishment of contact with important military leaders, favorably influence achievement of US foreign policy objectives.

I have forwarded to Cap Weinberger my proposals for continued assistance to Greece and the Republic of China, together with other specific recommendations on the funding levels for various recipients of Security Assistance during FY 1974./4/ I have also recommended to him that we restructure the FY 1974 Security Assistance Program into the Defense Appropriations Bill and that we include a request for increased Security Assistance funds in an FY 1973 Defense supplemental appropriations request.

/4/Not found.

Melvin R. Laird

 

102. Draft Memorandum From Secretary of the Treasury Shultz to President Nixon/1/

Washington, December 1, 1972.

/1/Source: Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, IFIs. No classification marking. Drafted by E.J. Finkel. A handwritten note on the memorandum reads: "Discussed in IDA IV mtg w/PAV et al. 12/1." According to notes by the Deputy to Assistant Treasury Secretary Hennessy, George H. Willis, the December 1 meeting was an internal Treasury meeting attended by Volcker, Hennessy, Finkel, Hirschtritt, and several others. Willis' notes deal only with the IDA-share issue. (Ibid.)

SUBJECT
Multilateral Economic Development Assistance

We urgently need to assess where we stand with multilateral development aid, and to decide anew where we are going with it. In 1970, after the Pearson Commission's work and Rudolph Peterson's review of U.S. aid policy, we announced a shift to greater emphasis on multilateral development assistance, and the overhaul of our bilateral aid structure, with the express idea of phasing the latter down over time./2/

/2/Reference is to the President's September 15, 1970, message to Congress, printed in Public Papers of the Presidents of the United States: Richard Nixon, 1970, pp. 745-756.

Beginning at about the time of that announcement, we have been experiencing increasing congressional delays in funding the international lending institutions at the levels we thought appropriate and committed ourselves to internationally. On the bilateral side, Congress has rejected the reorganization proposals and continued to reduce funding levels./3/ We have made some noteworthy progress on multilateral programs already before the Congress, e.g., replenishment of IDA, but decisions cannot be postponed much longer on further replenishment of some existing multilateral programs and on some new ones.

/3/The legislation was sent to Congress on April 21, 1971, but it never came to the floor for a vote.

There are a number of contributing factors to our recent problems with Congress over funding the multilateral institutions. The focus of these problems is in the House Appropriations Committee; our author-izing legislation has enjoyed substantial margins on the floor of both Houses, and the Senate Appropriations Committee is currently providing all we have asked for. Among the operative factors are:

(1) The feeling that Congress can exercise less scrutiny and control over multilateral than bilateral programs, and that the Appropriations Committees are being asked to rubber-stamp programs already negotiated internationally.

(2) The jurisdictional impact in the House of the shift from bilateral to multilateral aid, as between the Foreign Affairs and Banking and Currency Committees.

(3) The general international economic situation which makes it difficult to argue for increased amounts of assistance in any form, as well as our over-all budgetary stringency.

(4) Our own tendency to place a higher priority on obtaining security assistance funding when we have had to make such trade-off decisions on the Hill.

(5) A number of special cases where loans to countries which had expropriated United States interests or were taking other actions which we felt were contrary to U.S. interests still went forward in international institutions, since we do not hold a veto except over the soft loan window of the Inter-American Development Bank.

Notwithstanding the Congressional delays we have experienced, I believe the reasons which gave rise to our decision to provide an increased emphasis on multilateral aid, as opposed to bilateral are to a great extent still true.

--Multilateral cooperation for development is an integral part of a broader cooperative world system. The multilateral institutions channel European efforts and resources that might otherwise be directed toward a Europe-oriented regionalism vis-a-vis the Third World. These institutions can be part of a fabric of stability that is important as international economic matters move to the foreground and security matters recede.

--The international institutions have already shown a capacity to work constructively with diverse economic systems and have considerable potential in a period of improving East-West relations.

--The overriding concern of Third World nations is with their own development. For these nations, the international lending agencies, with their established expertise in the problems of development, are a preferred instrument which they value, identify with and respond to more willingly on matters of policy. One element in this preference may be the fact that the multilateral agencies operate without large overseas staffs, whereas our bilateral programs entail a major U.S. presence in recipient countries.

--The international institutions are our most important vehicle for financial burden-sharing in the aid field. We expect, for example, a substantial reduction--six percentage points or more--in our share of future IDA replenishments,/4/ and we are well advanced in the process of bringing others in to share the costs of the Inter-American Bank, which we have borne almost alone.

/4/A November 30 memorandum from Hennessy to Volcker on "IDA IV Replenishment," deals with proposed guidelines for a December 14-15 Paris meeting (DAC) on the IDA IV replenishment. Item 6 reads: "We will indicate that a substantial reduction in the U.S. share is a sine qua non of U.S. participation [and] without giving any assurance that it will prove acceptable in the congressional consultations . . . should be understood to mean to not more than 30 percent." (Ibid.) In a November 6 conversation with IBRD Vice President Sir Denis Rickett on the IDA replenishment, Volcker said that in order to get anything from Congress, it would be necessary to reduce the U.S. percentage share from 40 percent to between 20 and 30 percent. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, IFIs)

But there are some real problems and some limitations involved in our primary reliance on the multilateral institutions that must not be overlooked in any candid appraisal. Particularly with the World Bank, there may be a danger of sheer bigness and a resulting tendency to move too far beyond the control of its major shareholder governments. Moreover, we cannot look to the international bodies to be responsive to our foreign policy objectives in particular countries of key interest to us. For such situations, bilateral aid, particularly security assistance, is a much more flexible instrument which we should continue to use in the future. We also are unable, under the international competitive bidding procedures of the multilateral agencies, to tie procurement as we can with our bilateral aid. As our international competitiveness improves, however, we should be able to regain some of the ground lost in recent years.

At present, we have pending before the Congress fully authorized appropriations requests for IDA, the Inter-American Bank (hard and soft windows) and the Asian Bank's soft window. The pattern of appropriations over recent years, as well as projections for the period ahead and a comparison with bilateral levels, are shown in the attached table./5/

/5/Not found.

Different institutions serve our interests in different ways, and this has to be taken into account in planning for the future. IDA, for example, lends 40 percent of its funds to India, another 20 percent to Indonesia, Pakistan and Bangladesh, and very little to Latin America. The World Bank, on the other hand is a major lender to Latin America. At the regional level, the Asian Development Bank is still small, but concentrates on providing funds to countries which have been key to us in the East in the past, such as Taiwan and Korea. It is seen by most people in the area as an alternative to strict Japanese dominance to the whole aid process in that area of the world. The Inter-American Development Bank which is funded by ourselves and to a small extent by Canada is seen by the Latins as the major expression of our degree of commitment to that hemisphere. The Bank lends an amount about equal to the World Bank's Latin American lending on an annual basis but much more of this is on a concessional or soft basis.

Looking at the next four years, I believe shifts of priorities in our funding of the various institutions should take place. I would think that the major emphasis should be holding growth in our present $320 million annual participation in IDA to a minimum; if other countries feel the need or desire to increase IDA activities, they could put in an increasing share. In any case, we plan on reducing the U.S. participation of 40 percent down to about one-third during the next three-year replenishment period beginning in 1974. At the same time we would keep our average annual level of commitments to the Inter-American Development Bank somewhere around $350 million in soft funds and around $200 million in hard funds over the same period. Although IDA has steadily increased its activities in Africa, a modest participation at the regional level through the African Development Bank is indicated. Finally our level of commitment to the Asian Development Bank will have to be augmented, with the understanding that a large portion of this may go to helping in the reconstruction of Southeast Asia.

In this respect, I believe the international institutions do have a special role to play in Indo-China and we are in consultation with the National Security Council staff to try to work out what seems to be a coordinated package on this. For example, the IDA and the ADB between them should be able to build up within a relatively short period of time to loans of $150 million a year to the area. This would allow us to obtain the support of other donor nations, so that the reconstruction effort would be seen as a joint multilateral one.

The program I have outlined for our multilateral development assistance must, of course, be closely coordinated with our planning for bilateral assistance, for this is where the Congress will compel us to consider trade-offs. At present, taking bilateral development lending alone, our main emphasis is clearly on multilateral channels of financing by about 2:1. But defining bilateral aid more broadly to include security assistance, we have a more balanced total program, and in my judgment we should keep the over-all mix about where it is during the next four years, without a dramatic phasing down of bilateral aid or a corresponding dramatic increase in multilateral aid. I will be glad to cooperate and play any role you wish me to in the important process of achieving an integrated and coordinated approach to our total assistance program, multilateral and bilateral.

Even after we have fully satisfied ourselves as to the appropriate multilateral-bilateral mix, however, it will still take a major effort with the Congress to put our program across.

As I have indicated in my separate memorandum to you on our special problem in the IDB,/6/ your personal support and involvement on behalf of our multilateral programs is the key to success. Efforts limited to the departmental level, even with the full cooperation of State and NSC, can only be partially successful, and partial success is inadequate in meeting internationally negotiated commitments.

/6/Not found.

Specifically, Congressman Passman and key congressional leadership figures will have to be informed that you consider these international institutions to be responsive to our long-run economic interests, that you regard our support of them as an integral part of your foreign economic policy aimed at a peaceful and stable world order, and that you desire to see them funded in accordance with the international understandings negotiated under your instructions. Such a stance means, of course, that it will be necessary to resist the various trade-offs that Mr. Passman or others may seek to impose.

I would hope that, in addition to your response to my other memorandum, I could have an indication of your agreement that we should adhere to the original game plan of placing major reliance in our development assistance policy on the international lending agencies. It is also important for me to know at this juncture that you are prepared to make the game plan work by applying the weight of your office when and where it is required in the Congress this coming spring.

 

103. Memorandum From Secretary of State Rogers to President Nixon/1/

Washington, December 14, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Confidential. Attached to a January 4, 1973, memorandum from Kissinger to Laird (see footnote 1, Document 101).

SUBJECT
Moving Security Assistance to the Defense Budget

Secretary Laird has written to you proposing again this year that the funding of the Security Assistance program be transferred from the Foreign Assistance Act to the Defense Department Authorization and Appropriations bills./2/ I believe the problem is sufficiently serious for me again to convey to you directly my strong opposition to the proposal.

/2/Document 101.

The most significant problems with Secretary Laird's proposal will be with the Congress. An attempt to shift jurisdiction for this program from the traditional committees would be opposed by some of the most helpful and most crucial supporters of our foreign policy on the Hill. The Republican members of the House Foreign Affairs Committee continue strongly to support Chairman Morgan who is firmly committed against giving up jurisdiction on the one important substantive bill handled each year by his committee. Senator Stennis does not wish to handle the authorization of military assistance in his committee and is strongly opposed to attempts to alter jurisdictional responsibilities in the Senate in an effort to circumvent committees which now have jurisdiction. He made this point clearly and publicly in the recent Senate debates on the Jackson Amendment for Israel when he strongly opposed any shift in jurisdiction (Statement attached)./3/

/3/Not attached. In a list at the end of the memorandum, it is identified as an excerpt from the Congressional Record, July 31, 1972.

We have been working hard at putting together a new set of Congressional supporters for development aid and Security Assistance. This requires moving many House and Senate conservatives formerly opposed to "foreign aid" to support the Security Assistance legislation. We believe that we have made progress in building a new coalition favoring Security Assistance and that this effort should not be jeopardized by a proposal for circumventing established committee jurisdictions.

Shifting Security Assistance funding to the Defense Department budget will not help to avoid the principal problems which we have had in the past--the determination of the Senate to add crippling amendments and to cut funds for Security Assistance. Rather I believe our effort to seek new support for Security Assistance is the best answer to the problem of cuts. Also a shift to the Defense budget will provide Administration critics in the Senate with a single and more vulnerable focal point to which to attach the kinds of crippling amendments which in the past they have tried to fix to the Foreign Assistance Act.

Secretary Laird has stated that moving Security Assistance would facilitate Defense Department planning to integrate support for allied forces with that for our own. However, it is foreign policy rather than force planning which has increasingly come to dominate our thinking about Security Assistance. This is certainly true with our major programs in Asia and the Middle East in such countries as Israel, Jordan, Turkey, Greece, Indonesia, Thailand, the Philippines and even to a considerable extent in Korea. I cannot agree to transfer control over these important foreign policy matters to the Defense Department.

With the increasing prospects for a settlement in Indo-China, we should be considering now, how and under what conditions we should move Laos and Vietnam from the Defense budget into the Security Assistance program, rather than contemplating a move in the opposite direction. Secretary Laird makes clear in his memorandum to you on this subject that: "In the event of a negotiated settlement in Southeast Asia, Congress has clearly indicated that Military Assistance Service Funded (MASF) for Southeast Asian countries will not be authorized beyond FY 1973". I share his judgment on this point and believe it rules out a shift of Security Assistance to the Defense budget (MASF).

Curtis Tarr as Under Secretary for Security Assistance has been in the State Department for six months working on this program. I recently sent to you recommendations for the FY 1974 budget which he prepared after extensive study of the program designed to insure the broadest possible Congressional support./4/ I believe we should give these recommendations a chance to work to gain the wide support which we need and should have in the Congress. Now is not the time to reverse the direction you have selected or the new steps we have already taken or propose to take. I believe our present direction is right and is the best course to find the necessary funding to insure that the approach of the Nixon Doctrine succeeds.

/4/Not found, but see Document 99.

William P. Rogers

 

104. Memorandum From the President's Assistant for National Security Affairs (Kissinger) and the Director of the Office of Management and Budget (Weinberger) to the Under Secretary of State for Security Assistance (Tarr)/1/

Washington, December 26, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. No classification marking. Forwarded to Kissinger under cover of a December 29 memorandum from Kennedy with the recommendation that, based on a review by his senior staff who agreed that Tarr's proposal was the most reasonable distribution of the insufficient resources provided by the continuing resolution, he sign the memorandum to Tarr. Kennedy also provided a tabulation on security assistance continuing resolution funding through February 28 enacted by Congress just before adjournment. He concluded that the continuing resolution was $550 million below the President's request, necessitating drastic cuts in many key programs, noted that the worst-case scenario would be extension of the continuing resolution at current levels through the remainder of FY 1973, and proposed a few areas where additional funds might become available.

SUBJECT
Security Assistance Country Allocations for 1973

We agree that the allocations of 1973 security assistance funds set forth in your letters of November 14, 1972,/2/ provide an adequate interim basis for proceeding under the current continuing resolution consistent with the President's program, given various uncertainties, including those in Southeast Asia. In connection with the commitment to the F-5E co-production program for Taiwan of funds available under the continuing resolution, we are proceeding with an independent review of that issue based on your memorandum of November 24./3/

/2/Document 99.

/3/Not found.

We also agree that the allocations should be kept under continuing review so that they can be adjusted to meet changing circumstances and reflect further congressional action. In this connection, since it appears likely that recoupments and reimbursements under the Military Assistance Program be larger than you have estimated, the additional availabilities should be taken into account for high priority country programs. At such time as additional resources become available, it would be desirable to reexamine the allocations in the light of circumstances then obtaining before those additional resources are committed. This would permit consideration, for example, of a further allocation to the program to allow Greece some increase in the small materiel component of the presently approved program under the CRA.

Henry A. Kissinger
Caspar W. Weinberger

 

105. Action Memorandum From the President's Assistant for National Security Affairs (Kissinger) to President Nixon/1/

Washington, December 27, 1972.

/1/Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972. Confidential. Forwarded to the President under cover of a December 22 memorandum from Kennedy that summarized the issues.

SUBJECT
Security Assistance Legislation

Secretary Laird has recommended again that we transfer Security Assistance--now carried in the Foreign Assistance Act--to the Defense budget (Tab B)./2/ As you know, we have believed that this has considerable merit. If such transfer could be effected, it would change committee jurisdiction to the more favorably disposed Armed Services Committees from Foreign Relations/Foreign Affairs. The result would probably be fewer restrictive amendments and higher funding levels. Secretary Rogers believes the shift is neither feasible nor desirable: not feasible because Congress would not accept it, and not desirable because it would transfer control of important foreign policy matters to Defense (Tab C)./3/

/2/Document 101.

/3/Document 103.

Whatever the merits, it is clear that the attempt would cause a major jurisdictional dispute on the Hill. Senator Fulbright would resist, and Morgan in the House is diametrically opposed. Your congressional relations staff has contacted Senator Stennis whose support would be crucial. Stennis adamantly opposes and indicated he would not support or fight for the shift. Without his support there is no chance for success.

Unless we could be assured of success, attempting the transfer could cost us dearly. Our difficulties with the Foreign Aid bill would be compounded by all those members who saw this as an unsuccessful end run. Moreover, even some of the supporters would have expended capital in a losing proposition. Consequently, we believe that, however desirable the transfer might be, we have little or no chance of success and should not go forward with the proposal.

I recommend, therefore, that we inform Secretary Laird that we should not attempt the proposed shift of Security Assistance to the Defense budget at this time./4/

/4/President Nixon initialed the "Approve" option, and Kissinger informed Laird in a January 4, 1973, memorandum. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 324, Foreign Aid, Volume II 1972)

Bill Timmons and Ken Dam of OMB concur.

 


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