Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

121. Memorandum From the Chairman of the Policy Planning Council (McGhee) to the Administrator of the Agency for International Development (Hamilton)⁰

Washington, October 17, 1961.

SUBJECT

• Foreign Assistance

On the points in your memo of October 10¹ my thoughts are:

(1) Rather than distinguish between political and economic aspects of foreign aid matters, I would stress the relationship between foreign aid and overall U.S. objectives. These objectives, as formulated by the Department of State, should be the source from which stem the aid and other programs which constitute the tools of U.S. foreign policy. Conversely, the impact of a given tool on attainment of the over-all objectives should be the main criterion by which its results are evaluated.

I fully concur in the emphasis on country planning which characterizes the most recent thinking on foreign aid in our Government. In this connection, I would urge that over-all U.S. objectives for a particular country take priority as a rule over general concepts governing the use of our various foreign aid resources. Such concepts are of course necessary—I appreciated your comment on our aid criteria paper, by the way²—but they should be flexibly applied to individual cases.

Thus it seems to me that country aid programs should be developed initially in response to foreign policy guidelines supplied by the Department of State. Papers endeavoring to give such guidelines are in preparation for all countries with which we have diplomatic relations. They are discussed in draft at the working level in AID and you are given an opportunity to comment formally before the papers are issued.

These guidelines papers are an innovation in Washington and it may take some time to get them into fully satisfactory shape. Even then it may not always be possible to have a guidelines paper sufficiently up to date at just the time needed to start a new aid planning cycle. Hence although I hope the guidelines papers will generally do the job, procedures should always allow for the possibility of their being supplemented or replaced by ad hoc guidance, ordinarily to be given by the State regional bureau concerned.

After projections for a particular country aid program have been drafted pursuant to the foreign policy guidelines, I think the program should be further refined by a series of discussions between State and AID officers here and in the field, each of whom is aware of the special requirements of the other’s business. The upshot of these discussions should be a meeting of minds, taking into account such limitations as the amount of funds probably or actually available. I assume that the regional bureaus would coordinate State’s side of these discussions in Washington.

In some instances of course there will be unresolved differences, requiring an appeal mechanism. If the appropriate officer in AID is unable to settle the point with the appropriate regional Assistant Secretary of State, I would suggest an intermediate appeal to your Deputy and the Under Secretary of State for Economic Affairs. Only issues they were unable to resolve would then need to be discussed by you with the Secretary.

(2) I agree with the desiderate you mention under this head, but will leave it to my operational colleagues to suggest procedures.

0. Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 65 A 481, Hamilton, Oct. 10 Memo “Foreign Assistance”. No classification marking.
1. This memorandum, which was sent to several foreign policy principals, has not been found, but from this response as well as others it apparently set forth procedures to ensure effective coordination between AID and other executive agencies in discussing assistance matters with foreign governments.
2. Reference is to a paper on foreign aid criteria prepared by the Policy Planning Council, which was forwarded to Hamilton under cover of a memorandum from McGhee, October 4. (Washington National Records Center, RG 286, AID Administrator Files: FRC 65 A 481, State Department Policy Planning, FY 1962) In a note to McGhee, October 17, Hamilton wrote: “Thanks for the able memo on Foreign Aid Criteria. Now that I am in the saddle I’ll see that we use it in getting one out for the guidance of everyone concerned.” (Ibid.) For an extract from the final paper issued on October 26, see Document 124.