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

124. Report Prepared by the Policy Planning Council⁰

PPC 12-61

Washington, October 26, 1961.

THE NEW AID CRITERIA AND U.S. FOREIGN ECONOMIC PROGRAMS

I. Summary and Conclusions

Our new approach to foreign economic assistance with its emphasis on self-help and long-range planning represents a major advance in our aid thinking and holds out the promise of more prudent and effective use of our aid funds. No less important it aligns the US with the forces for economic and social progress in the less developed countries.

Because of widely different circumstances in individual countries our self-help approach needs to be flexible and pragmatic rather than doctrinaire. It cannot, moreover, be expected to achieve quick and dramatic results. Self-help must be viewed as a gradual and evolving proc-ess since it is addressed to some of the most deep-seated obstacles to economic growth.

Unquestionably we can utilize our aid more effectively to induce self-help than heretofore. We should be careful, however, not to overestimate our capabilities in this regard.

Many countries, particularly in Latin America, though they have the capability, have no great sympathy or understanding for self-help since it strikes at the heart of entrenched interests with which existing regimes are identified. Others in the pre-development phase, notably some of the newly independent states of tropical Africa, have only limited capacity for self-help. In still others such as Pakistan, Iran and Turkey overriding US political and strategic interests place limitations on the amount of leverage we can derive from our aid.

We cannot expect, therefore, to shift abruptly from a policy only mildly concerned with self-help to a rigid policy of adequate self-help on [and?] no aid. To do so would seriously undermine our relations with the less developed countries and jeopardize vital US strategic interests. Rather we should seek to achieve gradual but steady self-help gains in aid recipient countries, recognizing that sweeping demands for economic and social reform might even be counterproductive.

If we maintain persistent pressures for progressive economic and social reforms, the effectiveness of our efforts to move the less developed countries toward long-term political and economic stability will increase correspondingly.

Implementation of our new aid approach may be facilitated if we can develop more refined and objective guidelines for judging self-help. One possible approach is to group aid recipient countries according to their stages of economic development and to develop different sets of performance standards for each group. These could then be adjusted to take account of special political and other factors in individual countries within each group.

Most important, however, is the need to identify the half dozen at most specific self-help measures we should concentrate our efforts on in each country in order to maximize its economic and social growth. Our assistance gives us only so much leverage in aid recipient countries and we should not dissipate this by scattering our efforts.

We as the aid giver are going to have to assume the major burden of persuasion. This will require the most skilled and imaginative economic diplomacy if we are to achieve the full potentialities of our new aid concepts.

[Here follow Parts II-VII of the report: II. Introduction; III. Opportunities for Self-Help; IV. The Need for Flexibility; V. Obstacles to Self-Help; VI. The Need For More Precise Measures of Self-Help; and VII. Some Hazards in the Self-Help Approach.]

0. Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 65 A 481, State Department Policy Planning, FY 1962. Confidential. The portion of the source text printed here comprises pages 1-4 of the 40-page report.