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

125. Memorandum From Secretary of State Rusk to the Chairman of the Policy Planning Council (McGhee)⁰

Washington, November 1, 1961.

SUBJECT

• The New Aid Criteria and U.S. Foreign Economic Programs

I have read the reference paper with great interest and found it a valuable discussion of a very complex problem.¹

It seems to me that there are certain questions which could serve to clarify our policy and strengthen our notion of self-help.

• First, will an investment of American aid yield a satisfactory return in results? We do not have resources to waste. There is more to be done than our resources can accomplish. Therefore, we cannot afford bad investments. A temporary amiability on the part of a government receiving aid or the warm feeling which an American ambassador gets by saying “yes” instead of “no” are not adequate returns on the investment of critically scarce resources.
• Second, under what conditions are we justified in digging into our own taxpayers’ pockets and postponing some of the great social needs of our own society in order to render assistance to another country? Can we defend aid to a country which protects its own entrenched interests at a time when we are picking up about 70% of the earnings of corporations in some form of taxation and when personal income taxes range from 20% to 90%? Are we justified in spending public money to provide capital to a country whose own capital sneaks off to Swiss banks?

I do not agree that we, as the giver of aid, must assume the major burden of persuasion on the subject of self-help. The burden of persuasion must be shifted to those who are trying to obtain U.S. resources for their own economic and social development. Clearly, their development is in our interest but we must not let this fact trap us into a responsibility for their standards of living or development.

I am not impressed by the thought expressed at our African Chiefs of Mission Conference that if we fail to respond to their economic development needs “our Missions might as well pack up and go home”. To the extent that our ambassadors become dependent upon foreign aid programs, to that extent they become weak and ineffective representatives of American interests abroad. Surely our objective is to work toward an absence of need for American assistance; this means to me that there ought to be a number of countries in which we do not even start down the trail of providing assistance. If we plan to continue to keep going to the Congress for aid programs for 70-80 countries, the Congress and the American public will rebel—and in my judgment that would be right. We ourselves must establish some priorities and work toward some division of labor among the industrialized countries so that every underdeveloped country in the world is not an aid client of the United States. We should develop a special citation or decoration for an ambassador who gets his particular country off our aid list.

One possibility for dealing with the above problem is to put certain of our activities on a regional rather than a country basis. For example, we could have a regional program for training indigenous experts without having an aid mission in each country. Private foundations have been doing just that for decades. Further, we could play a regional role (without calling it that) by strengthening certain selective training institutions where young people of neighboring countries could receive advanced training. Further, we might combine this with some regional division of labor in the field of advanced training—somewhat along the lines on which a group of our own Southern States have been working for many years.

There are certain matters of self-help on which we should be as uncompromising as possible. I have in mind, for example, the question of graft and corruption. We can afford not to condone it in any way because we know that the elimination of graft is a continuing battle within our own society. Let us not underemphasize the critical importance of this matter; a handful of instances of corruption, with which our aid programs are associated, can blow our entire aid effort right out of the water.

Dean Rusk

0. Source: Washington National Records Center,RG 286, AID Administrator Files: FRC 65 A 481, State Department Policy Planning, FY 1962. Confidential. An undated, mimeographed notice attached to the source text indicates that the Secretary’s memorandum should be considered an addendum to the Policy Planning Council paper (Document 124).
1. Document 124.