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

167. Memorandum From the Administrator of the Agency for International Development (Bell) to President Kennedy⁰

Washington, May 13, 1963.

SUBJECT

• Coordination of Military and Economic Programs—NSAM 159, May 31, 1962¹

As directed in NSAM 159, I am forwarding a second report on the coordination of economic and military aid programs.²

The first step in improving coordination has been to establish a programming framework and procedure that will facilitate the making of overall judgments about our military and economic aid programs. Substantial progress has been made in this direction; however, coordination is not just the initiation of improved techniques, although these are important. More basically, it is a different way of thinking—a fuller recognition that various elements of the total U.S. foreign assistance program are inter-related means to common long-run ends and that there can be a fungibility of resources to achieve these ends.

The so-called “mix studies”, discussed more fully below, contributed at least as much toward fuller understanding of this inter-relatedness as toward more specific results.

I. General Improvements in the Planning Process

The greatest improvements in coordination of the economic and military assistance programs should come from the new format that has been established for progressively integrating the planning of military and economic assistance.

The A.I.D. program guidance issued to the field missions last summer emphasized three key aspects of over-all planning: the importance of developing an explicit assistance “strategy” which defines realistic goals and relates proposed actions to these goals; the need to plan for several years ahead; and the importance of basing the assistance strategy on a comprehensive analysis of all aspects of a country’s situation—social, political and military as well as economic.

The military assistance guidance provides for continued MAP planning on a five-year basis, identifies more expressly situations where the primary purposes of MAP are in political areas rather than military security, and singles out certain economic considerations to be incorporated in development of military plans. The Country Team submissions of both economic and military programs take the State Department Country Guidelines as the statement of basic U.S. objectives.

The revised program guidance has already had a considerable effect. The Country Assistance Programs submitted to A.I.D. by the field missions have, among other things, provided the basis for developing in Washington concise Country Assistance Strategy Statements. I believe that these provide a sharper focus than we had before in relating means to objectives, including both security and developmental objectives.

Further improvements in planning economic aid are expected both through refinements of subsequent annual Country Assistance Program submissions and through the use of a more penetrating analytical programming document, the Long-Range Assistance Strategy (LAS) for selected key countries. It is expected that these more comprehensive studies will be carried out, with Washington assistance, in Turkey, Pakistan, India, Thailand, and Free China this year, as well as in some other countries where the “mix” question is less important.

The broader, longer term emphasis of A.I.D. programming provides a better framework for considering military and economic programs together. Longer-term A.I.D. planning will facilitate the meshing of economic assistance programs with the Five-Year MAP Plans. More specifically, the total resources approach facilitates consideration of consumable maintenance requirements of commercial-type items, commonly financed under MAP, as a part of total requirements of the economy; examination of the budget as a totality will be encouraged rather than consideration of the military budget as an independent item. Also, the development of overall aid strategies provides a clearer basis for assessing the inter-relationships among different kinds of aid.

Not only the approach but also the timing of A.I.D. programming is being revised to facilitate joint consideration of economic and military assistance programs. The annual updating of the Five-Year Plans has normally been accomplished in the spring while the annual A.I.D. submission has been prepared in late summer or fall. This year I am instructing the A.I.D. Missions, and the Country Teams in major “mix” countries to prepare the general portion of the annual A.I.D. submission for transmittal in June. Next year, we hope to further consolidate the economic and military programming process. This will permit consistency in emphasis and establishment of priorities among assistance activities appropriate to each country situation.

More specific steps to improve the coordination of military and economic and assistance are still needed. Several of the “mix” studies have not yet been completed. Some of these can be combined with the LAS. Other special studies will be needed.

II. Specific Steps for Improved Coordination of Military and Economic Programs

The measures focusing specifically on the optimum balance of military and economic assistance programs have been the “mix” studies directed by NSC 2447.³ These have had a qualified success over a rather extensive period of time.

1. The visit of the Shah assisted in bringing the “mix” study of Iran to a definitive conclusion.⁴ The recommendations included a rather significant reduction in military forces to halt the rise in the Iranian defense budget. This recommendation was accepted at the expense of a commitment to a long-term Military Assistance Program designed to increase the effectiveness of the reduced forces with respect to both internal and external security. The latest reports from the field indicate that the Shah is planning to meet the conditions of force reductions and improved ability to use the new equipment effectively.

2. The Korean study has moved through several stages. A first step toward an ultimate 25% reduction in Korean forces has been recommended and has been endorsed by the Ambassador and by the Department of State. The recommended plan is to reduce forces by about 35,000 a year for two years, and to consider similar force reductions for two more years at a later date in light of ensuing developments. The Joint Chiefs of Staff have so far adhered to their position opposing such reductions. Various JCS studies of strategy in the Pacific theater are nearing completion and may affect the views of the Department of Defense. Meanwhile, political developments in Korea have made it inopportune to propose this action immediately.

The Korean force reductions would not of themselves free significant Korean resources for economic development, but they would be a step toward putting a ceiling on Korean defense expenditures and perhaps open the door to further action in this direction. In addition, we propose to reinstate the program of having the Korean economy take over the production of certain items previously supplied by MAP, thus providing work for Korea and reducing the charge on the U.S. to some extent.

3. In Taiwan we expect to initiate shortly a Long-Range Assistance Strategy study which will develop a plan to phase out economic assist-ance. It will be combined with the results of JCS strategic studies in the theater and any review of policy regarding support of GRC forces.

4. A review of our program for the Philippine Republic would also seem desirable in light of strategic and political considerations that may emerge from the current studies.

5. The studies of the balance of military and economic aid in Greece and Turkey have been long in reaching a conclusion. They have demonstrated the highly complex problem of evaluating needs for U.S. bilateral aid to countries which are receiving economic support through OECD consortia and in which the requirement for MAP and local defense budg-ets depend in part on NATO force goals. Practical results have been steps to transfer to the Turkish economy the production of certain items heretofore supplied by the MAP and to reduce support for the military budg-et in Greece. The intensive work within the Executive Branch on these studies has, I believe, resulted in a heightened consciousness of the inter-relationship of military and economic programs. This factor, coupled with the limited availability of military assistance funds, has in effect produced a fairly good balance in our efforts.

Further Aid Mix Studies

Mix problems can be pursued further through two alternative approaches. A high-level inter-departmental working group could be established to review our politico-military strategy on a worldwide basis in light of anticipated developments in the political and weapons fields. The group would need to be at a high level because it would inevitably have to consider the specifics of defense arrangements and war plans, intelligence evaluations, and the most sensitive politico-military matters.

The alternative approach would be intensified consultation between the Department of State and the Secretary of Defense, relying on the latter to provide his judgment as to worldwide defense requirements in relation to U.S. defense plans.

The latter course seems to me to be preferable, and I am proposing a series of discussions between the Secretary of Defense, the Under Secretary of State for Political Affairs, and myself to review these matters insofar as they affect MAP and economic assistance programs. We will then determine the need for further staff studies.

Frank M. Coffin⁵

0. Source: Kennedy Library, National Security Files, Meetings and Memoranda Series, NSAM No. 159. Secret. Komer’s May 16 memorandum to McGeorge Bundy(Document 168) was attached to the source text.
1. Document 141.
2. Apparently the first report, dated May 25, 1962 (Document 140), antedated NSAM No. 159.
3. Document 130.
4. The Shah of Iran met with President Kennedy and other senior U.S. officials in Washington April 11-13, 1962.
5. Printed from a copy that indicates Coffin signed the original above Bell’s typed signature.