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

169. Memorandum From the Assistant Director of the Bureau of the Budget (Hansen) to Robert W. Komer of the National Security Council Staff⁰

Washington, May 21, 1963.

SUBJECT

• AID Administrator’s report on NSAM 159

I believe that, by implication, the May 13 report of the AID Administrator on coordination of economic and military aid overstates the results achieved so far, and understates the basic problems which remain to be solved. It follows naturally that the report does not offer an adequate prescription of further steps to be taken on this front.

First as to achievements:

1. The AID “country strategy” papers represent an advance on the economic side, and may progressively offer some basis for better economic-military coordination, but they do not address the economic-military question in any fundamental way. In most cases, the military aspect is not even mentioned.

2. The new military assistance guidance has singled out some selected areas where MAP serves political objectives—but in so doing it has perhaps further obscured the substantial political content of MAP in other countries. The whole question as to which programs should carry how much freight for specific policy objectives—and the priorities among the objectives themselves—are not resolved or even clarified very much in the new guidance. (And it is no secret that the State Department guidelines papers are very weak reeds on this score.)

3. The meshing of planning cycles for economic and military aid, which will begin to some extent this year, provides greater opportunity for integrated country planning, but does not in itself assure this result—especially when the planning is done under separate sets of policy guidance which are not based on a unified concept of goals, priorities, and overall program emphasis. Exhortation to the field for integrated planning loses much of its impact when the Washington guidance fails to exemplify this approach.

4. The NSAM 228¹ exercise speaks for itself on coordination of economic and military aid in Iran.

5. The “aid mix” studies on Korea, Greece and Turkey which were requested by the President almost 16 months ago, and were originally due last July, have not yet been submitted for NSC discussion.² The Korea study has produced a general consensus (except in JCS) in favor of a shift in emphasis from military to economic programs, but this consensus is most fragile since it is not based on a solidly-shared appreciation of the basic policy considerations. Thus we do not have any agreed-on policy yardstick for appraising new courses of action as they are proposed in the future. This leaves us improvising tactics without a strategy, at a very crucial point in Korean history. (This is not to argue that immediate steps to implement the overall shift of MAP guidance should be undertaken—obviously the current political situation must be resolved first.)

The outstanding characteristic of the Greek and Turkish studies is that they have not adequately addressed the basic policy conflicts which underly the whole question of aid mix in those countries (NATO goals, etc.). While the report suggests that “a heightened consciousness of the interrelationship of military and economic programs” together with the limitations on MAP funds, have produced “a fairly good balance”, we are in fact still skirting the periphery of the substantive questions of aid mix in these countries.

In short, we may in many of these cases be achieving the “right” figures for the wrong reasons or just because we have pressed hard in the budgetary process. Furthermore, the gradual trend toward lower MAP levels, which has been discussed for the “aid mix” countries, is not reflected in the current projections of program level for the next 5 year planning period.

With respect to problems still unsolved:

1. Despite some meshing of time schedules, and increased exhortation to view these programs together, there is little indication of the actual process by which they are to be planned, reviewed or implemented on an integrated basis in the country teams. From the promulgation of policy on through the successive phases of planning, these programs are still running very largely on separate tracks—and are only “joined” if at all, at the point of final annual program determination.

2. Fundamental to this problem is the lack of an agreed framework of policy within which economic and military programs can be jointly planned in both Washington and the field in any meaningful sense. This is a prime area of concern for the AID Administrator, not only in terms of the pending “mix” studies, but in a more general and continuing sense as well.

3. The locus of aid policy and program decisions is one of the major problems of coordination which needs to be considered by the Administrator. The organizational and administrative relationships among State, AID and Defense, and the extent of responsibility each has for different aspects of aid policy, are matters which fall within the purview of NSAM 159. On this front, the Administrator by himself faces overpowering pressures, and the cause of effective coordination would be served by proposals that give the White House an opportunity to strengthen the Administrator’s hand.

4. Related and important questions which need to be re-assessed are the key MAP planning role assigned to the Unified Commands, and the structuring of country team work in the total aid field.

While the report admits that “more specific steps to improve coordination…are needed”, none of these basic problems are even mentioned, and no concrete steps are delineated.

The projected future course of actions is extremely vague and limited. Further consolidation of program processes is of course desirable, but it is hard to visualize at this point, since the basic program planning proc-ess has not been indicated yet. To our knowledge, the review process for this summer and fall in Washington has not even been determined, much less longer range processes. Completion of the aid-mix studies, perhaps in combination with the LAS, and “other special studies” merely suggest some of the work to be done, but not a way of going about it.

Only one real proposal is made, which is for a series of discussions between McNamara, Harriman and Bell instead of using a high level, interdepartmental working group. I would make four points about this proposal:

1. While using other terminology, it actually calls for an interdepartmental working group—the only difference being that it excludes the Executive Office circuit.

2. The subject for discussion is not clear, but by implication it would be fairly narrow in scope—U.S. military requirements as they affect MAP and economic aid programs. From this would flow “further staff studies”. But will the whole exercise be founded again on a separate and prior statement of military requirements, as the only real constant in the equation, or will these be subjected to constant challenge as they were in the “MAP-mix” enterprise (almost exclusively by White House/BOB participants).

3. To get a real assessment in which the variables include military as well as economic and political factors, Dave Bell may need all the allies he can get. This despite the Harriman and McNamara records of reasonableness on MAP. The real problem is to focus the dialogue on the fundamentals of the mix question, so that we end up not only with an agreeable set of figures for the moment, but a genuine policy consensus which can sustain a sensible balance in the future—or at least provide a valid yardstick for changing course again if that should become necessary later. Experience would suggest that Executive Office participation would help assure discussion in these basic terms.

4. Inter-agency discussions of the limited nature suggested raise special problems in view of the fact that we still lack basic policy decision on the mix question which the President presumably still wants to review. And since the agency heads are not yet accountable to any real established policy in this field, the settlement of key mix questions without further reference to White House views may not serve the President’s interest.

Kenneth R. Hansen³

0. Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 65 A 481, White House, FY 1962. Secret. Attached to the source text is a May 22 memorandum from Komer to David Bell, which reads:

   "Here, with Ken Hansen’s OK, is his acid comment on your reply to NSAM 159 (military-economic aid coordination). However politely phrased, the reply seems to add up to saying that not much has been done, nor is contemplated.

   "As I told Frank, I don’t want to show a report like this to the President without checking tactics with you. Would you want, for example, a fairly tart reply from the President saying in effect ‘this isn’t good enough; let’s keep humping.’ You could use this to back your hand on next moves.”

1. Entitled “Review of Iran Situation,” March 14. (Kennedy Library, National Security Files, Meetings and Memoranda Series, NSAM No. 228)
2. These studies were called for in NSC Record of Action No. 2447, Document 130. Komer’s comments on drafts of studies on these three countries are contained in his memorandum to Coffin, July 30, 1962. (Kennedy Library, National Security Files, Countries Series, Korea)
3. Printed from a copy that indicates Hansen signed the original.