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

89. Memorandum From the Assistant Secretary of State for Economic Affairs (Martin) to the Under Secretary of State for Economic Affairs (Ball)⁰

Washington, February 7, 1961.

SUBJECT

• Multilateral Approach to Increased Foreign Aid

I spent an hour with Mr. Rostow this morning during which he outlined his understanding of what the President wanted to accomplish in this field and we discussed various possible approaches and means for overcoming the obvious difficulties in the way of accomplishment prior to the presentation of the FY ’62 aid program.

He asked that we do some preliminary work on what we thought would be a fair distribution of an increment of about $1 billion in European aid defined, as we would define it, to exclude private investment and exporter credits. He also asked that we prepare a diplomatic plan of campaign.

With respect to the latter I would recommend on the basis of my discussion with Mr. Rostow, and I think he would agree with the broad outlines, that we should operate approximately as follows:

1. Get Adenauer to Washington as soon as possible and discuss with him in the context of an expanded US program the need for an expanded German program as an absolutely necessary prerequisite for an expanded European program. This is the crucial part of the operation. As Adenauer is concerned above all with his election prospects, he is likely to feel that too heavy pressure on him to commit himself to raise taxes or cut welfare expenditures to provide foreign aid will damage his election chances. Being a sensitive and often irrational old man, he could well interpret such pressure as reflecting a desire on the part of a new left-of-center government in the United States to have a similar government in Germany. It will be necessary to emphasize this program as a part of a general plan for putting new life into the Atlantic Alliance, as one in which the United States will add to its contribution and not just ask Europeans to pick up more and as one which is in Germany’s interest as well as our own. Mr. Rostow has suggested that we may wish to offer to secure a commitment to such a program from Mr. Brandt in order to take it out of the election arena. This is a matter to be examined with great care to ensure that Adenauer doesn’t resent it. Our future negotiating tactics should be explained to Adenauer in detail so he feels he is in full knowledge of our plans and a full partner. Talking to Adenauer may well not be enough as he does not really understand economic matters and may make general commitments which his Cabinet will talk him out of. There, therefore, should be other contacts in addition to that between our President and the Chancellor but, of course, with the Chancellor’s approval.

2. The best chance of getting a general willingness to move ahead on aid in Europe would be to hold a NATO Ministerial meeting, preferably of the 3 Minister-type, by mid-March at which we would present a four or five-part package for revising and strengthening the alliance. Presumably such a package will include an attack on the division of the military effort as well as on the economic aid effort. A connection between the two must be recognized. Such a meeting should be asked to approve a commitment to move ahead on aid by all countries in a position to do so by a round amount divided between Europe and North America. Something should probably be agreed as to what counts as aid broadly speaking and as to the broad guiding plan which should govern the division among countries of such a program. The United States should make clear that any commitment is contingent. This is necessary to take account of the difference between the United States position, where the executive can only recommend to the Congress, and the position in most European countries where the legislature carries out the executive decision or the executive falls.

3. This decision in broad principle should be followed by a Ministerial meeting of OEEC to bring the neutrals into the picture and enlist their aid, and to work out a more specific program of aid utilizing such technical, economic and statistical assistance as may be necessary. Great stress must be placed throughout on avoiding getting started on any considerable exercise with respect to categories of aid or definitions of capacity to pay or give aid.

4. Discussions should be held promptly with FE on how to bring Japan into this schemata.

5. Once a general outline of this character is agreed, we will wish to examine the role to be played in it by the DAG meeting scheduled for end-March and by the Indian and Pakistan Consortia meetings now scheduled for mid-April and mid-May. They all have a minor role but they can be useful in dramatizing the problem and the steps being taken.

6. If a scheme of this general character has some merit, it would be desirable to discuss it informally with Frank Lee and Jean Monnet¹ next week. They are both knowledgeable and discreet.

0. Source: Department of State, Central Files, 811.0040/2-761. Confidential. Forwarded to Ball through the Executive Secretariat. A handwritten notation on the source text reads: “Seen in B.”
1. Frank Lee, British Joint Permanent Secretary of the Treasury, and Jean Monnet, French political economist and chairman of the Action Committee for a United States of Europe.