137. Letter From the Administrator of the Agency for International Development (Gaud) to the Chairman of the Senate Foreign Relations Committee (Fulbright)1
Dear Mr. Chairman:
Some months ago I told you of my conversations with George Woods about a possible transfer of some of our Development Loan funds [Page 415] to the IDA under Section 205 of the Foreign Assistance Act.2 He told me then, and I gathered from talking to you that he had also told you, that he wanted to postpone consideration of such a transfer until the IDA replenishment was out of the way.
It looks as if the negotiations with respect to IDA replenishment will continue for quite a while. Nonetheless, over the past several weeks I have again explored the possibility of a Section 205 transfer with the interested departments and agencies of the U.S. Government and the World Bank.
George Woods says he is willing to accept a Section 205 transfer if it takes the form of an untied loan. This poses a tough problem for us in view of the present state of the IDA replenishment negotiations. For the U.S. has taken the position in those negotiations that it will not contribute any further funds to IDA without some balance-of-payments safeguards. Neither the Bank nor the other IDA contributors have yet accepted this proposition. It is still under active negotiation.
We would directly undercut our position on this issue if we made an untied loan to IDA under Section 205. Furthermore, the amount of the IDA replenishment is still being discussed, and there is considerable feeling that an unmatched transfer of U.S. funds to IDA at this time would make it even harder for us to persuade some of the European countries to increase their contributions to IDA.
I am sorry the situation is not more favorable. I had hoped to initiate use of the transfer authority this year. But I do not think we should do anything to jeopardize a substantial IDA replenishment, which is of great importance to the United States and the less developed countries. It therefore looks to me as if we had better go along with George Woods’ earlier suggestion of postponing further consideration of a Section 205 transfer until the IDA replenishment exercise is over.
Please let me know if you would like to discuss this matter further or if you have any other views. Meanwhile, knowing of Chairman Morgan’s interest in the matter, I am sending him a copy of this letter.
Sincerely yours,
- Source: Johnson Library, National Security File, Agency File, AID, Vol. IV [2], Box 2. No classification marking.↩
- These conversations have not been further identified. Regarding Section 205 of the Foreign Assistance Act, see footnotes 1 and 5, Document 120.↩