Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

28. Memorandum From the Administrator of the Agency for International Development (Bell) to Secretary of State Rusk¹

Washington, January 11, 1965.

SUBJECT

• Funding Requirements for Vietnam, FY 1965 and 1966

As you will recall, in October and November a proposed MAP funding plan for FY 1965 was worked out, which involved a $50 million transfer from the A.I.D. Contingency Fund.² This permitted covering some $47 million in MAP requirements for Vietnam and Laos which had then been approved over and above the budget projections, without cutting too sharply into the requirements for Korea, Taiwan, Greece, and Turkey.

Now Secretary McNamara has authorized further commitments for Vietnam (on the order of $50 million) and proposes to meet these requirements by cutting back the funds for other countries—principally Korea, Taiwan, Greece and Turkey.

State and A.I.D. staffs differ with this proposal, and believe instead that additional requirements for Vietnam in FY ’65 should be met by using the authority of Section 510 of the Foreign Assistance Act to draw upon Defense Department stocks, to be replaced by appropriations in the subsequent fiscal year.³ For the reasons stated in my December 10 memorandum to the President (copy attached),⁴ we believe it is highly undesirable to cut MAP funds for the four countries further.

Secretary McNamara’s view I believe rests on two points:

(1) he is not persuaded that the requirements in Korea, Taiwan, Greece and Turkey are in fact as large as the MAP plans for those countries would indicate;

(2) he is very reluctant to request funds beyond the 1965 budget, since he committed himself to the Congress to live within that figure if they gave him all he asked for.

We consider that these points are outweighed by the following considerations:

(1) while I agree that MAP requirements in the four countries need review, it would plainly be a disorderly process to cut existing plans, jointly agreed to by the U.S. and those governments, by whatever amounts happen to be required for Vietnam and Laos. The State regional bureaus concerned have expressed the deepest concern over the political effects of Secretary McNamara’s proposed action. In Korea and Taiwan particularly, there is increasing concern over the continued determination of the U.S. to stand by its commitments to them;

(2) the Secretary’s funding plan puts us in an unnecessary straight-jacket for FY ’65. The Congress certainly would not hold him to his budg-et presentation in the light of obviously increased requirements in Vietnam;

(3) moreover, it is plain that there will be still additional requirements to be met in FY ’65. Under the Secretary’s proposal they could only be met by further cutbacks in military assistance to other countries. The alternative of using Section 510 draw-down authority was provided by the Congress to meet exactly the present type of situation;

(4) finally, the Secretary’s proposals do not meet the problem of how to fund additional requirements for fiscal ’66, which are already evident, and which are larger than the 1966 budget would support. Our proposal would be to make clear to the Congress early in this session that we are using Section 510 during FY ’65; that this will require additional appropriations in fiscal ’66 for replacement of stocks; and that there may well be add-on budget requirements for fiscal ’66 as well. Later in the spring, when requirements are clearer, we could amend our request for FY ’66 more or less as we did last year.

I would appreciate an opportunity to discuss this with you at your early convenience. If you agree with the staff view, we will need to arrange to talk with Secretary McNamara, Budget Director Gordon, Mr. McGeorge Bundy, and perhaps the President.

DEB

1. Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 68 A 2148, DEF 19 Military Assistance, November–January FY 1965. Secret. A copy was sent to Secretary McNamara.
2. See Document 19.
3. 78 Stat. 1012; P.L. 88–633, the Foreign Assistance Act of 1964, as amended, was approved on October 7, 1964.
4. Not attached but printed as Document 24.