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

56. Memorandum From the President’s Special Assistant (Rostow) to President Johnson¹

Washington, October 14, 1966.

SUBJECT

• Future of Foreign Aid

I had dinner last night with Gene Black.² In the light of our discussion, I wish to set down for you thoughts which have been forming in my mind in recent months on foreign aid and its future.

These thoughts are set down on the assumption that the burden in Vietnam will not diminish in, say, the next nine months. If it does, we must plan how to trap a part of the resources saved from Vietnam for foreign aid purposes. But that is an easier matter.

1. To back your commitments to Asian, Latin American, and African development, we need more development resources in the West next year than we have had available this year. The increase required is not extravagant; perhaps $500 million or even less. What is necessary is that the curve turn upward and continue upward modestly for some time.

2. To achieve this requires four things:

• —A fresh presentation of the development aid problem which will have more political appeal in the Congress, to our people, and throughout the potential donor countries;
• —A purposeful man-by-man approach designed to bring around the key Senate and Congressional figures whose assent will be required to produce this increase in foreign aid;
• —Mobilization of U.S. public opinion leadership to back this effort; and
• —Mobilization of public opinion leadership in Western Europe, Japan, Australia, etc., to back this effort.

3. Elements for a new approach to foreign aid. Essentially what is required is to present with greater political effectiveness what we are now attempting to do pragmatically, step by step. Specifically:

• —Regionalism. In fact we have been moving towards a regional approach to foreign aid in Latin America, Asia, and Africa. This has two kinds of appeal if properly presented. First, economically it forces the local people to take greater responsibility for self-help; mobilize all the sources of aid more rationally around country programs; and makes clear to the Congress that many institutions and nations are in fact sharing the assistance burden. That is why we can do pretty well with the Alliance for Progress, Asian Development Bank, and countries where there are consortium arrangements. Politically—and this is a new element—regionalism holds the promise of gradually diminishing the political and military burden borne by the U.S. in the future. It is the half-way house we have discovered between endless U.S. leadership in bilateral relations and isolationism. If we can make this political dimension clear as part of our aid presentation and make our aid efforts not merely economic but clearly a part of building regional islands of order, we shall be ahead of the game.
• —Our presentation to the Congress and to the public should make clear that from here on out we expect the development burden to be borne by the richer countries on a fair shares basis. Again, we have the advantage of facts on our side. It is simply true that the loan terms from Europe and Japan have been getting softer while ours have been getting harder. It is true that, as we move towards institutions like the Asian Development Bank, build up IDA, and use the device of debt roll-overs, the relative burden on the U.S. in the development business declines. And, if we can follow through on the DAC meeting on the world food supply—and force others to contribute more not merely in food but in chemical fertilizers, etc.—once again we can get a fair sharing of the burden.
• —Finally, we must deal honestly and effectively with the question of the balance of payments effects of foreign aid. Our present arrangements are wrong in two respects. First, they impose cumbersome administrative burdens on the foreign aid program where those burdens are not really necessary; for example, in Latin America where the trade and financial patterns do not cause significant leakage to Europe. Second, they do not deal effectively with cases where trade and financial patterns do involve some leakage; for example, with respect to India and Pakistan who tend to buy more from Europe, naturally, than they buy from us.

I won’t go into solutions here; but I am sure we should clear away the mythology and the underbrush and build a foreign aid program which honestly projects our balance of payments where such protection is truly needed by measures that really work. I believe it can be done.

4. In addition, we must, of course, carry forward and dramatize more effectively the four dimensions of the development problem where you have left a distinctive mark:

• —The food population problem, which gets more critical every day.
• —Education.
• —Health.
• —Measures to enlarge the role of private enterprise and the flow of private investment to developing nations.

5. Out of these elements I am confident that we can build a fresh, honest, and appealing presentation of foreign aid, adding to it the simple moral fact that foreign aid has begun the declining proportion of GNP of the developing nations, including the U.S.

6. To formulate such a program, I suggest:

a) A group be appointed inside the government right now, headed by Bill Gaud, to include representatives of the Budget Bureau; Treasury; White House (Bator); State (Bowie,³ whom Gene has already assigned to this); and Agriculture. The group should be put to work under instructions to produce this fresh presentation and get it to you within a month.

b) This group inside the government should be instructed to work closely with the Jim Perkins Committee which, I gather, is ready to help on advice and in persuading key members of Congress but does not wish to take on a big public information and persuasion effort.

c) We design man-by-man approaches to the half-dozen key Congressional figures who constitute the major block to an expansion in foreign aid. Larry O’Brien might head such a committee, working with Mike Manatos and others who might be appropriate. Gene Black assures me he can be recruited for the effort once a strategy and tactics are defined. I’m confident others could help.

d) We get a first-rate man to give life to the old Linowitz Committee and put it in business.⁴ From my experience with Eric Johnston’s committee in the 1950’s,⁵ I’m sure this country is full of businessmen and labor leaders, church folk and professors, women’s organizations and foreign policy groups that would back us if:

• —we have a program;
• —we have an organization;
• —we mean business.

In February 1958 we had a whale of a team moving. But it got turned off by Sherman Adams just because George Humphrey & Co. thought it might be effective. It’s no substitute for man-by-man work in the Congress; but I’m convinced it’s an important supplement.

e) Finally, encourage Gene Black to set up his proposed private international committee on economic development with Europeans, Japanese, etc., to include parliamentarians as well as public figures. This is, I believe, now possible and important. It could have a wholesome effect on:

• —foreign governments;
• —U.S. public opinion;
• —the Congress.

Therefore:

Set up government foreign aid planning group as suggested in paras. 3 a. And b. to report in a month.

Set up group to plan man-by-man approach to key Congressional figures, with action to await formulation of substantive strategy.

Suggest a first-rate substitute for Linowitz, bring his name to me, and plan to crank up that committee by mid-November.

Encourage Black to go forward with his proposed international committee.⁶

Walt

1. Source: Johnson Library, National Security File, Subject File, Foreign Aid [1 of 3], Box 16. No classification marking. A handwritten note on the source text indicates the memorandum was received at 12:40 p.m. Another handwritten note by the President reads: “Walt—See me L”.
2. Eugene Black, former President of the IBRD, was a member of the President’s General Advisory Committee on Foreign Assistance Programs.
3. Presumably Robert R. Bowie, Counselor of the Department of State.
4. Sol M. Linowitz, Chairman of the National Committee for International Development, was asked by President Johnson in an address to this Committee on January 11, 1965, at the White House to examine the AID program and “insure the widest possible public understanding of this constantly changing and improving program.” For text of the remarks, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1966, Book I, pp. 22–23.
5. President Eisenhower in a letter of January 11, 1958, to Eric A. Johnston, Chairman of the International Development Advisory Board, asked Johnston to convene a committee of business and organization leaders “to explore means of conveying to our citizens a fuller flow of information on the foreign aspects of our national security.” For text of the letter, see Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1958, pp. 16–17.
6. Just below each of these four paragraphs are approval lines, as follows: “Yes,” “No,” and “See me.” All are blank.