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

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

Washington, January 5, 1967, 9:45 a.m.

SUBJECT

• AID “Number of Countries” Determinations

In the two attached packages (Tabs A and B),² Bill Gaud and Charlie Schultze recommend that you determine it in the national interest to:

• —make development loans during FY 1967 to 29 countries outside Latin America;
• —provide technical assistance in 40 countries, also excluding Latin America;
• —furnish modest technical assistance to the UAR. (This requires a special determination.)

Substance and Procedure

You will recall that Congress amended the Foreign Assistance Act last year to limit to 10 the number of countries outside Latin America to which we can make development loans without a Presidential determination of national interest.³ A similar limit of 40 countries was enacted for technical assistance.⁴ In both cases, Senator Fulbright and Speaker McCormack must be notified and 30 days must pass between notification and action. We strongly opposed both limitations.

Gaud and Schultze have carefully winnowed prospective development loan recipients to 29. These are the ten major AID clients, plus Israel, Thailand, the Philippines, Ceylon, and 15 African countries. An identical operation for technical assistance yielded 48 countries, 35 of them in Africa. I am satisfied that these totals reflect real requirements; the specific arguments are contained in Gaud’s memoranda.

Strategy with the Congress

The country limitations presented us with three options:

1. Select a “core” list of countries (10 for development loans, 40 for technical assistance), and ask you to make determinations only for other countries.

2. Request Presidential determinations covering all countries which will receive these kinds of aid, identifying no “core” 10 or 40.

3. Use the slots within the limitations for controversial countries, asking for determinations on the relatively safe ones (Israel, Turkey, etc.).

There is no question about the legality of any of these options. Procedure #1 is fairly clearly what the Congress had in mind. But it would (1) cause us serious political problems with the “non-core” countries, and (2) give us a poor basis for proposing that the limitations be removed in 1967. Procedure #3, on the other hand, could subject you to the charge of subverting the will of Congress.

Thus, we are recommending procedure #2—determinations covering all the countries we plan to aid in each category, with no indication of which countries we consider within the limitations and which we do not. It seems to me that this reflects the foreign policy realities—every AID loan involves an explicit finding of national interest—and complies with the law and the intent of Congress in a most defensible manner.

Even so, Gaud feels—and I agree—that he should explain these determinations to Senator Fulbright before they are announced. Together with the new approach on Africa (described below), they shouldn’t be an overly bitter pill. If you approve, Gaud is ready to approach Fulbright immediately.

Special Note on Africa

As you know, the “number of countries” problem fundamentally concerns Africa. Most criticism that we are spread too thin does not focus on the Alliance or the Near East/South Asia, or the Far East. It zeroes in on the fact that we help 35 countries in Africa (neglecting the more interesting fact that total aid to Africa is less than 10% of AID expenditures—much less if food is included). This criticism is by no means totally without merit. As Ed Korry pointed out, we have great difficulty trying to run separate country programs in so many—often fundamentally unviable—separate states.

Thus, in accord with the Korry report,⁵ and your NSAM of October 5, 1966,⁶ we plan to move gradually to:

• —limit bilateral development loans in Africa to 10 “concentration countries”;
• —limit bilateral technical assistance to the same group, maintaining small self-help funds in the others;
• —operate in non-concentration countries only through multilateral donor groups and/or in connection with regional and sub-regional projects.

The practical effect of this will be to reduce the 19 African countries included in the development loan determination to 10 by FY 1969. It would also lower the total of 35 African recipients of bilateral technical assistance to 10 in about the same period. (Under present law, however, even the small self-help funds we are establishing would count against the limitation. Thus, the number of technical assistance recipients would not fall so dramatically.) These steps are precisely in the direction the Congress favors. They should sweeten the medicine for Fulbright. In terms of the merits and the politics, I think they are worth taking.

However, these changes will be very hard to sell to many Africans. You should know that Joe Palmer—while fully committed to the general outlines of the policy—thinks we are moving too fast and with too little flexibility. He is worried that (1) we will not be able to present a sufficiently real multilateral alternative—the proposed World Bank Standing Groups on African Transportation, Communications, and Power; the African Development Bank; etc.—to convince Africans that we aren’t simply pulling out; (2) there are some countries (e.g. Somalia, Malagasy) which will have a hard time developing multi-country projects, and (3) we may appear—whatever our protestations to the contrary—to be imposing political unity on countries hypersensitive about their newly-acquired sovereignty.

While Joe’s concerns are valid, the rest of us—Gaud, Katzenbach, Schultze, Bator and Rostow—believe that the present changeover formula is as gradual as we can manage while maintaining a persuasive case to the Congress that we are making real changes. However, we would certainly agree with his further argument that a great deal depends on our ability to get the full AID budget request appropriated and to get special authorization to help the African Bank.

Recommendation

I recommend that you sign the determinations.⁷ If you approve, we need two signatures—one under each signature tab.

Walt

1. Source: Johnson Library, National Security File, Subject File, Presidential Determinations, Vol. IV [1 of 2]. Box 40. No classification marking.
2. Tabs A and B were not attached and have not been further identified.
3. Section 201(b) (2) of the Foreign Assistance Act of 1966; P.L. 89–583 was approved on September 19, 1966. (80 Stat. 796)
4. Section 211 (2).
5. See footnote 4, Document 59.
6. Scheduled for publication in Foreign Relations, 1964–1968, volume XXIV.
7. Not found, but see Document 61.