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

63. Memorandum From Edward K. Hamilton of the National Security Council Staff to the President’s Deputy Special Assistant for National Security Affairs (Bator) and the President’s Special Assistant (Rostow)¹

Washington, February 6, 1967.

SUBJECT

• How to Handle the “Number of Countries” Limitations in the new Foreign Aid BILL

As you know, the President has decided to propose a new Foreign Assistance Act. AID plans to describe the new bill as a clarification of the old—which had become hopelessly cluttered—rather than an overhaul of the program. Indeed, the basic authorities in the new bill will be precisely the same as in the present version.

To maintain this position, the AID draft bill contains all of the old Act’s restrictions (except the prohibition of aid into Indonesia), even though the Administration opposes many of them—e.g., 50–50 shipping. The question Gaud raises is whether the Administration’s bill should include the worst of the present Act’s restrictions—the limitations on the number of countries which can receive supporting assistance (limited to 13 countries), development loans (limited to 10 countries), and technical assistance (limited to 40 countries). These provisions were new last year. They were inserted by the Senate, opposed strongly by the House, but finally included in the Conference bill—with a Presidential waiver. The President was most unhappy with them, regarding them as part of a general legislative attempt to encroach upon executive prerogatives. He made an obvious allusion to them in his signing statement in a way which strongly suggested that he would propose their removal this session.²

Last month the President waived all three limitations for FY 1967, approving supporting assistance programs in 17 countries, technical assistance programs in 48 countries, and development loan programs in 29 countries. The Senate Foreign Relations Committee called Gaud in to testify on these actions, and Senators Fulbright, Hickenlooper and Morse gave him a very rough time. Morse told the press afterward that he would propose an amendment to divest the President of his waiver authority.

In the face of this, Gaud recommends that we (1) keep the limitations in the proposed bill, but (2) raise the development loan limit from 10 countries to 20, (3)lower the supporting assistance limit from 13 to 10, and (4) plan to make waivers this year for a few DL and TC countries. Basically, he feels that this approach may appease Fulbright and help to head off an attempt to remove the President’s waiver authority.

My own view is that the President should have a better feel for the specifics of this horse trade before he goes along with Gaud’s suggestion. The country limitations are indefensible as a matter of policy; the Administration made that crystal clear last year. The President should be in the business of proposing them only if he receives some clear quid pro quo. Moreover, the bargaining situation suggests that the further back we start, the less likely we are to end up losing the waiver authority. And there can be no serious argument that by leaving the limitations in we avoid opening the provision to further amendment; the proposal of a new bill by itself opens it to any and all amendments, and Morse is absolutely certain to try to remove the waiver authority. Finally, in the real world it will be harder for Morgan to get his reconstituted House committee to knock out these provisions than to go along with the draft bill which does not contain them.

Thus, I think Gaud should be asked to try to swing a deal with Fulbright. If he can get a commitment from the Senator to support the bill—and perhaps manage it on the floor—we would go ahead with a bill including the limitations. If not, we would take the limitations out and adopt the line that the bill is a clarification except for the elimination of these serious shackles on the President’s flexibility. I don’t think Fulbright will agree to this transaction (though there is some sentiment in AID that he will). But I also don’t think he will soften his attack if we make Gaud’s proposal. On balance, I think the President should back away from his earlier position only if there is a reasonable chance that he will gain some explicit benefit thereby. It should be up to Gaud to prove that he will.

EH

1. Source: Johnson Library, National Security File, Subject File, Foreign Aid, Box 16. Confidential.
2. On September 19, 1966, upon signing the Foreign Assistance Act of 1966, President Johnson stated in part: “I strongly urge the Congress next year to recognize the need for greater flexibility in the administration of a complex program that must be responsive to the rapidly changing circumstances of our world. Undue restrictions on the form and timing of our actions can significantly diminish the benefits we seek from the program.” For full text of his statement, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1966, Book II, pp. 1037–1038.