Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

94. Memorandum for President Nixon’s File¹

Washington, July 25, 1972.

SUBJECT

• Meeting between the President, AID Director John Hannah, Secretary of Commerce, Peter Peterson and General Alexander M. Haig

DATE

• Tuesday, July 25, 1972–3:00 p.m.

Director Hannah opened the meeting by informing the President that he had requested the appointment for a brief exchange of views before the November elections. He had several points that he wished to cover and knew that time between now and November would be at a premium.

The President responded that he welcomed the opportunity for a brief discussion with Director Hannah and wanted to emphasize that while their contact at some times had been indirect, nevertheless he was very much aware of AID’s problems. As the two men had discussed at the outset of the Administration, Director Hannah had assumed his responsibilities at a point in history when foreign aid was more unpopular than ever. Consequently, Dr. Hannah’s tasks were much more complicated than they had been during any earlier period of U.S. history.² Nevertheless, the President was well aware of the remarkable record of achievement that Dr. Hannah had accumulated, and he was very grateful for the splendid job Dr. Hannah had done.

Dr. Hannah remarked that the task was difficult primarily because AID’s position in the bureaucracy was a complex one, with supervision being provided by the Department of State and an excess of policy guidance from middle level bureaucrats in that Department. The problem was further complicated by the host of studies which had been conducted on foreign aid and the excess of free advice and policy guidance that had emerged from all sources. This had been a severe hindrance to him as Director and consequently only after the Peterson report recommendations ran amiss did he finally take hold and take his own counsel, especially on the Hill. This had proven to be the most successful course and for this reason Dr. Hannah had requested the appointment to see the President to emphasize his view that during the campaign no commitments should be made calling for additional studies of an area which had been studied to death.

Dr. Hannah continued by noting that the Peterson recommendations called for increased multilateralism. President Nixon interrupted and stated that that was no longer his view and that in fact our approach to foreign assistance should be concentrated on bilateral arrangements for which the U.S. would receive specific credit and obtain leverage in order to meet its own vital interests. Experience now confirmed that multilateralism frequently deprived us of any credit from the recipient states and in fact frequently found us in an isolated position with other states who were doing less, forcing us to adhere to policy lines which were not consistent with our views. The President’s discussions with foreign leaders tended to confirm this in almost every case. For this reason multilateralism was no longer the policy and a major effort should be concentrated on bilateral arrangements. Dr. Hannah agreed, recalling that the World Bank and Mr. McNamara were frequently involved in incentives which ran counter to our policy toward India.

Dr. Hannah then noted that an additional problem he was experiencing involved personnel matters. During the period of his tenure he had reduced AID’s overseas complement 37%, but in the U.S. he was still forced to carry some 3,000 AID personnel, many of whom were foreign service officers. Were they working in State they could be retired at the age of 60, but because of current personnel regulations when they were detailed to AID, they were not eligible for retirement until age 70. For this reason he had pressed for new regulations which would provide for parallelism in State personnel regulations, just as they had been broadened to USIA in earlier legislation. This would enable him to reach a new reduction goal of 1,000 additional cuts in the U.S.

Dr. Hannah then again stated that he agreed completely with the President’s view on multilateral aid. The President asked General Haig to talk to Congressman Passman about cutting 30% from the UNDP request for FY 72. Dr. Hannah remarked that World Bank operations frequently proceeded without our Ambassadors even knowing what McNamara and Company were doing. He recalled the case of our Ambassador to Jamaica who could not recite to his host government what the U.S. was doing for Jamaica although we were picking up most of the World Bank tab.³

President Nixon then stated that he wanted to emphasize several things with respect to aid in the future. First, he did not want to short the military assistance program in Latin America or elsewhere. Secondly, he wanted emphasis shifted from multi to bilateral assistance. In this way we would deal laterally with recipient countries and apply the kind of political leverage necessary to achieve our foreign policy objectives.

The President concluded by reassuring Dr. Hannah that he would not launch another study effort of our foreign assistance program but instead expected the Director to conduct a study of his own. He should bring his recommendations to the President after November and hopefully in time for the next budget. Dr. Hannah is in effect the new task force. In preparing the study Dr. Hannah should discuss the approach with John Connally and above all the programs should be designed to achieve our own interests. Dr. Hannah thanked the President for this mandate and added that the PL 480 program which totaled nearly a billion a year was an excellent case in point. Greater coordination was needed and specific policy guidance should be provided to AID in a clearer way. Many times, legislative breakdowns occurred because State legislative liaison people tended to fight for every desk officer’s objective and Congressional leaders could only be approached so many times. The trouble with multilateralism was that other nations decided how to spend our money.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 195, AID 1972-1973. No classification marking. Prepared by Haig. Kissinger’s July 24 briefing memorandum for this meeting emphasized that Hannah had done a fine job under difficult circumstances, especially Congressional efforts to frustrate major portions of the President’s foreign assistance program. (Ibid.) Kissinger noted that he and Flanigan would also attend the meeting with Hannah. According to the President’s Daily Diary, the meeting lasted from 3:04 to 3:37 p.m., and Flanigan and Haig were present. (Ibid., White House Central Files) See Document 93 for Hannah’s intended remarks at the meeting.
2. A supplementary note attached to Kissinger’s July 24 briefing memorandum (see footnote 1 above) reads: “After a 49 to 46 roll call vote in favor of an end-the-war amendment, the Senate yesterday voted 48 to 42 against the FY 73 authorization bill for Security Assistance, FMS, and MAP. A continuing resolution, however, is in effect through August 18. In the House, Doc Morgan is completing the mark-up, and will report the bill out next week. A determined effort must be made to avoid a similar amendment in the House. If this is successful, the bill can then be sent to the Senate for new consideration.”
3. The Ambassador to Jamaica was Vincent de Roulet. His remarks have not been further identified.