280. Memorandum From Secretary of State Kissinger to President Ford1
2
Washington, undated
SUBJECT:
- Mr. Lynn’s Memo to the
President concerning a Foreign Aid Budget Amendment for
Zaire-Add-on
State and AID are requesting a 1976
budget amendment to increase economic aid to Zaire and Mr. Lynn has written you an options paper
with regard to that request. My recommendation is that you approve the
budget amendment (which would provide for a $14 million supporting
assistance budget increase to Zaire) as part of a $50 million assistance
package, including an additional $15 million in CCC credit and PL 480
Title I, and a $20 million Ex-Imbank line of credit. We would urge
President Mobutu to adopt
certain IMF reforms but would provide
the $50 million in aid without conditions.
I believe there are important political and economic elements which
support approval of the budget amendment, and have attached for your
consideration a memorandum outlining some of these elements (Tab A).
As you know, in the wake of President Mobutu’s charges of US Government involvement in a plot
against him, I sent Sheldon
Vance, our former Ambassador to Zaire, to Kinshasa for
discussions with Mobutu aimed
at improving our bilateral relations. I have asked Ambassador Vance to return to Zaire to continue
those discussions tomorrow, July 18. We hope to convince President
Mobutu to accept an IMF stabilization program to deal with his
current fiscal problems, and believe we need to inform him of our desire
to be of assistance with a $50 million package as a demonstration of our
good faith.
I therefore recommend that in considering Mr. Lynn’s memo you approve a $20 million supporting
assistance grant for Zaire as part of a $50 million US assistance
package and that you agree that while Ambassador Vance would urge adoption of an IMF standby, he would be authorized to
provide US aid without condition.
Attachment
Memorandum
Washington,
undated
MEMORANDUM IN SUPPORT OF SPECIAL
ASSISTANCE FOR ZAIRE
[Page 2]
US relations with Zaire have been severely strained by the recent
charges of US coup plotting and by President Mobutu’s disappointment in what
he has perceived as our lack of support for his legitimate economic
and political concerns. In meetings with President Mobutu in Kinshasa three weeks
ago, Ambassador Vance was
able to allay Mobutu’s
apparently real suspicion that we had conspired to obtain his
assassination and was able to begin to repair our bilateral
relations. Vance will be
returning to Kinshasa shortly to continue this effort.
Our economic interests in Zaire are large: access to Zaire’s enormous
energy and mineral wealth; an existing financial stake of some three
quarters of a billion dollars in investment, loans and contracts;
and our largest market in black Africa after Nigeria.
Our political interests in Zaire are equally significant, given the
country’s importance to the stability and ideological orientation of
all central Africa and its growing influence in African councils and
in the Third World. These factors are recognized by other powers,
including the communists who are expanding their presence in
Zaire.
Zaire is now experiencing a severe foreign exchange cash-flow problem
and needs assistance to see it through until copper prices begin to
rise again. If the problem is not cured, and if the cure is not
applied soon, there is a high risk of economic breakdown—which would
jeopardize our economic interests—-followed either by political
disorder, in which we would be embroiled, or a sharp swing to the
left.
Mobutu has asked us for
help. We believe our help would be most effective in the context of
an IMF stabilization program, which
would provide the policy discipline and the basis for international
banking confidence which would assure a successful recovery. We are,
therefore, urging Mobutu to
turn to the IMF and we intend to
continue doing so. We would hope that by
[Page 3]
offering assistance at this time we might
induce Mobutu to pursue
that course. If, however, Mobutu persists in trying to overcome his financial
problems without an INF program, our failure to offer assistance now
could have severely, negative, immediate consequences on both our
political and economic interests in Zaire and could completely
reverse the momentum we have succeeded in creating toward repairing
our bilateral relations. These consequenccs could be even more
serious and longlasting if other countries respond to Mobutu’s requests for bilateral
assistance, as the French and Arabs to a limited extent have already
done.
We realize that from a purely economic stand-point it makes sense to
insist on an IMF stabilization
program. However, we believe the stakes in Zaire are so important
that we must be in a position to offer to Zaire assistance even if
Mobutu continues to
resist the IMF. Accordingly, it is
recommended that the President approve amending the AID appropriation request to provide
for a $20 million program loan to Zaire, whether or not Mobutu agrees to an IMF program. In such case it would be
our objective to encourage Mobutu to accept as much fiscal discipline and
control as possible.
To serve our political and economic interests effectively we believe
the total assistance package should be of the order of $50 million.
In addition to an AID program loan,
it would comprise about $15 million in CCC credit and PL 480 Title
I, and a $20 million Eximbank line of credit.
