Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

261. Memorandum From the President’s Assistant for National Security Affairs (Allen) to Secretary of State Haig¹

Washington, February 19, 1981

SUBJECT

• Private Sector’s Role in Development Assistance

As you know, the President has a great interest in promoting the role of the US private sector in development assistance to key, friendly developing countries. He was struck by the difficulties encountered during the Seaga visit in being responsive to Seaga’s requests for private sector assistance.²

Involving the private sector may be a general problem that should be considered in our reorganization and strengthening of foreign assistance programs. Current AID programs offer few opportunities to involve US private firms in continuing trade and investment relations with developing countries, while the two programs that do, OPIC and the Trade and Development Program (TDP), must now be subjected to the same budget stringency as other programs.

There is an opportunity, however, to reallocate reduced budgets so as to favor programs that offer greater opportunities to engage the private sector in development activities.

I attach a paper³ which discusses the development of such programs, starting with better targeting and coordination of several existing activities:

(1) The Trade and Development Program, currently a small, separate program under IDCA.

(2) Export-Import Bank.

(3) Economic Support Fund.

(4) Overseas Private Investment Corporation (OPIC).

(5) Enhanced and earlier reporting of export opportunities by US Executive Directors at the Multilateral Development Banks and US embassies.

(6) Joint Commissions, Commercial Attaches Program, etc.

The paper advocates the establishment of a leadership structure for private sector development assistance parallel with and comparable to AID (which works largely with the public sector on basic human needs projects). The private sector program and the basic human needs program would report for policy direction to a foreign assistance chief, currently the IDCA Director or, if a restructuring takes place, at the Under Secretary level in the Department of State.

These ideas are clearly in an early state of formulation. But I bring them to your attention now to ensure that the design of effective and flexible ways to involve the private sector in US foreign assistance is given the early attention it deserves.

Richard V. Allen
Assistant to the President for National Security Affairs

1. Source: National Archives, RG 59, Files of the Office of Under Secretary for Security Assistance, Science and Technology, James L. Buckley, Lot 82D352: Buckley Chron March 1981. No classification marking.
2. Reagan hosted Prime Minister Seaga of Jamaica and his wife at the White House on January 28. The text of the memorandum of conversation of this meeting is scheduled for publication in Foreign Relations, 1981–1988, vol. XVII, pt. 1, Mexico; Western Caribbean.
3. Not attached.