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

263. Memorandum From Henry Nau and Rutherford Poats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Allen)¹

Washington, May 22, 1981

SUBJECT

• Coordination of Economic Development Programs

The Senate Foreign Relations Committee has inserted an amendment to the pending Foreign Assistance Bill that would abolish the International Development Cooperation Agency (IDCA). Clem Zablocki, sponsor of the IDCA plan, is said by his staff to be determined to oppose such an amendment if raised in his House Foreign Affairs Committee and to fight it in the House-Senate Conference. We must, therefore, develop an Administration position on the disagreement before the conference, sometime next month.

Peter McPherson had planned to let IDCA wither away but not abolish it until experience confirmed his hope that he could be effective as coordinator of economic development matters from his position as head of AID. He outlined this informal approach in his memorandum of April 15 (Tab A).²

The prospective Senate-House Conference disagreement on abolishing IDCA affords the opportunity to compromise this issue with less Congressional difficulty than if we had initiated the debate by sending a reorganization plan to the House Foreign Affairs and Government Operations Committees, whose chairmen have a paternal interest in IDCA.

We share with OMB staff considerable skepticism that the head of one operating agency can achieve effective coordination of all of our development assistance programs and influence other US Government actions affecting the economies of developing nations. The history of failures by AID Administrators to do just this led Zablocki and the late Senator Humphrey to press for IDCA.³

We agree with Peter that IDCA has been an awkward bureaucratic layer in most respects and it overly insulated development aid from foreign policy. But we believe the coordinator must have a policy, rather than just an operating agency, position in the government if he is to get Treasury, Agriculture, and the State Department bureaucracy to respond to his views.

When these considerations are coupled with the determination to integrate economic development with other aspects of our foreign policy under the direction of the Secretary of State, the organizational conclusion seems to be either (1) retain a shell of IDCA and its legal authorities but put it in State and appoint McPherson as Director while he continues to serve, concurrently, as Administrator of AID; or (2) abolish IDCA but give its authorities to a new Under Secretary of State for Development and appoint McPherson to this position while he continues to serve as Administrator of AID.⁴

We will explore these ideas with OMB and with McPherson’s and Buckley’s people before anyone gets out on a limb in talking with Senate or House members. If it seems necessary, we will ask you to weigh in.⁵

1. Source: Reagan Library, Executive Secretariat, NSC Subject File, [Security Assistance] Foreign Aid, (May 1981–August 1981). No classification marking. Sent for information. A copy was sent to Bailey. A stamped notation reads: “RVA has seen.” Lenz initialed the top right-hand corner of the memorandum.
2. Attached but not printed.
3. Humphrey proposed the establishment of a single foreign aid agency charged with administering bilateral and multilateral aid. Ultimately, Carter issued Executive Order 12163 on September 29, 1979, establishing IDCA. For the text of the executive order, see Public Papers: Carter, 1979, Book II, pp. 1792–1800.
4. Allen wrote and underlined “unlikely” in the right-hand margin next to this point.
5. Allen wrote “Ok” and “(1) Seems best” in the bottom margin of the memorandum. In a June 15 memorandum to Stockman, McPherson, and Friedersdorf, Allen wrote that he supported McPherson’s approach of “seeking through consultations to design a compromise between Percy and Zablocki on the IDCA amendment. From my perspective, our objectives should be to (1) assure integration of development aid into foreign policy-making under the Secretary of State, (2) eliminate unnecessary bureaucracy, but (3) retain legal authority and organizational capacity for effective coordination of multilateral with bilateral development aid, and (4) preserve Zablocki’s support for the pending aid bill.” (Department of State, Executive Secretariat, S/S–I Records, The Executive Secretariat’s Special Caption Documents, Lot 92D630: Not For The System: Nov. 1982)