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

276. Memorandum From the Under Secretary of State for Security Assistance, Science and Technology (Buckley) to Secretary of State-Designate Shultz¹

Washington, July 9, 1982

SUBJECT

• Foreign Assistance; Arms Transfer Policy; Law of the Sea

Foreign Assistance and Arms Transfers

I manage two of the key resources you have available to support policy goals: I oversee the security assistance and arms transfer programs and coordinate, with Pete McPherson’s close cooperation, preparation of the overall integrated Foreign Assistance budget.

Assistance and arms transfers have some characteristics in common: they are politically sensitive here at home; they involve the interests and assets of other agencies; and foreign countries lust after them to a degree which can distort or even control our relationships. Both are central elements in the Reagan Administration defense planning. Our ability to deploy the RDF in an emergency depends on political and military cooperation from countries en route, (Cap Weinberger has told the President that security assistance is in the “must have” category).

There are also significant differences between the two. The principal one is that assistance is an active, affirmative tool, while arms sales and transfers are more reactive—to the occasional chagrin of our own industry and the Pentagon, we do not hustle American military equipment and services to foreign recipients.

[Omitted here is information on arms transfers.]

II. Foreign Assistance

— Money spent on foreign assistance is meant to achieve specific U.S. foreign policy and defense objectives. We can’t expect cooperation from others—nor expect them to take political risk of association with U.S.—if we do not respond to their own key problems, e.g., security and the need for economic growth and development.

— Assistance is no giveaway. Nearly three quarters of bilateral economic assistance buys U.S. goods and services. All the FMS purchases help maintain U.S. defense production capability. Of our total military sales, we finance only 20–30%, and that at cost-of-money rates.

— Our most important national objectives, e.g., Middle East peace, Persian Gulf security and stability and economic growth in the Caribbean, are those served by our assistance programs.

— Debate over whether we need more military security assistance or more economic assistance is continuous, partisan—and beside the point. We need an array of bilateral, and often multilateral, tools to deal with complicated economic and security problems.

— This Administration is the first to have considered all forms of bilateral and multilateral assistance within a common foreign policy framework. The resulting single integrated foreign assistance budget allows us to better design programs to optimize contribution to central U.S. national concerns.

— State/AID/DOD worked out this innovative and constructive approach; it should be even better this year (concluding stage of this process begins in about two weeks). We passed a foreign assistance bill last year for first time in three years; and many in Congress credited our new approach.

— The Administration is sharply criticized by Democrats for apparently turning from economic assistance and MDBs to security assistance. But only 42% of our total foreign assistance request including off-budget FMS guarantees is for military assistance per se. Three quarters of military assistance increases go to a limited group of key countries, e.g., Israel, Egypt, Turkey, Spain, Korea and Pakistan. Increases in concessional FMS and ESF reflect concern for the economic impact of assistance, and a desire to give substantial balance of payments support to key friends with beleaguered economies.

— Last year’s success did not, however, necessarily it remains difficult to convince Congress, or the public at large, that adequate resources are necessary to conduct foreign policy. Much needs to be done again this year, moreover, there is a wide perception, shared unfortunately by some key Republicans, that the President does not really support foreign assistance.

— Last year’s appropriation was first in three years; the election this year makes prospects for any assistance bill slim. Our priorities before the August recess are to get the CBI and FY 82 FMS supplemental. Both are vital for Central American policies; and the latter will ease relations with Portugal. FY 83 legislation is likely to be stalled until after elections, so CBI and ‘82 supplemental are also needed to set adequate baselines for the inevitable continuing resolution.

[Omitted here is information on Law of the Sea.]

1. Source: Department of State, Executive Secretariat S/S, Special Handling Restrictions Memos 1979–1983, Lot 96D262: 1982 ES Sensitive, July 1–10. Confidential; ES Sensitive. The initials “LPB” are stamped on the memorandum. Printed from an uninitialed copy.