313. Memorandum From the Under Secretary of State for Security Assistance, Science and Technology (Schneider) and the Administrator of the United States Agency for International Development (McPherson) to Secretary of State Shultz1
SUBJECT
- NSC’s Unilateral Decisions on Foreign Aid
During the past month, the NSC has twice presented us with decisions on the foreign aid budget. They have decided we would abandon conditions on disbursement of ESF funds for Honduras2 (see attached on Honduras),3 and they have decided we would provide an additional $20 million of FY 1985 money for Jamaica.4 In neither case did they [Page 772] consider the position of the Department or AID on the issues or on recommendations for action.
We recognize that the NSC feels the pressure to make quick decisions that will have short term political payoff. In making such decisions, however, they are not considering the damage that will be done to other policy objectives, both short term (e.g., loss of commercial lending possibilities) and long term (e.g., future U.S. financial liabilities and the ability to achieve meaningful economic reform). Over the last four years this Administration has developed an integrated budget process which takes account of these considerations on a country-specific basis as well as in the broader context of worldwide priorities. This process has worked well. Abandoning it now for short term political gains, driven in part by state visits—or by regional bureaus dealing directly with the NSC in support of their parochial interests—can only lead to a weakening or collapse of our overall program of economic reform and will do away with the discipline of thoughtfully applying scarce resources to strategic foreign policy priorities and objectives that we have worked so hard to establish. Should the NSC take the next logical step and begin ordering reprogrammings, we will be solving one set of problems only to create others that may be more severe (a step that we heard was being considered on another issue last week).
In the Honduras case, NSC sent a paper to the President which requested decisions on foreign aid allocations without our knowledge and without including our views. When McPherson called Poindexter, he was told the NSC has the right to take any matter to the President without interested Agency input, including decision memos, and to decide how that matter will be presented. We believe this approach is a disservice to you and to the President, as well as to the established budget process. When decision memos go to the President, our position should be known.
Recommendation: That you call Bud McFarlane (and, depending on the outcome of that call, the President if necessary), stressing the importance of making foreign aid decisions in the context of not only political considerations, but broader foreign and economic policy considerations as well. In this regard, Regional Assistant Secretaries do not have authority to speak for the Department.5 (Attached are suggested talking points for your call.)6
- Source: Department of State, Executive Secretariat, S/S–I Records, The Executive Secretariat’s Special Caption Documents, Lot 92D630: Not for the System—June 1984. Confidential; Not for the System. The stamped date of June 14, 1984, 7:26 p.m., appears at the top of the memorandum. A stamped notation reading “GPS” appears on the memorandum, indicating Shultz saw it. An unknown hand wrote “Action” at the top of the memorandum. Covey also initialed the memorandum and wrote “6/15.”↩
- Shultz underlined “Honduras.”↩
- Not attached.↩
- Shultz underlined “Jamaica.”↩
- Shultz wrote “done” in the margin below this recommendation.↩
- Attached but not printed.↩