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

347. Letter From Senators Jesse Helms, James McClure, Jeremiah Denton, Steven Symms, Strom Thurmond, and Mack Mattingly to President Reagan¹

Washington, September 18, 1985

Dear Mr. President:

We are writing to request an overhaul of our foreign assistance efforts.

As you know, we conservatives have had a profound skepticism historically of foreign assistance. In economic terms we have viewed our efforts as little more than thinly disguised welfare for the Third World.

As you said on March 17th, 1980,² “for too long at official levels we have been apologetic about, if not downright hostile toward, American capitalism as a model for economic development . . . .” You brought this point forcefully home at the Cancun Summit in 1981 when you pointed out that our real treasure was our economic system, not our financial resources. Reasonable people here and in the Third World applauded your commitment and began to prepare for the promised economic revolution.

AID has failed totally, however, to deliver on these promises. This is especially disappointing since it is a time when throughout the Third World there is a real desire for market oriented development. AID today offers little more than rhetoric, so your sound concept of economic development remains unfulfilled. This is a tragedy for two main reasons:

* It threatens U.S. long-term political and security interests.

* It deprives America and the Third World of opportunities for real economic growth through increased trade and investment.

We disburse well over $10 billion a year in foreign assistance with virtually all of this going to or through the local governments. Almost none goes to the indigenous private sectors. This allows bureaucracies to grow and assures that resources will be used for political purposes which work to perpetuate the regime in power. While this may be desirable from our own perspective in the short-term, it is a prescription for disaster in the long run. Such policies weaken the private sector which has proven itself to be the only sector of the economy which can stimulate self-sustaining economic growth and which can balance the power of the state in pre-democratic societies.

AID both sets our economic development policy and establishes the means by which it is carried out. We do not dispute AID’s role in humanitarian assistance nor minimize the legislative limitations which constrain AID’s activities. However, AID’s Bureau for Private Enterprise is underfunded and largely ignored. The private enterprise efforts of the other AID bureaus are rarely effective and frequently seem to have little to do with stimulating true privately driven economic growth.

There is no reason that this should be so, as other Western governments have successful programs aimed at the private sector which work in parallel with their assistance programs.

We believe the U.S. should pattern its development efforts after the successful model of some other Western countries. Your Task Force on International Private Enterprise suggested that the U.S. establish such an institution by modifying OPIC’s present charter and allowing OPIC to manage our presently budgeted economic development resources.³ We support this idea.

In addition, we see it as critical that our official development policy be set by an institution separate from any one of our functional institutions. At present the positions of Administrator of AID and Director of the International Development Cooperation Agency are filled by the same person.

While conservatives were opposed to the formation of IDCA in 1979, we now believe, retrospectively, that the high level of complexity of our foreign assistance efforts strongly suggests that we should have an IDCA director divorced from the day-to-day considerations of running a multibillion dollar relief and assistance agency.

Both these suggestions could be implemented quickly. We feel strongly this would restore the momentum for true change in the Third World which you promised early in your first term.

We stand ready to help.

Sincerely,

• Jesse Helms
• Jim McClure
• Jeremiah Denton
• Steve Symms
• Strom Thurmond
• Mack Mattingly

1. Source: Reagan Library, David Wigg Files, Chronological file, October 1985. No classification marking.
2. See footnote 2, Document 341.
3. See Document 324.