Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

113. Airgram From the Mission to the Organization for Economic Cooperation and Development to the Department of State¹

CEDTO A–273

Paris, November 6, 1965.

SUBJECT

• DAC Work Program for Current Year

1. The DAC on October 28, 29, for the first time in its five-year history, undertook to define systematically and in some detail exactly what problems it should concern itself with in the course of the work year. The two-day discussion was based on an exhaustive Secretariat paper, DAC (65) 36,² which presented all of the suggestions made in the course of the High Level Meeting, as well as those which had appeared in the course of regular meetings, and from delegations, and it had the benefit of prior discussion held in two Working Parties and an Ad Hoc Group concerning a major part of the proposals listed.

2. The two-day debate threw in clearer relief than ever before certain basic differences in philosophy concerning the essential character of the DAC, and at least the vague outline of the groups supporting the two basically different theories was defined.

3. The doctrinal divergence was between what might be called the introverted and the extroverted view of the organization—or the Little DAC view as opposed to the broader. The Little DAC view was clearly articulated by Harding, the U.K. Permanent Representative in the Committee. He said that the essential quality of the DAC derives from the fact that it is a group of donors. It cannot treat problems requiring an exchange with the LDCs; it cannot deal with individual country problems; it should not undertake individual country reviews. Conceding that sectoral studies, for example agriculture, might be more debatable, he made it clear that in his judgment the DAC had no contribution to make in this area. The broader view was not so explicitly formulated, but it is implicit in the U.S. initiatives last year in persuading the DAC to embark on a study of the relation between requirements and LDC performance. This view begins with the premise that assistance is a marginal element in development and that to treat it abstracted from the development process is unrealistic. From this point of view, the U.S. has urged attention to performance of the LDCs and to such problems as absorptive capacity, and has advocated country reviews as necessary to test principles and theories, and to inject an element of realism in what otherwise would be an abstract and possibly academic exercise.

4. Other terms carrying doctrinal implications which appeared rather often in the course of the discussion were “theoretical” and “operational.” These terms were used mainly by the “Little DAC” proponents to reinforce arguments for limiting the Committee’s activities; there was little effort to define exactly what the terms implied, however. The French appeared to suggest that the preparation in the DAC of TC Coordination Guidelines was “operational”, though it was perfectly clear that no operations of any sort were involved, and the role of the DAC was limited to imparting initial impetus to an operation which would take place exclusively, if at all, in the field. Country meetings were objected to either because they were “operational” (since they might affect aid policies) or because they might ultimately imply some contact between DAC and an LDC. There was a good bit of use of the term “practical” to describe the proper character of DAC efforts, but again there was little agreement in its application. Both Harding (UK) and Smith (Canada) were for practicality as a standard, but Harding used the standard to exclude discussions of such topics as agriculture, population and housing, whereas Smith argued that the DAC has an important role to play in the exchange of experience among its members, and that it was not always essential that new ground be broken.

5. The Little DAC doctrine was supported by the French and the Belgians, in addition to the U.K., but no other delegations rallied to this standard. The broader view as supported by the Germans, the Canadians, all three Scandinavian countries (both Denmark and Norway appear to have drawn strength from the adherence of Sweden and have become more vocal) the Netherlands and Austria. The Japanese did not take a very definite line, but appeared to lean to the U.S. view. The smaller countries obviously wish to receive from the DAC the maximum assistance they can get in supplementing their own meager resources of information and analysis concerning the LDCs, and since they are organizing themselves to deal with “problems of small donors” they may possibly come to exercise an important influence on the ultimate shape of DAC operations.

7. What emerged from the two days of discussion was a program of work clearly defined and generally supported on the side of donor efforts, and limited and somewhat vague on the side of the LDCs. Major attention will be placed on donor efforts, with the program including the following relevant elements:

1. An improved and strengthened AAR.

2. Attention to the volume of assistance, with major emphasis on “burden sharing.”

3. Further attention to the terms of assistance, with priority given to:

a. Principals for dealing with debt-servicing problems; and

b. Export credits and related indebtedness and commercial policy problems.

8. On the side of the recipients, it was agreed that there was not much possibility of additional useful work in general terms on the problem of requirements, performance, and absorptive capacity. It was the U.S. view that these subjects could best be considered within the context of individual country studies, a view supported by the Germans, and to which no direct exception was taken. The Little DAC contingent, however, stated its objection to country studies on general principles, and sought to assure that the reviews being undertaken by the Experts Group on Analytical Techniques should not be made the subject of any significant discussion in the working party.

9. In spite of these efforts at obstruction, the way was left open for further country reviews, and thus of further progress on elements of LDC performance, of which the U.S. induced the DAC to take cognizance last year. It should be recognized, however, that in the absence of a few meaningful country reviews, there is a distinct likelihood that the views of the Little DAC contingent will prevail. It should be further recognized that in the absence of a strong U.S. initiative, it is unlikely that the DAC will hold meaningful country reviews this year, or that the Experts Group will make a useful input into the Working Party on Supply and Requirements.

10. On the basis of the attitudes of delegations described in this message, it is likely that there will be strong resistance to the DAC repeating an exercise on Brazil and the Central American republics which has already been conducted in CIAP, and it may be that the only acceptable U.S. nominee among the group so far put forward will be Somalia. Delegation doubts that a study of this country will do much to forward the general cause.

Brown

1. Source: Department of State, Central Files, AID 1. Limited Official Use. Drafted by A. B. Daspit, Alice May, and E. M. Gilbert on November 5; cleared by A. E. Lachman (in draft) and P. R. Cook, Jr. (Secretary of Delegation); and contents approved by Alice May.
2. Entitled “Preparation of D.A.C. Work Programme for 1965/66,” October 12. (Washington National Records Center, RG 286, DAC Material: FRC 70 A 5922, Program (DAC Work Program 1965)) An annex attached to the source text, not printed, provides a point-by-point summary of the items covered in DAC(65)36.