434. Memorandum From Secretary of Agriculture Freeman and Administrator of the Agency for International Development Gaud to President Johnson ¹1. Source: Johnson Library, National Security File, Country File, Guyana, Vol. I, Memos. Forwarded as Tab B to the President under a July 11 memorandum from Rostow requesting Johnson's approval. Tab A to Rostow's memorandum was a July 8 memorandum from Director of the Bureau of the Budget Zwick concurring with Gaud and Freeman's recommendation. Johnson checked the approve options on Rostow and Zwick's memoranda. (Ibid., Guyana (Brit. G.), Vol. I, Cables, Memos, and Misc., 5/66–11/68)

Washington, June 21, 1968.

• SUBJECT
• Public Law 480 Program with Guyana

We recommend that you authorize us to negotiate a PL 480 sales agreement with Guyana to provide approximately 1,500 tons of edible vegetable oil, 2,000 tons of wheat/wheat flour, 100 tons of tobacco and 3,000 tons of potatoes for which the current export market value (including applicable ocean transportation costs) is approximately $1.0 million. The proposed terms are payment in dollars of 5 percent on delivery and the balance in approximately equal installments over 20 years; interest will be 2 percent per annum during a two-year grace period and 2.5 percent thereafter. The Departments of State and Treasury concur in this recommendation.

Need for Program

The Guyana (Burnham) Government has undertaken with help from the United States Agency for International Development and the British and Canadian Governments an ambitious economic development program over the past three years. We have given particular priority to assisting this government in its effort to demonstrate what a democratic government can achieve following the years of difficulties under the rule of communist-oriented Cheddi Jagan. The Burnham government is making a special effort to accelerate its development projects, particularly for agriculture, but local currency costs for development have placed a substantial strain on the Burnham government's budget.

This agreement would assist the Burnham Government to sustain its record of economic achievement and progress, which is important at this time since national elections will be held in Guyana prior to March 31, 1969, with Jagan again opposing Burnham.

Self-Help Efforts

In negotiating this agreement, we will seek the following commitments from the Government of Guyana:

The local currency generated from the sale of the commodities in the importing country shall be made available for development of agriculture as follows:

1. For the construction and improvement of roads connecting rural areas with the market cities and also for planning and construction of access roads in the Atkinson/McKenzie land settlement project.

2. For the modernization of agriculture through the expansion of adaptive research and extension and increasing the means for storage, processing and distribution of basic food crops and for land development and water control in farming areas along the coast.

3. For the improvement of facilities and operation of the government maternity and child health centers, especially for projected family planning, and including vaccinations for polio, etc.

4. For strengthening systems of collection, computation and analysis of statistics to better measure the availability of agricultural inputs and progress in expanding production and marketing of agricultural commodities.

5. For other improvements in the agricultural sector to be agreed upon by the USAID Mission and the Government of Guyana.

Military Expenditures Review

With respect to Section 620(S) of the Foreign Assistance Act, State/AID has concluded that U.S. developmental assistance is not being diverted to military expenditures and that Guyana's resources are not being diverted to military expenditures to a degree which materially interferes with Guyana's development. A summary of State/AID conclusion is attached.²2. Attached but not printed.

Recommendation

That you authorize US to proceed with this PL 480 sales agreement.

Orville L. Freeman
William S. Gaud