Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

356. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, December 16, 1980

SUBJECT

• Foreign Aid—For the Last Time (U)

1. Discussions at the Summit Preparatory meeting in Paris last week² lead me to believe that the other Summit countries might well be willing to match modest add-ons to US aid for food and energy production, and for family planning. If such US add-ons are presented as our response to the Venice Summit call for increased bilateral aid by Summit countries in these three fields,³ the Canadians will urge our allies to join us in forming food, energy, and family planning aid consortia. These consortia would be an important Carter legacy, in a field in which you have a good record. (C)

2. I therefore propose that your FY 82 bilateral development aid request to the Congress include a modest increase over the OMB mark, in response to the Venice Summit. Your budget message would state that this add-on was being proposed in the expectation that it would evoke a comparable increase in other Summit countries’ aid for these purposes, and that final Congressional action should hinge on whether such a response seems likely to occur. OMB tells me that such a contingent approach is feasible, and that at least one other item in the FY 82 budget (IFAD replenishment) will be handled in the same way. (C)

3. I propose the following:

a. A $65 million energy add-on, for increased production of fuelwood, as proposed by State and IDCA in the “leadership package”. According to IDCA, DOE, and World Bank estimates, this expenditure, if continued for several years and matched by others, would reduce LDC oil imports and reverse a growing deterioration in the energy supply available to the world’s poor countries.

b. $40 million for aid to national agricultural research institutes in food deficit countries and $60 million for food production aid to Africa, half of the amounts proposed for these purposes in the leadership package. Research has the highest pay-off of any agricultural aid; Africa is included because it is the region of greatest interest to our European allies and the area with the greatest need for famine prevention.

c. $55 million for family planning aid, the additional amount that OMB has approved; but not in lieu of existing country development aid projects, as OMB proposes. (C)

This total proposed add-on would be $220 million, or $33 million in FY 82 outlays. It would leave total bilateral development aid still below the $2 billion mark, and is far below State’s compromise package of $500 million, which is focused on the same three fields. (C)

4. This add-on might well be acceptable on the Hill, and for good reason: Increased LDC food and energy production would reduce pressure on global food and oil prices, which generate inflation in the US. Humanitarian aid to avert starvation and to restrain population growth have traditionally been supported by the Congress. The fact that this add-on package would be conditional on comparable additional effort by other industrial countries would be well received. (C)

5. I know that you are besieged with requests for international affairs budget add-ons. Secretary Muskie said at your December 8 budget meeting that international development aid deserved the highest priority among these appeals.⁴ In development assistance, all agencies agree that top priority should go to food, energy, and family planning—because of their importance, their popularity on the Hill, and the likelihood that they would evoke a response from other countries. The program I propose would pave the way for a new phase in foreign aid marked by increased emphasis on aid in these three fields, to be provided through functional consortia among bilateral aid donors. All this for an increased FY 82 outlay of $33 million seems to me a good bargain, the more so since the increase in real terms over last year’s request level would still be only 15% (as compared to about 1% for the OMB mark).⁵ (C)

1. Source: Carter Library, National Security Affairs, Staff Material, Special Projects, Henry Owen, Box 1, Chron: 12/10–31/80. Confidential. Sent for information.
2. See Document 252.
3. See Document 247.
4. Carter held a meeting on the FY 1982 budget on December 8 from 1 until 3:49 p.m. in the Cabinet Room. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation of the meeting was found. Muskie made this point publicly in a January 15, 1981, speech to the American Foreign Policy Association and the World Affairs Council. He discussed, among other things, the importance of North-South issues and foreign aid to the future of U.S. foreign policy. For the text of his speech, see the Department of State Bulletin, February 1981, pp. 24–26.
5. The FY 1982 budget proposal to Congress that Carter sent on January 15, 1981, included a request for a 14 percent real increase in foreign aid over the amount allotted for FY 1981. In his transmittal message, Carter noted that “[t]he bilateral development aid budget includes a U.S. response to the 1980 Venice Summit agreement that the major industrial countries should increase bilateral aid for food production, energy production and conservation, and family planning in the developing countries,” a proposal put forth “in the expectation that the other Summit countries will also increase aid in these sectors, in response to the Venice Summit agreement.” For the text of the message, see Public Papers of the Presidents of the United States: Jimmy Carter, 1980–81, Book II, pp. 2895–2903. (Quotations are on p. 2899.)