416. Cedto 137 from Paris, July 311
From Riddleberger. Chairman’s report on annual aid review encountered no objection when submitted to Council for information and was issued to press thus completing publication of DAC decisions.
As recent session was first high-level meeting of DAC since Tokyo in 1961, it may be appropriate to supplement USRO reporting with some additional observations on activity of past year. In brief, Tokyo decisions led to (a) annual aid review to compare relative burden and general aid policies, (b) expansion of total aid effort, and (c) improved coordination. It can justifiably be stated that first two purposes were accomplished and progress made on third. Total flow of resources from DAC countries rose from $7.4 billion in 1960 to $8.7 billion in 1961. Official contributions rose from $4.9 billion to $6 billion in same period representing increase of more than 20 percent. As a group, therefore, commitment of London resolution for expanded aid program was fully met. Simultaneously, there was progress toward easier terms, with respect to coordination there was likewise progress if less spectacular. Although no countries were specifically cited in Chairman’s report as laggard, it is clear from statistics that Canada and Italy are far behind other members.
I believe process of AAR led to a greater understanding that no one form of extending aid has an inherent primacy and that a doctrinaire approach should give way to the concept of an aid package which takes into account overall needs and circumstances of a recipient country. The plan for coordinating [Facsimile Page 2] groups which was approved in January provides mechanism for this improved approach. This does not mean that problem of better coordination is solved but start has been made and it should be possible to develop this concept during coming year. Negotiations are under way to establish groups for three East African territories, Thailand, and possibly Colombia in conjunction with IBRD. Vietnam group was launched in DAC but is being continued outside. Annual aid review process itself should likewise influence member governments to link their aid policies more directly to development objectives.
As the London resolution of March 1961 placed upon the chairman responsibility for leadership in the areas discussed above, it was naturally source of satisfaction that resolution adopted on July 26 corre [Typeset Page 1689] sponded so closely with recommendations set forth in the report, which in turn had been fully endorsed by us. Therefore I believe that mandate given me before Tokyo meeting has now been executed and ratified at Paris meeting, following intense efforts of past year.
Some progress has likewise been made in domain of technical assistance and while this is an extraordinarily complex subject, committee has succeeded in expanding the amount of such assistance to Latin America. Some steps have been undertaken which should eventually lead to better coordination.
The committee has added to its membership with admission of Norway on July 25 and henceforth this country, having accepted obligations and decisions of DAC, will participate fully in the joint endeavor. Accession of Norway brings total membership to eleven governments and EEC. The committee also decided in 1962 to admit Swiss Government to observer status in technical assistance sub-committee on assurance that Switzerland intended to coordinate its activities with other members. Informal discussions with Danish representative to OECD have taken place and there is some reason to think Denmark may eventually come in.
Several meetings have been held with respect to Latin America and while these were largely devoted to exchange of information to date, they may lead to more concrete results later. The first coordinating group meeting was held on [Facsimile Page 3] results of Punta del Este Conference, and while not entirely satisfactory to all participants, on balance the session was useful for information purposes. One result was establishment of a permanent Paris office of Inter-American Development Bank under direction of Mr. Gonzalez del Solar.
The foregoing represents principal accomplishments of DAC in past year. When the unique character of this endeavor is recalled, i.e. an effort to expand, improve and coordinate the foreign aid programs of ten countries and EEC with all that is involved in the way of national legislation, policies, regulations and political considerations of importance, I believe we can draw satisfaction from our own initiatives and results they have brought in consolidating the efforts of free world in this domain.
Recommendations:
1. AAR process should be vigorously pursued and increased attention given to comparison of burden and efficacy of aid.
2. Additional efforts should be made in Rome and Ottawa to increase Italian and Canadian contributions and our ambassadors be fully briefed and instructed to maintain continued pressure.
3. US should support vigorously and assist in every way study on tied aid.
[Typeset Page 1690]4. Efforts should be made to assure success of coordinating groups now-proposed and careful preparation made for future groups.
5. US position on multilateral investment guarantees should be determined in near future and decision made whether to pursue this idea.
6. Consideration of chairman for 1963 should now (rpt now) start and informal consultations begun by September with other delegations.
- Annual aid review. Confidential. 3 pp. Department of State, Central Files, 800.0000/7–3162.↩