Foreign Relations of the United States, 1964–1968, Volume XXVII, Mainland Southeast Asia; Regional Affairs

56. Memorandum From the Counselor of the Department of State and Chairman of the Policy Planning Staff (Rostow) to the Presidentʼs Special Assistant for National Security Affairs (Bundy)¹

Washington, March 30, 1965.

SUBJECT

• Southeast Asian Development Scenario

In response to your telephone call of this morning concerning a scenario for the Southeast Asia development track, herewith my observations.

1. Present Staff Work. I discovered that thoughtful staff work was already underway under the direction of Mr. Rutherford Poats of AID. His draft outline of March 27, 1965, is attached.² Some observations on his proposal are included herewith.

2. Setting the Plan in Motion. On page 7 of the attached memorandum it is suggested that we conduct confidential consultations with UN Secretary [General] U Thant and possibly ECAFE Secretary General U Nyun, suggesting that U Thant adopt the Presidentʼs proposal as his own and call for a special ECAFE meeting to consider it. This is the proper direction for an initial move. A principal advantage of attaching the organization to the UN would be to detach it from U.S. South Viet Nam policy. It may be wiser, however, to suggest that U Thant or, possibly, U Nyun appoint a small Asian Wisemenʼs committee to come up with concrete proposals which could then be considered at an ECAFE meeting some months hence. The function of the committee would be to recommend organization and procedures for expanding the Southeast Asian development effort, including its external financing, on a regional basis. Our experience with the Alliance for Progress suggests that governments do better if they react to concrete proposals rather than try to generate them around the table. Moreover, an Asian Wisemen exercise would give us an opportunity to feed in quietly our own substantive ideas.

3. A Fall Back. Obviously, a maximum effort should be made to persuade U Thant to seize this idea and make himself the Ernie Bevin of the exercise. If this proves impossible, we should persuade Thailand or the Philippines to sponsor an Asian Wisemenʼs exercise. First-rate people should be drawn from Thailand, the Philippines, Japan, and Australia. (By way of illustration, the following are some possible names of men of serious repute in the development business: Fuey Ungphakorn, Governor of the Bank of Thailand; Sixto Roxas, formerly chief planner in the Philippines, now in private business; and Okita Saburo, Japanʼs top professional economist recently retired from the staff of Japanʼs economic planning agency.) In this fall-back track, the sponsoring government would put the Wisemenʼs plan into discussion at a future special ECAFE session, or to a meeting of Asian nations especially called for the purpose. The proposed Southeast Asia Development Association could be independent of ECAFE, but its most desirable linkage would be with that organization, although operating with a certain autonomy.

4. Further Internal Staff Work. The attached draft should be brought to completion within Washington and then, as suggested, circulated to our Asian Embassies for more detailed comment. As noted above, we would already have set U Thant (hopefully) in motion. The purpose of our staff work and field comments would be to have something of substance to feed the Wisemen.

5. Some General Observations.

a. Having launched the concept in the context of the South Viet Nam crisis, we should seek now (via U Thant or otherwise) to detach it operationally from the crisis so that it may go forward on a parallel track with the widest possible Asian and Free World support.

b. We should set it in motion as fast as the realities permit, while the war proceeds. It will serve our political purposes best if it is an operation in being rather than something to be hoped for when the crisis in Southeast Asia is settled.

c. Its major political purposes should be conceived of as: (1) a way to dramatize the seriousness of our long-term commitment to Asian development in forms which enlarge the role of Asian leadership and which strengthen Asian unity; and (2) a way to dramatize in Hanoi that our South Viet Nam policy is not isolating us from the mainstream of Asian political and economic life. It may be that, in the end, Hanoi will be willing to associate itself with this kind of enterprise; but we should not count on the hope of future economic assistance to Hanoi as a major factor in determining its posture over coming weeks and months in the Southeast Asia confrontation.

6. Some Specific Comments. The attached draft plan needs, in my view, sharpening and clarification in at least three respects:

a. It implies that Hanoi might benefit from the Southeast Asia Development Association, but it does not indicate how regional membership for North Viet Nam (page 5) could be brought about in light of the fact that North Viet Nam is not a member of the UN or of ECAFE. It has always been assumed that North Viet Nam would have nothing to do with a UN organization. My own feeling is that any economic carrot to North Viet Nam, relevant to a settlement or immediate post-settlement circumstances, should be direct and ad hoc, in the first instance. Eventually, of course, Hanoi might be folded into more systematic regional arrangements.

b. The function of the Southeast Asia Development Association in reviewing national plans is not sufficiently emphasized. It is essential for our purposes that, as with CIAP, the proposed association screen plans carefully in terms of the adequacy of self-help measures.

c. At some stage, as with the Alliance for Progress, we shall have to hold out somewhat enlarged external assistance, and dramatize our assistance intentions by advancing a large over-all figure for total external support. External capital from all sources flowing into the countries included in the proposed regional members, excepting North Viet-Nam, is of the rough order of magnitude of $530 million, of which about $370 million represents AID, EXIM, and PL 480 funds; $60 million, IBRD (average of last three years); $100 million, other governmental assistance (1963 latest year available). Private investment figures, not immediately available, are believed to be relatively small. A figure of $6.4 billion for a ten year period would represent a 20% increase over present levels, and constitute a useful carrot. If to this we add, hopefully, some diversion of military aid expenditures ($310 million for FY 1964) and make some allowance for an expansion of private investment, we come to a figure of, say, $8 billion for the ten year period.³ Presented in this global fashion (as at Punta del Este in 1961), it does not nail us down to a specific AID increase, giving us scope to see what can be generated from IBRD, Japan, Europe, the Asian Development Bank, private investment, etc. If we set in motion a Wisemenʼs exercise, we shall have time to sort out our statistics and produce a more rational and realistic target figure.

1. Source: Johnson Library, National Security File, Country File, Vietnam, Southeast Asia Development Program, Vol. I, 1965. Confidential.
2. This outline, which was not attached, was sent by Poats to Cooper on March 27. (Ibid., Country File, Vietnam, Southeast Asia, Vol. IV, Memos 8/64–8/65)
3. This is similar to the figure of $4.5 billion for five years in the attached memorandum. For purposes of rough comparison, our external resources goal set at Punta del Este was $20 billion for ten years, for a population of about 200 million Latin Americans. Omitting Indonesia and North Viet Nam, the population of the Southeast Asian region, as defined, is 120 million. Thus, the proposed per capita external assistance target is low by the Alliance for Progress standard—very low if we assume Indonesia joins the club along the way. If Indonesia is included, the population of the region comes to about 220 million. [Footnote in the source text.]