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

278. Memorandum From Guy Erb of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)¹

Washington, October 10, 1977

SUBJECT

• PRC Meeting on Foreign Assistance, October 11, 3:30 p.m., Situation Room

The PRC meets on October 11 to consider the foreign assistance issues presented by PRM 8-Track III (the section on basic human needs), the DCC study, and the Brookings Institution report. An Issues Paper (Tab III)² contains the main policy options which emerge from the reports and summarizes the DCC and Brookings studies.

Our objectives for this meeting are two-fold:

(1) We seek PRC comment and guidance regarding the five principal options as outlined in the Issues Paper. Note: The Issues Paper’s options differ from those contained in the DCC’s summarization of issues.

(2) The PRC should approve a White House-chaired working group to prepare an options paper for the President by October 31. That paper should analyze the implications of the principal aid strategies for funding levels, the organization of US foreign assistance programs, and other issues. The working group’s report would define issues for Presidential decision and assist OMB in its preparations of the FY 1979 budget review.

The following points are relevant to the PRC meeting:

(1) The strategic options for foreign assistance. The attached Issues Paper’s five options for foreign assistance appear broad, but the choice among them could have a serious impact on (a) the direction of US foreign assistance programs and (b) their relation to US foreign policy objectives.

To illustrate, Option 5, “Multiple Objectives”, could most easily incorporate assistance programs in support of a variety of US foreign policy objectives; for example, an initiative for Caribbean countries. Option 3, a “poor country” strategy, if narrowly defined, would make initiatives in middle-income developing countries relatively difficult.

(2) The effectiveness of US assistance: The President requested the DCC to examine the overall effectiveness of US assistance programs (see Presidential Memorandum of June 27, Tab IIA).³ The DCC could not agree on an assessment of the multilateral and bilateral components of US assistance programs. In contrast, the Brookings report contains a sharp critique of the bilateral programs’s current effectiveness.

The DCC and Brookings reports call for improvement in US assistance programs and both, as well as PRM 8-Track III, accept a strong US focus on meeting basic human needs (BHN). Taken together, these findings indicate that we must design programs that (a) reach poor people more directly, and (b) will be more effectively administered by the US.

(3) Relations with Congress. An expansion of US assistance will require improved understanding on Capitol Hill of the Administration’s objectives. The imbroglio over the appropriations bill⁴ illustrates the need for an Administration initiative seeking broader Congressional and public support for US foreign economic policies.

The Treasury representative at the PRC meeting may refer in this context to the study on multilateral institutions which emerged as part of the compromise on the appropriations bill. Treasury first indicated that a joint Administration/Congress study of multilateral institutions would be undertaken. In concert with other agencies and the US Executive Directors of the IDB and the World Bank, I have insisted that the study be in consultation with the Congress. Moreover, that study should be seen as one part of the Administration’s response to Congressional concern, not as a device to delay PRC consideration of the options for an overall approach to US bilateral and multilateral concessional assistance.

(4) Funding levels. Both the DCC and Brookings reports contain illustrative tables on alternative funding levels (see Tabs A and B to the Issues Paper).⁵ Note: DCC figures are in nominal terms and Brookings figures are in real terms; to make a rough comparison between the two tables, add one-fifth to the Brookings figures.

We do not want PRC determination of funding levels at the October 11 meeting. However, it would be useful to have a PRC discussion of the prospects for low, moderate, or high levels of US concessional assistance.

(5) The Organization of US Assistance. The DCC study advocates administrative reforms in AID and a simplification of legislative requirements for bilateral assistance programs. The Brookings report calls for a complete overhaul of AID and the establishment of two new institutions. As in the case of funding levels, we do not seek final PRC pronouncements on organizational questions. Nevertheless, preliminary indications of agency views would be useful to the working group.

(6) Other Issues: Only a brief and general consideration of security assistance or PL 480 should take place at this PRC meeting.

Tom Thornton concurs with this memorandum.

1. Source: Carter Library, National Security Affairs, Staff Material, Deputy, Meetings File, Box 5, PRC Meeting: 10/11/77: [Brzezinski Copy] [I]. Confidential. Sent for information. Copies were sent to Aaron, Owen, the North-South Cluster of the NSC Staff, and Tuchman.
2. Printed as Document 277.
3. Printed as Document 268.
4. Apparently a reference to the Carter administration’s effort to secure the removal of country-based restrictions on the provision of direct or indirect foreign assistance by the United States.
5. See footnote 2, Document 277.