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August 10, 1970

National Security Decision Memorandum 76
TO: The Secretary of State
The Secretary of the Treasury
The Secretary of Defense
The Secretary of Agriculture
The Secretary of Commerce
The Secretary of Labor
The Director, Office of Management and Budget
The Administrator, Agency for International
The Special Trade Representative
The Director, Peace Corps
The Director, U. S. Information Agency
The Director, Office of Science and Technology
The Chairman, NSC Under Secretaries Committee
The Director, Office of Emergency Preparedness
The President, Export-Import Bank
SUBJECT: The New U. S. Foreign Assistance Program

Based on the recommendations contained in the report of the Peterson Task
Force, the issues paper submitted by the Under Secretaries Committee,
and the memoranda submitted by several of you, the President has made
the following decisions concerning his new foreign assistance program.

1.   General Philosophy

      a.     The United States has a profound national interest in the social and
economic development of the lower income countries.

      b.     The new U.S. foreign assistance program should be separated clearly,
both in terns of objectives and organizations, into its three component parts:
security assistance, humanitarian assistance, and development assistance.

      c.     The United States, through its assistance programs should hence-
forth seek to support the initiatives of other countries and the international
development institutions rather than seek to dominate the development process.

      d.     The levels and forms of U.S. development assistance should he deter-
mined by the needs of the lower income countries anti the most effective ways
in which we can help meet them.


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      e.     Our development assistance should be divorced from short-term
U.S. foreign policy objectives.

2.   Security Assistance

      a.     The President has decided to consider further the rationale and organ-
ization of our security-related assistance programs before making a final
decision on them.

      b.     The Under Secretaries Committee should therefore study the alterna-
tives available for using our security-related assistance programs in support
of the Nixon Doctrine. It should also study the alternative organizational
arrangements for military assistance, foreign military credit sales, disposal
of excess military stocks, supporting assistance and the contingency fund. A
paper developing options and recommendations on both issues should be sub-
mitted to the President by October 1.

      c.     The Committee should also submit recommendations on whether
the public safety program should be treated as a "security-related assistance
program" and how it should be administered in the new assistance program.

3.   Humanitarian Assistance

      a.     U. S. assistance programs which seek to promote our humanitarian
interests -- child feeding, maternal feeding, disaster and emergency relief,
and refugee relief -- should be combined in an International Humanitarian
Assistance Act.

      b.     The Department of Slate should manage these programs, which should
continue to rely heavily for their implementation on private organizations.

4.   Development Assistance Policy

   a.   The United States should seek to channel all of its development assistance
through multilateral institutions as soon as practicable, in light of the capabil-
ities of the institutions and without raising the U.S. share in them.

      b.     The downward trend in the level of U.S. development assistance should
be reversed, and the present level should be raised substantially. The U.S.
will avoid any pledges to meet the international targets relating foreign
assistance to GNP, but will seek to minimize damaging their usefulness to
other donor countries.

5.   Development Assistance Organization

      a.    A U.S. Development Corporation should be established as an independent
government agency to carry out the U.S. bilateral development lending program.


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      --     The main criterion for use of Corporation resources should be their
effectiveness in promoting development. There should be no attempt to
relate Bank loans to short-term foreign policy considerations.

      --     The Corporation should rely heavily on the efforts of the international
institutions, to provide the broad framework and country programs within
which it considers individual loans.

      --     The Corporation's Board of Directors should include public officials
and private citizens the Corporation should have a full-time President,
serving also as Chairman of the Board, who reports directly to the President.
The Secretaries of State and Treasury should be ex-officio members of the

      --     The Corporation's loan functions should be supplemented with authority
to provide grant-financed technical assistance only for projects closely re-
lated to the Corporation's lending operations.

      --     The Corporation should be equipped with authority to borrow directly
from the public to supplement its appropriated funds arid to subsidize, with
reflows from existing foreign assistance loans, interest rates on loans
financed from its borrowed capital.

      --     The Corporation should be authorized to guarantee foreign official
borrowing on international capital markets as a transitional device to help
countries become independent of U.S. concessional lending.

      --     The Corporation should seek authorizations on a multi-year basis,
subject to annual appropriations.

      --     The Corporation should centralize all of its loan operations in
Washington, with technical advisors supplied only via field visits.

      b.     A U.S. Development Institute should be established as an independent
government agency to concentrate on bringing U.S. science and technology
to bear on the problems of developing nations, help develop research capacities
in the lower income countries, and help finance projects of private institutions
working on social and economic problems in these areas.

      --     The Institute should have primary responsibility for administering
U.S. technical assistance programs abroad.


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      --     The Institute's Board of Directors should include public officials
and private citizens. It should be headed by an independent director,
serving also as Chairman of the Board, who reports directly to the President.
The Secretary of State should be an ex-officio member of the Board.

      --     The Institute should seek authorizations on a multi-year basis, sub-
ject to annual appropriations.

      c.     U.S. economic policies toward the lower income countries should
be coordinated by an interagency Council or committee, at the Under Secre-
tary level, chaired by a Presidential Assistant in the White House. The
Council or committee should formulate and coordinate over-all U.S.
development strategy, under the general policy guidance of the National
Security Council. The President will make more specific decisions in the
near future on the organization of this committee. A Western Hemisphere
subcommittee should be established and chaired by the new Under Secretary
for Western Hemisphere Affairs, inter alia to recommend a guideline for
the approximate share of resources of the U.S. development institutions that
would go to Latin America.

6.   Other Issues

      a.     The U.S. should henceforth permit goods and services financed
under U.S. development loans to be purchased in any non-European lower
income country (defined as any country with per capita income of less than
$1000) eligible to receive U.S. assistance, as well as in the United States.

      --     Such purchases should be permitted for any eligible product for
which at least 50 percent of the components originates in the U.S. or other
eligible country.

      --     AID should henceforth use untied dollars, instead of dollar credits,
to purchase local currencies where local currency financing is necessary.

      b.     All procurement restrictions under the U.S. Extended Risk Guarantee
Program should be removed.

      c.     The U.S. should seek to bring into operation the proposed International
Investment Insurance Agency as soon as the minimum number of countries
agree to do so.

      d.     We should propose that the Hickenlooper-type amendment in the new
foreign assistance legislation (i) avoid any mandatory time limit for application.


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of sanctions and (ii) require only that the President "take into account"
expropriations in determining country eligibility for U.S. assistance.

      e.     The new legislation should require only that the President "take into
account" the specific "political" restrictions in the present law, rather than
be required to apply them.

      f.     The new legislation should exclude procedural requirements which
encumber the administration of the assistance program and reduce its
flexibility, except for the 50 - 50 shipping requirement, the restrictions on
sourcing of iron and steel products for Vietnam, and the limitations on the
number and rank of Presidential appointees to the new institutions. Admin-
istrators will be accountable for achieving program objectives.

      g.     The U.S. should continue to press for the establishment of a gener-
alized system of tariff preferences in the markets of the industrialized
countries for exports of lower income countries, as directed in NSDM 29
and NSDM 65.

      h.     The U.S. should recommend that the UN Fund for Population Activities
undertake a study of world population problems and measures required to
deal with them, as a top priority item in the Second Development Decade.

7.    To manage the transition from present arrangements to the new program,
a temporary office will be created in the White House. The office will be
responsible for directing the preparation of the implementing legislation,
which is to be submitted in January 1971, and for directing Congressional
consultations on the new program. The President has directed that addressees
give their full support to this office, and that they make personnel available
to it as requested.



NSDM 314
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