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H. R. Haldeman
Nixon For President Committee
450 Park Avenue
New York, N.Y. 10022
(212) 661-6400
Chief of Staff
For Richard M. Nixon
Reproduced at the Richard Nixon Presidential Library
78 Brgce Harlow
for handling
and/or rec
Reproduced at the Richard Nixon Presidential Library
NEWMAN
"AID"
January 8, 1968
Mr. Robert H. Newman
Department of State
Washington, D. C.
Dear Mr. Neuman:
Thank you very much for your letter of
January 2, in which you discuss the program
of assistance to less-developed countries. I
appreciate hearing your thoughts on this very
important matter.
Thank you also for your congratulations
on my appointment and for sharing your views.
Sincerely,
Henry A. Kissinger
Reproduced at the Richard Nixon Presidential Library
DEPARTMENT OF STATE
WASHINGTON
January 2, 1969
Dr. "Honry Kissinger
Room 1232
Hotel Picrre
61st Street and Fifth Avenue
Now York, Nov York 10021
Dear Dr. Kissinger:
We met on several occasions in Carbridge during the Fifties, when I was
a tutee of Prof. Elliott at Harvard, but I am sure you would not remember me.
At present I am Assistant Legal Adviser at State. In that capacity, and during
my previous experience in the private practice of law, I have had the opportunity
of observing the operation of our foreign aid program in action (or inaction) in
various parts of the world, particularly in Africa and South Asia.
Last Spring I set down some observations on the AID program which I gave
to the Agency's policy people; I received in response an expression of the
Agency's gratitude, but I believe that my ideas did not reach the top level of
the Agency's administration. Subsequently, I tried to rethink the whole concept of
foreign assistance, with a view toward reshaping our ideas of both the means and
the goals of the program. I have written a brief memorandum outlining some of these
thoughts. This paper is enclosed for your examination in the hope that it may
provide some assistance in the current reassessment of foreign aid. I did not
wish to go into great detail, and thus the ideas presented in the paper may
appear too brief or radical. Nevertheless, I believe something along the lines
suggested therein would be more effective, less costly, and more politically
acceptable than our present approach.
I was very pleased to hear of your appointment, and I congratulate both
you and the President-elect on it. Should you wish at any time to discuss
the matters raised in the enclosed paper, I am of course available at your
convenience.
Yours sincerely,
Robert # Neuman
Robert H. Neuman
Assistant Legal Adviser
Enclosure
Reproduced at the Richard Nixon Presidential Library
PROPOSAL FOR A TACTICAL AID PROGRAM
Objectives
The defects in the USG's program of oconomic and
technical assistance to less-developed countries have
long been apparent, and have become more serious with
bureaucratic expension and budgetary limitations. The
program has not by and large fulfilled either its
humanitarian goals OF significantly enhanced the prestige
of the United States in recipient countries. At bost, our
aid program has given us some leverage in certain countries,
but these have largely been countries which would in any
case be well disposed towards the United States. Too
often the program has led to disappointment among
recipient governments. This is due partly to administrative
delay, to overly cautious scrutinization of implementation
procedures, and to inscnsitivity on the part of
Washington decision-makers in selecting and approving
projects. At its worst, the aid program has been a
source of resentment and embarrassment in donee countries.
The proposal outlined below is intended to reorient
our assistance thinking and to reactivate the spirit in
which foreign assistance was originally conceived. It
reflects an attempt to bring together the best elements
of the aid program and the Peace Corps, while encouraging
local participation on a sub-central level in recipient
countries. It is intended to create an atmosphere of
"getting something done", producing a visible result
at minimum cost with the active participation of both
private and public elements in the donee country. It is
also intended to eliminate the permanent establishment
of large AID missions abroad, thus reducing foreign
currency expenditures and overall administrative costs.
A Tactical Aid Program
It is suggested that the present Agency for Inter-
national Development be abolished entirely along with its
permanent missions abroad. In its place, a new and much
smaller agency would be created which would function as
something in the nature of a "clearing house". The new
/agency
Reproduced at the Richard Nixon Presidential Library
-2-
agency would be largely administrative in function. It
would establish rosters of technical personnel across the
country who would be available on call for specific
projects abroad. In addition, the agency might maintain
a small directorial staff of technical personnel in such
fields as engineering, geology, banking, forestry, land
use, legal services, agronomy and other disciplines. The
agency would, when and as required, assemble teams composed
of diverse professional elements to travel to the recipient
country, either together or in phases, to accomplish a
specific goal.
The economic sections of our embassies abroad would
both stimulate and receive requests for assistance projects.
For this purpose, the economic sections might be augmented
to a limited degree. The emphasis in selecting projects
for implementation would be on a local (province, region)
approach rather than centered in the capital. Provincial
governors, town councils and, wherever possible, local
citizen groups would be encouraged to articulate their
needs and express preferences and priorities. These ideas
would be discussed with central government authorities
and would be subject to their final approval.
A "Total" Approach
The idea would be to approach assistance on a more
concentrated scale and at a horizontal level. Thus,
after appropriate consultation and discussion on both
local and central government levels, a region, province,
or other local subdivision with high-need priorities and
attainable goals would beselected for a project. The
project would encompass a number of diverse but coordinated
efforts. Thus, for example, efforts in irrigation, land
reform, development of local capital, improvement of local
roads, and establishment of local marketing cooperatives
might be combined in a single project. The team of
specialists would be assembled by the Washington agency
and sent to the field to work as a unit. At the same
time, the Washington agency would seek to coordinate.
financing among several sources, such as the IBRD, the
Export-Import Bank, the Inter-American Development Bank,
and private lending and investment sources in the United
States. Private American groups organized to stimulate in-
vestment abroad, such as ADELA in Lutin America, could be
/helpful
Reproduced at the Richard Nixon Presidential Library
-3-
holpful in this respect. The Washington agency would use
USG funds, where available and appropriate, as seed money.
The recipient country would be encouraged and perhaps
required to contribute come of its funds to the develop-
ment effort. Local private sources of capital would also
be encouraged to participate.
When a project was well on its way, the American
assistance team would be withdrawn with the exception of
certain technical personnel who might be required to
remain for a longer pedod of time to follow up.
Administrative responsibility for the completion of the
local project would lic at all times within the hands
of provincial and central government authorities in the
recipient country. Once the project concept was approved
in Washington, the details of implementation would be
left largely to authorities in the host country rather
than imposed from Washington.
Conclusion
It is suggested that this assistance concept reduces
delay, makes more sense in terms of accomplishment, and
costs less than the present aid program. It would probably
be more popular domestically and politically than the
present program because of its reduced cost, its emphasis
on local participation, and its use of non-public sources
of capital. It also has the virtue of getting American
specialists in and out of a country rather than main-
taining large administrative staffs abroad.
NOTE: If funds were to become available to continue
development assistance grants, perticularly on a regional
(multri-national) basis, financing and administration could
be handled by the Department of State.
L/NEA;RHNeuman:eg
7/29/68
Reproduced at the Richard Nixon Presidential Library
Dr. King Dr.
OFFICE OF THE PRESIDENT-ELECT
RICHARD M. NIXON
File-HID
WASHINGTON, D.C.
December 2, 1968
MEMORANDUM
TO:
BOB HALDEMAN
FROM:
JOHN WHITAKER
Please plug into RN's foreign aid task force the attached report
recommending organizational changes in the Agency for International
Development (A.I.D.)
This report was written by an A.I.D. man who, for protection, needs
to remain anonymous for the time being. He is extremely bright and
was referred to me by Bob Hampton, the Republican Civil Service
Commissioner. I think the report should be closely read and con-
sidered by RN's foreign aid task force, and I will be glad to
turn over the author's name should the task force people wish to
talk to him in more detail.
Iolus
JW:es
Enclosure
Reproduced at the Richard Nixon Presidential Library
November 14, 1968
A New Look at Foreign Aid Organization
This paper explores the present organization of A.I.D. and suggests
some alternative forms which could be considered by the new Administra-
tion.
Background
Foreign aid agencies have been organized in a variety of ways, including,
(a) an operating arm of the Department of State (TCA, 1950-53; ICA,
1955-61; and, A.I.D., 1961-69), (b) a semi-autonomous corporation (The
Institute for Inter-American Allies (IIAA), 1942-53 and the Development
Loan Fund, 1955-61), and (c) an independent agency (Economic Coopera-
tion Administration (ECA), 1948-51; Mutual Security Agency (MSA), 1951-
53; and, Foreign Operations Administration (FOA), 1953-55).
Organization Within the Department of State
The present organization of A.I.D. within the Department of State stems
from efforts many years ago to improve the coordination of foreign
policy by placing as many foreign civilian programs as possible under
the direct control of the Secretary of State. As a result, A.I.D.,
the Peace Corps and the Arms Control and Disarmament Agency (ACDA) are
located within the Department of State. The control of these operating
programs by the State Department has clearly been achieved. The sole
exception is the Peace Corps which has enjoyed a large measure of
independence due primarily to the personality of its first Director and
his close relationship with the President. A.I.D. and ACDA have become
relatively docile operating Bureaus which have adopted much of the
Department of State organization, procedures, and attitudes. In theory,
the agencies report to the Secretary of State. In fact, there are a
variety of administrative mechanisms (integration in the field, joint
administrative support, back-to-back arrangements and direct infusion of
FSO's at the executive level) which have provided control by lower
echelons of the State Department. Many A.I.D. executives find themselves
working directly or indirectly for parallel units of the Department of
State.
A significant result of this location has been the gradual disintegra-
tion of the independence and creativity of the A.I.D. agency itself.
A comparison with the creative period of ECA--MSA under the Truman
Administration and FOA under the Eisenhower Administration with the
relatively unimaginative foreign aid operations under Department of
State control since 1955, clearly demonstrates the loss of: agency
identity; top caliber, imaginative leadership; and creative programming.
Few new ideas emerge in a climate in which management success is
measured by adjustment and adaptation to the Department of State rules
and policies.
Corporate Form
Two attempts to organize foreign assistance efforts as development
corporations had modest success. IIAA from 1942-53 pursued a quietly
Reproduced at the Richard Nixon Presidential Library
2
effective Latin American program which pioneered in new program concepts,
most notable was the Servicio which established the basis for subsequent
successful technical assistance programs in that region. The Development
Loan Fund was founded upon the concept of a business-like corporation
making loans from a Washington office with no overseas staff. It was
thought that this objective would be more palatable to the Congress than
the traditional foreign aid approach.
The failure of the DLF to achieve significant program gains was due
more to the shallowness of its essential purpose than to any inherent
defects in the corporate approach. The flexibility achieved through
the corporate form of organization (revolving fund, freedom from GAO
restrictions, freedom from administrative appropriations) suggests that
serious consideration be given to the establishment of some form of
corporation as an authority for any new foreign aid effort. DLF experi-
ence suggests that it would be a mistake, however, to assume or to give
the impression that foreign aid can or should be run as a profit making
business. Foreign aid is an essential element of foreign policy.
Economic and technical assistance rank with military and political programs,
psychological and intelligence operations as key mechanisms for achieving
world security and peace. The pay off from foreign aid is not in repaid
loans, friendship or votes, but in the successful achievement of political
and economic independence in the Free World and the maintenance of world
peace.
Independent Agency Form
A foreign aid program organized as an independent agency has, by any
criteria, an opportunity to develop the greatest degree of creativity,
flexibility and dynamic leadership. Two names of past Directors of foreign
aid programs stand out: Paul Hoffman and Harold Stassen. These men, of
national stature, attracted to them outstanding creative leaders who
made ECA and FOA the most important operating civilian arms of foreign
policy in the entire period from 1942-69. Hoffman headed the Marshall
Plan which successfully demonstrated for the first time what foreign
aid could accomplish, not only in rebuilding war-ravished economies
and in successful resistence to Communist threat, but also in estab-
lishing inter-European cooperation--laying the ground work for the
political and economic institutions which have for 20 years formed the
basis for much of the current peace and progress in western Europe.
FOA under Harold Stassen created for the first time the concept of
major economic development programs in undeveloped countries, revamping
small scale operations under TCA and IIAA into major successful operating
programs like those in Korea, Taiwan, Turkey, Iran, Israel and Brazil.
Stassen showed, through the FOA mechanism, what could be accomplished in
undeveloped countries--given necessary resources, technical assistance
and imaginative leadership.
Reproduced at the Richard Nixon Presidential Library
3
Deficiencies of Foreign Assistance Programs Today
Any new look at organization should consider the status of the program
at the present time. These shortcomings stand out:
A. Lack of high level dynamic leadership, agency identity and
independence, largely stemming from the organizational status
of the program. One direct result is low morale and uninspired
performance.
B. Lack of definitive program goals and a sense of priority and
urgency. Gone are the days when the program had such goals as
restoring pre-war European production levels in 4 years, eradi-
cating malaria from the face of the globe in 5 years, establishing
a common market arrangement within 4 years, achieving X percent
annual growth rate in certain countries within the next decade.
Instead, A.I.D.'s congressional presentation has relied on such
concepts today as: "the smallest and tightest foreign aid
program ever,' "full repayment on loans with interest," "94% of
foreign aid funds spent in the U. S. for American products, and
"rapid elimination of country programs and reduction of technical
assistance staff levels."
While these are good business-like statements they are hardly
significant justifications for a foreign assistance program nor
can they be used to establish a sense of program goals and
priorities to generate the enthusiasm of agency staff, foreign
governments, the Congress or the American public. Yet, the world
problems which require American foreign aid are real and urgent
and cry out for solution. In many areas, U. S. security and
world peace is threatened and foreign assistance is one of the
most important techniques available to solve these problems.
The agency must become goal-oriented. This lethargy has conveyed
itself to the Congress and the general public.
C. Congressional relations of A.I.D. are among the worst in
Washington. The absence of clear-cut goals is partially responsi-
ble. A comparison of the congressional programs in DOD,
Agriculture and NASA with those of the 13 man Congressional
Liaison Staff in A.I.D. clearly show the low priority assigned
to this function in this agency. The results of this low priority
speak for themselves.
D. Neglect of the private enterprise community. A.I.D. programs
benefit both foreign and U. S. enterprise but such benefits
are bi-products of economic and technical assistance rather than
a principle objective. This should be changed.
E. Lack of a domestic constituency. Unlike other international
programs such as the Peace Corps, United Nations, Red Cross, etc.
A.I.D. has not mobilized the tremendous resources of the American
Reproduced at the Richard Nixon Presidential Library
4
public in support of its overseas policies and operations.
There are in the business community, universities, foundations,
and the general public, literally millions of Americans who
are concerned with some aspect of foreign aid and who would
willingly support it and lobby for it if they are given a
opportunity actively to participate in policy discussions and
operations.
F. Triumph of staff units over line management. Without meaningful
goals and priorities, staff units whose concerns are budgets,
ceilings, procedures, systems and central controls have gained
dominance over line offices concerned with programs and projects.
Proposed Organization
The question of how a foreign aid program is to be organized in the new
Administration turns on the purpose for which the new President wishes
to use this vehicle. If the prime objective of the Nixon Administration
is to strengthen the Secretary of State in his role as coordinator of
foreign policy and to insure that the U. S. speaks with one voice on
foreign policy matters, then the locus of foreign aid should be within
and subservient to the Department of State. If, on the other hand, foreign
aid is to have a dynamic role as a tool of foreign policy it must be
organized so as to attract top-level executives from business, industry,
academic communities and foundations as well as from the Federal government.
It must have a free creative opportunity to develop its own procedures
and policies, without the need to live within an old-line bureaucracy.
This suggests the creation of an independent agency reporting directly
to the President.
The assumption in this paper is that President Nixon will opt for an
independent program headed by a leader of national stature who will be
personally subordinate to the Secretary of State in policy guidance, but
will retain organizational independence in procedures and operations.
It is useful to explore how such a change would effect the operations of
the agency and what the differences would be from current operations.
Field Organization
ECA and FOA Missions were independent operating units which attracted
major figures as Mission directors. Forceful, on the whole, and dynamic--
they often disagreed with Ambassadors. They produced hundreds of new
ideas and approaches, many of them unpopular with Department of State
authorities in Washington and abroad. Yet, they represented the only
strong creative period in foreign aid history. Since 1955, the stature
and influence of the Mission Director has been gradually whittled away.
One by one Missions have been integrated with the embassy, had their
administrative staffs stripped from them as economy moves, or been inte-
grated at the top through joint diplomatic titles for the senior executives.
As a result, the A.I.D. Mission has often become the responsibility of
Reproduced at the Richard Nixon Presidential Library
5
officers several steps away from the Ambassador, rather than the concern
of the top men. With a few exceptions, it has been increasingly difficult
to obtain men of stature for the top jobs.
A new revitalized foreign aid effort suggests a new approach to field
organization: namely, in each country where there is to be a foreign
aid mission that mission should be headed by a strong executive,
responsible only to the foreign aid agency (subject to coordination by
the Ambassador, of course). To get and keep such men, the Missions
should be self-contained:- their own separate planning, operating
and administrative staffs-rather than sharing their functions with
embassy units, which today usually have preference in priorities.
The small additional costs of this administrative independence will be
more than offset by the gains in dynamic leadership and agency esprit and
effectiveness.
Washington Organization
The same principles apply in Washington. For twelve years the A.I.D.
agency had its headquarters in the Miatico Building on Connecticut
Avenue. Its transfer to the Department of State Building in 1960 was
marked by a significant decline in Agency identity. As second class
citizens in the State Department Building, A.I.D. units are geographically
dispersed to be near State units. Directories of senior executives in the
corridors list State executives but do not list A.I.D. executives of
comparable or higher rank.
If the agency is to be independent, therefore, a physical move from the
New State building is imperative. The agency should be regrouped in
some location where it could all be together. Rosslyn Plaza or Crystal
City are two areas with sufficient office space available to house the
entire foreign aid effort in contiguous space.
Regional Organization
During their history, foreign assistance agencies have alternated between
geographic and functional approaches to organization. The current
regional set up was developed in 1961 by the Gant Task Force. The self-
contained region is probably the most important organizational "plus" to
emerge in foreign aid history. The regions have worked well. They have
provided a measure of priority to individual country programs. Regional
Administrators have at their command self-contained resources of personnel,
commodities, contracts and funds sufficient to enable them to make decisions
and get things done directly without going "cap in hand" to central
functional sources.
In the last two years, A.I.D. has diluted the regional approach by
creating a fifth region (Vietnam), gradually stripping the authority
from existing regions, and by creating back-to-back arrangements with
regions of the Department of State. This last arrangement, in the case
Reproduced at the Richard Nixon Presidential Library
6
of Latin America, gave it some independence from central A.I.D. authority,
but in the process, weakened the A.I.D. structure considerably at the
same time.
A new strengthened foreign aid agency would suggest that a return be
made to strong line regions with decentralized authority. The number
of regions should be cut to 3 which will provide not only an economical
use of resources but more effective management. The Regional Director
could then be held responsible for success or failure in a major region
of the world.
Regional organization should be accompanied by a new emphasis on develop-
ment of regional institutions among nations abroad. A key reason for
the success of the Marshall Plan in Europe was the creation of a score
of regional institutions (coal-steel community, OEEC, the inter-European
clearing house, the common market and many NATO units--to mention a few)
which have flourished during and since the Marshall Plan period and
resulted in achieving not only developmental goals but also in furthering
cooperation and world peace. The new independent foreign aid agency should
be pushing hard to foster similar efforts in Latin America, Asia, Pacific,
Near East and Africa.
Personnel System
Critics have deplored the lack of a career service for the foreign aid
program. A comparison of that with the Department of State or USIA is
unflattering to A.I.D. There is a serious question, however, whether
the dynamic goals of the foreign aid program could be accomplished by
a stable career group such as that which operates the diplomatic service.
Successful economic and technical assistance requires a constant input
of ideas and skills from unitersities, the American business community,
local government and other sources. This could not come from a strictly
career service. For this reason, the current flexible A.I.D. personnel
legislation seems better suited to the program demands of foreign aid than
the system of the Department of State. This is not to say that some
improvement in foreign aid Foreign Service personnel authorities are not
clearly required. The program needs:
A. Authority to appoint Foreign Service personnel for initial
service in Washington without limitation.
B. Full conversion between Foreign Service and GS at all
levels, without restriction.
C. A more liberal retirement program, similar to that of
Foreign Service officers.
What Should Be Done
During the last few months, the foreign aid effort has sunk to its
lowest point in twenty years: out of favor with the Congress, its
Reproduced at the Richard Nixon Presidential Library
7
appropriation cut to an all time low, and the morale of its personnel
severely strained by reduction-in-force and downgradings in Washington
and program and staff cuts abroad. With the sole exception of the
Vietnam program, A.I.D. has failed to attract new leadership or new
ideas for the last 4 or 5 years for a program which could and should
be a vital part of U. S. foreign policy. A.I.D. appears to be on its
last leg.
A fresh approach to foreign aid under the Nixon Administration with a
new independent agency headed by a leader of national stature should
include the following concepts:
1. A major effort to improve relations with the Congress through
a new Congressional Liaison Staff prepared to provide congressional
service equal to the best in any agency in Washington.
2. The development of quanitative program goals and a sense of
urgency. Urgent world problems cry out for solution: in India,
Vietnam, Indonesia and Brazil massive problems of population,
hunger, land reform, education and health, which cannot be
solved by the efforts of the indigenous people alone, menace
world peace and U. S. security. The U. S. has not only a world
responsibility but a selfish interest in acting speedily and
effectively to strengthen these countries before it is too late.
Foreign aid must be planned and programmed as if the sands of
time were running out, because they are. A forceful program
with definite goals would appeal to the Congress and the American
public much more than the present uninspired effort.
3. A new approach to the building of public support for U. S.
foreign assistance programs through a strong people-to-people
program which would include mobilization of voluntary and non-
profit groups, exchange programs, participant training, establishment
of bridges of understanding between local, county and state
governments and similar groups in the U. S. allied nations
abroad. Funds should be made available for exchange programs
for secondary schools and universities, to provide health
services, and public administration assistance. We must get
the American public involved in foreign aid.
4. A fresh approach to the problems of building free enterprise
abroad. Already the differences between free enterprise economies
such as Taiwan, Korea, Iran and Turkey and socialist states such
as India, Pakistan, Indonesia and Burma have clearly demonstrated
the value to the underdeveloped world of tempering state planning
with a freer rein for private creativity. The U. S. should not
stand aloof from this issue. Time is running out.
5. A strengthening of "line" leadership over "staff" by decentralizing
operating authority to three strong regional directors. These
regions could be Latin America, Near East, Africa, Asia and
Reproduced at the Richard Nixon Presidential Library
8
Pacific. These regional directors would have complete control
over their programs, Foreign Service and GS personnel, procure-
ment, contracting and training; program and funding approval.
At the same time, there should be a professionalization of
administrative support units such as financial, personnel,
management and program services by staffing them with experienced
personnel who have made their disciplines a career rather than
with Foreign Service officers who consider such assignments as
temporary interruptions to career progress in a Foreign Service
career.
The regional approach in A.I.D. organization should be supported
abroad by the attempt to strengthen and utilize regional organi-
zation of recipient countries such as ASPAC and the OAS.
6. Reduction in Washington staff. There are today, almost as many
personnel in Washington as are stationed abroad. With the new
agency a vigorous effort must be made to reduce numbers to at
least 2,700 in Washington.
Implementing Mechanism
A new agency could be established within sixty days in the new Administra-
tion by issuance by the President of a new reorganization plan, and the
appointment of a leader of national stature to head it.
Reproduced at the Richard Nixon Presidential Library
OFFICE OF
DIRECTOR
THE GENERAL
EXSEC
COUNSEL
DEPUTY DIRECTOR
ASSISTANT
ASSISTANT
ASSISTANT
ASSISTANT
ASSISTANT
ASSISTANT
DIRECTOR FOR
DIRECTOR FOR
DIRECTOR FOR
DIRECTOR FOR
DIRECTOR FOR
DIRECTOR FOR
PROGRAM
PROGRAM
PERSONNEL
FINANCE
MANAGEMENT
CONGRESSIONAL
SERVICES
COORDINATION
LIAISON
ASSOCIATE
ASSOCIATE
DIRECTOR
DIRECTOR
FOR
FOR
PEOPLE-TO-PEOPLE
PRIVATE
ENTERPRISE
REGIONAL DIRECTOR
REGIONAL DIRECTOR
REGIONAL DIRECTOR
FOR
FOR
FOR
THE NEAR EAST & AFRICA
LATIN AMERICA
ASIA AND THE PACIFIC
FRAUN
Reproduced at the Richard Nixon Presidential Library