Special Message to the Congress on the Foreign Assistance Programs: "To Build the Peace."

To the Congress of the United States:

Peace will never be secure so long as:

--Seven out of ten people on earth cannot read or write;

--Tens of millions of people each day-most of them children--are maimed and stunted by malnutrition.

--Diseases long conquered by science still ravage cities and villages around the world.

If most men can look forward to nothing more than a lifetime of backbreaking toil which only preserves their misery, violence will always beckon, freedom will ever be under siege.

It is only when peace offers hope for a better life that it attracts the hundreds of millions around the world who live in the shadow of despair.

Twenty years ago America resolved to lead the world against the destructive power of man's oldest enemies. We declared war on the hunger, the ignorance, the disease, and the hopelessness which breed violence in human affairs.

We knew then that the job would take many years. We knew then that many trials and many disappointments would test our will.

But we also knew that, in the long run, a single ray of hope--a school, a road, a hybrid seed, a vaccination--can do more to build the peace and guard America from harm than guns and bombs.

This is the great truth upon which all our foreign aid programs are founded. It was valid in 1948 when we helped Greece and Turkey maintain their independence. It was valid in the early fifties when the Marshall Plan helped rebuild a ruined Western Europe into a showcase of freedom. It was valid in the sixties when we helped Taiwan and Iran and Israel take their places in the ranks of free nations able to defend their own independence and moving toward prosperity on their own.

The programs I propose today are as important and as essential to the security of this nation as our military defenses. Victory on the battlefield must be matched by victory in the peaceful struggles which shape men's minds.

In these fateful years, we must not falter. In these decisive times, we dare not fail.

NO RETREAT, NO WASTE

The foreign aid program for fiscal 1969 is designed to foster our fundamental American purpose: To help root out the causes of conflict and thus ensure our own security in a peaceful community of nations. For Fiscal 1969, I propose:

--An economic aid appropriation of $2.5 billion.

--A military grant aid appropriation of 420 million.

--New and separate legislation for foreign military sales.

--A five-year program to develop and manufacture low-cost protein additives from fish, to help avoid the tragic brain damage now inflicted on millions of children because of malnutrition in their early years.

--That the United States join with other nations to expand the International Development Association, the devdopment-lending affiliate of the World Bank. For every two dollars the United States contributes, other nations will contribute three dollars.

--That the Congress authorize a contribution to new Special Funds of the Asian Development Bank.

--Prompt appropriation of the annual contribution to the Fund for Special Operations of the Inter-American Development Bank.

--A further authorization and appropriation of callable funds for the Inter-American Development Bank to stand behind the Bank's borrowing in private money markets.

COMMON EFFORT FOR COMMON GOOD

I pledge to the Congress and to the people of America that these programs will be carried out with strict attention to the six basic principles of foreign aid administration we announced last year.

I. Self-Help

Self-help is the fundamental condition for all American aid. We will continue to insist on several dollars of local investment for every dollar of American investment. We will help those--and only those--who help themselves. We will not tolerate waste and mismanagement.

2. Multilateralism

This year, 90 percent of our AID loans will be made as part of international arrangements in which donors and recipients alike carry their fair shares of the common burden.

America now ranks fifth among donor countries in terms of the share of its national product devoted to official foreign aid. Japan increased her aid by nearly 50 percent last year. Germany has increased her aid budget despite fiscal restraints which have curtailed domestic welfare programs. Great Britain is maintaining aid levels despite severe financial problems. With the signing of the International Grains Agreement, other wealthy nations will for the first time be obligated to contribute food and money to the world-wide war on hunger.

This year we must take another important step to sustain those international institutions which build the peace.

The International Development Association, the World Bank's concessional lending affiliate is almost without funds. Discussions to provide the needed capital and balance of payments safeguards are now underway. We hope that these talks will soon result in agreements among the wealthy nations of the world to continue the critical work of the Association in the developing countries. The Administration will transmit specific legislation promptly upon completion of these discussions. I urge the Congress to give it full support.

3. Regionalism

Last year I joined with the Latin American Presidents to renew, reaffirm and redirect the Alliance for Progress.

The nations of free Asia began a general survey of their joint transportation and education needs, while work proceeded on projects to bring power, water and the other tools of progress to all.

The African Development Bank, financed entirely by Africans, opened its doors and made its first loan.

The coming year will present three major opportunities for the United States to add new momentum to these regional efforts:

A. The Inter-American Development Bank.

This Bank stands at the center of the Alliance for Progress. Last year, the Congress authorized three annual contributions of $300 million each to the Bank's Fund for Special Operations. The second of these contributions should be appropriated this year.

The Ordinary Capital of the Bank, which comes mainly from sales of its bonds in the private market, must now be expanded. Since 1960, we have appropriated $612 million which is kept in the U.S. Treasury to guarantee these bonds. Not one dollar of this money has ever been spent, but this guarantee has enabled the bank to raise $612 million from private sources for worthy projects. We must extend this proud record. I urge the Congress to authorize $412 million in callable funds, of which $206 million will be needed this year.

B. The Asian Development Bank. This Bank has asked the United States, Japan, and other donors to help establish Special Funds for projects of regional significance--in agriculture, education, transportation and other fields. Last October I requested that the Congress authorize a United States contribution of up to $200 million. This would be paid over a four year period--only if it were a minority share of the total fund, and if it did not adversely affect our balance of payments. I urge that the Congress take prompt and favorable action on this request.

C. The African Development Bank. This Bank has also asked for our help to establish a small Special Fund for projects which cannot or should not be financed through the Bank's Ordinary Capital. We must stand ready to provide our fair share, with full safeguards for our balance of payments.

4. Priority for Agriculture and Population Planning

Victory in the war on hunger is as important to every human being as any achievement in the history of mankind.

The report of 100 experts assembled last year by the President's Science Advisory Committee on the World Food Supply rings with grim clarity. Their message is clear: The world has entered a food-population crisis. Unless the rich and the poor nations join in a long-range, innovative effort unprecedented in human affairs, this crisis will reach disastrous proportions by the mid-1980's.

That Report also reminded us that more food production is not enough. People must have the money to buy food. They must have jobs and homes and schools and rising incomes. Agricultural development must go hand-in-hand with general economic growth.

AID programs are designed both to stimulate general economic growth and to give first priority to agriculture. In India, for instance, about half of all AID-financed imports this year will consist of fertilizer and other agricultural supplies.

We have made a good start:

--India is harvesting the largest grain crop in her history. Fertilizer use has doubled in the past two years. Last year five million acres were planted with new high yield wheat seeds. By 1970 this will increase to 32 million acres.

--Brazil, with AID help, has developed a new grass which has already added 400,000 acres of new pastureland and increased her annual output of beef by 20,000 metric tons.

--The Philippines is expecting a record rice crop this year which will eliminate the need to import rice.

In the year ahead, AID will increase its investment in agriculture to about $800 million-50 percent of its total development aid. In addition, I will shortly propose an extension of the Food for Freedom program to provide emergency food assistance to stave off disaster while hungry countries build their own food production.

We must also tap the vast storehouse of food in the oceans which cover three-fourths of the earth's surface. I have directed the Administrator of the Agency for International Development and the Secretary of the Interior to launch a five-year program to:

--Perfect low-cost commercial processes for the production of Fish Protein Concentrate.

--Develop new protein-rich products that will fit in a variety of local diets.

--Encourage private investment in Fish Protein Concentrate production and marketing, as well as better fishing methods.

--Use this new product in our Food for Freedom program to fortify the diets of children and nursing mothers.

But food is only one side of the equation. If populations continue to grow at the present rate, we are only postponing disaster not preventing it.

In 1961 only two developing countries had programs to reduce birth rates. In 1967 there were 26.

As late as 1963, this government was spending less than $2 million to help family planning efforts abroad. In 1968, we will commit $35 million and additional amounts of local currency will be committed. In 1969 we expect to do even more.

Family planning is a family matter. The United States will not undertake to tell any government or any parent how and to what extent population must be limited.

But neither we nor our friends in the developing world can ignore the stark fact that the success of development efforts depends upon the balance between population and food and other resources. No government can escape this truth. The United States stands ready to help those governments that recognize it and move to deal with it.

5. Balance of Payments Protection

Our ability to pursue our responsibilities at home and abroad rests on the strength of the dollar. Economic aid now helps--not hurts--our balance of payments position.

In 1963, the dollar outflow from foreign aid expenditures was over $600 million. Last year it was down to $270 million. I have already directed that even this figure be reduced in 1968 to less than $170 million. More than nine dollars of every ten dollars AID spends will buy American goods and services.

And the repayments of prior loans will more than offset the small outflow from new loans.

Moreover, our AID programs have a favorable long range impact on our balance of payments by building new markets for our exports.

6. Efficient Administration

Over the past few years AID has reduced by twenty percent the number of U.S. employees serving overseas in posts other than Vietnam. Last month I directed a ten percent reduction in the number of employees overseas in all civilian agencies. In addition, AID is further improving and streamlining its over-all operations.

A CREATIVE PARTNERSHIP WITH FREE ENTERPRISE

Foreign aid must be much more than government aid. Private enterprise has a critical role. Last year:

--All 50 states exported American products financed by AID.

--The International Executive Service Corps operated 300 projects in which experienced American businessmen counseled local executives.

--Nearly 3,000 American scientists and engineers shared their know-how with developing countries under the auspices of VITA Corporation, a private, U.S. non-profit organization.

--More than 120 American colleges and universities contributed to AID technical assistance programs.

--Thirty-three American states supported development work in 14 Latin American countries under AID's Partners of the Alliance program.

All of these efforts will be sustained and expanded in the coming year. We are committed to maximum encouragement of private investment in and assistance to the developing countries. We shall remain so.

A YEAR OF OPPORTUNITY, A YEAR OF RISK

LATIN AMERICA

I propose appropriations of $625 million for the Alliance for Progress.

The American Presidents met at Punta del Este last spring to reaffirm a partnership which has already produced six years of accomplishment:

--The nations of Latin America have invested more than $115 billion, compared with $7.7 billion in American aid.

--Their tax revenues have increased by 30 percent.

--Their gross national product has risen by 30 percent.

A new course was charted for that partnership in the years ahead. At Punta del Este, the American nations agreed to move toward economic integration. They set new targets for improvements in agriculture, in health, and in education. They moved to bring the blessings of modern technology to all the citizens of our Hemisphere.

Now we must do our part. Some nations, such as Venezuela, have progressed to the point where they no longer require AID loans. More than two-thirds of our aid will be concentrated in Brazil, Chile, Colombia and Central America. Each has done much to deserve our help:

--Brazil increased food production by 10% in 1967 and achieved an overall real economic growth of 5%. Inflation was cut from 40% in 1966 to 25% in 1967.

--Chile, under President Frei's Revolution in Freedom, has launched a strong program of agricultural and land reforms, while maintaining an overall growth rate of about 5%.

--Colombia has also averaged 5% growth while undertaking difficult financial and social reforms.

--Central America leads the way toward the economic integration so important to the future of Latin America. Trade among these countries has grown by 450% in the six years of the Alliance-from $30 million in 1961 to $172 million in 1967.

This peaceful Alliance holds the hopes of a Hemisphere. We have a clear responsibility to do our share. Our partners have an equally clear responsibility to do theirs. We must press forward together toward mutual security and economic development for all our people.

NEAR EAST AND SOUTH ASIA

I recommend $706 million for the Near East and South Asia.

Half the people we seek to help live in India, Pakistan and Turkey. The fate of freedom in the world rests heavily on the fortunes of these three countries.

Each is engaged in a powerful effort to fight poverty, to grow more and better food, and to control population. If they succeed, and in so doing prove the effectiveness of free institutions, the lesson will be heard and heeded around the world.

This is a year of special importance for all three countries.

India

India has survived two successive years of the worst drought of this century. Even as she fought to save her people from starvation, she prepared for the day when the monsoon rains would return to normal. That day has come. India is now harvesting the greatest grain crop in her history. With this crop, India can begin a dramatic recovery which could lay the groundwork for sustained growth.

India must have the foreign exchange to take advantage of this year of opportunity. A farmer cannot use the miracle seed which would double or triple his yield unless he can get twice as much fertilizer as he used for the old seeds. A fertilizer distributor cannot sell that much more fertilizer unless it can be imported. An importer cannot buy it unless he can get foreign exchange from the Government. India will not have that foreign exchange unless the wealthy countries of the world are willing to lend it in sufficient quantities at reasonable terms.

This is the crux of the matter. If we and other wealthy countries can provide the loans, we have much to look forward to. If we cannot, history will rightly label us penny-wise and pound-foolish.

Pakistan

Pakistan, though also plagued by drought, has continued its excellent progress of the past few years. Her development budget has been increased. Her military budget has been reduced. Agricultural production is growing faster than population. Private investment has exceeded expectations.

Now the Government of Pakistan has undertaken further steps to reform its economic policies--to free up its economy and give more play to the market. These reforms are acts of wisdom and courage, but they require foreign exchange to back them up. Pakistan deserves our help.

Turkey

Turkey's economic record is outstanding. Her gross national product has grown an average of six percent annually since 1962. Industrial output has grown nine percent per year. Food production is growing much faster than population growth.

Turkey's own savings now finance some 90 percent of her gross investment. Difficult problems remain, but we may now realistically look forward to the day--in the early 1970's--when Turkey will no longer require AID's help.

AFRICA

I recommend $179 million for Africa.

Just one year ago, I informed the Congress of a shift in emphasis in our aid policy for Africa. We moved promptly to put it into effect:

--There will be 21 U.S. bilateral programs in Africa in Fiscal 1969, compared to 35 last year.

--Most of our bilateral programs will be phased out in eleven more countries in the following year.

--Expanded regional and international projects will meet the development needs of the countries where bilateral aid is ended.

The past year has provided further evidence that this support for regional economic institutions and projects is a sensible approach to Africa's problems. It expands markets. It encourages economies of scale. It gives meaningful evidence of our concern and interest in African development.

This is not a policy of withdrawal from Africa. It is a policy of concentration and of maximum encouragement of regional cooperation. A continent of 250 million people has set out with determination on the long road to development. We intend to help them.

VIETNAM

I recommend a program of $480 million to carry forward our economic assistance effort in Vietnam. This effort will be intensified by the need to restore and reconstruct the cities and towns attacked in recent days.

Defense of Vietnam requires more than success on the battlefield. The people of Vietnam are building the economic and social base to preserve the independence we are helping them to defend.

Since 1965, when galloping inflation loomed and continuity of government was repeatedly destroyed, the people of Vietnam have achieved two major civil victories which rank with any gallantry in combat:

--They have written a Constitution and established representative local and national governments through free elections, despite a concerted campaign of terror, assassination and intimidation.

--Runaway inflation has been averted, and the foundation laid for a thriving economy, despite the enormous stresses of war.

But still the innocent victims of war and terrorism must be cared for; persistent inflationary pressures must continue to be controlled; and the many problems faced by a new government under wartime conditions must be overcome. The framework for economic and social progress has been established. We must help the Vietnamese people to build the institutions needed to make it work.

In the coming year, we will:

--Improve our assistance to refugees and civilian casualties. The wages of aggression are always paid in the blood and misery of the innocent. Our determination to resist aggression must be matched by our compassion for its helpless victims.

--Intensify agricultural programs aimed at increasing rice production by 50 percent in the next four years.

--Concentrate our educational effort toward the Government's goal of virtually universal elementary education by 1971.

--Stress, in our import programs, the key commodities needed for agricultural and industrial growth.

The rapid program expansion of the past two years--in dollars, people and diversity of activities--is ended. The emphasis in the coming year will be on concentration of resources on the most important current programs.

We will pursue these constructive programs in Vietnam with the same energy and determination with which we resist aggression. They are just as vital to our ultimate success.

EAST ASIA

I recommend $277 million for East Asia

For twenty years resistance to attack and subversion has been current and urgent bush ness for the nations of East Asia. The United States has helped to make this resistance effective. We must continue to do so, particularly in Laos and Thailand.

But this year the larger portion of our aid to East Asian countries will-be focused directly on the work of development. Asians know--as we do--that in the long run, economic, social and political development offer the best protection against subversion and attack. Despite communist pressure, they are getting on with the job. For example:

--For the last three years, the Korean economy has grown by a phenomenal 10 percent per year; domestic revenues have doubled since 1965; exports have grown tenfold in the last seven years. Population growth has fallen from 2.9 percent in 1962 to 2.5 percent today, and a strong national population program is contributing to further reductions. We are now able to plan for orderly reduction of U.S. economic aid as the capacity for self-support grows. Despite recent pressure from the North, the momentum and self-confidence of this gallant nation must be--and will be-maintained.

--Indonesia has stepped away from the brink of communist domination and economic chaos. She has undertaken the hard course of stabilization and rehabilitation and is moving toward development. She needs help from the U.S. and other donors, who are working together with the International Monetary Fund and the World Bank. It is overwhelmingly in our interest to provide it.

MILITARY ASSISTANCE PROGRAMS

I recommend $420 million for grant Military Assistance Programs under the Foreign Assistance Act.

More than three-quarters of our grant military assistance will support the military efforts of nations on the perimeter of the communist world and those nations where the U.S. maintains defense installations important to our own national security. These programs are a vital link in our own defense effort and an integral part of Free World collective security.

Elsewhere our programs focus on building the internal security necessary for lasting development progress.

Our aid--economic as well as military-must not reward nations which divert scarce resources to unnecessary military expenditures. More less-developed countries have resisted large expansion of military expenditures. Their military budgets have remained a small portion of national income. Their leaders have made politically difficult decisions to resist pressure to acquire large amounts of new and expensive weapons.

We must help them maintain this record and improve it. We will give great weight to efforts to keep military expenditures at minimum essential levels when considering a country's requests for economic aid.

In the coming year, we will work directly with the less-developed nations and examine our own programs, country-by-country, to deal more effectively with this problem. In addition, we will explore other approaches toward reducing the danger of arms races among less-developed countries.

Over the past several years, we have significantly reduced our grant military aid wherever possible. Where new equipment is essential, we have provided it more and more through cash and credit sales. I will submit separate legislation to authorize necessary military sales and provide for credit terms where justified.

Our military assistance programs will provide only what is needed for legitimate defense and internal security needs. We will do no more. We can afford to do no less.

Special Assistance to the Republic of Korea

The internal peace and order of this steadfast ally is once again threatened from the North.

These threats summon Korea to strengthen further her defenses and her capacity to deter aggression.

We must help.

I propose that Congress appropriate immediately an additional $100 million for military assistance to the Republic of Korea.

This can be accomplished within the authorizing legislation already enacted.

With this additional help, the Armed Forces of the Republic of Korea can gain new strength through the acquisition of aircraft and anti-aircraft equipment, naval radar, patrol craft, ammunition and other supplies.

AMERICA'S CHOICE

Foreign aid serves our national interest. It expresses our basic humanity. It may not always be popular, but it is right.

The peoples we seek to help are committed to change. This is an immutable fact of our time. The only questions are whether change will be peaceful or violent, whether it will liberate or enslave, whether it will build a community of free and prosperous nations or sentence the world to endless strife between rich and poor.

Foreign aid is the American answer to this question. It is a commitment to conscience as well as to country. It is a matter of national tradition as well as national security.

Last year some Americans forgot that tradition. My foreign aid request, already the smallest in history, was reduced by almost one-third.

The effects of that cut go much deeper than the fields which lie fallow, the factories not built, or the hospitals without modern equipment.

Our Ambassadors all over the developing world report the deep and searching questions they are being asked. Has America resigned her leadership of the cause of freedom? Has she abandoned to fate the weak and the striving who are depending on her help?

This Congress can give a resounding answer to these questions by enacting the full amount I have requested. I do not propose this as a partisan measure. I propose it as an extension of the humane statesmanship of both parties for more than twenty years.

I said in my State of the Union address that it is not America's resources that are being tested, but her will. This is nowhere more true than in the developing countries where our help is a crucial margin between peaceful change and violent disaster.

I urge the Congress to meet this test.

LYNDON B. JOHNSON

The White House

February 8, 1968