Special Message to the Congress on Foreign Aid.

To the Congress of the United States:

Twenty years ago, President Truman set forth the basic proposition underlying the foreign aid program when he told the Congress:

"I believe that we must assist free peoples to work out their own destinies in their own way. I believe that our help should be primarily through economic and financial aid which is essential to economic stability and orderly political processes."

This judgment was shared by Presidents Eisenhower and Kennedy and by every Congress since the 79th in 1946. It is my judgment today. I believe it is the judgment of most Americans.

Our commitment to assist the economic growth and security of developing nations is grounded in the hard realities of the postwar world. We know that want is the enemy of peace and hopelessness the mother of violence.

We know that:

--in the long run, the wealthy nations cannot survive as islands of abundance in a world of hunger, sickness and despair.

--the threat to our security posed by internal subversion and insurgency cannot be countered by withdrawal, isolation or indifference.

--men--acting together--have the power to shape their destiny. Around the world, from Mexico to Greece to Taiwan, we have seen the energy and determination of the emerging peoples transform our aid into the seeds of prosperity.

--abroad, as at home, the true national interest of the American people goes hand in hand with their sense of freedom, justice and compassion.

Precisely because foreign assistance programs are so vital to our national interest, they must reflect the circumstances of the late sixties, not those of the past. They must respond to the ideas which move men in the emerging nations today. They must draw upon the lessons of experience. They must take account of the growing wealth of other advanced countries.

The proposals in this message reflect the experience of our aid activities over two decades. They emphasize the six guiding principles on which our programs must be based:

1. Self-help--nations develop primarily through their own efforts. Our programs can only be supplements, not substitutes. This is the overriding principle.

2. Multilateralism--every advanced nation has a duty to contribute its share of the cost.

3. Regionalism--the future of many countries depends upon sound development of resources shared with their neighbors.

4. Agriculture, health and education-these key sectors are the critical elements of advancement everywhere in the underdeveloped world.

5. Balance of payments--we cannot help others grow unless the American dollar is strong and stable.

6. Efficient administration--every American citizen is entitled to know that his tax dollar is spent wisely.

NEW DIRECTIONS

To carry out these principles, I propose:

-- A new Foreign Assistance Act, stating in clear language our objectives, our standards, and our program techniques.

--A statutory National Advisory Committee on Self-Help, to advise the Congress, the President, the Secretary of State, and the AID Administrator on how effectively recipient nations are mobilizing their own resources under the self help criteria of the Act.

--A statutory objective that at least 85% of our development loan funds be spent in a regional or multilateral framework.

--More than $1 billion in programs to improve agriculture, education and health, a 25 percent increase over last year.

--A shift in emphasis in our aid policy in Africa, to concentrate our help increasingly on regional and multi-national projects.

--Sympathetic consideration of a U.S. contribution to a new special fund of the African Development Bank.

--A $200 million U.S. contribution to new special funds of the Asian Development Bank, in accord with the recommendations of the Black mission, headed by Mr. Eugene Black, my Special Representative on Asian Development.

--A reorganization of the Agency for International Development, to better carry on the War on Hunger and to promote private investment and the growth of private enterprise in the less-developed world.

My proposals for programs authorized by the Foreign Assistance Act in fiscal 1968 will require total appropriations of slightly over $3.1 billion. Of this, some $2.5 billion will be devoted to economic aid. Almost $600 million will be for military assistance. Funds for the regional development banks would be authorized by separate legislation.

THE FOREIGN ASSISTANCE ACT OF 1967

Foreign aid now rests on a legislative foundation enacted in 1961. This pathfinding statute has served the nation well. But the experience we have gathered over the past several years should now be codified in a new law.

I propose the Foreign Assistance Act of 1967.

This Act will contain a clear statement of the philosophy which underlies our programs and the criteria to be used in this Administration. To provide the continuity needed for sound management, it will contain authorizations covering two years. Most important, it will provide a framework for each of the basic thrusts of our aid policy.

1. Self-Help

Self-help is the lifeblood of economic development. No sustained progress is possible without it. Aid provided as a substitute is aid wasted.

Waste is a luxury none of us can afford. The only obligation tied to our aid is the recipient's obligation to itself--to mobilize its own resources as efficiently as possible. I will not ask any American citizen to contribute his tax dollars to support any country which does not meet this test.

Accordingly, the Act will make it dear that the development job is primarily the responsibility of the developing countries themselves. In no case will the United States undertake to do for any country what it should do for itself. Nor will we assist in any venture which we believe has received less than full support from the recipient country. The United States will insist on the general economic policies necessary to make our aid effective.

We are now applying strict and effective self-help standards. The results are evident in the fact that, on the average, each citizen in the major aid-receiving countries is saving one of every eight dollars he earns. These savings become investments. For every dollar the United States and other donors provide, these local sources invest ten dollars.

Still, there is an urgent need for a permanent, nonpartisan, public body to evaluate self-help performance.

Thus, the Act I propose will authorize the President to establish a National Advisory Committee on Self-Help. This Committee will consist of members from both parties, from the business community, from labor, from universities and from other walks of life. It will review and evaluate our aid programs in as many countries as it sees fit. It will examine our program to see whether the recipients are extending their best efforts and whether we are making the best possible use of our aid. Its findings will, be available to the Congress.

2. Multilateralism and Burden-Sharing Development is a world problem. No single country has all of the resources required. Equity demands that no single country be asked to carry the bulk of the load.

I propose that the Act set as an objective that 85% of our development loans be undertaken in a regional or multilateral frame work.

This action fits the trend of recent years, as advanced nations have increasingly accepted the responsibilities associated with their growing wealth. The combined value of our economic and food aid is less than seven-tenths of one percent of our national income, only slightly more than the average for all advanced countries. We devote smaller shares to foreign assistance than such countries as France and Belgium.

But these figures do not tell the whole story. Our defense expenditures far exceed those of all other free nations combined and serve their common interest. This burden too must be counted in the balance.

Thus, we must redouble our efforts to get other donors to enlarge their commitments.

3. Regionalism

Resources know no national boundaries. Rivers flow through many countries, transportation and communication networks serve different peoples, sources of electric power must be shared by neighbors. Economic advance in every part of the world has required joint enterprises to develop shared sources of wealth.

These facts underlie the growing movement toward regional cooperation:

--The Alliance for Progress has transformed the inter-American system of institutions into a reliable and dynamic engine of change.

--Asian initiatives have created the framework for cooperation of all kinds. Such institutions as the Asian and Pacific Council and the Asian Development Bank are clear evidence of the new will to press forward.

I propose that the Act state that the United States will encourage regional economic development to the maximum extent consistent with the economic and political realities in each region.

I propose three steps to carry out this policy: --First, in most African countries, we will gradually shift to cooperative .projects which involve more than one donor or more than one recipient.

--Second, we will seek an appropriate means of responding to the recent request of the African Development Bank for U.S. participation in a special fund to finance worthy projects which are beyond the means of the Bank's ordinary capital.

--Third, we will respond favorably to the request for special funds for the Asian Development Bank. Preliminary explorations suggest a U.S. share of $200 million, to be contributed over a number of years with matching arrangements and balance of payments safeguards.

These proposals spring from a philosophy of pragmatic regionalism. They reflect the facts of economic life.

Political unity is neither required nor expected. But the resources available for development are too scarce to scatter among many countries when greater promise lies in joint action. We must take full advantage of the benefits of cooperation.

4. Agriculture, Health and Education

The fundamentals of a decent life are sufficient food, freedom from disease, and an opportunity to absorb as much knowledge as individual capacities permit.

These are the first goals of all societies. They must be the first objects of our aid.

I Propose that the Act establish agriculture, health and education as our primary concerns and that investment in these areas be substantially expanded.

I propose that our investment in:

--agriculture rise from $504 million last year to $668 million in 1968.

--education rise from $166 million to $2:28 million.

--health rise from $192 million to $202 million.

In particular, we will wage War on Hunger. Together, the world must find ways to bring food production and population growth into balance. My proposals make clear our determination to help expand food supplies. We must be equally ready to assist countries which decide to undertake voluntarily population programs.

5. Balance of Payments

Our foreign assistance programs rest on the basic strength of the dollar and our balance of payments. This Administration will continue to see that our aid programs have the least possible adverse effect on our balance of payments.

Almost 90 percent of our economic assistance and over 95 percent of our military assistance is now spent in the United States. These programs serve to expand U.S. trade abroad. They help develop new trading patterns.

6. Efficient Administration

The Agency for International Development is a sound, well-run instrument of public policy. But, like all arms of government, AID can be improved. It can add further to its economy record--a record which includes $33 million in cost reduction last year alone, and a 20 percent cut in personnel-apart from Southeast Asia--since 1963. I am establishing two new offices in AID:

--An Office of the War on Hunger to consolidate all AID activities relating to hunger, population problems and nutrition.

--An Office of Private Resources to concentrate on marshalling private investment and the expansion of private sectors in the less-developed world--the best long-term route to rapid growth.

Both of these steps are consolidations-they will require no new appropriations or personnel. They will focus the attention and energy of the Agency directly upon two priority areas. They are significant steps forward.

ECONOMIC ASSISTANCE

LATIN AMERICA

For Latin America, I recommend an economic aid program of $624 million.

This amount is clearly justified by our own interests and the recent performance of our Latin American partners. The program I propose is lean and concentrated. Nearly 70 percent of it will be committed in four countries--Brazil, Colombia, Peru and Chile. In each case, we will make certain that the amount actually spent is in accord with clear needs and meets the strict self-help criteria of the Act.

The outlook for a solid return from these expenditures is promising: --Brazil shows greater economic dynamism than at any time in her recent history. She has forced inflation down from the 1964 high of 140 percent to 40 percent--still far too high, but an enormous improvement. Her balance of payments situation is well under control. Agricultural production has been increased. Per capita income is up. In general, the economic situation is more hopeful than the most favorable predictions of three years ago

--Peru continues its steady economic climb. Per capita income last year was $378, compared to $325 five years before. The critical job now is to bring more people into the economic mainstream, while further stimulating the developed coastal areas. U.S. contributions will be heavy in the areas of agriculture and education.

--In Chile, the favorable copper market will make possible a reduction in our aid. We will concentrate our help in the crucial rural area to increase agricultural production and exports.

--In Colombia, economic trends are also encouraging. Our contributions will be made through a group of donors led by the World Bank. We will concentrate on agriculture and education.

--Our program for Central America-Nicaragua, El Salvador, Guatemala, Costa Rica, and Honduras--is tailored to support the Central American Common Market. This Market is one of the most promising innovations in the developing world. The spirit it reflects has already increased trade within the Central America region by 400 percent over the past five years. We will make modest contributions to the Central American Integration Fund to continue and accelerate this pace.

--The balance of my request is largely for the Dominican Republic and Panama. It is essential that we maintain strong programs in these countries, although they will cost slightly less than in the past.

The vision and hard work of 450 million people in this hemisphere have made the Alliance for Progress into one of the great tools for human betterment. Its success is by no means assured. There will be disappointments as well as achievements along the way. But it is a vehicle for the hopes and energies of a continent. The program I propose will carry it forward.

Meetings among the governments of the Western Hemisphere during the year may produce further proposals, such as replenishment of the resources of the Inter-American Development Bank. Where these proposals merit our consideration and support and require action by the Congress, I will submit my recommendations to you at the appropriate time.

NEAR EAST-SOUTH ASIA

For the Near East-South Asia, I recommend a program of $758 million.

This region provides the harshest test of free institutions: --Nowhere else in the free world are there so many people: as many as the combined populations of North and South America and Western Europe.

--Nowhere else do so many people live in such dire poverty: per capita income for nine out of every ten persons is under $100 per year.

--Nowhere else are divisive forces so poised to take advantage of any misstep. Several advanced nations have banded together, under the leadership of the World Bank, to form an Aid Consortia for India and Pakistan. A similar group has been formed for Turkey, chaired by the Organization for Economic Cooperation and Development. These groups determine the share each member will contribute and provide a forum for continuing discussions with recipient countries. They have served the interests of all parties.

In my Message on Food for India, I proposed that food and related aid be added to the agenda of the consortium for India as an additional area of assistance in which all donors should join. We will exert the full extent of our influence to insure that this consortium becomes the primary vehicle for all aspects of development aid to India-from grants of funds to evaluation of performance.

Despite the shadow of famine and the ever present danger of renewed frictions, the situation in the three countries--India, Pakistan and Turkey--which will receive 91 percent of our aid to the Near East-South Asia gives reason for hope:

--India is trying to regain the lead in the race between her expanding population and her food supply. She plans to double her outlays for agriculture in the next five years and to quadruple her voluntary population program. India has increased fertilizer purchases by 85 percent and has started crash programs in farmland development. She has begun campaigns to increase supplies of better seeds and pesticides. But Indian performance is not confined to agriculture. In early 1966 she liberalized her system of import controls and devalued her currency. All advanced nations must come to her aid if these hard-won opportunities are to be realized.

--Pakistan has an outstanding economic record. Her future is brighter still. From 1960 to 1965, her Gross National Product grew at an average annual rate of 5.8 percent compared to 2.5 percent previously; agricultural production grew at an average annual rate of 3.5 percent compared to 1.6 percent previously; local private investment grew by 54 percent; and total private investment was 63 percent over planned targets.

--Turkey also has a remarkable record. We and other Western nations are determined to help Turkey meet its goal of self-sustaining economic growth by 1973. She is already well on her way. In -1966, her Gross National Product grew by 8.3 percent, industry by 9.5 percent, agricultural production by 11 percent, and the use of fertilizer by 40 percent. The percentage of children of school age enrolled in primary schools increased to almost 80 percent.

If it cannot be demonstrated that hard work, coupled with relatively modest amounts of our aid, will produce better lives for the countless millions of this region, our cause will surely fail. The programs I propose will enable us to continue meeting this challenge.

AFRICA

For Africa, I recommend a program of $195 million.

Africa is undergoing the historic growing pains of attaining stable independence. Thirty-five of her thirty-nine nations have gained their freedom since World War II, many in the past five years. The inevitable strains are evident in the headlines of the world's newspapers.

The most hopeful sign of growing African maturity is the increased support for cooperative economic enterprises. With 14 countries of less than 5 million people each, this attitude is essential for progress.

Our AID policy toward Africa will

--encourage the African activities of the World Bank and its affiliates.

--direct a greater part of our resources into projects and programs which involve more than one African country.

--seek new breakthroughs in private investment in Africa, particularly the current efforts by private American banks and other financial institutions.

EAST ASIA

For East Asia, I recommend a program of $ 812 million. East Asia, I recommend a program of $ 812 million.

Nearly 85 percent of our assistance to this region is directly or indirectly related to our effort to block Communist aggression.

My recent visit to Asia confirmed my deep conviction that foreign assistance funds for Vietnam and surrounding countries are just as important as military appropriations. They are vital to a successful war effort. They permit us to build for the future.

Most of these funds--about $650 million-will be used in Vietnam, Laos, and Thailand. The $550 million planned for Vietnam is indispensable to military success, economic stability and continued political progress. It will stimulate and support measures to bind the people and government of South Vietnam together in a common cause. It will help to begin the task of reconstruction and development. It will relieve war-time suffering for millions of Vietnamese.

In Laos and Thailand, these funds will finance economic development and security which will assure that armed conflict will not engulf all of Southeast Asia.

Our assistance to Thailand will be channelled through a new consultative group of thirteen donors, chaired by the World Bank. In Laos, five other countries will join the U.S. with significant contributions.

Elsewhere in free Asia, the tide of history clearly favors progress: --In Korea, the economy is now growing at the rapid annual rate of 8 percent. Industrial production is rising at a 14 percent rate annually, agricultural production at a 6 percent rate. In the few short years since the Korean War, the Republic of South Korea has become strong enough not only to maintain its internal advance, but to help in the defense of freedom in Vietnam.

--In Indonesia, the new government has committed itself to a program of economic rehabilitation and recovery. We are joining with other European and Asian nations to provide urgently needed help to the stricken Indonesian economy. We are also participating in arrangements with other nations to reschedule Indonesian debts.

The road ahead in East Asia is long and dangerous. But these accomplishments are hopeful signs. We will encourage the vital and progressive spirit that has stimulated them.

MILITARY ASSISTANCE

For military assistance, I recommend appropriations of $596 million.

This is the smallest request since the program began in 1950. In part, this fact reflects transfer of appropriations for military assistance for Laos, Thailand, NATO Infrastructure and international military headquarters to the budget of the Department of Defense.

But this request also represents a substantial reduction. Military assistance outside Southeast Asia is now only 45 percent of what it was in 1960.

For the Near East-South Asia, I recommend $234 million, down 50 percent from 1963. Virtually all this will be used in Greece, Turkey and Iran, three countries which have shared the burden of mutual security for twenty years.

For East Asia, I recommend $282 million, almost entirely for Korea and Taiwan. We will use these funds to strengthen these outposts against further Communist expansion in Asia.

For Latin America, I recommend $45.5 million, largely for internal security and training.

For Africa, I recommend $31 million, heavily concentrated in countries where we have major interests and where there are problems of internal security.

It is not the policy of the United States to provide sophisticated arms to countries which could better use their resources for more productive purposes.

It is the policy of the United States to help:

--where we are asked.

--where the threat of invasion or subversion is real.

--where the proposal is militarily and economically sound.

--where it is consistent with our interests and our limited means. This will continue to be our policy.

THE CHALLENGE AHEAD

The programs I propose represent the minimum contribution to mutual security and international development which we can safely make.

There are some who say that even this request should be foregone in view of needs at home and the costs of the struggle in Vietnam.

Nothing could be more short-sighted and self-defeating. This country--the wealthiest in human history--can well afford to devote less than seven-tenths of one percent of its national income to reduce the chances of future Vietnams.

Some would have us renege on our commitments to the developing countries on the ground that "charity begins at home."

To them, let me emphasize that I have recommended no charity, nor have I suggested that we stray from home. The inescapable lesson of our century, inscribed in blood on a hundred beaches from Normandy to. Vietnam, is that our home is this planet and our neighbors three billion strong.

Still others have grown weary of the long, hard struggle to bring the majority of the world's population out of the shadows of poverty and ignorance.

To them, let me say that we are dealing in decades with the residue of centuries. There is no shortcut. There is no easy way around. The only effective tools are ingenuity, capital and, above all, the will to succeed.

All of us sometimes find ourselves sympathizing with these complaints. All of us are subject to the frustrations, disappointments and shattered hopes which accompany a supporting role in a task which must fundamentally be performed by others. But, in the cold light of reason, our responsibility to ourselves and our children reasserts itself and we return to the task with renewed vigor.

I am confident that the American people have not lost the will and the dedication which have made them the most powerful and responsible nation on earth.

I am confident that they will go forward into the new era of world progress for which their past efforts have prepared the way.

I am confident that their vision will transcend the narrow horizons of those who yearn for a simpler age.

The proposals I offer today are the practical requirements of that vision. To do less would endanger all we have accomplished in the past two decades.

I know that this test shall not find us wanting.

LYNDON B. JOHNSON

The White House

February 9, 1967