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1, a little before, so I am going to have to ask you and the remaining five witnesses to limit yourselves to about 5 minutes.

Mr. CATCHINGS. Thank you very much.

DISTURBING TRENDS IN OUR FOREIGN ASSISTANCE PROGRAM

Mr. Chairman, I would like at the outset of this presentation to point out that some of us who are deeply committed supporters of U.S. assistance to less-developed countries are today seriously disturbed by two trends which are apparent in our foreign assistance efforts.

The first is that the amount of funds which we have authorized for foreign assistance to less-developed countries has year by year steadily decreased. Once near the top of the heap reduced appropriations for foreign aid now puts the United States in seventh place among the aidgiving countries.

The second trend about which we are concerned is that we have almost imperceptibly drifted into a position of justifying our foreign assistance programs by the degree to which they aid the U.S. economy. When we pioneered economic assistance some 20 years ago, the aid was in outright grants. But today we have moved from loans to hardened loans to decreasing loans, and the situation does not seem to be improving.

When we look at these two trends together, they appear to suggest that we are seeking to get the largest possible return to our economy from the smallest possible investment in foreign assistance.

Now these trends in our foreign relationships to the developing countries are presently being seen by leaders in some of these countries as new forms of exploitation, and that if they are to help their countries develop, they must find ways to meet this difficult situation in the United States.

We call upon Congress and the administration to reverse this trend. The U.S. foreign assistance program runs a risk of becoming identified as a program of foreign assistance to the United States. It is urgent that this trend be reversed. In the light of the seriousness of this situation we commend Mr. Nixon in his efforts to go beyond the practical reasons for the foreign aid program and to emphasize, as he does, in his foreign aid message the moral responsibility of the United States for the alleviation of world poverty.

SEVERAL COMMENTS ABOUT PROGRAM

Now, to comment on a few items which we have listed in detail in the statement, we feel this year that the line must be held on the amounts requested, and that the appropriations must not be decreased.

We feel that terms should be made softer with reference to the borrowing countries. We feel that there should be some relaxation on restrictions in procurement.

It has been mentioned that 98 percent of the goods made available to the developing countries this year come from U.S. businesses when, in fact, these developing countries can purchase some of these commodities in their own countries or in nearby less-developed countries at cheaper costs.

We, of course, support the increased multilateral participation, and the forward move on population planning and food production.

We would like especially to comment on the new Office of Private Investment and say that as we guarantee the investments of U.S. businesses in the less-developed countries, we also work out criteria whereby this investment will not result in immense and massive profits to the expense of the countries which are receiving that help.

We also would like to mention especially that more creative ways be found for involving nonprofit organizations, labor unions, cooperatives, savings and loan associations, credit unions, educational groups, church mission and service groups, and other voluntary activities.

It is our hope that a high priority be given to finding ways in which to involve these groups more effectively in the development process. In fact we have thought of the possibility of an office being created in the aid agency which would administer the relationship program with the voluntary agencies.

Senator PELL. Thank you very much. Are you about through now? Mr. CATCHINGS. I have more information for you, but if your time does not allow you to take it

Senator PELL. It will be in the record in full.

Mr. CATCHINGS. It is in full in the record, that is correct.
Senator PELL. Yes; it will be.

Mr. CATCHINGS. Yes.

Senator PELL. Thank you very much, Mr. Catchings.

(Mr. Catchings' full statement follows:)

STATEMENT OF THE REV. L. MAYNARD CATCHINGS REPRESENTING THE COUNCIL FOR CHRISTIAN SOCIAL ACTION OF THE UNITED CHURCH OF CHRIST

Mr. Chairman, members of the Committee: My name is L. Maynard Catchings. I appear here on behalf of the Council for Christian Social Action of the United Church of Christ. With the Council of Christian Social Action, I am serving as Director of its program in International Development. During my course of service in this work, I have had opportunity to see first hand the work of our Mission Boards and our government in East Africa and in Zambia. Subsequently I have observed the work of these agencies and that of Church World Service in Peru and Ecuador. Prior to joining the Council for Christian Social Action (CCSA), I served as director of Guidance and Assistant Headmaster for the Singapore American School in Singapore. For five years prior to that I was fraternal secretary to the YMCA's of Malaysia and Singapore during which time I conducted training institutes in some six Southeast Asian countries. It was also during this period that I served as a consultant to the Ministry of Education of the Republic of Singapore in regard to educational guidance programs.

The Council for Christian Social Action (CCSA) which I represent here today is an official agency of the United Church of Christ. It has a governing board of 27 men and women who are elected by the General Synod of the denomination. The United Church of Christ of which the Council for Christian Social Action is an integral part was formed in 1957 by the merger of the General Council of the Congregational Christian Churches and the Evangelical and Reformed Church. Its current membership is more than two million persons. While I do not presume to speak for everyone of our churches or every one of our members, I have based my statement upon resolutions formally voted by the General Synod of the denomination.

International Development has been a concern of the U.C.C. for some time. In 1966 it opened the first church office to focus primarily on issues pertaining to international development. In June of 1967, the General Synod of the U.C.C. adopted a position statement entitled "Justice and International Development". This statement includes a twelve-point program on development and has been shared with members of this Committee.

In our recent General Synod meeting held last month in Boston, Massachusetts, a resolution was passed expressing our continued concern for issues of hunger, population and world development. We see poverty at home and abroad as being opposite sides of the same coin; both require our attention. As the General Synod

stated: "It would be the utmost folly to preserve in this country an island of light while the world is plunged into a growing sea of darkness because of increasing hunger, poverty, racial tensions and war". This resolution of June 28 is appended to this statement for your information.

Mr. Chairman and members of the Committee: I would like at the outset of this presentation to point out that some of us who are deeply committed supporters of U.S.A. assistance to the less developed countries are today seriously disturbed by two trends which are apparent in our foreign assistance efforts: The first is that the amount of funds which we have authorized for foreign assistance to less developed countries has, year by year, steadily decreased. Once near the top of the heap, reduced appropriations for foreign assistance now puts the U.S.A. in 7th place among aid-giving countries. The GNP of the U.S. has grown rapidly and is now greater than the GNP's of the three next most wealthy countries. Under the Marshall plan (1948 to 1953) the U.S. gave two percent of its GNP as economic grants for European reconstruction. The United States in 1967 was providing only 0.3 percent to all of Asia, Africa and Latin America.

The second trend about which we are concerned is that we have almost imperceptibly drifted into a position of justifying our foreign assistance programs by the degree to which they aid the U.S. economy. When the U.S. pioneered economic assistance some twenty years ago, most of the aid was in outright grants. Increasingly the U.S. has emphasized loans over grants in the transfer of capital to underdeveloped countries. Also, the terms for these loans have progressively been "hardened". Today, the accumulation of loans under "tightened terms" to some developing countries is so large that concern is being caused over their ability to pay the interest charges without crippling their development efforts. Beginning in 1959 in order to improve the U.S. balance of payments, we began to limit our policy of world wide procurement which was an advantage to the less developed countries. Today, A.I.D. dollars are spent almost entirely in the U.S.A. for the purchase of materials, equipment and other products of our labor and industry. It is expected that 98 percent of AID funds will this year be spent in the U.S.A. even when some of the products could be purchased in the less developed countries at cheaper costs.

When we look at these two trends together, they appear to suggest that we are seeking to get the largest possible return from the smallest possible investment. These trends in our foreign assistance relationships to the developing countries are being seen by some leaders in the less developed countries as signs of new forms of exploitation that they must face if they are to receive American help in the economic and social development of their countries.

Unless Congress and the Administration are able to reverse these trends, the U.S. foreign assistance program runs the risk of becoming identified as a program of "foreign assistance to the U.S.A." It is urgent that these trends be reversed. In the light of the seriousness of this situation we commend Mr. Nixon in his efforts to go beyond the practical reasons for a foreign aid program and to emphasize as he does in his Foreign Aid Message, the moral responsibility of the U.S.A. for the alleviation of world poverty.

We note with appreciation that in keeping with the Javits amendment to the Foreign Assistance Act, the President is establishing a national task force of private citizens to make a comprehensive review of the entire range of U.S. A.I.D. activities. While the report of this task force will be the basis for the Administration's formulation of next year's foreign asistance program, we feel that reform and corrections in the AID program should be instigated at once. We stress this because we know there may be a temptation on the part of some to attempt few changes this year as forces are marshalled for new programs which the task force may recommend for next year. This we feel would be unrealistic. Efforts must be made now to reverse downward and inward trends, thus changing the atmosphere for this review. It is imperative that we achieve a level of actual appropriations that establishes an upward trend from last year's all-time low. That we carry on aggressively the programs that have shown real success and which it would be unconscionably costly to neglect at this time and that there be creative suggestions of some new approaches and programs to indicate we are making progress in finding new ways to tackle these complex problems.

We would therefore like to make the following comments regarding ways in which we feel the present bill can be strengthened:

1. Hold the Line on Amount of Funds Requested

The funds requested will fall far short of the most conservative estimates of the real needs and absorptive capacity of the less developed countries. It would be

disastrous if further attempts during consideration of this bill or in the appropriation process to cut these funds were not effectively forestalled.

2. Soften Terms of Loans

Hardening of terms across the board that took place last year is unrealistic and self-defeating in face of the serious debt service problems of many countries and the attendant resentments that are being engendered.

We feel that steps should be taken at this time to soften the terms at least to those prevailing in 1967.

3. Relax Restrictions on A.I.D. Procurement in Less Developed Countries

Tying of aid funds often results in uneconomic use of resources and again is a cause for misunderstandings and resentment. Balance of payment problems may make a change in procurement policies regarding developed countries difficult to make in the near future, until monetary reforms or more acceptable formulae for handling this matter are developed. However, in the meantime, there should be a relaxation of these restrictions on procurement from local sources and purchases made from other less developed countries. Such a step would help to enlarge the markets of these countries and would in many cases pay much higher development dividends than other forms of resource transfers.

4. Increase Multilateral Participation

We are quite sympathetic to the aim of drawing other advanced nations into the development effort especially to the extent that we set an example by our own increased participation in other multilateral programs and organizations. We must remember, however, that if we are to be taken seriously in this attempt, it will mean an increase in our own total commitment as we now rank seventh in the percentage of income going for such purposes. We must also recognize frankly the continuing need for bilateral programs.

5. Move Ahead on Food and Family Planning Programs

The amazing breakthroughs in agricultural development in many parts of the world is heartening to all who believe that with technology and hard work and will, the battle against world poverty and world hunger can be won. It is important not to let down in our efforts at this time but to press for increased application of the successful methods as well as preparing for the next steps in new research, marketing, storage, distribution, etc.

We realize that the food problem as well as many others cannot be substantially alleviated until there is more progress in the field of population planning. We must press for expanded planning in this field. However, we must be realistic about the time and the other factors involved in bringing about such basic changes in human attitudes and behavior. We must not assume that population programs can compensate for the lack of efforts aimed at other economic and social problems.

6. Separate Development from Political Objectives

The concentration on helping those nations who demonstrate the will to help themselves is a recognition of the fact that development is indeed a serious business in that it requires hard work, specific goals and responsible behavior if efforts are to be successful. This does require real commitment on the part of recipient countries but it also means that the donor must behave with the same singleness of purpose. They must not confuse the things that are required for long term development purposes with those that offer only short term political advantage.

7. Provide Channels for Increased Participation of Peoples of Developing Countries in Development Process

Participation on the part of people in any country is a prerequisite for real progress. If the deep seated sociological and political changes necessary for selfsustaining progress are to occur, it will require a much more meaningful and broader participation of the people in the developing nations in the planning and execution of development programs as well as sharing in the benefits to be desired. This means listening to the peoples in their countries, through government contact, and through people-to-people programs as well. It means giving them freedom to make decisions, perhaps mistakes, in order to achieve the greater goal of self reliance. It means taking a new look at some of the governments with which we deal to determine whether or not steps toward achieving full participation of their peoples are really being implemented.

8. Create a Realistic Attitude Toward Technical Assistance Programs

We are encouraged to see the recognition of our technical assistance programs and especially the increase in funds and the request for the two year authorization of funds that will help give them greater continuity. However, much of the effectiveness of the technical assistance depends on the somewhat more costly development of both economic and human infrastructures and we must not fool ourselves into thinking that even improved technical assistance can be really effective if there is to be a continuing erosion of the development loan funds available on concessionary terms for these purposes.

The importance of having not only adequately trained technical personnel but also those who are well versed in the anthropological, sociological and political aspects of the countries in which they serve cannot be overemphasized. The proposed Technical Assistance bureau may be a good step in helping to create a more professional atmosphere to attract more such people but great care must be taken to see that this "professionalizing" does not lead to isolation from the practical problems involved in the funding and the implementation of specific projects and programs.

9. Strengthen Aspects of Overseas Private Investment Programs To Make Them More Effective and More Responsive To Development Needs

At best we know that it will be a long time before government resources are adequate to fill the need for economic development and we recognize that private enterprise can play a useful role in filling this gap. (1) It can be an effective way of transferring management skills of which most developing countries have a great shortage; (2) it can provide for the increase in employment opportunities so desperately needed in developing countries; (3) Outside investment can sometimes help stabilize business conditions to the extent that local capital will be invested at home rather than abroad; and (4) it is often true that sometimes assistance given on an outright businesslike basis is better understood and accepted than when undetermined political strings are involved, as is unfortunately the case in many government programs.

It has been claimed that private investment overseas corporations can be a more effective business-like approach to promoting this kind of activity.

We feel that it is indeed possible that such a Corporation can be useful in helping to relate more closely to the businessman, inspire his confidence, and draw him into the dialogue on development; it can encourage his natural pride in the transfer of business skills and expertise while offering the expert assistance necessary to help him to adjust to new cultures and attitudes and ways of doing things and to learn to cooperate with often complex government requirements, and thus be a great help in eliminating many of the causes of misunderstanding and conflict. Such a corporation can also help channel private investment funds to projects that meet real development needs but still meet necessary criteria for success-recognizing that in all cases activity should be limited to areas in which the developing countries request help. By granting investors, by means of guarantee and insurance programs, a measure of security it can thereby make exorbitant profits and excessive or abrasive demands for concessions less necessary. Yet there needs to be some method of assuring that this will actually be the case.

If provision for such a corporation is to be included in a foreign assistance bill the purpose of which is to further the economic development of other countries, it is imperative that there be enough control of general policy to see that the foregoing development objectives are carried out and that there can be no cause for accusation that the program is designed only as a boon to U.S. business interests.

We would call for a very careful review of the details of these proposals by the Committee with these questions in mind.

10. Find More Creative Ways for Involving Non-Profit Organizations, Labor Unions, Cooperatives, Savings and Loan Associations, Credit Unions, Educational Groups, Church Missions and Service Groups, and the other Voluntary Agencies in Development Programs

Investment funds are not the only or perhaps the most important asset of our private sector that can be called upon to assist in the development process. Organizations such as those listed above can make a very real contribution by way of their particular organizational skills and experience in working with people or in particular situations overseas, although by their nature they do not have the funds for investment or to finance sizable programs.

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