(The following information was later supplied :) U.N, RELIEF AND WORKS AGENCY FOR PALESTINE REFUGEES IN THE NEAR EAST (UNRWA) 1 Includes $2,000,000 special contribution for emergency needs arising from the Arab-Israel war of June 1967. * Estimated. Source: Report of the Commissioner General of the United Nations Relief and Works Agency for Palestine Refugees in the Near East, July 1, 1967-June 30, 1968. The CHAIRMAN. The Senator from Wyoming. PROGRESS MADE IN AID PROGRAM Senator MCGEE. Mr. Secretary, when we open hearings again for another year on the aid program, it leaves one with a sense that perhaps there belongs at the opening a recasting of the perspective of the changes that have occurred in aid. I think Dr. Hannah alluded to it a moment ago and I think it would be important that we put in the record here someone on your staff perhaps can supply it for the recordthe significant changes in policy, in dimensions, in limitations in the aid program during these 20, 25 years, because the reason for that ought to be obvious, that we started out, all of us, very critical or at least very questioning, and each year we have the bill up for consideration we make some more suggestions. We want it tightened up. We want this done or that done, and most of those suggestions have actually been accepted and are now in force. I just think once in a while we ought to remind ourselves how far we have come on this. We understandably have to focus on what is going wrong because we like to tighten that up too but in that kind of latter focus, I think we do lose sight of the very considerable progress. I wonder if somebody couldn't supply that. Secretary ROGERS. Yes. Thank you very much, Senator. I appreciate that opportunity. I think it is an excellent idea and we will have that provided for the record. (The following information was later submitted:) SIGNIFICANT CHANGES IN U.S. FOREIGN ECONOMIC ASSISTANCE PROGRAMS AND POLICIES Since the start of foreign economic assistance programs by the United States at the end of World War II, there have been several significant program and policy changes. In part, these changes have served to focus foreign assistance efforts on changing conditions and requirements. They also represent improvements in the way foreign assistance is provided. MARSHALL PLAN The overall goal of the Marshall Plan, started in 1948, was European economic recovery. The Marshall Plan grappled with the problems of national planning and 32-308-69 budgeting for functional countrywide objectives, other than for isolated inputs or outputs, and it was possible to construct a four-year aid budget in which costs and results were easily connected. However, the problems confronted by the European nations were quite different from those faced by the less developed nations. In contrast to the less developed countries, the European nations were technically sophisticated and economically advanced. Transportation and communications systems, financial institutions, industrial complexes and other basic infrastructure destroyed or disrupted during World War II needed only to be rebuilt and revitalized. POINT IV As the focus of aid shifted to the less developed countries of Asia, Latin America, and Africa, the simple provision of financial resources for equipment and raw materials was not adequate. In "Point IV" of his inaugural address in 1949, President Truman called for a new program of technical assistance to make "the benefits of our scientific and industrial progress available for the improvement and growth of underdeveloped countries." Carried out by the Technical Cooperation Administration, which was created in 1950, the "Point IV" program was based on the assumption that the technological gaps in the less developed countries could be quickly bridged through human resource development and that rapid overall economic development would follow. However, the different cultural backgrounds, widely divergent attitudes and diverse social, political and economic systems proved difficult to overcome. Visible progress was slow in coming in many places. Whereas problems were evaluated on a national basis during the Marshall Plan era, the Point IV program focused on the planning preparation and funding of as many worthwhile projects as possible. While numerous institutions were created which continue to flourish and contribute to development today, the selection of projects was not always based on major national priorities and long-range needs. Nor could these technical assistance measures overcome severe shortages of capital. It was gradually realized that longer-range and more comprehensive evaluation of overall resource requirements-human and financial-was essential to successful development. MUTUAL SECURITY PROGRAM The Korean War temporarily interrupted the gradual change in thinking on the development process. Our attention was quickly shifted to the security and stability of the countries rimming the communist world. Our assistance in these countries, which quickly became the primary recipients of financial capital, placed greater emphasis on increasing their immediate ability to participate in their own defense and less on their development. A limited number of such programs continue today, primarily in Southeast Asia. THE SHIFT TO DEVELOPMENT ASSISTANCE By the late 1950's U.S. assistance began to shift from short-term security objectives to the longer-term task of creating self-sustaining economies in the less developed countries. The role of Technical Assistance was expanded and improved under the International Cooperation Administration (ICA). The Development Loan Fund (DLF), set up in 1958, reflected recognition that financial aid, as well as technical assistance, was required by most of the poor countries. It sought to increase the availability of capital on terms and conditions which the poor countries could afford. But like Point IV, the DLF operated on the philosophy that good projects were enough to do the job. By the end of the decade, there was increasing evidence that the project approach to economic assistance was not adequate to respond to the total task of development. As those involved in both the developed and developing countries gained better understanding of the ways in which the investment, trade, fiscal and monetary problems as well as social and political problems-of a country all influence one another, it became increasingly apparent that isolated project investments alone would not remove some of the main obstacles to selfsustained growth. This firmer grasp of the nature of the development problem led to the country programming approach-the analysis of critical gaps and the planning of assistance in relation to each country's circumstances and overall development potential. Objectives, and the means of reaching those objectives, were determined in the context of each country's resourcs and prospects. The country programming approach was formally incorporated into the planning and programming of the International Cooperation Administration in fiscal 1959. It was further strengthened by the merger of the ICA and the DLF into the Agency for International Development in 1951. The basic tools of development-Technical Assistance and Development Loans were brought together to be administered in a coordinated fashion for the first time. During the period 1961-1968, A.I.D. refined and improved the "country programming" approach. Major policy innovations during this period, in considerable part through legislative action, included the following: 1. Recognition that self-help is the key to a nation's development, and increasing insistence on effective self-help measures as a condition for U.S. aid. 2. Greater focus on the social and economic problems of Latin America through the creation of the Alliance for Progress. 3. Use of production and sector loans as a means to induce improvements in overall fiscal and monetary policies of the recipient country, and greater emphasis on those sectors of the economy most critical to development. 4. Concentration of the bulk of U.S. assistance in a relatively few countries with the greatest potential for development. 5. Increasing use of multilateral aid channels through contributions to multilateral development banks and U.N. agencies, as well as greater coordination with such agencies through consortia and consultative groups. 6. Special emphasis on agriculture, education, and health and family planning. 7. Increasing efforts to assure broad popular participation in development, as emphasized by Title IX of the present Foreign Assistance Act. Policies relating to development assistance have been re-evaluated by the United States on numerous occasions to ensure responsiveness to the needs of the less developed countries and changing views in academic and government circles. Although major decisions on any further policy changes will not be forthcoming until the Task Force proposed by President Nixon has submitted its report early next year, the President has singled out for emphasis four areas at this time. They are: 1. Greater involvement of private enterprise-both in the U.S. and the recipient country-in the development process. Creation of an Overseas Private Investment Corporation to manage U.S. private investment-incentive programs on a businesslike basis. 2. Even greater use of multilateral aid channels, including a greatly expanded contribution to the U.N. Development Program in FY 1970. 3. Top priority focus of our resources-both manpower and financial-on the key problems of low food production and high population growth. 4. Emphasis on innovative use of Technical Assistance to remove critical bottlenecks to development resulting from a lack of the human and institutional capacity to make efficient use of external financial resources and mobilize a country's own natural and other resources. As the country programming approach has been refined and focused more sharply on areas of major policy concern, so too have the techniques of evaluation of requirements for particular types and levels of inputs to affect outputs and objectives been improved. However, despite previous and current efforts to accelerate the pace of development by improving country programming and concentrating our assistance in key sectors of countries with the best development prospects, a number of legislative restraints on economic analysis and consideration of alternatives increasingly limited effective allocation of A.I.D.'s resources. Among these are: Restrictions on the number of countries which may receive certain types of assistance and prohibitions on U.S. assistance to penalize less developed countries for various political or military actions. Increased cost of U.S. aid as a result of (a) higher interest rates on Development Loans, thus adding to growing debt servicing burdens of the less developed countries whose repayment abilities are best treated on a case-by-case basis, and (b) tying of aid to procurement from U.S. sources. While many of the legislative restrictions have reasonable purposes and may have been necessary to respond to specific problems at a given time, e.g., balance of payments, they also have significant costs in limiting the effectiveness of A.I.D. program analysis and achievement of development objectives. AID-BUILT ROAD IN IRAN Senator MCGEE. I remember in the very early days reading a disturbing article-perhaps not as disturbing as the Philippines article but a very nasty one-in the Readers' Digest, entitled, "The Road to Nowhere". And so far as I know the Readers' Digest never carried a follow-up article on it. But "The Road to Nowhere" was supposed to be a road built in Iran. It started up the side of the mountain and stopped, and it was a spectacle, enough of a spectacle, that it took a newsman there to write an article to sell to the Readers' Digest about it. Some 2 or 3 years ago several of us here not only went over that road but saw what it was doing, and not only did it carry out the possibilities now for a complete and pure water supply for all of the slope including Teheran, the largest single concentration of population, but it opened up the first direct contact over the mountain to the semitropical part of Iran. I would suppose it is one of the landmarks of constructive programing. But I use it to illustrate again the point that my colleagues have made that we tend to be caught up with our mistakes of the past, and lose sight of the gains. I would wish that the Readers' Digest, if I may say so bluntly, might even be willing to write a sequel to the first article, and follow through on the "Road to Nowhere," because it seems to me that too is part of the price we pay each year when we come up for new requests in the aid program. COUNTRIES NO LONGER RECEIVING AID That leads me then to ask if it would be possible to list all of the countries which have ever received aid and now are no longer on the aid program? I think that might be a useful capsule to inject here. In other words, to suggest that sometimes aid does end, and does meet its objectives. It is an important reminder to us at this stage, so if someone could supply that for the record it would be good. (The following material was later supplied :) COUNTRIES WHICH ONCE RECEIVED ECONOMIC ASSISTANCE BUT WHICH WILL NOT RECEIVE SUCH ASSISTANCE IN FY 1970 NONMILITARY AID TO SOUTHEAST ASIA I think one other inclusion might be made, I hate to be making so long a speech but I feel very strongly about our aid program and the abuse it takes. It does not have a constituency. I think it is a very meaningful program which is in our total interest in the world. What I am asking is that you take the countries of eastern Asia that have been recipients of American programs of one sort or another, and give us some kind of a profile of what their development has been in the way of economic growth since the end of World War II or since we have been involved in the area, leaving Vietnam alone. I think Vietnam has tended to focus or draw so much of our attention that we have tended to forget about the nonmilitary aid to other areas in eastern Asia. I think that in itself would be a useful inclusion for the record at the opening of these hearings. (The following information was later supplied :) ECONOMIC GROWTH OF EAST ASIA A.I.D. RECIPIENT COUNTRIES SINCE 1955 The attached table represents available information on the estimated average annual growth rates of the developing countries of East Asia which have been recipients of U.S. assistance. Of particular interest is the remarkable rate of economic growth of Korea and the Republic of China (Taiwan), the two largest recipients of U.S. aid in the region. The performance of their economies in recent years approximates that of Japan, the economic leader of the region. LARGEST FOREIGN AID CONTRIBUTORS FROM GNP STANDPOINT Senator MCGEE. The last thing I would ask from you is to list the other countries that Dr. Hannah referred to that are, if I understand you correctly, making a larger contribution to foreign aid in relation to their GNP than the United States. Dr. HANNAH. Yes. Senator MCGEE. You say we rank sixth? Dr. HANNAH. Correct. Senator MCGEE. That is not classified information, I am sure. List the identities of the first 10 countries in the order of their relative contribution. Dr. HANNAH. I will be glad to do it. |