Latest Word on Foreign Economic Aid
from LWV National Office
Congressional support for foreign economic aid has been deteriorating steadily all summer. House action on August 23, when the bill was extensively amended arid the ceiling on appropriations for some programs was lowered by $585 million, proves the point. Two of the House cuts drastically affect programs supported by the League of Women Voters: the Development Loan Fund was reduced by $160 million from the $1,060 billion requested by the President; and the Alliance for Progress request was reduced by $150 million from the $600 million request. (The other cuts made by the House were in military assistance funds reduced by $225 million, and in the President's contingency fund, a cut of $50M)
The Senate will have an opportunity to restore these cuts either in the Senate Foreign Relations Committee or on the Senate floor, where debate is expected to begin about October 1.
The deterioration of congressional sUpport can be countered by the public support which we know exists. Many people are not aware of the facts about foreign aid. Misinformation and distortion about the size of the program, and amount of funds that have been spent have been widely publicized.
This is a time when quantities of reasonable letters to the Senate are sorely needed, to counteract the large quantity of unfavorable mail that is being received in every office. Mail from the business community, much of which has a real financial stake in these programs, is especially needed. Letters on business letterheads are read carefully in congressional offices.
Remember, we are still working for the authorization of funds, and that the appropriation battle is yet to come, probably as soon as the authorization has gone through a house-Senate conference and been approved again by both houses.
WHAT THE HOUSE CUT WOULD MEAN TO ECONOMIC AID
An analysis of the potential effects of the House cuts, made by the State Department and AID, was given to the press by David Bell, AID Administrator in an interview August 29. These are some of the things he had to say: The reduction in funds for the Alliance for Progress would come at a time when the Alliance is 'beginning to roll," and requirements for the program are rising. The funds the House proposes granting would not only be inadequate to meet the real needs but the reduction would be a severe psychological blow to the Alliance.
"We have, all of us," he said, "been thinking of the Alliance as a strong, steady, long *term effort...intended to run for ten years, and we have been stressing throughout the 'necessity to look ahead and plan and make commitments, and we have been saying 'if you will do that, we will be there when you need us.'...Under this House cut we could not be there when they need us."
On development loans apart from Latin America he said: "We have major multi-year programs under way under international consortiums where our pledges have been related to those of other countries with respect to four countries: India, Pakistan, Turkey and Nigeria. The planned programs for those four countries would require more than 80% of the funds that would be available under the (louse action. These programs would have to be trimmed, obviously, if this cut actually were sustained. But they would be exceptionally difficult to trim and in consequence the major effect of the cut would fall on other countries."
These other countries fall into two categories: new nations in Africa, where our lending program is small but important both to U.S. policy and to the borrowing country; and some other countries which are doing so well that the U.S. is almost ready to phase out economic aid program, i.e. Greece, Israel, Taiwan.
Mr. Bell said that some of those who voted for the cuts may have thought that the cuts would assist the U.S. balance of payments position, but if so they were in error. The appropriations for the programs cut are spent entirely in the U.S....In consequence the cuts would not reduce the U.S. payments deficit, but would only reduce U.S. exports.
He commented on the talk in Congress about the so-called pipeline... about 66.9 billion for military and economic assistance, as of June 30. "These funds," he said, "were committed to projects in previous years. They are not available to be committed to new projects and have no bearing on the requirements that would be met by the appropriations the President asked Congress for this year."
He also commented on some of the amendments adopted by the House:
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the requirement that the minimum interest rates on development loans be 2%. "If we were running a commercial enterprise this would of course be an entirely appropriate conception. But we are seeking to advance U.S. interests in some situations which we are trying to help... We tailor our interest rates to the situation of the country we are trying to help... In the last few months we have raised rated for Greece, Israel, Taiwan and some other countries... But to put a 2% floor under our interest rates would hurt a number of significant countries which have very low foreign exchange earnings..."
A second amendment adopted by the House called for cutting off aid to countries which do not sign bilateral agreements with the U.S permitting us to provide investment guarantees under our law against expropriation. There are only a few countries which do not sign such guarantees. These are countries where pressure from us to sign such an agreement would probably lead to internal political pressures against such agreements on the ground that we were trying to coerce them into signing. He thought such a provision in the aid legislation would not achieve the objective sought and would not be effective.
NOW IS THE TIME FOR ACTION
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