Special Message to the Congress Proposing a U.S. Contribution to the "Special Funds" of the Asian Development Bank

To the Congress of the United States:

This generation of Americans knows the importance of 'peace in Asia.

Twice since 1950 we have fought for the right of small Asian nations to be free from coercion by their neighbors. In Vietnam this struggle continues. It will continue so long-and only so long--as aggression persists.

Yet lasting peace in Asia requires much more than resistance to armed aggression.

Peace will come to stay when despair gives way to hope--when insurrection gives way to peaceful opportunity--when hunger gives way to harvests.

Peace in Asia will rest on the citizen's trust--in his government, in his nation's economy, and, most of all, in his ability to improve the conditions of his life.

Asians must create this trust. Only they can decide to build the schools, the roads, the dams, and the clinics that provide the foundations of trust. Only they can decide to put aside their ancient differences and join in a common effort to improve the life of all.

There is good reason to believe that Asia has made that choice.

Hope is a living fact in the rugged hills of Korea, in the thriving cities of Thailand, and in the lush rice land of the Indonesian Archipelago.

Free Asia has determined to break the vise of poverty which has killed and maimed many more Asians than all the wars ever fought.

The nations of Asia are working together to provide more food, better housing, and more education for their growing numbers. They have given a clear signal to the world that they are ready to make the sacrifices progress demands. And they have asked for help.

These are the facts. They are established by the reports of Mr. Eugene Black, my Special Adviser on Asian Development. They are confirmed by the many Senators and Congressmen of both parties who joined in the founding of the Asian Bank.

Mr. Black has traveled widely in Asia in the past 30 months. He has talked with nearly every Asian leader. His careful judgment is that the hopeful signs in Asia are real.

With his help, we have begun the transition from American programs to build Asia to world programs to build Asia.

The Asian Bank was born out of the belief that international cooperation is not only possible and desirable, but absolutely necessary to the growth of freedom and prosperity in Asia. It united thirty-one nations, and distributed the financial burden of assisting Asia among them.

After consultation with Mr. Black, with senior officials of the United States Government and with many members of the Congress, I propose that we join with other nations to strengthen this international instrument of peace and progress.

I propose that the Congress authorize a United States contribution of up to $200 million to new Special Funds of the Asian Development Bank.

This authorization will not involve any budget expenditures in Fiscal 1968.

Our contribution would be made over four years, and would constitute a minority share of total contributions to the Special Funds.

This must not and will not be an American effort alone. The development of the most populous region of the earth affects every nation. It must be supported by all who are able to help.

Several leaders of the Congress and the Nation have urged that we transform the bulk of our foreign assistance from bilateral aid programs to multilateral, cooperative efforts where all the wealthy nations of the world join to help the developing nations through the World Bank, regional development associations, and other multilateral arrangements.

We look to the day when our foreign assistance can be handled under these arrangements.

The proposal I make today is a step in this direction. It is an example of multilateral assistance that we fervently hope will be followed increasingly in the years ahead in Asia and throughout the developing world.

THE PEACEFUL REVOLUTION IN ASIA

Free Asia has done more in the last two years to create a true community of interest among its peoples than in all the long centuries that went before. Here is part of that extraordinary record:

--Asian initiative founded the Asian Development Bank with assets of $1 billion, to finance development projects throughout the great arc from Afghanistan to Korea.

--Nine nations joined to form the Asian and Pacific Council, the first regular forum for discussion of the full range of Asian problems.

--The nations of Southeast Asia and Indonesia formed a sub-regional association to foster better understanding and economic cooperation.

--The Mekong Coordinating Committee and other existing agencies moved with new energy and urgency, producing such important projects as the Nam Ngum Dam in Laos.

Asians are gaining new insights into the needs of their region:

--The Asian Development Bank is sponsoring a comprehensive study of Asian agriculture which will identify the specific projects necessary to meet the food crisis of the next decade.

--The Southeast Asian Ministers of Education are planning regional centers of academic excellence, to open the way toward improved education, more broadly shared among their peoples.

--Led by Malaysia, representatives of eight Asian nations met last week to plan the transportation and communications networks Asia needs to achieve trade, travel and economic integration.

These are the beginnings of a peaceful revolution in Asia--a constructive revolution which serves not just the interests of the United States, but of all humanity.

It is a revolution which seeks to build, not to destroy; to succor, not to subvert.

But planning is only the first stage. Blueprints must become bricks and mortar.

Most of the money Asia needs must come from the Asians themselves. Some will come from the World Bank, from national aid programs, and from private sources. Some will come from the ordinary capital of the Asian Bank. But there remains a gap, particularly for projects in the most critical areas--agriculture, education, transportation and development of the Mekong River Basin.

It is that gap that I propose we help dose.

THE PRESIDENT

Experience in the World Bank and with regional development banks suggests that development finance requires two different and separate funds:

--Ordinary capital, largely to finance the foreign exchange costs of projects which have a relatively rapid and direct return on investment, and

--Special Funds, for longer-term loans at lower interest rates, to finance the foreign exchange costs of projects such as schools and roads which do not yield immediate financial returns, but which add powerfully to economic growth.

This is the investment structure of the World Bank and the Inter-American Development Bank. The 31 member nations of the Asian Development Bank have determined that it should also be the structure of their organization.

The Asian Bank now has subscriptions totalling $1 billion in ordinary capital. This appears sufficient for the foreseeable future.

Today's need is for Special Funds to complement the ordinary capital. Development cannot be limited to projects which can be financed at commercial interest rates. Where there are factories and power plants there must also be dependable all-weather roads, farm equipment, and clean water supplies. The Bank must be able to lend for these long-term, as well as for short-term, necessities.

The Government of Japan has already announced that it will contribute $100 million to these Special Funds, mainly to support projects in agriculture. The Government of Canada indicated its willingness to contribute at the Asian Bank's inaugural meeting. Other governments have contributions under consideration.

I propose that the United States pledge up to $200 million to be provided over four years, on the following conditions:

--The United States contribution must comprise less than one-half of the Special Funds. The Executive Branch would make every effort to assure that our share of total contributions is as modest as possible.

--Because of our balance of payments problem, our contributions must be available only for the purchase of United States goods and services for use in Asia.

--The Funds will be used only on the firm understanding that they will supplement, not supplant, the efforts of Asian nations to help themselves. Self-help will be the watchword in these programs, just as it is for all our foreign assistance.

This proposal would result in no cash disbursements during this fiscal year. Appropriations would be sought from the Congress as other contributors pledge their share to the Special Funds.

I believe this proposal represents our fair share.

I believe it protects our vital interests in Asia.

I believe it provides the American taxpayer with the assurance he demands, and deserves, that his money will be put to careful and productive use.

THE ASIAN FUTURE

It is hard for any of us to visualize the face of Asia in the decades ahead. Caught up in the trials and frustrations of the day, many people assume that the poor will always be poor, and that this new wave of Asian determination will falter and dissolve.

But Americans know what can be done with natural resources. We know that a single river can transform the lives of millions. Properly developed, it can provide food, jobs, and transport. It can be an avenue to the bounty of modern life.

What has worked here will work in Asia.

Flowing through Thailand, Laos, Vietnam, and Cambodia, the Mekong River drains an area 60% the size of the Missouri Basin. But only 8 1/2 million people live in the Missouri Basin. Thirty million draw their sustenance from the lands surrounding the Mekong. The Mekong's flow is eight times greater than the Missouri's, and its hydroelectric potential is two to three times as great.

Ten solid years of work have already gone into careful and comprehensive planning for the Mekong area. The Mekong Coordinating Committee, along with 23 donor nations and 18 United Nations agencies, have:

--invested $30 million in the most detailed study of the area.

--invested $70 million in three major projects which set the stage for full development of the region.

--identified 34 potential tributary dam sites and completed detailed studies on 11 of them.

--conducted feasibility studies on 3 of the 12 potential mainstream dam sites.

These are examples of the sound ideas and projects which will be financed by the Special Funds I propose today. They are the Asian equivalents of the Erie Canal, the Transcontinental Railroad, and the land grant college system which transformed our own society.

These are the productive works which build nations. They carry with them social progress as well as economic growth. Our decision to support them is a test of faith in our own vision. Meeting that test is as important to us as it is to Asia.

More than two years ago, when I first announced our willingness to respond to Asian initiatives, I said:

"I would hope that all other industrialized countries, including the Soviet Union, will join in this effort to replace despair with hope, and terror with progress. The task is nothing less than to enrich the hopes and the existence of more than a hundred million people. And there is much to be done."

Much has been done since then--more than we could reasonably have hoped. Thirty-one nations have joined to build a Bank and the nations of Free Asia have joined to strengthen a continent.

The task now is to capitalize on the progress of the past 3° months.

The Congress knows this record of progress. Its Members have been deeply involved in the birth and growth of the Asian Development Bank.

Now the question is whether the United States will join other nations to provide the Bank with a new dimension of productive effort in the basic areas of human need.

The United States knows many needs in this critical hour. Many worthy causes compete for our time, our attention, and our limited resources. In the last analysis, only the people's representatives in Congress can decide where the priorities lie.

I offer this proposal because I believe whatever we do to strengthen Asia, and to enable her people to achieve security and growth in the years ahead, is in our national interest-and thus deserves consideration among our national priorities. In that spirit and with that understanding, I urge its consideration by the Congress.

LYNDON B. JOHNSON

The White House

September 26, 1967