Special Message to the Congress Transmitting Proposed Legislation for Funding of Foreign Assistance Programs in Fiscal Year 1975

To the Congress of the United States:

For more than twenty five years, America has generously provided foreign assistance to other nations, helping them to develop their economies, to meet the humanitarian needs of their people and to provide for their own defense.

During this era foreign aid has become an indispensable element of our foreign policy. Without it, America would risk isolating herself from responsible involvement in an international community upon which the survival of our own economic, social and political institutions rests. With the continuation of a healthy foreign aid program, this Nation can continue to lead world progress toward building a lasting structure of peace.

Now that we have ended the longest war in our history and no American troops are serving in combat for the first time in more than a decade, there is a temptation to turn inward, abandoning our aid programs and the critical needs facing many of our friends in the process.

We must not succumb to that temptation. If we lay down the burden now, we will foreclose the peaceful development of many of the nations of the world and leave them at the mercy of powerful forces, both economic and political. Moreover, we will deny ourselves one of the most useful tools we have for helping to shape peaceful relationships in the most turbulent areas of the world.

Many of the nations which were once dependent upon our direct assistance for their survival are now managing their own economic and defense needs without our aid. Those nations which still need our aid will not need it indefinitely. We expect those nations we help to help themselves. We have made it clear that we do not intend to be the world's policeman, that our aid is not a substitute for their self-reliance, and that we do not intend to do for others what they should be expected to do for themselves.

But as long as there are governments which seek to change the frontiers and institutions of other nations by force, the possibility of international conflict will continue to exist. And as long as millions of people lack food, housing, and jobs; starvation, social unrest and economic turmoil will threaten our common future.

Our long-range goal is to create an international environment in which tolerance and negotiation can replace aggression and subversion as preferred methods of settling international disputes. While this goal is not as distant as it once was, present circumstances do not now permit reduction in foreign assistance. We must not only maintain our efforts, but also make special efforts in two critical areas of the world--the Middle East and Indochina.

In the Middle East, we have an opportunity to achieve a significant breakthrough for world peace. Increased foreign aid will be a vital complement to our diplomacy in maintaining the momentum toward a negotiated settlement which will serve the interests of both Israel and the Arab nations.

In Indochina our assistance is no less critical. South Vietnam, Cambodia, and Laos are trying to make the difficult transition from war to peace. Their ability to meet their defense needs while laying the foundations for self-sustaining social and economic progress requires continued and substantial amounts of American aid.

To meet these continuing and special needs, I am proposing to the Congress a total foreign aid budget of $5.18 billion for fiscal year 1975. In my judgment, these amounts represent the minimum which the United States can prudently afford to invest if we are to maintain the present degree of international equilibrium and advance our efforts to construct a durable peace with prosperity.

TOWARD PEACE IN THE MIDDLE EAST

The hope for a lasting solution to the Arab-Israeli dispute is stronger today than at any time in the previous quarter century. American diplomatic initiatives have helped create the conditions necessary for an end to conflict and violence. While our diplomatic efforts must and will continue, there is already much that can be done to supplement and consolidate what has been achieved so far. I am therefore requesting a Special Assistance program for the Middle East, and have asked the Congress to provide the following:

--For Israel: $50 million in security supporting assistance and $300 million in military credit sales. Israel's continued ability to defend herself reduces the prospect of new conflict in the Middle East, and we must continue to assist her in maintaining that ability.

--For Egypt: $250 million in supporting assistance. These funds would be used for the tasks which come with peace: clearing the Suez Canal, repairing the damage in adjacent areas, and restoring Egyptian trade.

--For Jordan: $100 million in military assistance grants, $77.5 million in security supporting assistance, and $30 million in military credit sales. Jordan has been a moderating force in the Arab world and these funds will enable her to maintain a position of moderation and independence which will be crucial to a permanent settlement in the area.

--For a Special Requirements Fund: $100 million. This fund will be used for new needs that may arise as the outlines of a peaceful settlement take shape, including provision for peacekeeping forces, refugee aid or settlement, and development projects.

All of this aid will contribute to the confidence these nations must have in the United States and in their own security if they are to have the base from which to negotiate a lasting settlement. It will strengthen moderate forces in an area where only moderation can form the basis for a settlement acceptable to all.

TOWARD RECONSTRUCTION OF INDOCHINA

Another area of acute and continuing concern to this Government is Southeast Asia. Our aid in Indochina is no less crucial than our aid in the Middle East in achieving a peaceful outcome which protects our interests and reflects our past involvement in these two areas. I am asking the Congress to authorize the appropriation of $939.8 million to assist South Vietnam, Cambodia and Laos in their efforts to shift their economies from war to peace and to accelerate the reconstitution of their societies.

We have already invested heavily in these countries. Progress has been significant, and we are nearing success in our efforts to assist them in becoming self-sufficient. Although our total request is higher than last year, the budget I am proposing is actually austere. We must recognize that a modest increase in economic assistance now will permit the development of viable, self-supporting economies with lower requirements for assistance within a few years.

The South Vietnamese face an unusually difficult task in reconstructing their economy and caring for their war-torn population even as the effort to end hostilities goes forward. Progress in reconstruction, economic development and humanitarian programs, which offer the hope of a better life for the people them, should make it clear that a peaceful settlement of political disputes is in the interest of all.

This year and next the South Vietnamese face several related challenges which make increased U.S. economic assistance essential:

--They must resettle more than a million refugees and displaced persons.

--They must provide the investments needed to create productive jobs for the several hundred thousand who have lost jobs with the withdrawal of U.S. forces.

--They must meet the much higher costs of such essential imports as fertilizer and other critical resources caused by worldwide inflation.

--They must provide for the orphans, the disabled, and for widows who can never recover their wartime losses.

--They must continue to support the military forces needed to preserve movement toward peace so long as hostile forces continue to be deployed within South Vietnam and supported from outside.

The South Vietnamese have made laudable efforts to solve their own problems. They have increased their taxes--a 40 percent increase in real terms in 1973. They have expanded their exports, which were virtually eliminated by the war-doubling exports in 1972 and again in 1973. They have sharply reduced the consumption of imported goods, including a notable reduction in petroleum. But after more than a decade of war, they cannot reconstruct their economy and their society alone. Increased U.S. assistance is needed now to support the increasing efforts of the Vietnamese to achieve peace and self-sufficiency as soon as possible.

In Laos, a peaceful political solution to the conflict is in motion and the people there can finally look forward to a secure and stable environment. The problems of resettling refugees and establishing a viable economy, however, will provide a major test of the Laotian government's ability to work in the interests of all. Our continued assistance is essential to permit this underdeveloped, land-locked country to reconstruct its economy after so many years of war.

Continued U.S. assistance is also essential to alleviate the hardships facing the Cambodian people, many of them refugees with little opportunity to support themselves until hostilities subside.

The investment I am now seeking--an investment to sustain the peace, to overcome the human suffering resulting from the war, and to give the people of Indochina a chance to stand on their own feet--is small in comparison with what we have committed over the years in Indochina. But the potential return on this investment is large in enhancing the prospect of peace both in Indochina and around the world.

DEVELOPMENT ASSISTANCE

U.S. assistance programs---both bilateral and multilateral--have made a very substantial contribution to the economic growth of the developing nations over the past decade.

In spite of encouraging progress, it is estimated that 40 percent of the total population in all the developing countries still remain trapped in conditions of poverty beyond the reach of the market economy. These people continue to exist below minimal levels of nutrition, literacy, and health.

It is clear that in the modern world, peace and poverty cannot easily endure side by side. In the long term, we must have peace without privation, or we may not have a durable peace at all. All that we have worked, and fought, and sacrificed to achieve will be in jeopardy as long as hunger, illiteracy, disease, and poverty are the permanent condition of 40 percent of the populace in developing nations of the world. But the progress which we have been able to help bring about thus far demonstrates that this need not be a permanent condition. Our developmental assistance continues to be needed to maintain and expand this record of progress.

To provide this needed assistance I am asking the Congress to authorize for fiscal year 1975 the appropriation of $255.3 million for functional development assistance programs in addition to the $618 million already authorized by last year's Foreign Assistance Act.

These additional funds will permit the Agency for International Development to assist developing nations in increasing food production. The widespread hardship caused by recent pressures on world food supplies calls for greater efforts by all to raise agricultural productivity. Population growth combined with recent crop failures in many parts of the world have led to the lowest grain stock levels in many years as well as high prices. In some cases, famine is threatening entire populations, and the world shortage of food makes it difficult to provide the assistance needed to avert tragedy. But food aid alone does not provide a solution. Developing nations must increase their own agricultural productivity, and almost 60 percent of AID's development assistance programs will be aimed at achieving this goal.

We will continue to reorient our development assistance programs, as jointly endorsed by the Congress and the Administration, to concentrate more directly on acute human problems in poor countries. AID will thus focus on providing family planning and basic health services, strengthening education and other human resource programs, increasing food production, and improving nutrition.

A strong bilateral U.S. foreign aid program can be fully effective, however, only if it is complemented by continued, active multilateral assistance efforts. Pending before the Congress is legislation to authorize United States contributions of $1.5 billion to the International Development Association (IDA). Appropriations for those contributions will be spread over a number of years beginning in 1976.

The International Development Association has a 14-year history of excellence in providing development loans to the poorest nations. We have negotiated a reduction in the United States share of the total contributions to IDA from 40 percent to 33 percent, thereby shifting additional responsibility for international lending to other nations. It is inconceivable that the United States should abandon such a successful international activity, and I urge the House of Representatives to reconsider its recent vote denying the IDA authorization. Such a step would constitute a false economy in violation of the very principles toward which we would hope to move in providing foreign development assistance.

Also pending is legislation to authorize contributions of $362 million for the ordinary capital and $50 million for the special resources of the Asian Development Bank (ADB). The performance of the IDA is being matched today by the newer Asian Development Bank. The African Development Fund of the African Development Bank has excellent prospects of playing an increasingly critical role in a continent whose need has been most recently highlighted by severe drought.

It is imperative that these authorizations as well as those for our bilateral programs be enacted. It is equally imperative that appropriations be enacted in the full amount necessary to fulfill our responsibilities in these institutions and in the Inter-American Development Bank, for which authorizing legislation has been enacted.

The United States is currently engaged in negotiations relating to international monetary and trade reform. It should be recognized that less developed nations will play an important role in the success of these important initiatives. These nations will look to the United States to continue our leadership in the development assistance field as well as in trade and monetary reform.

SECURITY ASSISTANCE

The security of our allies and of nations friendly to us is an essential consideration in the foreign and national security policies of the United States. Not all are capable of providing for their security, and our assistance enables those countries to assume primary responsibility for their own defense. It gives them the confidence to negotiate with potential adversaries from a position of strength and to resist subversion and intimidation. The effectiveness and wisdom of these policies is being proven today in the Middle East and Southeast Asia.

There can be no real peace in the world so long as some governments believe that they can successfully obtain by force or threat of force what they cannot obtain by peaceful competition or negotiation. Our security assistance programs reduce the likelihood that such calculations will be made and thereby increase the incentives to resolve international disputes by peaceful means.

Just as security assistance can ease the impact of large and unexpected defense burdens on the economies of friendly nations, it can also strengthen their economies and thereby allow a greater use of military sales credits as opposed to grants. We need a flexible military credit sales program to encourage and facilitate the self-reliance of friendly states and to help gradually reduce the cost to the United States of providing security assistance.

I am asking the Congress to authorize the appropriations for fiscal year 1975 of $985 million for grant military assistance, $555 million for foreign military sales credits to finance an $872.5 million program, and $385.5 million for security supporting assistance.

CONCLUSION

The United States has only recently emerged from more than a decade of direct involvement in a long, bitter, and costly war. It is not remarkable that we should see a strong sentiment in the land for giving up the difficult duties of world leadership. But temporary sentiment must not obscure the long-range interest of our Nation.

The percentage of America's gross national product dedicated to foreign assistance is small. It is less, indeed, than that of some other nations. But it is a wise investment, undertaken with bipartisan support in the interest of our own Nation, in the interests of our historical role as a generous and courageous defender of freedom and human rights, and in the interests of world peace.

With our assistance, other nations have reached a point where they can share this burden. But we have not yet reached the point where we can safely lay it down. The amounts I am requesting for fiscal year 1975 are the minimum essential to support the responsible and constructive American role of international leadership and cooperation, a role which it is in our national interest to continue and strengthen.

RICHARD NIXON,

The White House,

April 24, 1974.