Development Programs for the 1970s

The most important objective of the lower income countries of Africa, Asia and Latin America- where two-thirds of humanity live-is their economic and social progress. It is their highest priority. It is the overriding commitment of most of their governments. Thus it is a subject of central importance in our relations with them. For we cannot expect these nations to join with us in building a structure of peaceful relationships unless we cooperate with them to help solve the problems which they regard as most critical to them. Nor can we expect the changes which will inevitably come in these countries to be accomplished peacefully unless we help them do so.

Our new approach to providing this development assistance is based on recognition of major historical changes in the world.

First of all, many lower income countries are today ready and able to assume the primary responsibility for articulating their own requirements, setting their priorities and generating the bulk of the resources necessary for their own development. They are eager to do so; in fact, they demand the recognition of their right to do so.

Secondly, while the United States remains the largest single contributor to international development, the other industrial nations of the world together now extend more assistance than we do.

Thirdly, international institutions-such as the World Bank group and the regional development banks-are now capable of fusing the efforts of all countries into a true multilateral partnership for development.

The new United States assistance program will be designed to realize the full potential of this broader sharing of responsibility- with the developing countries themselves, with the other industrial nations and with multilateral organizations. This is a major application of the Nixon Doctrine.

There are two channels of development assistance-bilateral and multilateral. I announced the broad outline of a new program of foreign assistance in my message to the Congress of September 15, 1970. I will submit detailed legislation to bring about the change. I will recommend that our bilateral assistance be provided through three new specialized institutions:

A new U.S. International Development Corporation will be our instrument for bilateral development lending. It will rely on the recipients of its loans to identify their own development priorities clearly and to submit sound proposals for development financing. It will work increasingly within a framework set by the international development institutions.

A new U.S. International Development Institute will break new ground in technical assistance. It will mobilize the vast expertise of the American scientific and technological community, focusing it on development problems and matching up American skills with specific needs abroad.

The Overseas Private Investment Corporation, which I proposed in 1969 and which came into being last month, will manage our investment insurance and guaranty programs and thus assist U.S. private firms to invest-to the extent desired by host countries-in constructive development projects in lower income countries.

I have also proposed that all donor countries cooperate for development by ending the requirement that each nation's development assistance be used only to purchase goods and services produced in that nation itself. Such untying would both increase the value of aid to the lower income countries, and reduce the frictions which develop from the inherently sensitive relationship between donors and recipients. We have submitted our specific proposals to the OECD, and active negotiations with the other member countries are now in progress. I am pleased that virtually all of the industrialized countries have agreed with our proposal in principle, and we hope and expect that actual untying will commence this year.

To be effective, full sharing of responsibility for development must be multilateral and worldwide. It must link the industrialized and the lower income countries in a network of cooperation. This is fundamental to our new approach to foreign assistance.

The United States will therefore channel an increasing share of its development assistance through multilateral institutions as rapidly as practicable. We shall provide our bilateral development aid largely within the framework established by these institutions. These changes will maximize the contributions of the recipient countries and the other donor countries alike, reduce the political complications of our aid, and reduce the extensive involvement of U.S. government personnel overseas in advising governments and monitoring programs.

Accordingly, I will shortly propose that the Congress authorize an annual contribution of $320 million over the next three years as our appropriate share to permit the International Development Association to double its "soft" (low-interest) lending capacity. I have also pressed strongly for expanding American contributions to the regional development banks of which we are members-the Asian Development Bank and the Inter-American Development Bank-and we are exploring a way to provide financial assistance to the African Development Bank. These banks play a major role in helping the lower income countries to expand their trade and mutual support on a regional basis. The Congress made a start last year on an expanded U.S. investment in the Inter-American Development Bank, and I again urge the Congress to authorize the remaining $900 million of our proportionate contribution. I also urge the Congress to authorize $l00 million for our contribution to the Special Fund of the Asian Development Bank.

We have also pledged our support for other mechanisms of regional cooperation such as the Inter-American Committee for the Alliance for Progress, the new arrangements for regional integration in Latin America, the Mekong River Development Committee and the promising links among nations in East and West Africa.

In addition to our direct support of these regional organizations, one purpose of our desire to see aid untied is to permit developing countries to use foreign assistance to purchase goods from one another in order to support greater trade among them. Indeed, our own decision to permit all developing countries to participate in the provision of commodities financed under U.S. assistance programs is already encouraging an expansion of such trade.

For trade expansion plays an important part in our new strategy for development. Developing nations wish to rely more on their own economies to provide jobs and earn the foreign exchange they need; they wish to become less reliant on aid. We share this objective with them. We have sought to enhance their trading positions by pressing for concerted action among the industrialized nations on a generalized system of tariff preferences in the industrialized markets for the exports of all of the lower income countries. I am extremely pleased that the discussions among the developed countries in 1970 produced broad movement toward a worldwide system of comparable generalized preference schemes. I will shortly be submitting legislation to authorize U.S. participation in this program.