COPY
CIA HISTORICAL REVIEW PROGRAM ELEASE IN FULL
DIFFICULTIES IN THE IMPLEMENTATION ABROAD OF POINT FOUR
CENTRAL INTELLIGENCE AGENCY
n rii .
JHlr
DISSEMINATION NOTICE
L This copy of this publication ls for thc Information and use of the recipient designated on the front cover and of indlrtduals under the Jurisdiction of the recipient's office who require the Information for the performance of their official duties. Further dissemination elsewhere ln the department to other offices which require thefor thc performance of official duties may be authorized by the following:
Assistant to the Secretary of State for Research and Intelligence,Department of State
of Intelligence, OS, USA, for the Department of tho Army
Naval Intelligence, for the Department of thc Navy
of Intelligence, USAF, for the Department of the Air Force
of Security and Intelligence. AEC, for the Atomic Energy
eputy Director for Intelligence, Joint Staff, for the Joint Staff
g. Assistant Director for Collection and Dissemination, CIA, for any other Department or Agency
1 This copy may be either retained or destroyed by burning in accordance with applicable security regulations, or returned to the Central Intelligence Agency by arrangement with the Office of Collection and Dissemination, CIA.
DISTRIBUTION: Office of the President National Security Council National Security Heaources Board Department of Stole COee ol Secretary of Defease Department ot the Army Department of the Nary Department of the Air Tore*
State-Army-Nary-Air Force Coordinating Committee Joint Chlefi of Staff Atomic Energy Commission Research and Development Hoard
annTTnFTfTinr
OO'If riDBHTTXT.
DIFFICULTIES IN THE IMPLEMENTATION ABROAD OF POINT FOUR
SUMMARY
Implementation ot the Truman program ol granting technical assistance and encouraging capital investment inareas will promote economicraise living standards, combat theof Communism, and promote the spread of US methods and influence. This program will, however, encounter certain obstacles which. If not surmounted, could limit itsWhile these obstacles arc Inherent in any such undertaking and none of them is of such critical Importance as to cripple thetheir cumulative impact could beto hamper full achievement of Its broad aims. The most serious problem will be to counteract the tendency of recipient countries to lose sight of the technical aspect of the program and attempt to convert ltorld-wide "Marshall Plan" involving huge capital grants. Many nations will be lessin technical aid for public health,surveys, and overhauling of financial systems than in grandiose and unrealisticprojects for which they will expect US Government financial as well as technical aid. Unless It is made clear that Point Four
'This paper seeks to present some of Uie over-all problems, arising from conditions and atU-.udes abroad, which will be encountered In theof Point Four. It purposelyroad general approach, and Is to be considered onlyietaee to possible future analyses of specific area and functional problems as thc Point Four Program Lakes shape. For the purposes of this paper "underdeveloped areas" ar* assumed to be those whose natural and human resources are largely untapped, primarily the dependent arras and young states of Asia, Africa, and much of Latin America. While more highly developedlute those of Western Europe will also have underdeveloped sectors of their economics, theoaUlncd here apply more dlrecUy to thebackward areas.
Isechnical aid program and not something on the order of the ERP. many inadequately considered schemes will have to be rejected, and the consequentof the nations rebuffed will beto US interests. Another problem will be the probable competition for aid priorities between various nations and groups ofall of them seeking preferentialIn the allocation of the limited aid available.
Subsequent implementation of technical aid, through foreign private investment, will meet some opposition from local nationalists who fear foreignrom local commercial Interests afraid of foreignfrom political groups desirous oftheir governments, and from local Communist groups which will exploit theMany governments will prefer totheir own control of developmentand to avoid foreign "exploitation" by acquiring financial aidovernment-to-government basis rather lhan throughInvestment. These countries may insist upon restrictions on foreign capital soas to prevent any substantial flow offunds.
Another obstacle to success of the program will be the unwUiiiignrss or inability of many recipients lo utilise technical assistanceLocal apathy, official corruption, bureaucratic inefficiency, and localresentment may combine in some areas to resist foreign missions and advisers and to make it difficult to carry out theirUse of the "servlclo" method In Latin America, where US technicians have been hi charge of aid programs underoreign government has, however, had encouraging success In overcoming this type of obstacle.
The InteUlgence organizations of the Departments of Slate. Navy, and the Air Force have concurred In UUs report; thc Intelligence Division, Department of Uie Army, had no comment. The report is based on information available lo CIA asune
EflirriDu.
planned execution of much of thcthrough the United Nations will have the advantagestilizing existing UNtrengUienlng the prestige of the UN;iving theruly international aspect, thus minimising USto charges of "imperialism" On the other hand, the US will have less control over the program, and some UN specialized agencies and regional economic commissions may seek to undertake programs morethan the US. which will have tothe bulk of the resources. Is willing to support. Moreover, such UN programs will
tend to be Influenced by politicalperhaps leading to an effort tobenefits evenly among members rather than on the basis of need. Nevertheless, the US will still exercise considerable Indirectthrough its Influence over other UNand since It Is the only country capable of supplying most of the required funds.
While the USSR will bitterly attack the Truman program as US "Imperialism" and seek to obstruct It on the same basis as the Kit I'. Soviet capabilities of impeding theare relatively limited. The USSR will probably prohibit Satellite participation.
DIFFICULTIES IN THE IMPLEMENTATION ABROAD OF POINT FOUR
the fourth point of his InauguralPresident Trumanbold new program" designed to extend technical assistance and foster the flow of capital Investment to underdeveloped countriescooperative enterprise in wluch all nations work together through the United Nations and its specialized agencies wherevererely granting technicaland encouraging capital investment abroad are not new undertaking for the US Government, which lias engaged In this type of activity through the Export-Import Bank, the Interdepartmental Committee onand Cultural Cooperation, the Institute of Inter-American Affairs, and variousarrangements; but the expanded andprogram now proposedajor instrument of national policy is ainnovation. The two aspects of thetechnical assistance and private foreign Investment, arc designed to bewith the technical aid providing the necessary groundwork and opening the way to privately financed development projects.
The economic, political, and social effectsigorously implemented program would be of major benefit to the United States. Since thc US would be called upon tothe bulk of the capital, skilledtechnological training and guidancethe program would inevitably result in the spread of US machinery and methods to thc countries aided, thus forming closer ties with the US, economically, socially, and politically. The effective implementationechnical assistance program of broad scope would also raise world living-standards, thus encouraging political stability. SuchImprovement of world stability oners one method of combatting the expansion of Communism.
Certain difficulties will ariso in thcof the program, however, which If "ot properly coped with, will hinder success-
ful achievement of these objectives. This estimate seeks to examine these probablerather than to attempt anyof the prospects of the program as a
whole."
ttempts To Change tho Character of fhe Program.
Although the underdeveloped areas and the European powers which control many of them have received the President's proposal with enthusiasm, their later reactions as thedevelops will raise numerousproblems. Chief among these will be the attempt of many areas to shift theemphasis from technical aid toassistance from the US Government and to propose grandiose and impracticableIn the first place, enthusiasm win in many cases outrun wisdom and numerous governments will tend to consider this the opportunity for realizing cherishedprojects with little or no regard for over-all world needs or the resourcesfor implementation of the most urgent programs. This type of reaction has already manifested itself In the nebulous proposals for loan assistance made by numerous countries to the International Bank and thc US Erport-Import Bank.
In addition to advancing unrealistic and exorbitant requests for technical aid, many governments will seek to turn the emphasis of the program from technical to financial assistance on the order of the EuropeanProgram. The vision of substantial foreign financial backing will prove much more alluring to prospective beneficiaries than the reception of advisory and training missions. Thc point will be raised that lor
'More extended analyses ol many of theseand proposed measures for rneeUng them are contained In policy papers prepared by theof State Technical AssUtanee Workmx Group iTACH and thc interdepartmental Advwory Committee on Technical Assistance 1ACTA1.
fOMMMlfl 1AL
types of development projectsassistance and capital Imports will have to be simultaneous, that foreign technicians must have the machinery with which tolocal personnel and carry out their plans. This attitude has already appeared in the UN Economic and Social Council where the Lebanese representative asked logically whether granting technical aid before capital goods might not prove "wasteful andThe fact that many types ofsuch as technical missions andsurveys will themselveseed for capital Investment to Implement them will be utilizedurther argument for stressing thc financial aspect of Point Four. If such tcclinical aid Is given without first ascertaining whether capital Is available, thc result Is likely to be increased pressure for US financing. An additional argument for (jamedialc financial assistance will be that many economic surveys of various kinds have already been completed and Uial the realot for more surveys by technical experts but for money to put existing plans IntoSome local governments may notthe necessity for creating aclimate for foreign private Investment or local capital which under thc Trumanis to be relied upon to Implement de-Yetopment projects; they may instead seek GS governmental financial aid.
Another probable development after the program has been put Into action willraving disappointment on the part of cer-tsai governments that so few tangible results are immediately evident. There willsiunU impatience for concrete evidence of progress in thc formigher standardag, Industrialization, and mechanized agriculture. This tendency can be overcomeby emphasizing that thisong-range rwqaam with infinite potentialities which ess be realized onlyeriod of time <mrmg which active steps must be taken loold prejudices and Institute reforms *oico may require present sacrifices and
Ditess the US makes it unmistakably clear tarn the very beginning that Point Fourcanfcal aid program andultiplc-
MiirshaH plan, ultimate US rejection of many Impracticable schemes will cause disappoint merit in nations thus rebuffed and may even produce unfavorable reactions toward the US Such developments could leadowering of US Influence which might be reflectedore uncooperative attitude or even in the exertion of minor pressures tliroughon US business enterprises and trade. Such resentment of US action might also strengthen the propaganda position of local Communist and pro-Soviet elements, andimpede cooperation with the West. Any such tendencies will be fully exploited by Uie USSR to stimulate nationalism and arevulsion against internationalIf the underdeveloped countries enter Into thc Point Four Programlearof its cooperative requirements as well as its long-term aims andthe possibility ot- illusion-inent and consequent apathy will be greatly cniianced and thc way cleared foraction.
2. Competition for Aid Priorities.
In view of Uie limited resources likely to be available, another major problem in the Implementation of Point Four will be thearising between nations and groups of nations for priority in receiving assistance. There willatural tendency for each nation to try to get the maximum amount of assistance for itself, and furthermore. Into Point Four there will not be, as was the case with the ERP, the restrainingof an overriding and urgent necessity for cooperation as thc alternative to economic collapse.ertain amount of such competition willealthy indication ofin the technical aid program, failure to satisfy simultaneously the demands of Burma, India and Pakistan, for Instance, may result in resentment toward the US on the part of the country or countries omitted.
In addition to the competition betweennations for aid priorities, there may emerge, with thc development of thetrend toward regionalism and the strengthening of Uie UN regionala competition between areas of the world The launching of the ERP has
.-ought forth requests for similar programs (for ether parts of the world, and disappolnt-jEnent has been expressed in these areas over US neglect Consequently thc demand for an kfcian "Marshall Plan" put forward In the j'session of the Economic Commission for Asia and the Far Fast at Lapstone.mayorerunner of similar official requests for regional development programs for Africa. Latin America, and the Middle East. The difficulties arising from thisbetween areas will be less pressing than those arising from conflicting national claims, however, since the present coheslveness ofblocs ls somewhat tenuous and will tend to break down in the event that anation sees Its own prospects forthreatened through Its support of the demands of other nations merely for the sake of regional solidarity. National rivalries and the dissimilarities of economic patterns within geographical areas will also have aeffect on the maintenance of unity within these blocs.
Should competitive tendencies be allowed to develop unchecked, they could negate the possibilityooperative plan for economic development, either byitter and importunate atmosphere in which there would not be agreement sufficient to implement any plans or by the emergence of International "log-rolling" wluch would expand programs of assistance beyond thc realm of practical action.
3. Locnf Opposition io Foreign
Any US-backed program of technical aid and particularly of private financialwillertain amount of opposition from local nationalistic elementsocal commercialafraid of US competition, political groups desirous of embarrassing their governments, and local Communist groups which willthe situation. For example, manycountriesingering suspicion that US interests are loo closely linked with those of the European colonial powers. Both tho Asiatic nations and numerous latin American states alsoew economic imperialism of the US itself. Such intensely
rationalistic states will be Jealous of foreign tutelage and may well place obstacles in the way of any technical missions whosediverge from their ownalms. Less opposition may be expected, however, ba thc case of strictly technicalIn such fields as health andwhere no substantial foreign Investment bi involved.
A serious obstacleew areas such as Burma and Malaya may be the localmovement, which will actively resist the penetration of US methods and influence. Communist-dominated labor and youthmay be utilized for demonstrations, strikes, and possibly even Industrial sabotage to discourage the US from granting assistance and local governments from accepting It. Once aid has been Initiated, these tactics will be used to resist the effective implementation of Point Four.
That portion of thc President's program which calls for financing economicthrough foreign private investment will meet strong obstacles in some areas. The growing nationalism in most underdeveloped countries has everywhere brought with It an Increased distrust of foreign capital. Many governments will prefer lo assure their own strict control of development projects and to avoid foreign "exploitation" by acquiring financial aidovemmcnt-to-governmcnt basis rather than through private means. Moreover, many of these slates will feel that they can secure better terms from foreignwhere they can use politicalas bargaining points, than from foreign private investors who are Interested primarily in economic returns.
Despite US assurances, many countries will hesitate to allow direct private foreignbecause of their feararge share of the profits will leave the country and that their resources will be exploited for foreign benefit rather than for their own. Even though thc US continues to emphasize the necessity of creating favorable conditions for foreign investment, these countries mayupon arbitrary restrictions on foreign private capital which may defeat thcof thc technical aid already received.
i iii, tin urn
private capital In turn will belo (low into areas where It runs the risk of expropriation, must operate under onerous restrictions, and is sharply limited in the profits which It may extract. Moreover, in those countriesigh degree ofand economic Instability, private capital will be unwilling to invest. In such cases, there will be great pressure for government-to-government loans, and there will be little Incentive on the part of recipientto promote conditions necessary toprivate capital if they feel assured of the former.
Incapacity To Utilize Technical Aid Properly.
Since the success of the Truman program will depend largely on the efforts of thecountriesajor obstacle will be the unwillingness or inability of many recipients to utilize technical assistanceIn many areas governmentalofficial corruption, the low level ofefficiency, local nationalisticand sheer inertia will combine to defeat ln large measure the achievement of anyresults from technical aid. Much of thc past US aid to China has encountered these obstacles. Moreover, some recipients will be unwilling to accept the type of technicalproffered, preferring large-scaleprojects to the unpalatableof first initiating administrative, fiscal, and tax reforms.
Maximum benefit can be derived fromaid projects if each country involved establishes an honest administration of the program. In many Instances suchwill have to be headed byexperts, since there will be noqualified local personnel available.ethod, however, may proveto some governments. Since It would tend to place control of funds and personnel selection beyond the reach of the localpossibUlllcs for graft and political patronage would be lost. In addition, the necessity of employing foreign administrators might below to national pride.
Faced with this necessary but unpalatablesome states will wish to do thc Job with poorly qualified local, and perhapsappointees, while others may letgather dust rather than accept foreign supervision. Considerable success lnthis type of opposition to foreignhas, however, been achieved In latin America where "Scrviclos" headed by UShave been established underministries.
5. Relationship to the United Nations.
Should the Truman program be carried out as planned, largely through the Unitedand its specialized agencies, several problems would arise. The UN already has available the machinery for various types of technical assistance, which the United States will be under considerable pressure to use. This course will have certain advantages. Utilization of existing UN machineryiminish the necessity for creating newreatly strengthen the prestige of the UN;inimize liability of the US to charges of political interference and manipulation; and lessen the fear of USChanneling technical missions and financial aid through the UN would give theruly International aspect and thus weaken the opposition of thosegroups which fear US economicCommunists who have repeatedly branded theool of "Western reaction" would not be deflected from attacking thebut their charges would lose force with non-Communist elements.
On thc other hand, the major disadvantage to the United States of operation through thc UN would be the decentrahzatton ofand diminished US control of thceffort. To be sure, the US could stillsome indirect control through ils hold over some UN members and through the fact that It must provide the bulk of the resources. Nevertheless, lack of direct US control over UN agencies will permit the development of such tendencies as some UN bodies haveshown toarge number of projects with wholly Inadequate attention to the resources available. Moreover, UN pro-
rfTTTA I,
grains will tend to be Influenced by political considerations, such as the effort to distribute aid evenly among members, rather than on the basis of need.ertain amount of -leg-rolling" in the form of vote-trading could be expected.
Consequently many Impracticable schemes, which would never be seriously considered if the US controlled negotiations, will be given the dignity and publicity of UN discussion; and some projects npjiroved in the UN may involve excessive demands on the United States for technicians, training faculties ha the US. and loans and capital goods. Many of these demands will inevitably Incorporate features which the US will have to reject, and these rejections will be attacked by theaffected and will be utilized by the USSR to denounce the whole concept of technical assistance as poliucally motivated andefined method of "capitalistic imperialism."
6. Soviet Reaction to ihe Program.
The Soviet Union will strenuously oppose any US-dominated program for technicalto underdeveloped areas, sinceproductivity and raising livingby evolutionary methods will weaken Communist influence and materially andfortify non-Communist parties andThe Polish representative in the' UN Economic and Social Council hasthe most probable future Soviet line by his bitter denunciations of the programS scheme designed to shape the "American Century" through political maneuvering,and espionage.
Although the USSR can aggravate thc many difficulties Inherent Inorld-wideit has only limited capabUities for Impeding it. The initial Soviet objective will probably be to utilize its propaganda resources In an attempt to block or discredit the whole program in its formative stage. Falling in this, the USSR will then set out to neutralise the potential effect of the programbstructionism in the UN;olitical agitation. Sovietwill undoubtedly seek to prove that the actual motives of thc USothe capitalist system by securing profits
for American entrepreneurs and outlets for surpluso insure political subjugation of independent nations;o advance preparations for an aggressive war against the USSR and the "Newhc familiar labels of "dollar diplomacy" and "imperialist expansionism" will be liberally applied, and small slates will be warned against opening their doors to economicand political subservience in the guise of American technical and financialFurthermore, attempts will be made to split thc Western Powers by portraying the US as seeking to displace the colonial nations in the exploitation ot their dependencies. Once the assistance program Is in operation, however, the USSR will be ready and willing to participate In investigating commissions sent out by thc UN, in order not only to thwart, if possible, constructive efforts of the commissions, but also to obtain Industrial and military Intelligence, give covert support to local Communist organizations andagitators, and pose as the defender ofpeoples.
The USSR can be expected to prohibitSatellite participation in the program,It will involve some type ofof the Soviet orbit. Although the USSR would like to secure needed technical and material assistance for its sphere and at the same time reduce thc benefits to non-Soviet nations by draining off as much aid asthe Kremlin Is not willing to pay the price of lifting the curtain to foreignIn addition, the Soviet state cannot afford to lose prestige by admitting theof the capitalist world.
Another Soviet tactic may be to use theformed Council for Economic Mutual Assistanceropaganda campaign to counteract thc Western program. Pointing to Its provisions for exchange of experience and technical aid. and claiming that Itsis open to any states subscribing to "democratic" principles, the USSR mayto neutralize the psychological benefits of the US offer. The USSR cannot, however, spare the resources for any program of more substance than token gifts throughparlies.
Original document.
Comment about this article, ask questions, or add new information about this topic: