Foreign Aid Is Launched in a New Direction

THE foreign-aid program that the President went to bat for last week adds up to a sweeping change in the U.S. conduct of the economic cold war. The program is new in the sense that it grasps all the varied foreign-aid operations and sorts them, logically, into a streamlined framework comprehensible at home and abroad. The program is new in the sense that the Administration now seeks to deploy the U.S.'s economic might not merely to stave off Communist aggression but to roll it back by enlarging the area and the appeal of freedom-plus-economic-progress. Moreover, the new program, evolving out of such successful predecessors as the Truman Doctrine and the Marshall Plan, is in keeping with U.S. traditions and the U.S. idea. "We are stirred not only by calculations of self-interest," said the President in his TV speech, "but also by decent regard for the needs and the hopes of all our fellow men. I am proud of this fact, as you are."

The plan falls into three categories of what Ike calls partnership for growth.

Military Aid. The U.S. offers aid to bolster the common U.S. and free-world defenses by supporting the military forces of allied nations. Already the U.S. has mutual-security treaties with 42 nations; since 1950 the U.S. has spread out $17 billion in direct military assistance to such good effect that the allies have spent $107 billion of their own on the common defense. (In 1950 U.S. allies had 500 jet aircraft; now they have 13,000.) The military program provides not only for direct purchases of military hardware but for aid to create a sound logistic base (e.g., supply lines) and to enable allies to maintain forces they could not otherwise afford. In South Korea, for example, the U.S. now contributes $600 a year to help maintain a South Korean soldier on the 38th parallel in the common interest; to support an American soldier there would cost the U.S. $6,000 a year.

To date these military expenditures have been lumped confusingly and often misleadingly into the overall term and the overall financing of "foreign aid." President Eisenhower now wants these military items charged, as they should be charged, to the annual budget of the Defense Department. Estimated cost: $2.8 billion.

Emergency Aid. In the fire-alarm crises in Iran. Guatemala, Viet Nam, and Jordan, the U.S. used the technique of military-economic aid repeatedly and effectively to defeat Communist attempts to take over whole nations by subversion. Drawing the moral, Ike now wants a special emergency fund of $300 million to enable the U.S. to act swiftly and flexibly in whatever new crises come up.

Economic Aid. The new program offers long-term aid on a loan basis to the underdeveloped countries of Asia and Africa to help provide the visible signs of economic progress that their peoples are learning to expect and demand. The method of providing capital is entirely new: creation of a Development Loan Fund, to replace former handout-style grants, through which the U.S. will be able to channel $500 million in fiscal 1958 and $750 million in both fiscal 1959 and 1960 into basic foreign-growth projects such as roads, dams, utilities, "the sinews of economic strength."

Unlike former aid programs, the new Development Loan Fund is not designed for relief or reconstruction; the loans will be granted on the basis of the best economic analysis of how much new capital the underdeveloped countries can actually absorb. The new program also promises to:

P:Assure self-conscious new nations that they are not expected to become satellite to U.S. policies, but are expected instead to work to create the kind of stability out of which they can repay the U.S. loans (on low and perhaps interest-free terms).

P:Encourage recipient nations to take greater responsibility in exploring, ap praising, managing projects jointly with the U.S. commissions and experts.

P:Increase the flow of private-enterprise investment abroad--and private-enterprise prestige--by specific cooperation with private interests wherever advisable.

The President is asking for funds for three years to ensure the kind of continuity in which the U.S. and the partner nations can look, plan, hire ahead. Another key facet of U.S. economic aid, already a standout success: technical-cooperation projects in which skilled U.S. doctors, agricultural experts, engineers, et al. are sent out to help train Asians and Africans in American techniques. Estimated 1958 budget cost of economic aid: $652 million.

Overall, the hope behind the Administration's program is that judicious U.S. military aid will create in the new nations a new climate of security and confidence, that judicious U.S. economic aid will create higher national living standards. Both forms of aid thus contribute toward the destruction or the minimizing of the myth that only through Communist-style regimentation can an underdeveloped nation create the capital that it must have for development. The destruction of the Communist myth contributes to the expansion of freedom and inevitably to the rollback of the Communist empire. Thus the expansion of freedom contributes to the peace, prosperity and developing opportunities of the non-Communist world.

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