FOREIGN RELATIONS, 19 5 0, VOLUME I


the United States attempt to use such funds for general administrative
expenditures of this Government.
  3. Loan-Grant Policy
  (a) Europe
  For the last two years the Council has recommended that extraor-
dinary assistance to Europe should be on a grant basis. There appears
to be no reason for changing this policy during the coming year.
  (b) Underdeveloped Countries
  (1) The basic justification for the magnitude and tempo of the
economic assistance programs in Asia, the Middle East and Africa,
must rest primarily on political considerations. It is proposed to
foster economic development programs in these areas insofar as phys-
ical availabilities will permit at a rate faster than the countries might
undertake exclusively on a loan basis.
   (2) The programs for the fiscal year 1952 are to be regarded as
initial steps in a longer-range program whose precise magnitude and
form can not be determined at .the present time. Moreover, the physical
availability of supplies makes it difficult to determine to what extent
such programs will be feasible. Under these circumstances it is diffi-
cult at this time to arrive at a good judgment as to the appropriate
part of any such long-term programs which might be financed on a
loan basis.
   (3) Where a country is in a position to service a loan and the
projects are of the appropriate type, they should be financed by the
established lending institutions under their usual terms and condi-
tions. The Executive Branch should not request authority from Con-
gress or appropriations for special categories of loans under this
program.
   (4) In the 1952 program grants should be made so far as 'possible
for programs which are appropriate for grant financing-because of
their inherent character, such as technical assistance, STEM, and re-
lated projects.
  4. Increase in Export-Import Bank Lending Authority
  The National Advisory Council recommends an increase of $1.5
billion in the lending authority of the Export-Import Bank as an
integral part of the legislative program for foreign financing pro-
posed to be presented by the Administration to the next Congress.
   [Here follow 24 pages of detailed exposition and analysis on the
 four subjects indicated in the recommendations.1]

 At its meeting on December 26 (No. 168) the National Advisory Council took
 action to approve the Staff Committee's recommendations as set forth here.
 In the case of (2) Counterpart Policy, the Council chose Alternative B.
(Lot
 60D137, Box 362)


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