Dr. LODGE. Well, our experience has been that it is possible to take Government funds and in effect decontaminate them and to distribute them in such a way.

Senator HUMPHREY. Launder them?

Dr. LODGE. Excuse me.

Senator HUMPHREY. You are saying launder them?

Dr. LODGE. Distribute in such a way that the recipient is fully aware of the fact that these are his to control and direct and that nobody is trying to impose anything on him. The foundation deals directly with these organizations, it does not go through any intermediary U.S. group and I think that is a great strength.

Senator HUMPHREY. This is very similar to our antipoverty program with regard to the community action groups where the funds went beyond the governmental structure, down into what we call the organized community action groups, until people in Congress and elsewhere got to wondering whether or not the community action groups were upsetting the status quo.

Dr. LODGE. Exactly.

The CHAIRMAN. Senator Case.

INTER-AMERICAN FOUNDATION

Senator CASE. It is very nice to have you back. Tell me how is the Inter-American Foundation funded now?

Dr. LODGE. From Congress.

Senator CASE. I should know all about this. You tell me about it, it is created by what law?

Dr. LODGE. It was created in 1970, I believe, through an amendment to the Foreign Assistance Act that was sponsored by Representative Fascell and it was funded initially, I believe, on a 3-year basis by congressional act and, of course, while we have funds for 3 years we have to get those approved each year and go through the appropriation process, which has meant that we have been curtailed and restricted a little bit more than we would like to have been.

Senator CASE. Do you think that the Government, the Congress of the United States, knew it was creating a "subversive” organization when it did this, and I mean this not in a bad sense, an organization that was going to meddle around with foreign countries and promote change? Is change always desirable?

Dr. LODGE. I think that what it thought it was doing, which is what it has done, is to recognize that in the countries of Latin America change is absolutely inevitable, the leaders of those countries know it is. We have had virtually no controversy or conflict with any government. These governments particularly at the highest levels know that, for example, in their countryside change has to take place, that if it does not take place one way it is going to take place another way, and that it is plainly in their interest to have the kinds of funds that the foundation can provide available for organizations that are capable of doing it well.

Why you might ask can't AID do this? Why can't you fund these organizations through the AID mission working with their counterparts in the local government? And I think the reasons are very subtle but very real. When you work at lower levels of the bureaucracy you run into all kinds of vested interests in these countries,

which I think frequently regard these organizations as threats to one or another set of interests which they do not want to get involved in trampling, but if you get high enough up in the government of any country or if you approach it in the right way it is possible to do it. The experience of the foundation has been that if you kind of get outside of the conventional bureaucratic institutional setting in dealing with what is called development you can do a tremendous amount without having it seem to be subversive or threatening.

Senator CASE. It is a vacillating question. I think Senator Humphrey was right when he suggested the analogy to some of our poverty programs. I am not sure it is an organization that strengthens the case in any sense, because I think, in very many if not most of these cases, we have just succeeded in creating bureaucracies outside of the regular elected democratically chosen small government units as well as larger ones and I think we are likely running into a very dangerous situation if this develops any more at all.

Dr. LODGE. The German Government has been doing this for years through their foundation, the Conrad Adenaur Foundation, and other similar foundations. It sounds peculiar but I think it is really very practical. Take, for example, expenditures that Inter-American Foundation has made in northeast Brazil in the state of Piaui, probably one of the poorest states in northeast Brazil, effectively beyond the reach of any of the Brazilian governmental institutions. Now IAF is helping there a home-grown, community-initiated organization. First my guess is that it probably looked somewhat controversial to the central government. As time went by I gather that the attitude was, well let's give it a chance to see what it can do.

Now the Inter-American Foundation was able to go in at a critical time with relatively small amounts of funds and to give that organization the lift it needed. I don't believe that in the same circumstances AID would have been able to move so quickly or so effectively.

DIRECTION OF CHANGE MUST BE IN HANDS OF LOCAL COMMUNITY

Senator CASE. I do not think so either. I do not think it should. I wonder how we would deal if, say, the Fabian Foundation persuaded the British Government to create a foundation and finance it, an agency of the government, to come over here and sell us on a socialistic regime at the lower level promoting a change from that outrageous capitalistic system to the regime that is Fabian's proposals, how would we like it, what would we think about it?

Dr. LODGE. As I said in my statement

Senator CASE. Not necessarily hostile, because there are certain elements of snobishness about what you are talking about. Dr. LODGE. Of course.

Senator CASE. That suggests it may not be very sound.

Dr. LODGE. The critical, the key to the success of the foundation is operations is the absolute insistance that the control and direction and decision as to the direction of change be in the hands of the local community.

Senator CASE. Not the elected people, not the existing government. Is it a creature that you evoke from the mass of humanity that is ground down to the Earth? Is that right?

Dr. LODGE. The problem, of course, is as you know Senator, that in much of the rural world there is not anything that really is government or what is government is pretty much detached from the fabric of society. This is the case in Veraguas, for example. There were land reform laws, there were quite sizeable AID allocations over the years made to Panama for land reform. Nothing happens. Now, nobody is to blame. It is just the way the system works. And now an organization was started under the sponsorship of the local bishop which had the capacity to start the process going and this community was able to take advantage of the law.

Now, sure that is controversial, that is all the things you say it is, but if it is done carefully I do not think it is dangerous or counterproductive or negative.

Senator CASE. You have to get the 12 o'clock train, you had better beat it, thank you very much.

The CHAIRMAN. Thank you, Dr. Lodge. I am sorry your time is so

short.

Senator HUMPHREY. Good to see him again.

Dr. LODGE. Thank you very much, Mr. Chairman.

The CHAIRMAN. Our next witness this morning is Dr. Theodore Hesburgh, president of the University of Notre Dame and chairman of the board of the Overseas Council. We are very pleased and honored to have you this morning.

Senator HUMPHREY. I have just been called over to the Senate floor and I am terribly sorry because I wanted to hear your testimony. I am going to try to get back, so take it slow.

STATEMENT OF FATHER THEODORE M. HESBURGH, CHAIRMAN OF THE BOARD OF DIRECTORS OF THE OVERSEAS DEVELOPMENT COUNCIL, AND PRESIDENT OF THE UNIVERSITY OF NOTRE DAME

Reverend HESBURGH. Thank you, Senator Humphrey.

I appreciate the opportunity of appearing before your committee this morning and I thought before beginning my formal testimony I might mention the fact that for the past 2 days a group of us who were on the past two Presidential advisory committees on foreign assistance, the Perkins Commission under President Johnson's administration, and the Peterson Commission under President Nixon's administration-some of the alumni of these two associations met informally and got out a press release this morning. I would, if I could, just like to mention two paragraphs of that release.

The CHAIRMAN. Certainly.

Reverend HESBURGH. I will give you the whole release for the record. The CHAIRMAN. Yes, sir.

PRESS RELEASE OF FORMER PRESIDENTIAL FOREIGN AID ADVISERS

Reverend HESBURGH [reading].

A bipartisan group of former presidential foreign aid advisors meeting in Washington today (this was yesterday) unanimously endorsed an innovative bilateral development assistance program proposed in both Houses of Congress and endorsed by the Administration. The new program would focus American development assistance on the problems of the poorest majority in the developing countries, and would authorize funding aimed primarily at rural development,

food production, population and health, and education and human resource development. The bipartisan bill also would provide for export credits both to provide American goods of a developmental character for the lowest income countries and to help create more jobs for American workers.

In endorsing the Congressional initiative, members of the group pointed out: "While the United States has achieved great improvements in relations with East and West since 1970, no such progress has marked American relationships with Asia, Africa and Latin America. This is despite the fact that we Americansare discovering now that many of our most pressing and international problems no longer can be solved through isolation or solely in cooperation with other rich countries. Secretary Brezhnev's visit reminds us that a nation which is able to achieve imaginative breakthroughs in dealing with the Soviet Union and China should be able to lead the world in achieving similar advances in relationships with the poor countries of the world containing a majority of the earth's people."

This is signed by the people in attendance and there is a list of them here.

The CHAIRMAN. We will put the entire statement in the record.
Reverend HESBURGH. Thank you.

[The information referred to follows:]

MEMBERS OF FORMER PRESIDENTIAL ADVISORY GROUPS ENDORSE NEW CONGRESSIONAL INITIATIVE TOWARD DEVELOPING COUNTRIES

WASHINGTON, JUNE 26.-A bipartisan group of former presidential foreign aid advisors meeting in Washington today unanimously endorsed an innovative bilateral development assistance program proposed in both Houses of Congress and endorsed by the Administration. The new program would focus American development assistance on the problems of the poorest majority in the developing countries, and would authorize funding aimed primarily at rural development, food production, population and health, and education and human resource development. The bipartisan bill also would provide for export credits both to provide American goods of a developmental character for the lowest income countries and to help create more jobs for American workers.

The group is composed of members of President Johnson's General Advisory Committee on Foreign Assistance Programs which was headed by James A. Perkins, Chairman of the International Council for Educational Development and formerly President of Cornell University, and President Nixon's Task Force on International Development chaired by Rudolph Peterson, presently Director of the United Nations Development Program and formerly President of the Bank of America. The two groups are the most recent presidential commissions on United States foreign aid programs.

The bipartisan and bicameral Congressional initiative endorsed by the group would restructure and expand United States bilateral policies and programs for working with the poor countries in a manner consistent with President Nixon's State of the World Message on May 3. It would redirect United States bilateral aid to focus on the problems of the poorest majority in the developing countries in areas such as disease control, food production and population planning. The proposed legislation would also establish a new export development credit fund to provide American goods and services of a developmental character on terms which the poorest countries could afford.

The group indicated that it would later issue a fuller statement on bilateral and multilateral assistance programs, as well as a trade and monetary policy affecting the developing countries.

In endorsing the Congressional initiative, members of the group pointed out: "While the United States has achieved great improvements in relations with East and West since 1970, no such progress has marked American relationships with Asia, Africa and Latin America. This is despite the fact that we Americans are discovering now that many of our most pressing and international problems no longer can be solved through isolation or solely in cooperation with other rich countries. Secretary Brezhnev's visit reminds us that a nation which is able to achieve imaginative breakthroughs in dealing with the Soviet Union and China should be able to lead the world in achieving similar advances in relationships with the poor countries of the world containing a majority of the earth's people."

In addition to Perkins and Peterson, other members of the group included: Bell, David E., Vice President, Ford Foundation

Case, Josephine Young

Casey, William, Under Secretary of State for Economic Affairs

Cooke, Terrence Cardinal (Represented by James Norris)

Curtis, Thomas B., Vice President & Gen. Counsel, Encyclopedia Brittanica

Foster, Luther H., President, Tuskegee Institute

Haas, Walter A., Chairman & Chief Exec. Officer, Levi Straus

Hesburgh, Theodore, President, University of Notre Dame

Linowitz, Sol, Coudert Brothers

Mason, Edward S., Prof. Emeritus, Harvard University

Perkins, James, Chief Exec. Officer & Chairman of the Board, International Council for Educational Development

Peterson, Rudolph, Administrator, U.N. Development Program

Wood, Robert J., General, U.S. Army (Retired)

SUPPORT FOR OTHERS MATTER OF MORALITY, PRACTICALITY

Reverend HESBURGH. There is no more important work before this committee or before this Nation than to renew and improve our support for our fellow humans on our small Earth. That is the purpose of the legislation you are considering today. I am delighted to respond to your invitation to give my personal views on that legislation.

It is not only a matter of what is right, although it is of the essence of morality. It is also a matter of utmost practicality-indeed of hardheaded self interest-that we should be concerned with the struggles of distant people to free themselves from man's ancient enemies, poverty, disease, ignorance, and hunger. For one paradox of our times is that these people who seemed so far away a few years ago are every year borne closer to us by the rush of change that is everywhere about us. As we prepare to celebrate the 200th anniversary of our independence as a Nation, we find that our independence of others is diminishing; our interdependence with other nations, including the poor, is rapidly growing.

ARE WE PREPARED FOR INTERDEPENDENCE?

We have lost our independence in the profoundly important sense that we can no longer solve many of our own internal problems by ourselves. Nor can men in other nations. The most pressing and painful problems of our time can only be solved by cooperating with other countries. Even all 200 million Americans working with greatest unity can no longer do it alone. Think of the principal threats to our wellbeing: war, crime in the streets, narcotics, unemployment, inflation, pollution, global overpopulation, or shortages of fuels, food, and raw materials. Then think of how they can be solved. In every case the solution demands some degree of international cooperation, in many cases through formal international institutions or covenants. And this transformation in our lives has come upon us with such breathtaking speed it has caught us unprepared. We are unprepared in our basic view of our Nation in relation to other nations-a fact that is manifest in our consideration of the topic before this committee today. The topic is normally called "foreign aid." Certainly it is in one sense foreign. And where it helps others it is right to call it "aid." Yet in a much deeper sense it is neither foreign, nor aid, but rather an investment in making our small planet livable. For a planet is not livable if four out of five