Aiding Friends

The process of giving away U.S. money to strengthen friendly foreign governments sometimes seems to have a built-in mechanism of self-defeat.

More than three years ago American foreign-aid officials set about modernizing the transport system in struggling little Laos, a pastoral nation bordered by Red China and Communist North Viet Nam. Motives were high and the task seemed simple, but within months the project was bogged down in a mass of bribes, kickbacks and plain confusion.

Taking Favors. The first difficulty developed after Washington's International Cooperation Administration bought and shipped $1,500,000 worth of road-building and repairing equipment and signed up an American engineering firm to teach Laotians how to operate the machinery. But the engineers arrived to find that, without Washington's knowledge, the local ICA mission had arranged for a Bangkok company, Universal Construction Co., to handle the job. One explanation emerged in testimony last week before a House subcommittee; Edward T. McNamara, husky ICA public-works officer in Laos from 1955 to 1957, admitted receiving stock and cash amounting to more than $12,000 from Universal "for assistance rendered by me in establishment of the contract."

It also developed in testimony that McNamara and another former ICA official, William E. Kirby, accepted substantial favors in 1957 from a Hong Kong transportation firm that got a $275,000 contract to supply ferryboats for a transport system across the Mekong River, between Thailand and Laos. Kirby later quit ICA and took a job with the company. Until Congress took notice, ICA headquarters in Washington seemed almost indifferent to the shenanigans in Laos, and slow to investigate thoroughly. Representative Porter Hardy Jr. of Virginia, chairman of the subcommittee, last week indignantly suggested abolition of ICA altogether, and a fresh start for foreign aid under State Department control.

Tightening Up. Under the glare of publicity on this old case, ICA has drastically tightened its procedures. They are now so tight, in fact, that the fresh team of Americans in the Laotian capital of Vientiane complains that "red tape strung about to prevent repetition, of the old mistakes has got the place tied up." Premier Phoui Sananikone, who, since coming to power in August has swept away much of Laos' old corruption and sloth, is happy over U.S. help but objects: "We are pressed for time here in Laos. We find ourselves going into interminable discussions here. Then the decision goes to Washington, where there is more exhaustive discussion, and an enormous amount of time is lost before we can act."

Last week the popular Rural Self-Help scheme, which gives villagers essentials such as nails, cement and simple tools so that they themselves can build schools, roads and small dams, had ground to a stop because U.S. funds had run out. ICA's new discipline requires strict accounting of first-quarter funds before second-quarter funds can be released. But Laotians, not accustomed to American accountants' techniques, were slow to comply with all the forms, despite lengthy pleas from Vientiane. Rather than see the whole program collapse before the rainy season stops all work in June, ICA Mission Chief Daly Lavergne fortnight ago decided on his own to release more funds without a Washington go-ahead. Hearing of this, Premier Phoui grinned with relief.

Less than a year ago, Laos was a country so caught in corruption and chaos that it seemed headed for Communism. Now the government is anti-Communist rather than neutralist; ministers no longer hang out at Dirty Dan's nightclub; no ministry can purchase a car without the signature of Phoui or his Finance Minister, and both men are showing an admirable tendency toward writers' cramp. Into this tiny nation of 2,000,000 people, the U.S. has since January 1955 poured $225 million (plus large amounts of classified military aid). The future looks promising, if the past is not allowed to haunt it.

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