Inter-American Foundation during the Reagan era
The Inter-American Foundation was described in August 1983 as "a unique kind of hybrid. It is 100 per cent government-funded and controlled by a seven-person Board of Directors appointed by the US President. Yet it has autonomous status and is relatively free of political interference. By law, four members of the Board are from private organisations and three are from US government agencies. The unique shape of the Foundation is the result of public and Congressional frustration with US aid to Latin America during the 1950s and 1960s," the New Internationalist reported.
Richard Kazis said that the IAF "demonstrates how government aid funds can promote grassroots development" and "somehow manages to keep its nose clean of CIA or State Dept. interference. The Foundation itself doesn't run projects. 'It funds local organisations like the Co-op Centre, which do the actual work on the ground. By keeping a low political profile (impossible for a government aid agency) the Foundation can work." 
"In the United States, a government-funded aid agency is proving an effective means of bypassing bureaucratic and political obstacles to reaching the poor in Third World countries," Peter D. Bell, then IAF president told the New Internationalist. Bell said that IAF's "main goal" is "'to encourage economic and social change that is bottom-up rather than top-down, self-help rather than charity'. It aims to channel American foreign aid directly to poor people, helping them to achieve their own objectives in ways which they themselves have chosen", an approach "usually associated with voluntary agencies, not with government-funded organizations."
Reagan administration "take over" in 1983
After three years of attempts, by December 1983 President Ronald Reagan achieved "a majority on the seven-person Board.  The five appointees included Peter McPherson, USAID administrator; Langhorne A. Motley, Assistant Secretary of State for Inter-American Affairs ; Reagan-appointee Organization of American States (OAS) Ambassador J. William Middendorf II ; Harold K. Phillips, "a car salesman from Los Angeles with a long fundraising and recruitment record for the California Republican Party; and Victor Blanco "a right-wing Cuban-American California businessman selected by Reagan as the IAF's chairman." 
On December 5, 1983, Blanco "promptly fired" IAF president Peter D. Bell "for reasons of 'chemistry'" , "stimulating widespread press coverage in the United States and angry protest from members of Congress." 
Rep. Dante Fascell (D-Fla.), chairman of the House Foreign Affairs Committee, said that this "was 'the culmination of a three-year effort by the administration to re-cast the IAF in its own ideological mold." "Latin American leaders, development organizations and other members of Congress -- including moderate Republicans -- joined in the chorus of criticism, and three members of the IAF’s advisory council resigned in protest." 
According to Reagan's appointees, the "new policy" was "to involve the US embassies and Latin American governments in project selection", which "violates the Foundation’s mandate from Congress," according to the New Internationalist. 
In April 1984, the New Internationalist wrote that President Reagan had "taken over" the Inter-American Foundation and had "moved in to snuff out one of the few progressive initiatives that have appeared on the official US aid scene in many years."
The Board had been "taken over by White House appointees," the New Internationalist wrote, "proof if proof were needed that the Foundation had become an effective channel for funds to progressive groups in Latin America." Previously, IAF funding "came from the US government" but was "administered by an independent Board outside the government aid machinery. So it could reach many small groups that governments would not normally deal with. Some 1,600 grants were made over its 13 years of existence and the 1983 budget was $23 millions." 
The move was suspect, the New Internationalist stated, as it was "difficult to believe that such an organisation could operate completely independently" and that the "channels" established "with peasant co-operatives ... could be [readily] used for the gathering of intelligence" by the CIA.
In a June 14, 1984, news release, the Council on Hemispheric Affairs (COHA) sounded an alarm that independence for the IAF was "in jeopardy" as Bell's vacant position was in danger of being filled with someone "with highly conservative credentials" "as the result of a tainted selection process".
The three candidates presented to replace Bell each possessed "scant" "combined development experience", which "could fatally imperil the integrity of the United States' most successful development organization," the COHA wrote. William Dyal had been "the only other president in the organization’s history." 
Of the three candidates, Deborah Szekely and Donald Powell were called "unequivocal political candidates with little Latin American development experience" and "inappropriate credentials-in grass-roots development." Frank Gannon, the third candidate, was "an experienced Latin Americanist who in recent years has been a consultant to the Organization of American States, including a stint as former Secretary-General Alejandro Orfila’s speechwriter." However, Gannon possessed "limited administrative experience", held a "conventional attitude towards development issues", and lacked "a powerful political base that could undergird his independence," which would "inevitably" "leave him open to being dominated by the Board’s chairman, Victor Blanco," COHA wrote. 
In January 1984, the IAF Board appointed a three-person "search committee", COHA reported: 
- Blanco, Middendorf, "another Reagan appointee, who is universally regarded as an illinformed Reagan militant on Latin America and whose name prominently has figured in corridor chatter about past financial peccadillos. The third member of the search committee is William Doherty, recently appointed to the IAF’s advisory council and the executive director of the American Institute for Free Labor Development (AIFLD), which has played a key role in El Salvador’s land reform program. Doherty, a nominal Democrat and a fast-talking old-time operator on Latin America, has been at the center of a long-standing controversy over unproven allegations that he has systematically cooperated with the CIA in carrying out U.S. cold-war security interests in the region as much as advancing genuine labor concerns. He has been extremely supportive of most of the White House’s regional initiatives, and is widely viewed as the binding figure between the administration’s foreign policy interests and other U.S. international aid organizations, including AIFLD and the Agency for international Development (AID)."
The search committee "hired the New York firm" of Heidrick & Struggles (web) to "help in the initial search for a new president. For the first time in the IAF’s history, however, there was no reference check on candidates" and H&S "always operated under the strict instructions of the Board search committee," COHA wrote. Initially, there were 14 named candidates, later cut to six. Later, three more candidates dropped out, "including White House-favorite José Sorzano, another right-wing Cuban-American and a long-time aide to United Nations Ambassador Jeane Kirkpatrick, who withdrew after a press report labelled him the leading candidate."
COHA accused the IAF Board members of being power hungry and Chairman Blanco "intent on cleaning house at the Foundation" since fall 1982. An early January 1984 Senate Foreign Relations internal memo, which "described Blanco as an 'unguided missile' whose actions would be sure to cause 'unnecessary embarrassment' to the administration", urged the White House to rein Blanco in. 
The IAF had also been "under fire" from the right-wing Heritage Foundation, which, in 1981, "accused the body of supporting peasant groups in Chile and Peru that were 'socialist or Marxist-Leninist oriented or controlled.' Blanco resonated to these totally unproven allegations and the plot to oust Bell was hatched. Sources close to the organization have feared that since Bell’s firing, Reagan administration-supported IAF projects could crop up in such controversial settings as El Salvador and Guatemala," COHA wrote.
Controversial Board Candidate 1986
In a November 25, 1986, news release, COHA issued another alarm, this time regarding the anticipated choice of Thomas W. Pauken , "the highly controversial former director of ACTION" as "the White House’s expected choice" to replace Jimmy Carter appointee Luis Nogales, whose term on the IAF board ended in September 1986.
According to COHA, Pauken's nomination was "viewed as a part of the Reagan administration’s continuing effort to compromise the original congressional mandate given to the IAF in 1969, and turn the nonpartisan agency into a White House foreign policy tool in Latin America." Additionally, the possibility existed that Pauken would be a Reagan recess appointment, which, under U.S. Senate rules, "could serve without confirmation for an entire legislative session," setting aside "careful congressional scrutiny for as long as a year." 
COHA wrote that, as ACTION director, Pauken had "crippled the VISTA program, circumventing civil service hiring procedures [by] bringing in right-wing ideologues under the designation of 'specialists,' and in one case approved over $100,000 in VISTA money for anti-abortion programs despite the fact that the agency’s money is specifically limited to anti-poverty programs." Pauken halted the practice "after a public outcry" but "VISTA director Dixie Cassell, who had first opposed funding the project and brought it to the attention of ACTION officials, was later moved to another position."
Pauken was "such a controversial figure and high-speed right wing ideologue, that Congress separated the Peace Corps from ACTION in 1981 because of strong concerns raised in the Corps during Pauken’s confirmation hearings as ACTION director that year," COHA wrote.
Intelligence Community Connections
In the past, IAF avoided "any connections with U.S. intelligence services." However, Pauken's "backround in army intelligence in Vietnam from 1967 to 1970" was a threat, as "[h]aving a former intelligence officer on the IAF board would severely damage the organization’s credibility in the eyes of the grassroots movements throughout Latin America with which it works, as well as expose its overseas staff to political attacks," COHA wrote.
"During the hearings, questioning over Pauken’s military backround eventually disclosed that his involvement in intelligence activities Was more extensive than he had previously admitted. Pauken had deemphasized his past activities in these areas in his descriptions of himself and failed to mention his top secret security clearance as well as his work in covert operations while Team Chief of Intelligence Collection, all of which was recorded on his army records." 
Supporting the "democratic opposition"
At the September 22-23, 1986, board meeting, "Reagan appointee" Richard T. McCormack, U.S. ambassador to the Organization of American States, "asked why the Foundation was not spending more money in Nicaragua, particularly on the 'democratic opposition'," COHA reported November 25, 1986. "When told that the IAF does not fund political activities without specific board approval, McCormack asked the IAF staff to prepare an options paper on a funding program in Nicaragua for anti-Sandinista efforts."
Additionally, "information" had "come to light regarding Carlos Perez", who had been named to the IAF advisory council at the September 1986 board meeting, COHA wrote. Perez had been "identified by the Washington Post as the head of the 'Concerned Citizens for Democracy,' a group that provides 'humanitarian aid' to the contras." Another member of "the advisory board of the 'Concerned Citizens for Democracy' [was] retired Gen. John Singlaub, head of the extremist U.S. Council for World Freedom, perhaps the most important private contra-funding operation."
Related SourceWatch Resources
- Foreign Assistance Act of 1969 creating the Inter-American Foundation.
- "Rules for Real Aid. Rebuild the aid machine," New Internationalist, August 1983.
- AID: "Foundation founders. Reagan takes over Inter-American Foundation," New Internationalist, April 1984.
- "Development Agency's Already Wounded Independence at Stake as Board Sets to Meet to Choose New President," Council on Hemispheric Affairs, June 14, 1984.
- "Controversial Appointment Would Mark Further Administration Effort to Politicize Inter-American Foundation," Council on Hemispheric Affairs, November 25, 1986.