As western powers and the eastern bloc competed for spheres of influence, economic and financial aid to the "third world" gained in importance. The Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD) was founded in 1961.
The same year, Switzerland's Parliament created an initial credit facility of 60 million francs for project work and other development aid programmes. This was followed by the Federal Council's appointment of the first Delegate for Technical Cooperation, paving the way for today's Swiss Development and Cooperation (SDC). In 1962, spearheaded by the Trade Division (today SECO), Switzerland signed the first commodity agreement between producers in developing countries and consumers in the industrialised world. The agreement regulated the global market for coffee over the next 10 years.
The concept of priority countries led to lengthy internal debate at the Federal Political Department (predecessor of the FDFA) and the Trade Division, with advocates and opponents in both departments. For project work, a distinction was made between simple projects (comprising individual measures), mixed projects (comprising different elements) and combined projects (mixed projects with financial aid). Most of the financial aid came from the Trade Division.
In 1966, the Head of the Trade Division signed the first mixedcredit agreement on behalf of the Federal Council; it was with India and for over 70 million francs. These funds were earmarked for infrastructure, industrial and agricultural projects. Switzerland became the 17th member of the DAC in 1969.
The faster the pace of industrialisation in a developing country, the greater is the need for external capital. Products manufactured in the new industries there replace imports and thereby help save foreign exchange [or increase the revenue from the corresponding exports]. However, as the additional foreign currencies spent on industrialisation are higher than these savings, the need for capital is very long term with regard to the balance of payments.
Edwin Stopper, Head of the Trade Division (in a memo to the department head, 1965)