Progress in economic and social development by developing countries should not spell the end of US. bilateral assistance, argues Ambassador Valdez in this article. In recent years such progress has occurred in Latin America and the Caribbean to the extent that many of the nations of the region no longer qualify for assistance under theper capita income criterion tradition- ally employed by U.S. policy-makers. Ambassador Valdez explores the needfor continuing bilateral assistance, and then articulates why it is in the best interests of the United States to provide this assistance. He concludes by setting out the parameters of aforeign aidpolicy structured in light of the changing concerns of “middle income” developing nations, as well as the United States.