The story "Japan's Hands-on Foreign Aid" {Business, Jan. 13} gave an excellent report on the sorry state of Japanese foreign aid. Unfortunately, the story seems to conclude by default that the United States should follow this model, as is being proposed by some prominent Democratic senators.

U.S. foreign aid that is a subsidy to U.S. business should be transferred to the Commerce Department budget, and foreign aid that is a subsidy for U.S. universities might best be included in the Education Department budget. Aid that is strictly for geopolitical advantage should be run by the State Department in a separate account.

The remaining funds should be used to eliminate hunger and poverty around the world, a goal that would be much more possible if our foreign aid were as focused on the poor as that of donor agencies in Norway, Sweden and Canada.

While some might question whether the American people would support aid that was truly targeted at the Third World poor without U.S. interests coming first, recent surveys by the nonprofit umbrella agency, Interaction, indicate strong support for this kind of aid.

I hope Congress will follow the example of the Scandinavian countries and not that of Japan. ALEXANDER M. COUNTS Legislative Director, Results Washington