France, came to a total of $221 million. The cost-sharing of the $221 million second slice was split up between the United States, the United Kingdom, the Netherlands, France, Canada, and BelgiumLuxembourg.

Mr. VORYS. Does cost-sharing include the cost of the land?

Mr. NASH. No, sir.

Mr. VORYS. In no case?

Mr. NASH. In no case does the cost-sharing include the cost of land or the cost of utilities connected with the land-roads and sewers and gas lines and whatever it may be. They are already there in place. The so-called host country, the country where the facility is being constructed, has to furnish that and bear the cost of it and this is an important thing to bear in mind because this is mostly not Government property that is being used for those facilities; it is privately owned property that has to be taken under what we would call "eminent domain," and it has to be paid for by the Government who takes it. That second slice, $221 million, added to the first slice of $92 million comes to a total of $313 million and the United States-of the first two slices, the United States agreed to take on the cost of $106 million. That came out at 34 percent, computed on the total cost of the first and second slices. And looking only at the cost of the second slice alone, it came out at 48 percent.

Mr. VORYS. How was that?

Mr. NASH. The first slice of $92 million, the second slice of $221 million comes to a total of $313 million and of that $313 million the United States agreed to pay $106 million, which percentagewise is 34 percent of the cost of the first two slices; it is 48 percent of the cost of the second slice alone.

At Lisbon, the third slice-and I emphasize again, it comes along in annual increments; it comes to us from SHAPE. SHAPE lists its requirements, what it thinks it is going to need in a year or 2 years hence for the forces expected to be in being at that time.

The standing group of the Military Committee review it, screen it and cut it down, and then submit the figure to be chewed up by the ministers in the way of cost-sharing.

What they chewed up at Lisbon was a third slice which is shown on the chart there, of $425 million. That was split up among all the NATO countries except Turkey and Greece who had just come in there at Lisbon for the first time and Portugal who had no infrastructure, and Iceland, who is not participating in this picture shown here because Iceland has no forces of her own. Iceland's principal contribution is her geography, her geography for the airbases she has there.

In the $425 million, the United States agreed to take on $182 million, or 43 percent.

The fourth slice negotiated at Paris last December, broken down, is in two pieces: $230 million to which the ministers addressed themselves at Paris in December and left an additional $187 million to be agreed to subsequently. The United States agreed to take on $92 million of the $230 million agreed upon at Paris, or a percentage of 40 percent.

Now where we stand therefore as of the present time is agreed costsharing for a total of $968 million. Of that total the United States has agreed to pay $380 million and that percentage wise comes out at 39.2 percent, rounded off at 40 percent which is the percentage that we stand on for negotiating purposes and intend to continue to stand on. No more than 40 percent.

PROGRESS IN NATO INFRASTRUCTURE CONSTRUCTION

On the side of physical construction, I think in terms of a general statement it is fair to say that over the 3-year period-2-year period, really, speaking of the program starting with the establishment of SHAPE in April 1951-we are from 10 to 12 months behind.

The construction of the airfields got off to a slow start for a number of reasons. It took an awful long time in some cases to get the land that we wanted. Usually you want the land that is the choicest. Frequently its location for strategic purposes puts it right in the center of some of the best agricultural land in Europe, people hate to give up land as you well know, and it is always a difficult proposition to get the precise site that you want.

Second, we ran into the difficult problem of taxes. The imposition of taxes by these NATO countries on our construction work, on our materials and so on was something that we addressed ourselves to a year ago December. This is one of the things I would like to brag about a little-not personally, but I mean in terms of an effort of the United States.

A negotiating team was sent over to Europe in January 1952, and succeeded in securing the agreement of the NATO countries to lift the taxes on our construction work, on the materials, and the whole long list of very complicated technical taxes. They did an excellent job. In about 6 weeks they secured the bulk of agreements. More agreements have been added since, but I can say to the Congress that with respect to the construction of infrastructure-NATO infrastructure workthe tax problem is not a problem any more.

It took us some time to work it out but there is one area in which the NATO countries have, I can say, cooperated very well and in a very difficult area. This tax picture in our area alone is complicated enough but when you get into some of these European countries it is almost beyond understanding.

On the side of physical construction we have made up a good deal of the lost time. It got off to a very slow start, it took some time to get construction companies located who could do a good job, some of them were not experienced in the work and had to do their work over again. Here is where we stand as of the end of 1952, after all the projects in the first slice are fully completed: The target for 1952 was to complete 66 airfields. As of the end of 1952, that target was met by 60 percent. It is 40 percent off target. We think that as of the present time, all but about 25 percent remains to be completed. All of that will be complete by 1953.

Mr. SMITH. What are those figures, "12 extensions"? What is the significance of that?

Mr. NASH. Extension of existing airfields, making them larger for the more modern planes, sir.

For 1953, of the 26 airfields scheduled for completion in 1953, all but one will be finished by the end of 1953, so we are catching up. Progress is going along and we have been making it up, but until the end of 1954, we will not complete all the airfields scheduled for completion at the end of 1953. In 1954, we will have been caught up and have met our 1953 goal as well.

In the signal communications, about 60 percent were completed at the end of 1952. About 85 percent will be completed by June of this year and all of it will be wound up this year. The program for 1953 involved 35 additional signal projects, and of these we expect to have 80 percent completed by the end of the year.

On the side of infrastructure, we have physically made good progress in the last year.

As a concluding note on it, it is our aim at the Paris meeting in April to see if we cannot get the countries to agree and see if SHAPE would not come up and give us for our October meeting, the balance of the infrastructure program.

They will tell us how much more they think is needed in the way of physical facilities and give the best estimate of its cost so that governments can plan budgets in advance that will take into account the cost of infrastructure.

PROJECTED NATO INFRASTRUCTURE NEEDS

The program to date involves as you see there, $968 million. I would hesitate to give the committee at this juncture, how much more they are going to tell us it will require to complete the job, because you see that involves a decision on what further forces are going to be brought into being. It is particularly important on the side of airfields.

You saw in the presentation General Hansell made on Friday that we have quite a large number of aircraft to buildup to 10,000. We have to have the requisite airfields for them, and until you get the aircraft, you do not want to plan and finance bases beyond the needsmeaning by that, the forces that will be there to use them. Just venturing a guess, I would say approximately another $700 million will be required to wind up the infrastructure program, $600 million to $700 million.

We hope we can get a cost-sharing agreement to that in October and then you will have the infrastructure part of our NATO force buildup taken care of.

Mr. SMITH. You will have to get a buildup won't you?

Mr. NASH. We will. By that, Mr. Chairman. I am talking about an agreement that will wind the thing un. It will be more than just an annual increment. That will be in effect, probably taking a 2-year program and getting it agreed to so that you can plan ahead and budget ahead for it, that is the important thing, and not have it treated as has been the case heretofore, as a sort of the tail on the dog can ing along after you have been working on the dog itself. The fat it is really the legs of the dog. It is the part upon which the dog travels.

THE NEED TO BUILD UP NATO SUPPORT AND RESERVE FORCES

Mr. SMITH. Is it safe to say that when we reach the present objectives of the NATO goals, that when we hit those targets, that that will be about the limit and then the program is to develop your reserves behind that program?

Mr. NASH. That is the principal problem, Mr. Chairman. That is what I think General Ridgway will concentrate his attention on when he comes before the committee, to tell you what is needed in the way of the backup for these divisions.

This is something with which he is very concerned, particularly on the side of the ammunition reserves which is a problem as you know, around the world. He will concentrate his attention on it. What he wants is effective frontline forces. He is more interested in the effectiveness of them than he is in just numbers.

He says he wants to get rid of this numbers racket. There is no magic in what he calls "window dressing divisions." What he wants to be able to say is:

The divisions I am talking about are divisions that can fight on the frontline and fight for such and such a period. I do not want to fight for just one day or two days or three days. I want them to have the stuff to fight with for 60 or 90 days, which is what is estimated will be necessary until reserve replacements could be secured.

On that he secured the agreement of the North Atlantic Council in December. They agreed that from here on, what we will concentrate on-I would just like to read this one paragraph-if you will put that chart on entitled "North Atlantic Treaty Organization"-the Military Committee reported to the Council as follows:

In the past the NATO Defense Program has placed greater emphasis on the build-up of combat frontline forces than the buildup of support and reserves to make these forces really effective. During the examination of information available on forces in the current review

That is, the current review that is going on now that will come from our decision in NATO

serious deficiency in support units and operational reserves has been brought to light. These deficiencies at present compromise the ability of existing forces to conduct sustained combat. The report calls attention to the need for a decision on the priority to be given to the eliminations of these deficiencies, if necessary at the expense of further build-up in front-line unit to insure effectiveneess of forces.

Now, that being the guideline that the Military Committee gave to the Council at its interim meeting in Paris, they came out with this conclusion, this guideline for the determinations that have to be made in April.

The North Atlantic Council directs that to the extent that the measures envisaged in paragraph 2 above cannot provide resources adequate to meet in full the militarily desirable force plans, the appropriate civilian and military NATO bodies in completing the 1952 annual review should remember the necessary adjustments in force plans to reconcile them with political and economic capabilities, and accepts to this end the proposals set forth in the Military Committee's report

what I have just read to you—

in particular their recommendation that "where resources are inadequate to meet in full the militarily desirable force plans, emphasis should be given to the

effectiveness of the forces rather than to numerical increases in units inadequately supported." This emphasis should not jeopardize the later build-up of the required forces.

PRIORITIES FOR NATO

Now, on that note, I would like to conclude by repeating what I started out with and that is that the military have set military requirements and the job of the NATO Council, the ministers themselves, is to see how much their nations are willing to take on in the direction of meeting those military requirements.

To the extent that you cannot have everything-namely, the full number of divisions, planes, and ships that the military recommends they should be furnished with to carry out their task-it is the guideline laid down in December which will be the basis of the decisions taken next month and in April, that you should make as effective as possible the forces you now have, that is your first priority. Address your resources to that first. Then to the extent that you still have additional money in your defense budgets, apply that to the buildup of further forces, more divisions, more planes, more ships. Mr. SMITH. Mr. Vorys.

DETERMINATION OF NATO INFRASTRUCTURE NEEDS

Mr. VORYS. Coming back to this infrastructure, with $968 million, you are going to have how many airfields?

Mr. NASH. One hundred forty-nine.

Mr. VORYS. Who is it who figures that it will require 50 percent as much or more for infrastructure, a half million dollars more on top of $968 million.

Mr. NASH. Do you mean more airfields?

Mr. VORYS. No. Nine hundred sixty eight million dollars is going to produce 149 new airfields and a lot of other things up there. I am just using airfields as a kind of an index as you have on your chart. Who is it who figures that there will be half a million dollars more needed for infrastructure?

Mr. NASH. Nobody has figured that out yet, Mr. Vorys. That is right off the top of Nash's head.

I am guessing. SACEUR may come out with a recommendation. For building expenses, I need jet fuel lines and I need radar nets, and so forth, which will be included. Not just airfields, but also the things necessary to make airfields fully operational. That is just a guess off the top of my head and maybe it would have been better had I not thrown it at you, but I wanted to give you some sort of a feel as to the end of the road figures.

Mr. VORYS. I got a feel out of that.

Mr. NASH. Probably SHAPE would scream and say that probably is not nearly enough.

Mr. VORYS. As I understand it, we have quite a radar network operating over there now.

Mr. NASH. We have some, but we have a lot more to go. That is a problem as to just how much each country will do for itself.