Comment.-Our aid programs must inevitably be different from what they would be if all countries were equally able and determined to put themselves in readiness as quickly as possible to meet a Soviet attack regardless of the sacrifices involved. Yet the governments of the members of the alliance are providing vigorous leadership to their peoples with respect to the necessity of rearmament. In relation to their capacities the efforts of these countries reflect substantial sacrifices. Mutual cooperation for defense requires continued vigorous leadership. 3. Criticism In certain instances the principal recipients of our aid do not agree with us on certain policies. In the Far East the British disagree with our policy toward Communist China. The French still fear the rearmament of Western Germany. There are some nations which regard the fighting in Korea as of only secondary concern to them. Comment.-Major disagreements must occasionally be expected so long as we have strong allies and not subservient satellites, but they should not be allowed to persist long enough to endanger the joint security effort. It is to our interest to continue vigorous efforts to eliminate disagreements rather than abandon our mutual defense policies as a result of them. 4. Criticism International negotiations and legislative action by countries participating in the Mutual Security Program have always taken longer than was anticipated. As one example, the ratification of the European Defense Community and the German contractual arrangements on which the rearmament of Germany is dependent are a year behind schedule and there is no certainty when action will be completed. Comment.-Under the committee bill restrictions are placed upon the availability of funds until all necessary agreements are reached. 5. Criticism There is objection to any support of totalitarian regimes. Comment.-In the present world situation United States security in the face of the threat of Soviet aggression sometimes makes it necessary to work with those who can and will resist Soviet power effectively. 6. Criticism In the newly independent nations which have recently evolved from colonialism or dependent status there is a hostility toward the western countries, including the United States. Comment. This attitude makes it difficult to enlist the full cooperation of most of them in the defense program. Their fear of domination by foreign powers and their suspicions and hostility toward the industrialized nations must be overcome by reassuring cooperation. It is important to our own security, therefore, to do everything possible to prevent any weakening of their governments or their falling under Soviet domination. 7. Criticism Money which has been made available for the mutual security program has not been expended as rapidly as originally anticipated. Comment. This has been, in part, due to the demands made on United States military production by the Korean war and, in part, to the fact that negotiation, legislation, and organization among recipient nations has taken longer than had been estimated. In the case of military funds, the situation is as follows: Unexpended balance from present appropriations re- Similar figures for nonmilitary funds are as follows: Deficit $8, 038, 300, 000 5, 000, 000, 000 3, 038, 300, 000 1, 474, 800, 000 1, 871, 500, 000 396, 700, 000 More military end items will be delivered to foreign nations during the next fiscal year than any previous fiscal year because contracts which have been let in previous years are now maturing. Continuity in the long-term program requires additional authorization. 8. Criticism The transformation of the original European recovery program to a defense program in Europe is not complete. Vestiges remain of operations which originated in and are directly related to a recovery program. These include programs to reform the economic structures of the recipient countries by such measures as getting rid of cartels and developing United States type trade unions. There are leftover staffs of economic analysts and advisers who devote most of their attention to the economic health of Allied Nations. There may be a tendency to feel the national pulse to see that a country does not overstrain itself rather than to urge exertion to the utmost to attain the goals necessary for defense. Comment. It is desirable to make the necessary administrative adjustments to make sure that United States foreign aid funds are expended to enable our allies to meet their defense commitments of 1953 and 1954 rather than to carry on the traditions of the Marshall plan of 1948. These adjustments are facilitated by the committee bill. 9. Criticism Numerous criticisms have been leveled against the administrative operation of the foreign-aid programs. Comments. In its hearings which cover 1,300 pages, the committee has made a worldwide survey of the operation of this program and on the basis of these hearings recommends the continuation of the program. In the course of its hearings and through the use of subcommittees in the field, the committee has investigated many of the criticisms of the program, but the committee has not attempted to investigate all of them. Other committees are exploring in detail such operations, including the trade with countries behind the Iron Curtain, the utilization of counterpart funds, and the selection of personnel in the program. Correction of many of the situations can be accomplished by administrative action without additional legislation. Reorganization Plan No. 7 is designed to accomplish this result. An opportunity should be given to those charged with the administration of the program to deal with such problems. G. NEED FOR CONTINUING PROGRAM Despite the factors just enumerated, several of which are unpleasant and difficult to reconcile with each other, the program must go forward. The committee has held clearly before it as the paramount consideration the security interest of the United States which is being greatly fortified by the increased mobilization of the resources of the free world against Soviet aggression. It is not just the addition to our own strength which we would gain if it is possible to unite and organize effectively the manpower and the production facilities of the nations not yet under Soviet domination. There is also the added danger to us if these same resources are permitted to fall under Soviet control. The committee believes that the threat of Communist aggression still requires a continued defense effort on the part of the free nations of the world. We do not profess to be mindreaders. Security requires us to base our plans on enemy capabilities rather than on enemy intentions. There are all kinds of guesses as to the intentions of the Soviet leaders at this moment or in fiscal 1954 or at some later date. There is no doubt now as to their military strength and their ability to launch an attack in great force with little warning. Until we are ready to withstand and turn back such an attack we should push forward our defense program regardless of difficulties and disappointments. It is our conviction that this course is the best way to deter such an attack. The committee believes also that progress has been and is being made in organizing the forces and facilities of sovereign nations under a unified military command. A chain of airbases is under construction in Western Europe for intercepting any Soviet attack. Jet planes are being supplied to man these bases. Trained units of many nations are already equipped with modern United States tanks, artillery, and other weapons. The fact that annoying problems have been encountered, that it has taken longer to accomplish objectives than anticipated, and that our money has not been spent as effectively as originally hoped does not indicate that the concept is unsound or that the entire effort should be abandoned. The Committee on Foreign Affairs is convinced that it is in the interest of the security of the United States to try to mobilize the free nations against Communist aggression. The program in the committee bill carries out this purpose. It should be adopted. H. NEED FOR NEW LEGISLATION This is an interim bill. The committee is disappointed that we do not have a better legislative structure for this "package" which now contains nine different laws as follows: (1) The Mutual Security Act of 1951. (2) The Mutual Security Act of 1952. (3) Any provision of the Economic Cooperation Act of 1948 which is in effect on the day preceding the effective date of this act. (4) The China Aid Act of 1948. (5) The Far Eastern Economic Assistance Act of 1950. (6) The China Area Aid Act of 1950. (7) The Mutual Defense Assistance Act of 1949. (8) The act entitled "An act to provide for assistance to Greece and Turkey", approved May 22, 1947. (9) The United Nations Palestine Refugee Aid Act of 1950. (10) The Act for International Development (point 4). (11) The Institute of Inter-American Affairs Act. We have realized, however, that more was needed than a mere recodification of existing laws. The administrative structure, the basic policies, need overhauling. Time has not permitted the new administration to do this, and the committee has had neither the time nor the authority to do it. The new administration, however, recognizes the problem and has set out to solve it in Reorganization Plan No. 7. In his message submitting this plan to Congress, President Eisenhower said: "Our organization for the conduct of foreign affairs has been built upon a patchwork of statutes which needs careful restudy as a basis for new legislation. The development of new legislation will take time. By early next year we will be prepared, with appropriate consultation with the Congress, to recommend such legislation. In the meantime we must improve the present arrangements within the framework of existing legislation. "To date the organization of the executive branch for foreign affairs has been deficient in two major respects. First: There has been no clear assignment of central responsibility for foreign policy below the President. Second: A number of programs which implement our foreign policy have been scattered within the executive branch rather than being grouped together for the most efficient and economical administration. "We must correct these deficiencies. The measures proposed are directed toward that objective. The consideration of new legislation will open up further reorganization possibilities." 1. EXECUTIVE CANDOR In the earlier stages of the hearings there was apparent either a lack of candor or a lack of understanding as to the type of material the committee wanted. This was cleared up and, in general, the information desired was obtained. The effort of N. E. Halaby, Deputy Assistant Secretary of Defense, in this direction is particularly appreciated. There are a number of instances of this candor. Savings of $354 million already effected and probable savings of an additional $50 million were announced after the original authorization request was made and the request was reduced by this amount. The authorization for special economic assistance for the Near East and Africa includes $30 million for United Nations Relief and Works Agency to be used for displaced Arabs al though no appropriation will be requested this year. Plans are admitted to be insufficiently advanced for using this sum to justify an appropriation. It is regarded as essential, however, to our relations in the Middle East to indicate the willingness of the United States to go forward toward meeting the problems of the Arab refugees. A similar situation occurred in Italy where delays in a project for assembling military airplanes in Italy permitted the application of $37,500,000 of funds to the fiscal 1954 program which had been previously included in the fiscal 1953 authorization. The Department of Defense has substantially reorganized its accounting procedures following a study by the General Accounting Office initiated by the Committee on Appropriations of the House. As a result of this accounting change, the Defense Department has informed the committee that its unobligated balance as of June 30, 1953 is likely to be as great as $1,600 million (the unexpended balance is not affected). The committee was also given information that the United States has entered into a commitment with the other NATO countries, subject to parliamentary action in all cases, to contribute approximately 42 percent of the cost of the construction of additional airfields and other facilities in Europe even though the plans for this program are not yet firm and it may be several years before construction is finished. J. EVALUATION TEAM REPORTS Upon his assumption of office as Director for Mutual Security, Mr. Harold E. Stassen sent evaluation teams made up of business leaders from various sections of the United States to survey Mutual Security Agency operations in Europe and Asia. The committee was furnished with copies of all the reports of the evaluation teams, many of which were secret. The Mutual Security Agency has supplied the committee with a detailed analysis of all recommendations and suggestions of the evaluation teams, together with a statement of the action taken by the executive branch with regard to them. This bill reflects a number of changes recommended by the evaluation teams and the Reorganization Plan No. 7 which provides for the combining of foreign aid operations in a new Foreign Operations Administration carries out additional recommendations of these teams. The judgment of the committee as to the request for economic assistance is also reinforced by the statement of Mr. Clarence Francis, chairman of the board of the General Foods Corp., and director of the evaluation teams that the request for authorization reflects the general recommendations of the evaluation teams. K. AUTHORIZATIONS COMPARED WITH 1953 APPROPRIATIONS MUTUAL SECURITY PROGRAM-FISCAL YEAR 1954 AUTHORIZATION RECOMMENDED BY HOUSE FOREIGN AFFAIRS COMMITTEE AS COMPARED TO FISCAL YEAR 1953 APPROPRIATION1 1 Fiscal 1953 figures have been adjusted to reflect transfers of funds and to correspond where possible to 1954 categories. |