LATIN AMERICAN PROGRAM REVIEW ON AN INDIVIDUAL BASIS

Secretary LAIRD. Senator Javits, I think it is very difficult to establish a set of criteria applicable throughout South America or Central America because each country has to be looked at almost separately in connection with both economic assistance and military assistance. This is a matter which is reviewed very carefully by the State Department because it is basically one involving foreign policy considerations. My statement alludes to the fact that it is more a matter of foreign policy considerations than it is a military question. That is why the State Department reviews these programs for Latin America on an individual country basis.

I would hasten to add that the amount of money involved here is not of great significance. The program for Latin America that we have before the committee totals $21.4 million for fiscal year 1970, and $10.8 million of that amount will be used for training. We propose to train 4,462 individuals in this program. That training cost is $10.8 million, so there is very little left in the total program to buy hardware, to buy weapons, to buy rifles, to buy ammunition. But to set up a fixed and rigid review practice, without considering each country separately, I think would be rather dangerous.

Senator JAVITS. I do not think, Mr. Secretary, with all respect, that the money involved makes the difference. I do not suppose it cost $10 million to stage the overthrow of the czar's government at the close of World War I, and that was a pretty big operation. It depends on where you put it and what you have at the point of contact. But I do think that probably we ought to ask the State Department about that, since this is a matter which you say comes more completely in their jurisdiction; is that it?

Secretary LAIRD. That is correct, Senator, and that is why I alluded to the fact that I believe the possibility of direct military attacks in this hemisphere by an outside power or by Cuba is quite remote. I may be proven wrong, but that is my assessment of the situation; and that is why the overall military significance of these various programs is not as important as the foreign policy considerations, and why they are reviewed very closely by the State Department.

Senator JAVITS. I have just one last question, Mr. Secretary.

ORIENTATION OF CERTAIN U.S. MILITARY AID TOWARD
DEVELOPMENT ACTIVITIES

Are we having good experience with what I understand is an orientation which we have in the Philippines, perhaps Indonesia, where our military aid is strongly oriented toward development activities? Would you care to make any comment on that operation?

Secretary LAIRD. Yes.

Senator JAVITS. For example, I understand we are helping certain construction battalions.

Secretary LAIRD. Programs of civic action, including construction work and so forth are moving forward very well; and we have been quite successful in those areas. I have a detailed statement here on the program if I could supply it to you, Senator, or I will read it.

Senator JAVITS. No, to save time, if you would just file it, and also may I ask you to add, orally, if you wish, if we contemplate extending that type of program elsewhere under this military aid request.

Secretary LAIRD. The program has been a very important part of our MAP, Senator.

Senator JAVITS. That is the Philippines. Is it also extended in Indonesia?

Secretary LAIRD. It is important in both countries. I will supply for the record more exact data.

Senator JAVITS. Are we considering extension of the same idea to any other country to which we are giving military aid?

Secretary LAIRD. Yes, we are now involved in 21 countries.

Senator JAVITS. In that way?

Secretary LAIRD. In that way.

Senator JAVITS. Could you give us the order of magnitude and the whole thing in the statement?

Secretary LAIRD. I will give it to you by country and the total number of dollars involved. I believe that the dollar figures by country are classified, but I will supply them to the committee.

Senator JAVITS. Well, whatever is classified, you, of course, will take care of that.

Thank you, Mr. Chairman.

(The information requested is classified and in the committee files.) The CHAIRMAN. Senator Pell?

Senator PELL. Thank you, Mr. Chairman.

I was struck with Senator Javits' reference to insurgency. One of our basic problems is that we think insurgency is automatically a naughty word and ought to be eliminated.

Speaking as one Senator, I would not be here if it were not for insurgency. I know the Secretary knows about insurgency in Wisconsin. I wish we could get away from insurgency, and, as the Senator mentioned, I think we would welcome insurgency in Haiti.

Going to the subject of your testimony, I was struck in this connection by a book recently that came out by George Thayer called "The War Business." I made a fairly long speech on the Senate floor on the subject of it, and a couple of points from it I wanted to ask you your reaction to.

UNITED STATES AND U.S.S.R. ARMS EXPORTS

Is the basic thrust pretty well correct, that we in the last 4 years, have exported about $28 billion of arms and munitions around the world and the Soviets about $14 billion, making about a 2-to-1 ratio outside of our Warsaw and NATO Pact allies?

Secretary LAIRD. I have some reservations about the figures.

COMPARABLE UNITED STATES AND U.S.S.R. MILITARY AID PROGRAMS

Senator PELL. How would our military aid program compare with the Soviets last year or 2 years ago? Are we giving more?

Secretary LAIRD. It depends on how we handle the Southeast Asia conflict. Our aid is considerably more if we include the amounts funded in the Defense appropriation bill, but it is about on the same basis if you discount the amounts carried in the Defense appropriation bill

because Soviet costs in North Vietnam are approximately in the area of about $2 billion.

Senator PELL. $2 billion. I thought we were about $1 billion a year. Secretary LAIRD. Well, I think

Senator PELL. These are the figures with which we have been working before.

Secretary LAIRD. It is very hard to estimate. I had some discussion with Senator Symington about this when I was using the figure of the cost of a particular missile system. It is difficult to give an accurate estimate of the funding requirements. I think the Central Intelligence Agency figure is approximately $1.5 billion. Secretary McNamara used a figure of $4 billion. So there is some disagreement, and it goes to the manner in which you price out labor and other costs within the Soviet Union. It is difficult to give accurate figures as far as Soviet costs are concerned.

Senator PELL. But in a very rough order, would it not be correct to say we are giving, not counting our aid to South Vietnam and Soviet aid to North Vietnam, our military assistance programs would be on the order of about 2 to 1 or even

Secretary LAIRD. They were giving less. I would say that——
Senator PELL. Numerical order.

Secretary LAIRD. Right now, about 3 to 2.

Senator PELL. Three to two.

Secretary LAIRD. And this is based upon-there is difficulty in making this estimate.

Senator PELL. I understand.

Secretary LAIRD. But I would say that it would be closer to three to two when you discount those other factors. We have some estimates here that I can give you as far as dollars and cents are concerned. Senator PELL. I will not take the time of the committee.

Secretary LAIRD. They are all classified. That is my problem, Senator Pell. May I put them in the record at this point?

Senator PELL. I will look at them afterwards. I guess they should be put in the classified record as long as they are touched on. (The following information was later supplied :)

COMPARISON OF UNITED STATES AND SOVIET MILITARY EXPORTS WORLDWIDE, EXCEPT SOUTH AND NORTH VIETNAM, FOR THE 4-YEAR PERIOD FISCAL YEARS 1965-68

Secretary LAIRD. I have an unclassified statement that has been handed me.

The Soviet Union over the years has extended some $5 billion in military aid to non-Communist countries. Over 90 percent of this total has gone to the countries in the Middle East and Asia.

Senator PELL. Thank you.

In the same period of time, and excepting Vietnam, would the ratio be 2 to 1,3 to 1?

Secretary LAIRD. The ratio of total aid, discounting the Vietnam situation, we would be in the range of 3 to 2 during that time period. Senator MCGEE. May I put one footnote in that the Soviet figure would not include their Eastern European activity, that would be outside.

Secretary LAIRD. It does not include the Eastern European activities, that is correct. It does not include their aid to Eastern European countries. It does not include their aid to North Korea. It does not include their aid to North Vietnam.

Senator PELL. Could you supply for the record a list of the sales and grants from other major world arms supplying nations for the latest year available?

Secretary LAIRD. Yes, I will.

Senator PELL. Thank you.

(Classified information was later supplied for the committee files :) What would be the average interest rate on sales of arms charged last year and what would you propose to charge this year?

Secretary LAIRD. The cost of money to our Government is the rate that is used. Last year, the rate was approximately 6 percent.

Senator PELL. And this would be the rate you intend to use this year. Secretary LAIRD. Approximately 6 percent for credit sales, that is

correct.

U.S. POLICY REGARDING SALE OF F-5'S IN LATIN AMERICA

Senator PELL. In recent years several nations in Latin America have wished to buy the F-5 fighter aircraft. What would be the administration's policy with regard to sale of these aircraft in Latin America? Secretary LAIRD. We cannot, of course, sell these aircraft under the terms of the present law without a Presidential waiver. We intend to follow the requirements set forth by the Congress in the present law. Senator PELL. So there is a possibility that a waiver might be requested?

Secretary LAIRD. I cannot predict with certainty that it is going to be requested. There has been no decision to ask the President for a waiver.

Senator PELL. You could not reassure us to the extent of saying that your policy would be not to request a waiver?

Secretary LAIRD. This is a matter that would have to be studied very carefully, and I would not want to make a definite statement that would bind us all during this period of time. I think that that would be a mistake. But there has as yet been no decision to ask the President for a waiver.

The CHAIRMAN. Will the Senator yield to me on that point?
Senator PELL. Surely.

F-5 INTENDED FOR SALE ABROAD

The CHAIRMAN. In January, Mr. Secretary, the Air Force approved use of $2 million for preliminary design modifications of the F-5 for which the U.S. Government had no use. This plane was intended for sale abroad, and I think the House Armed Services Committee early this year proposed a first increment of $14 million out of a total $62

million to be made available out of the defense budget for retooling of the Northrop Corp. for production of the modified version, but this authorization bill was not acted on by the Senate Armed Services Committee.

The $2 millon, it seems to me, should have been charged against the military aid program, because it was exclusively designed for supplying planes to foreign countries. Is that not correct?

Secretary LAIRD. If I may just comment on that, Mr. Chairman, that money was entirely for engineering studies, and it did not go beyond engine engineering studies.

As far as the $14.5 million, I want to make that very clear that this was not a request of the Department of Defense or the Air Force. This was not approved by the Bureau of the Budget or by the administration. This request came from the Congress, and it was on the initiative of the House Armed Services Committee and was tied up in the authorization bill for the supplemental. This authorization bill, as you quite correctly stated, Mr. Chairman, was not acted upon by the Senate Armed Services Committee.

The CHAIRMAN. You are quite right, it was initiated by the chairman of the Armed Services Committee of the House, but this story in the April 10th New York Times by Mr. Finney says:

The justification offered by the committee for subsidizing production of an airplane not being ordered by the Air Force was that an improved version of the F-5 was necessary if the United States was to compete against such countries as France in foreign sales.

It continues:

The argument was supported at the hearing by Lieutenant General Doward L. Crow, director of the budget in the Air Force. Noting that the plane had been "extremely successful," the general told the committee, "In its present configuration, we feel its competitive position is slipping. The improved version would enhance the possibility of worldwide sales."

While the program was not proposed by the Defense Department, General Crow fully supported the idea once it was broached by Mr. Rivers.

Secretary LAIRD. I think that is a correct report, but I would like to comment on General Crow's support in that line of questioning. He was speaking personally. He was not speaking for the Air Force, and was not speaking for the Department of Defense. A decision had not been made by the Department of Defense, by the administration, nor by the Bureau of the Budget at the time that testimony was given; and I want to make it clear that the initiative was taken by the congressional committee.

The figure that is used in the story on the F-5-21, Mr. Chairman, is really only on paper. It would cost $65 million to ready a production line

The CHAIRMAN. This said $64 million. That is close.

Secretary LAIRD. The figure in the bill was $14.5 million, and this would not ready a production line. It would cost $65 million to do that.

The CHAIRMAN. The story says that was the first increment. It says early this year he proposed the first increment, but it was calculated to cost $64 million.

Secretary LAIRD. I do not quarrel with the story, but I want to make it very clear that this is not the Department of Defense initiative.