in the hopes that we might at least take part of the edge off, if nothing

more.

There may be other things that are basically wrong with this suggestion, I do not know.

Secretary LAIRD. I think it should be looked at.

Senator MCGEE. But I think it ought to be explored, and if there is a better idea, why then, let us turn on the light and try.

Secretary LAIRD. I think the multilateral approach could certainly be looked at, and we will also look at your suggestion as regards the United Nations.

TROOP WITHDRAWAL FROM VIETNAM

Senator MCGEE. I was about to tell you how many questions I had left, but I have been observing others this morning, and I do not want to be committed at this point, but I did want to ask you a question in regard to your dialogue with Senator Case of New Jersey, about the new policy of this administration in Vietnam.

If I understood Senator Case's question correctly, he wanted you to tell him whether the course that was now underway, namely, troop withdrawal over a period of time was indeed irreversible.

I think that this is how it came out to me, he was talking about the fact that the course had been set, the direction was determined, and that this is now irreversible, and I thought you responded in agreement. Have I restated this fairly?

Secretary LAIRD. Our program, Senator, as far as reduction of force commitments in Vietnam is concerned, is based upon three factors. First, success in Paris towards mutual withdrawal; second, success as far as Vietnamization is concerned; and, third, a reduction of the level of hostilities on the part of Viet Cong and the North Vietnamese. Thus far, we have made progress with point No. 2, and I believe that this progress should be and can be continued.

I was making it very clear to Senator Case, that I thought it was most important, that we make our announcements as to the progress of this program, and the number of troops that can be reduced at short intervals rather than for 12 and 14 months. If we predict withdrawals far in advance, we run the risk of not being able to deliver on our predictions.

So this is the procedure that is being used to set these various decision dates. Our next decision date, which has been announced by the President, will be on or before the 15th of August. A decision will be made at that time by the President of the United States, as to the progress that has been made and the number of American troops that can be reduced as a result of this program.

I think, and I hope, we will continue to meet with success in this

area.

Senator MCGEE. Yes. I certainly join you in that very deep hope. If I may reassess Senator Case's question, and I am sorry that another commitment required that he leave, it would seem to me the thrust of his question was, that there was nothing going to happen to reverse the tide of the American withdrawal from Southeast Asia, and this is what disturbed me.

Secretary LAIRD. That is not in our hands, Senator McGee.
Senator MCGEE. I think this is the point.

VIETNAMIZATION OF FORCES

Secretary LAIRD. There are certain things that could be done by the North Vitenamese and the Viet Cong, that could change this course of action. The success of this program depends on the activities that can be turned over to the South Vietnamese forces-the second guideline that we are using.

We are not relying on any hope for mutual withdrawal that might result from the Paris talks, and we have not made any decision based upon the reduction of hostilities on the part of the Vietcong or the North Vietnamese. Our decisions are presently being based on the progress toward Vietnamization, and that progress can be slowed up by actions on the part of the North Vietnamese. If they were to cross the DMZ, or if they were to do certain other things that they have the military capability to do, this would make a difference.

Senator MCGEE. It might even reverse it to some extent, depending on how serious it was, I assume; is that what you are saying?

Secretary LAIRD. The decisions would be made on the basis of the strength of the forces of the South Vietnamese, and of the United States required to attain our overall objective in Vietnam. These decisions will be based not on our hope, but on what we actually can do. Senator MCGEE. I am relieved to hear it. It was my understanding that was to be the procedure.

I interpreted the colloquy between you and Senator Case to reflect an endorsement, and I daresay that will be interpreted by some of the media in that light, and I think again, unless there has been a reversal of your policy, it would lead to serious misinterpretation.

Secretary LAIRD. I want to make it very clear that any reductions will be based on these three guideposts that have been set forth, and there are things that can intervene and interfere with that progress.

The 25,000 reduction that has been announced, however, I can assure you will be met by the end of August. The figure that will be announced-if it is possible to announce a figure on the next decision date on or before the 15th of August, will be a realistic one for reductions during the next given time period.

Senator MCGEE. This clarifies it a good bit, because many of us recognize that all U.S. troops ought to have been out of there yesterday, but there also are considerable other factors at stake that make a precipitous decision such as that rather reckless, and that is the reason I thought I would take this moment to spell that out just a little bit.

U.S. NEGOTIATIONS WITH THE SOVIETS

You said another thing in regard to a question from Senator Symington of Missouri that related to the Soviets and Chinese.

The burden of your point, if I recall it correctly, was that we could probably negotiate a little more easily these days with the Soviets than we could with the Chinese. The obvious question is why?

Secretary LAIRD. Well, as a practical matter we are engaged in negotiations and we are having discussions with the Soviet Union, and we have not been having discussions with the Red Chinese.

This year we have had difficulties maintaining even the communications with Communist China that had been set up in Poland. It was the Chinese who walked out, not the United States. We were there,

ready and available to carry on discussions; but they were not available and ready to carry on discussions.

I think also that some of the recent statements made by the Soviets would indicate that we are very close to the time when we will enter into negotiations on the strategic arms limitation talks which have been suggested by President Nixon.

Senator MCGEE. Well, I happen to agree with this interpretation, but I have one other point, and I wondered whether you would agree or not, that bears upon it, and that is the relative state of discombobulation in China, and at least the state of great uncertainty and confusion there. It seems to me that this, too, mitigates against chances of any meaningful negotiations at almost any level.

I wish it were not so, and I move to the argument then that probably China's most negotiable time will come when she acquires a deliverable weapon. This puts it over simply and draws it rather starkly.

We saw this with the Soviets, when they began to acquire what Senator Symington alluded to as a balance of terror, and it became once more possible for conversations on other questions to open up, and I have had a thesis that, perhaps, this might also obtain with the Chinese.

Would you care to comment on that?

Secretary LAIRD. That could very well be possible. I believe that they will acquire capabilities in the very near future. I stated earlier to the subcommittee of this committee that I felt that the Chinese were perhaps going to fire an ICBM, on a test range within the next 18 months and that, by the 1975 time period, they will have acquired a small operational capability. This could very well change their negotiating position.

EFFECT OF BALANCE OF POWER ON SOVIET INTENTIONS?

Senator MCGEE. The last of these queries that I would put to you relates to your very interesting discussion with Chairman Fulbright in regard to the Soviet possibilities or probabilities and their policies or their intentions. My question would be, does the balance of power between the Soviets and the United States, a balance of forces, say, that prevails in Western Europe, have any bearing upon the probability of action or, say, Soviet intention?

Secretary LAIRD. Yes. I think that undoubtedly it does. I am one of those who believes that the economic drain on the Soviet Union at the present time resulting from tremendous effort, they have been making in strategic offensive as well as defensive weapons and the tremendous conventional force level which they are maintaining, requires them to give approximately 22 to 25 percent of their gross national product to military purposes.

The United States is in a position where, even with a war, it is making available about 8.8 percent of its gross national product for defense. This is lower even than the figure for the period from 1962 to 1964. I believe that their outlay has an influence upon the Soviets' negotiating position at this time.

Senator MCGEE. In terms of whatever their intentions may be, if there were a substantial disproportion between their capabilities in Eastern Europe, let us say, and ours, or a combination of the allies,

NATO, would this not alter the spectrum of possible thrusts on the part of the Soviets?

Secretary LAIRD. There is no question about that. Our NATO allies are very concerned about it, too. They have raised the subject on several occasions during the consultations we are carrying on with them at the present time over a possible arms limitation agreement.

Senator MCGEE. I mention this because it seems to me that we may be guilty sometimes of overreacting to the implications of improving climates in the politics of the world, or at least not to appreciate what made the improved climate possible. We have come a long way in Europe in structuring a meaningful balance line, theoretically at least a very fine one, that has been drawn across Europe, and I have contended that this does explain or permit a good bit of the improved atmosphere that seems to be characteristic in many of the relations in that part of the world, and that is why I think it is important that we underscore what has contributed to its possibilities.

I hate to see us begin to erode the base of that possibility by cutting it back precipitously or eroding it in other ways that might worsen the situation, and then we would have a far more expensive task of retooling once more to try to achieve a new balance, and that was the point of my question to you in regard to the relative possibilities or probabilities.

It is possible that you can scare yourself to death every night with whatever there may be around the world. We have to be realistic about it.

Those are the only questions I have, Mr. Chairman.

WRITTEN QUESTIONS FROM SENATOR FULBRIGHT

The CHAIRMAN. Mr. Secretary, we have kept you here quite long. I have a number of questions that I think, if it is agreeable with you, we will submit to you and your staff. They are more or less routine, not policy questions particularly, and to save time, if it is agreeable with you, I will submit them to Mr. Stempler and you can work out answers for the record.

(Senator Fulbright's questions and the Defense Department's answers follow :)

Question. How much, if any, military aid was provided in FY 1969 to foreign countries through foreign currencies generated under P.L. 480? How much is planned for FY 1970? What is the cumulative total for P.L. 480 funded military aid?

Answer. A total of $1,243.5 million was allocated from FY 1955 to FY 1969. Of this amount, $154.9 million was made available to Defense but only $62.4 million was allocated for military assistance; the balance was used by AID for defense budget support. In FY 1969, less than $50 thousand was obligated by DOD for military assistance purposes.

The FY 1970 allocations for P.L. 480 Section 104 (c) uses cannot yet be determined. The amount allocated to 104 (c) uses will depend on the number and size of agreements negotiated in FY 1970, the split between the amount of local currency allocated to U.S. uses and military budget support purposes arrived at in negotiations with concerned U.S. government agencies and the recipient countries, and the commodities and local currency involved.

Question. How many countries with which we do not have some type of defense treaty arrangement receive military aid from the United States? Answer. Twenty countries in FY 1969. Of these, eleven received only training in the United States and four received training overseas and in the United States. The remaining five received materiel and training.

Question. What arrangements, if any, do we have with Vietnam and Thailand as to disposition of our air bases, communications facilities, and other military installations in those countries after the war is over?

Answer. At present there are no formal arrangements with the GVN regarding disposition of U.S. air bases, communications facilities or other military installations in South Vietnam. Post-hostilities planning is not yet far enough along to define future requirements for these facilities. However, planning for the appropriate disposition of these facilities is now in process.

U.S. forces have utilized and improved Thai facilities with the permission of the Thai Government, pursuant to its obligations under the Southeast Asia Collective Defense Treaty. There are no formal base agreements. No decisions have as yet been made regarding the disposition of these facilities after the Vietnam war. This will be the subject of future discussions with the Royal Thai Government.

Question. How much of the proposed military assistance program is in payment for base rights?

Answer. $14.4 million.

Question. What criteria is used for classifying a country as developed or underdeveloped for purposes of the military assistance and sales programs? What countries are presently considered as underdeveloped?

Answer. Since the military assistance and sales programs are operated under separate statutes, the response to this question must necessarily address each of these programs separately.

MILITARY ASSISTANCE

Section 620 (m) of the Foreign Assistance Act of 1961, as amended, prohibits grant assistance to any economically developed nation capable of sustaining its own defense burden and economic growth, except (1) to fulfill firm commitments made prior to July 1, 1963, or (2) for military assistance orientation and training expenses in an amount not to exceed $500,000 per country per annum.

The term "economically developed nation" was deliberately not defined in the subsection, it being the judgment of the committee of conference at the time of its enactment in 1963 that such a determination is one of reasonable judgment. In this connection, the committee noted its intent that countries of Western Europe, among others, be included in the category of economically developed nations but stated that, in view of U.S. base rights in Spain and Portugal, it did not intend this subsection to be "immediately applicable" to those two countries (H. Rept. No. 1006, 88th Cong., first sess. p. 30). While the subsection is now, in view of the passage of time and of the current economic status of Spain and Portugal, regarded as fully applicable in fiscal year 1970 to those two countries, the same considerations justifying continued military assistance continue to pertain. For this reason, section 3(h)(1) of the Foreign Assistance Act of 1969, as proposed by the executive branch, amends section 620 (m) so as to permit the President to furnish assistance to such countries when he determines it to be important to national security. Alternatively, section 620 (m) may be waived by the President pursuant to section 614(a) of the Foreign Assistance Act of 1961, as amended, in amounts not to exceed $50,000,000 to any one country in any fiscal year.

In exercising the rule of "reasonable judgment", the executive branch has available to its several listings of less developed countries. The Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD), has a standard list of less developed countries, which includes both independent nations and overseas territories and colonies of developed nations. This list is currently under review by the DAC for possible revision. Another list of developed and less developed countries has been put out by the Department of Economic and Social Affairs of the United Nations, which has classified countries and territories for purposes of resource transfer information. Domestically, for balance of payments purposes, three other listings of developed and less developed countries have been promulgated. One such listing is that established in E.O. 11285 of June 10, 1966 for the purposes of the Interest Equalization Tax. Pursuant to E.O. 11387 of January 1, 1968 governing capital transfers abroad, two other listings were issued. The list issued by the Board of Governors of the Federal Reserve System as part of the guidelines for restraint of foreign credits by banks and other financial institutions, is identical with the Interest Equalization Tax list. The list issued by the Department of Commerce under its Foreign Direct Investments Regulations divides countries into three categories: