(The following information was later supplied :) ECONOMIC ASSISTANCE TO INDIA, PAKISTAN, AND LATIN AMERICA, FISCAL YEAR 1970 MILITARY ASSISTANCE REQUEST FOR KOREA, CHINA, GREECE, AND TURKEY Senator SYMINGTON. Now, you say the bulk of the fiscal year 1970 military assistance request, almost 80 percent, is for Korea, China, Greece, and Turkey. Have you any comments about the justification of this aid to any of those countries? Secretary ROGERS. Well, I do not think any beyond what the committee is well aware of. It is consistent with the past programs over the last several years. Senator SYMINGTON. Thank you. UNITED STATES-NATIONALIST CHINA AGREEMENT On July 3 the Chinese Nationalists announced they had attacked the mainland coast with gunboats and sunk two ships and a pursuing naval craft. Did this raid violate any agreement between the United States and Nationalist China concerning prior agreement on attacks. against the mainland and, if not, what are the precise terms of that agreement? Secretary ROGERS. Well, under the question of precise terms, as you know, whatever the agreement was, it occurred long before we were in office, and I will be glad to supply those terms for you. Senator SYMINGTON. Would you do that? Secretary ROGERS. But we did express our concern to the Government of China, the Republic of China, about those raids and, as you know, there have not been any since that time. Senator SYMINGTON. Thank you. (The following information was later supplied :) DULLES-YEH EXCHANGE OF NOTES, DECEMBER 10, 1954 His Excellency JOHN FOSTER DULLES, Secretary of State of The United States of America EXCELLENCY: I have the honor to acknowledge the receipt of Your Excellency's Note of today's date, which reads as follows: "I have the honor to refer to recent conversations between representatives of our two Governments and to confirm the understandings reached as a result of those conversations, as follows: "The Republic of China effectively controls both the territory described in Article VI of the Treaty of Mutual Defense between the Republic of China and the United States of America signed on December 2, 1954, at Washington and other territory. It possesses with respect to all territory now and hereafter under its control the inherent right of self-defense. In view of the obligations of the two Parties under the said Treaty and of the fact that the use of force from either of these areas by either of the Parties affects the other, it is agreed that such use of force will be a matter of joint agreement, subject to action of an emergency character which is clearly an exercise of the inherent right of selfdefense. Military elements which are a product of joint effort and contribution by the two Parties will not be removed from the territories described in Article VI to a degree which would substantially diminish the defensibility of such territories without mutual agreement." I have the honor to confirm, on behalf of my Government, the understanding set forth in your Excellency's Note under reply. I avail myself of this opportunity to convey to Your Excellency the assurances of my highest consideration. GEORGE K. C. YEH, Minister for Foreign Affairs of the Republic of China. RESALE OF U.S. TANKS TO PAKISTAN Senator SYMINGTON. Now, there are recurring rumors that Italy or Turkey may sell Pakistan a large quantity of U.S. surplus tanks. Such a sale would require U.S. approval. Is a proposal of this nature under consideration by this government? Secretary ROGERS. Senator, you are correct that a sale of tanks by Turkey or, I think, Italy, would require approval by the U.S. Government. We have not given any such approval this time, and we have nothing actively under consideration at the moment. U.S. CONTROL OF WEAPONS IN SOUTHEAST ASIA Senator SYMINGTON. There will be hundreds of millions of surplus arms in Southeast Asia-my next question, Mr. Secretary-after the Vietnam war is settled. Are any plans being made for the disposition of these weapons, specifically to insure that they do not end up in the hands of countries picking up war materials? Will we control the disposition of weapons we furnished and plan to furnish the South Vietnamese? I notice we planned to give them some $6,200 million in equipment. Secretary ROGERS. Yes. Senator SYMINGTON. If the war stops will they be allowed to sell that for a profit without our aproval? Secretary ROGERS. Well, insofar as the first part of your question is concerned, I do not think we have given any consideration to disposition of surplus tanks for India and Pakistan, but on the overall question you asked, the answer is "Yes." We are giving consideration to what happens after the war is over, and to many of the programs and plans that we will have to consider at the end of the war. Senator SYMINGTON. Could I make my question more specific? If we move the $6,200 million military equipment into South Vietnam, will we have them under contract not to move it to another country without our approval? Secretary ROGERS. If the war is completed, and we have a great deal of surplus military equipment, we will make provision for how that equipment will be disposed of. Certainly in order to do that we would have to have some control over the disposition of the equipment. Senator SYMINGTON. Thank you. LACK OF PHILIPPINE SUPPORT FOR VIETNAM OPERATION A prominent member of the Eisenhower administration was very critical about the support we have been getting from some of the other countries in the Far East with respect to our Vietnam operation. When I asked what country he thought had given us the least support as against what they were getting out of it he said "There is no question about that in my mind, the Philippines." I read a rather shocking article in Fortune magazine, the last issue, about the Philippines. Do you happen to have read it? Secretary ROGERS. I have it, but I have not read it, Senator. Dr. HANNAH. Yes. We have a small aid program in the Philippines. It is programed to be continued. It is primarily in education, and in agriculture, health and family planning. Of course, one of the problems in the Philippines in spite of the fact it is a pretty sophisticated country Senator SYMINGTON. Dr. Hannah, have you read the article? Dr. HANNAH. I have not read the article. Senator SYMINGTON. May I suggest you do? Dr. HANNAH. I will read it. Senator SYMINGTON. Then will you let us know what you think? Dr. HANNAH. I would be glad to do it. Senator SYMINGTON. Thank you, Mr. Chairman. (The following information was later supplied:) RESPONSE TO FORTUNE ARTICLE JUSTIFICATION OF PHILIPPINE AID PROGRAM It is true that the Philippines faces serious problems of the kind outlined in the July 1969 Fortune Article. However, this article is a collection of most of the worst aspects of the Philippine society and its problems, and presents an unbalanced composite impression of the country. Moreover, the article obscures the fact that many of the problems highlighted e.g. crime, maldistribution of income, explosive population growth, unemployment, inadequate housing, increased nationalism, etc. are not problems peculiar to the Philippines but are characteristic of many of the developing countries worldwide. The country is one of the few functioning democracies in the developing world and the Filipino citizen has effectively exercised his voting rights to accomplish an orderly transfer of political power in each election since independence in 1946. The Philippine military is under the firm control of the civilian government and has no political aspirations. Less than 12% of the budget is allocated for military expenditures with the balance used for economic development and government operation. The country consistently allocates 25% of its budget for education, which has provided the Philippines with one of the best educated and trained manpower pools in the developing world-a factor which contributes to the exodus of trained people referred to by Fortune. The article stated that median per capita income is $60; in actual fact, it is closer to $100 and higher than the level in India, Burma, Indonesia, Korea, Thailand, Ceylon and many other countries. The Private Sector in the Philippines, which Fortune characterizes "heavily committed to fast buck" enterprises like real estate, is generally conceded to be one of the best in Asia and is funneling increased amounts of capital into steel mills, cement plants, fertilizer plants, agro industry, private power development and industry across the board. This year private Filipino business donated-no strings attached-nearly $4 million to establish an Asian Institute of Management patterned after the Harvard Business School to upgrade and expand the business management talent pool in the Philippines and the rest of Asia. The question posed was why the U.S. should continue aid in view of the picture presented by Fortune. Essentially, A.I.D.'s program is designed to help the Filipinos address many of the problems highlighted by Fortune-problems recognized by many Filipinos and ones they are attempting to correct. As an example, the article referred to achievement of self sufficiency in rice by the Filipinos (after close to 90 years of recorded deficiency in production) and imports which in recent years averaged close to $40 million annually. For the last four years A.I.D. has had a program of assistance in rice production which has helped the new Filipino "technocrats" tackle the problem of food self sufficiency. Clearly the major portion of the credit for this accomplishment goes to the Filipinos but A.I.D.'s program helped by providing assistance in agricultural credit, adaptive research, extension training, etc. In tax and customs administration the Filipinos have used A.I.D. technical assistance to increase collections. During the Marcos Administration tax revenues increased 53% and customs revenues 72%. The recent upsurge in classroom construction reflects effective use of the U.S. War Damage Claim's Special Fund for Education with over 40,000 classrooms built in the last four years compared to the 400 constructed in the previous four-year period. This year the World Bank has budgeted close to $83 million for the Philippines for projects which had their roots in AID programs. Included is a $25 million loan to a private development bank that was established with AID help in 1963, a bank which prohibits real estate projects in its bylaws and which has already channeled $45 million of IBRD and ADB funds into productive industrial and agro-industrial investments. Another $12.5 million from IBRD, earmarked for farm mechanization, is to be channeled through a highly successful network of private rural banks, a system which was started with AID assistance in the early 1950's and which has been instrumental in providing farm credit for the rice program. An additional $31 million from IBRD is programmed for a $65 million irrigation dam which will irrigate 80,000 hectares in Central Luzon, the core area of Huk activity. The Feasibility Study for this dam and the National Water Resources program which preceded it were AID funded. Finally, $15 million from IBRD earmarked for grain storage facilities to handle increased rice production emanated from an AID funded national survey and feasibility study of this problem. In the rural areas where Fortune characterizes the peasant as living in a Nipa hut with no plumbing, no electricity and no "rising expectations," signs of change are emerging. The successful rice program not only solved the country's cereal shortage but doubled the income of many of the participating farmers. Nipa huts are being replaced by new board houses, caribou with hand tractors, etc. Much of the impact has occurred in Central Louzon, the traditional "Huklandia." Electricity for the rural Filipino is also on its way due to AID help. An AID survey set the guidelines for rural electrification in 1964. A follow-on team developed a pilot project subsequently funded by a $3.1 million AID loan to electrify areas populated by 800,000 rural Filipinos. The Philippine Congress and the Marcos Administration passed, during this Congressional Session, a new comprehensive rural electrification bill to expand this program. The current AID program also provides assistance in the field of population where the 3.5% growth rate continues to tax the physical and manpower resources of the country and contributes greatly to the problems highlighted by Fortune. Two years ago there seemed little hope that there would be early action on this problem in this essentially Catholic country. Now the picture is changing radically-private clinics are growing in number and the Marcos Administration has created a new Council on Population to help develop a national policy to grapple with the difficult political and economic problems presented. Progress to date has been very satisfactory and further assistance seems clearly warranted. We also provide assistance in the field of law and order in the smaller towns and rural areas. In our agricultural program the target now is to consolidate the progress made in rice production and move the peasant farmer on to modern diversified multi-cropping. Finally, in the area of Provincial Development AID has been working hand-inhand with the Filipino Central Government in pilot programs to strengthen the provincial and municipal governments. In the first pilot province of Laguna a provincial planning group now exists, provincial revenues have increased through improved tax practices, and funds generated are facilitating increased development for the province without relying solely on Central Government resources. We do not wish to imply that the Philippines does not have difficult problems— it does, and not primarily because of peculiar Filipino characteristics but because it is a developing country and shares the same problems in greater and lesser degree with the other less developed countries. The Filipinos know their problems as well as we and are attempting to solve them within the context of a democratic system. On balance we feel our small AID program has made and can continue to make an important contribution to these efforts. The CHAIRMAN. Senator Mundt. SUCCESS OF AID PROGRAM IN INDONESIA NOTED Senator MUNDT. I was pleased to note that we have cut down the number of countries substantially to which foreign aid is being made. available. I was interested in Dr. Hannah's statement where he lists the recent success of aid, because it seems to me there is one rather conspicuous omission in the listing of the places we have been successful. I was curious why you omitted reference to Indonesia. Dr. HANNAH. No good reason except that here I was talking about countries that have now ceased to get economic assistance and/or are approaching that point. Of course, Indonesia continues to get substantial assistance and is programed to do so for some years ahead although very great progress has been made there. It is still going to be necessary to give them considerable assistance for some time down the road. Senator MUNDT. I agree. It seems to me that if I were going to try to sell aid in today's world I would point with great praise to Indonesia and point out the great potentiality. For some reason this statement implies, and we had other statements from other witnesses which have clearly indicated they do not consider Indonesia a success story. I think it is the most dramatic success story we have had since the beginning of the aid program because there we not only preserved a country for the free world but went out and got one that was slipping behind the Iron Curtain. I have not had a chance to examine the statistics and your figures but I hope that they do not reflect the same sort of casual approach to Indonesia that we seem to get when we hear testimony about it. Dr. HANNAH. It is not casual at all. It has my complete approval. I will put it another way: considerable enthusiasm for what has been accomplished in Indonesia in the last few years. There was no intention to downgrade the progress. Senator MUNDT. Do your proposals money wise reflect your en thusiasm? Dr. HANNAH. Yes, they do. Senator MUNDT. They do. I am glad to hear that because it seems to me that, relative to the question that Senator Pell asked, when my constituents ask me about aid, as some of them do quite often, I point to Indonesia because that is one place where it seems to me we can really blow the whistles and wave the flags. Now, we are hopeful, you have to take the march of history and look at the parade of passerbys, it may not last, but communism did not last in Greece and it did not last in other places. It is your picture it seems to me of the situation that you confront, and I am glad you share my enthusiasm for it. DEVELOPMENT LOAN RECIPIENTS Eighty-six percent of the countries getting aid, I believe you said, were the eight countries listed by Secretary Rogers in his statement. |