Representative BROWN. Just one or two.

Mr. Hoopes, you, in fact, were prominent in the negotiations of those bases in Spain, were you not?

Mr. HOOPES. Not really. I can tell you exactly my part. It was in 1968. I led a small American delegation into three sessions with a counterpart, who was a Spanish general officer; the effort resulted in total impasse. We made military aid offers that seemed inadequate from the Spanish point of view. The negotiations then lapsed, and were not resumed until the Nixon administration had taken office.

Representative BROWN. The Chairman has sort of sidled up to the suggestion of a rearmed Japan. At least a Japan more prominent in the perimeter defense of Asia might be one option that would be open to us in the international field, and a Japan perhaps operating in an independent way developing its own foreign policy in this

area.

What do you think Red China's reaction might be to that possibility?

Mr. HOOPES. I can't say what the reaction of Red China would be. I assume that both Red China and the Soviet Union anticipate some growth in Japanese military strength.

Representative BROWN. With pleasure.

Mr. HOOPES. Not with pleasure, but perhaps as an inevitable reality.

Representative BROWN. What about the small countries of Asia? Mr. HOOPES. Well, there is still a lot of residual antipathy to the Japanese enterprises of 1940 and 1941.

Representative BROWN. This is my final question. You also suggested in your testimony that we might develop a little bit more interest in bringing Red China to the outside world. In point of fact hasn't this been done to an extent by the Nixon administration in the last 2 years, specifically by the reduction of trade controls with Red China? We have indicated that Chinese goods brought back by tourists will now be somewhat more acceptable than they were before. And subsidiaries of U.S. companies abroad can now trade with China to some extent, as I understand. We have removed controls on shipping trade with Red China, and in the Presidential message last February the President stated that the Chinese are a great and vital people who should not remain isolated from the international community. As I understand it, there was some effort to approach the idea of press and public officials touring Red China if the Red Chinese would accept that kind of inter-relationship.

Haven't those steps been taken in the last couple of years to move toward what you have suggested in your testimony?

Mr. HOOPES. I am aware of some of them, Mr. Brown, and if they add up to a trend I would certainly applaud and encourage it. Representative BROWN. Thank you.

Chairman PROXMIRE. Thank you again, Mr. Hoopes, for an excellent job.

Mr. HOOPES. Thank you, Mr. Chairman.

(The following information was subsequently supplied for the record :)

RESPONSE OF TOWNSEND HOOPES TO ADDITIONAL WRITTEN QUESTIONS POSED BY CHAIRMAN PROXMIRE

Question 1. You state "the considerable turbulence and fluctuation in the U.S. military procurement programs create major problems of management, coordination, and adjustment for the military assistance programs." I wonder if you would elaborate on these problems, and cite some examples to illustrate your point.

Answer. U.S. military procurement programs, taken as a whole, are very large, complicated and often interdependent. Orders to move from pilot operations to full production usually depend on evaluations of prototypes or early models. Such evaluations, even when affirmative, are subject to change, and these changes affect ongoing production rates and schedules. Budget availabilities fluctuate from year to year, as do perceptions of the civilian and military leadership with respect to equipment priorities. These factors lead to further changes in production rates and schedules on particular items. These changes are more or less continuous.

Changes affecting procurement for U.S. military services impact on planning for military assistance programs. For example, a squadron of aircraft sold to country X (with a future delivery date) may be affected as to price, specifications, and delivery date by model changes that are subsequently ordered for purely American purposes. Similarly, a decision to give second-hand equipment to country Y may depend upon assurances that the appropriate U.S. military service can provide maintenance, spare parts, and replacement units for a number of years ahead. Even with the best of intentions, however, such assurances are subject to future changes in policy, procedures, and budget availabilities.

Question 2. You indicate that there were similar problems, if not more serious ones, in connection with military sales and you suggest that in effect the U.S. Government was pushing expensive military hardware on underdeveloped countries which did not need it. Would you please elaborate on this point also.

Answer. Foreign military sales, like other exports contribute to the U.S. balance of payments position. Some elements of the Government have accordingly considered it good policy to facilitate such sales. In addition, there has been a tendency on the part of the administrative technicians in charge of the military sales program to promote sales without a full consideration of the economic impact on the recipient or a full appreciation of the foreign policy implications. There is, however, sufficient knowledge and authority at the higher levels of U.S. Government to prohibit or restrain military sales where the net impact is judged to be adverse. In my experience, such authority has been responsibly exercised in the great majority of cases. Congress has also added legislative restraints.

Question 3. The Committee has been led to believe that some of the most serious pressures to enlarge military assistance come from within the State Department, that some of our diplomatic missions consider it their duty to obtain the maximum military assistance for their client countries, and that contrary to popular belief, it is the Pentagon which often resists the efforts to increase spending in this area. Would you comment on this?

Answer. I believe the record makes clear that the Secretary of Defense and his civilian staff consistently pressed for orderly, selective reductions in MAP during the past ten years. It is difficult for an ambassador (or a military advisory group leader) to avoid becoming an advocate for the country to which he is accredited. Almost by definition, his task is to maintain cordial and effective relations with the host government. If the host government places great importance on obtaining U.S. military assistance, the ambassador will be under certain pressure to advocate it, whether or not there is a genuine military need. This kind of pressure applies of course to other forms of American largesse as well-like economic aid, bank loans, technical assistance, etc. This situation points up the need for strong-minded, independent U.S. ambassadors, who can maintain a broad view of the U.S. interest and can avoid the temptations and hazards of "localities."

Chairman PROXMIRE. Our next witness is Mr. Nicholas Katzenbach, vice president, general counsel, and a director of International

Business Machines Corporation. Most of us know him better as the former Under Secretary of State and the former Attorney General. He also served in World War II with the Army Air Force, a graduate of Princeton and a Rhodes scholar.

Mr. Katzenbach, you did not provide us with a prepared statement until just this minute, but it came, as you might say, in the nick of time.

We are very grateful to you for it. It is a concise prepared statement, the hour is late, and you proceed, and if you don't cover your full prepared statement, it will be printed in the record.

STATEMENT OF NICHOLAS deB. KATZENBACH, VICE PRESIDENT AND GENERAL COUNSEL, INTERNATIONAL BUSINESS MACHINE CORP.

Mr. KATZENBACH. I would be happy if you wish just to proceed to questions,

Chairman PROXMIRE. Why don't you summarize your prepared statement?

Mr. KATZENBACH. Basically, the prepared statement says that I have no particular wisdom but a lot of very difficult problems.

I think that there has been an effort to cut down on military assistance, particularly grant assistance, in order that it not impose too great an economic burden on other countries, and I think this trend has been continuing for some time.

I think the difficulty with that is that other policies get in the way, when we get into our security interests and what we regard as our security interests.

I express in the prepared statement some questioning of the Nixon doctrine which I really do not understand, and it has not yet been clarified, and it would be unfair for me to attack it unless I knew exactly what it was and what it involved.

To the extent that it appears to involve or may involve large-scale military assistance in Southeast Asia, an increase in this for the purpose of getting Americans out, it seems to me that it is somewhat faulty in that respect.

I don't really think it would be a stabilizing force, I don't think it can really play the role of containment of China successfully, and I would feel the more we invested there the greater would appear to be our security stake and then the greater the danger of further involvement in Southeast Asia might be.

I think that generally summarizes my prepared statement, Mr. Chairman.

I think that as far as coordination is concerned that the military aid programs are pretty well coordinated in the executive branch. I think there is a tendency in the field, both by the ambassadors as well as by military assistance groups, to rather always urge more than really ought properly to be given. I think we could probably cut down further if we cut down our military presence, just the MAAG groups, and use Salami tactics there to simply squeeze them down, I think that would be helpful.

I think there is a certain lack of order in it which is due to matters

of various forms of aid. is under various different committees of the Congress, and I think it makes it a little more difficult to get a consistent coordinated policy.

(The prepared statement of Mr. Katzenbach follows:)

PREPARED STATEMENT OF NICHOLAS DEB. KATZENBACH

Mr. Chairman: I appreciate your invitation to testify before this subcommittee on the Economic impact of foreign military assistance. It is an extraordinarily difficult subject. I do not come before this subcommittee with any very satisfactory answers to the problems which are posed.

I do not think that there is any question that there is within the Administration a general recognition that foreign military assistance, whether it takes the form of grant aid, sale of excess U.S. equipment, or new commercial production, has to be looked at from the point of view of its impact on the economic development of the recipient country. Thus there has been a general effort to discourage arms transfers from the United States where there would put an unwarranted burden on a country's foreign exchange resources, or create excessive claims on future budgets.

I wish to emphasize this point because I think the record over the past several years does show that genuine efforts to cut down and phase out military assistance programs have taken place. And I think it would only be fair to add that, in addition, there have been genuine efforts to keep the recipient country's military budget as low as possible, and to refuse to sell more sophisticated weapons, partly as a result of Congressional action, but also partly as a result of trying realistically to assess a country's needs. As a part of this program there has also been the effort to shift from grant aid to credit sales. This has the advantage of forcing a more rigid budgetary discipline on the recipient country and making more clear the sacrifices which have to be undertaken to support a military establishment.

I think that in general terms this has been the right policy and that we should continue to follow it. But it has serious difficulties of execution, not the least of which is that other policies of the U.S. Government can get in its way. In addition, we have to recognize that this policy necessarily involves a whole series of political judgments which are by no means easy to make and on which there is almost inevitably differences of opinion.

Let me briefly examine some of these difficulties. But before I do so it is probably important to note that our military assistance, whatever form it takes, has different motivations in different parts of the world. The great bulk of our grant assistance goes to the so-called forward defense countries. Some of these-Vietnam, Laos, Thailand, and today Cambodia-are funded and administered by the Department of Defense and are closely related to support of the Vietnam war effort. The remainder goes to the Republics of Korea and China, and to Turkey and Greece as part of the NATO forces arrangements. All of these have, in the past, been related to the concept of containing Russian or Chinese aggression, and been related to United States treaty obligations and commitments. Today this basis has been supplemented by the Nixon Doctrine, which I confess that as yet I do not wholly understand. I make this point for the obvious reason that our military assistance programs in Southeast Asia are closely related to what we conceive to be our security interest in that part of the world, to the intent of Red China, and to our own force posture. There can be no question about the fact that the rather large military forces presumably required and supported in these countries require in addition a good deal of U.S. economic support and assistance in one form or another and that large investments in military forces are bound to slow down important economic development. A good deal of economic progress has in fact been made in Korea and in China, but this has required very substantial U.S. assistance over the years.

I can understand and sympathize with the Administration's present dilemma. We have a clear interest in disengagement in that part of the world as far as U.S. forces are concerned, and it seems to me that Mr. Nixon is following that policy. Certainly the policy of Vietnamization is designed to relieve U.S. forces of the need for major combat activities, although it does not seem possible in the near future to avoid the need for logistical and air support. And if I understand the Nixon Doctrine, it is in essence a process of Viet

namization in other countries. Frankly, I have serious problems with this as a viable policy over the long haul. Admittedly there is appeal-for Americans, at least-in having other countries protect their own security with their own manpower. But there are at least three problems with this: First, I agree with the comments in the Peterson Report which expressed doubts as to the possibility that the recipient nation could become both economically self-reliant and modernize its forces. Certainly one cannot be encouraged by the examples of either the Republic of Korea or the Republic of China in this respect. I am not critical of the efforts made on their own behalf by those two countries, but I do point out that it has involved large expenditures to the United States and that total disengagement has been impossible in both situations.

Second, it seems to me that the logic of large scale military assistance in these countries assumes that the United States has an important security interest. The more we invest, the more important that interest appears to be. If that is true, then I suppose the policy assumes that the United States would itself intervene militarily if the military assistance to the country involved was not adequate in the circumstances. Third, the more we modernize military forces the more we inevitably encourage military solutions to political problems. This is true in Southeast Asia, and I think it is true in other countries as well. It appears to put the United States in the uncomfortable position of supporting military governments and opposed to often needed political change. I think we pay a tremendous price in terms of international politics when we create this image, difficult as it is to avoid in all circumstances.

The problem that I have with large-scale military assistance to Southeast Asia is simply that we cannot, on the one hand, really expect any of these nations to be a substitute for the United States if the purpose is to contain Communist China. On the other hand, both China and Vietnam are likely to continue to aid and assist insurgent movements for a long time to come. If this is true then I have serious doubts that large-scale military assistance is in fact going to result in either U.S. disengagement or in political stability in that part of the world. The more insurgency the more counterinsurgency and repression is almost inevitable.

Let me turn briefly to other parts of the world. There are similar problems, although these exist on a far less dangerous scale. We have phased down considerably our military assistance throughout Latin America, but we are, unfortunately, left with a number of military governments. Here there are two areas of problems: first, there are the efforts of Castro and his colleagues to subvert various governments in Latin America. This has led the United States to involve itself in counterinsurgency programs, again carrying the political penalty which goes with supporting political repression. Again, I have serious doubts that real economic progress can be made in some countries until there is a change in outlook on the part of politically conservative leadership.

Secondly, because the military forces are often important to the very existence of a government, there is strong pressure on the local governments to provide military forces with at least a modicum of modern armament, irrespective of need. The United States can refuse to supply such armaments; it can threaten to cut out economic aid if such armaments are purchased. But if the pressure from the military forces is really great, those arms will be purchased in any event. There are others who are willing to supply them, and we have faced this problem in a number of countries in Latin America. To sum up. Over the past few years, which have aimed at severely limited arms assistance to most of the least developed countries is the right policy. By moving from grant assistance to sales unreasonable armaments expenditures can be discouraged, but they will not, as a political fact, disappear. I think we could further improve this situation by reducing the number of military advisory missions which we have abroad quite sharply, and I think that the Department of State should be given an even clearer mandate to control arms shipments. I do not think that the practices have been badly coordinated, but I do believe that there are a number of instances where the military missions have something of a vested interest in the continuation of the program, and are not as vigorous in recommending cuts as they might be. And the same is often true of Embassies. The closer to the field one gets, the more likely this is to be the case. It is for that reason