Mr. KATZENBACH. We tried that in the case of Peru.

Chairman PROXMIRE. You cut off all economic assistance and they continued to buy?

Mr. KATZENBACH. Yes.

Chairman PROXMIRE. They bought the Mirage anyway?

Mr. KATZENBACH. Yes.

Chairman PROXMIRE. That may be true in the case of Peru but how about in other instances? Was this an isolated example?

Mr. KATZENBACH. It is the only one that I can recollect that got to that point because I think the policy was constantly to keep cutting it down.

Chairman PROXMIRE. I hope that one example will not be used as a standard by which to say, "Well, we might as well continue selling military equipment to these poor countries because if we don't, somebody else will," just because it has been done once.

It seems to me we do have a very heavy responsibility and I think you have indicated much deeper knowledge than I have of the impact this is going to have on the society, the economy, the political stability, of the country if we force unsupportable military aid. Mr. KATZENBACII. The real difficulty

Chairman PROXMIRE. Maybe we ought to just cut them off if they insist on impoverishing their economy by buying military equipment they don't need except to engage in aggression against their neighbor. Mr. KATZENBACH. Well, then what we run into when we do that, and I think it is a dilemma, is the problem if we cut off economic loans and we cut off economic assistance apart from the fact those are always ongoing programs, they are always difficult to terminate, then the people we are really trying to help then don't get help. You increase the capacity for subversion from the Castro people, and so forth.

Now, maybe we ought to take more risks of that kind, I don't know, but it is the reason, I think, why administrations tend always to hedge their bets on this and always to, sincerely trying to, cut the arms down but giving some and working that route rather than taking a more drastic route.

Chairman PROXMIRE. That brings us to the other aspect of this. What is your response to the assertion we have heard from other witnesses that we have such pressure to increase the military assistance flow from the State Department and the diplomatic missions which see it as their duty to increase that and the Defense Department resists and argues in some cases that it doesn't make any military sense, let alone economic and social sense, and yet the diplomatic missions working their influence on the State Department, persuade the State Department to go ahead and provide military assistance.

Mr. KATZENBACH. That does happen. Certainly, I said at the outset I thought you always get more pressure from the people out in the field, whether they are military assistance group people or the ambassadors on this, and the reason is that the other government wants these pieces of equipment, whatever they may be, they desire to have them and so the ambassador uses them as political poker chips or is tempted to do so.

Chairman PROXMIRE. What can we do to counteract that?

Mr. KATZENBACH. I think just to be tougher than we have been. We have been fairly tough. I think one of the difficulties as to what always looks like goodies are your excess military supplies particularly in the smaller countries and this doesn't take a lot to shake some of these loose and the cost seems to be small. Very often you are dealing with programs which have been started in the past and continue to go on, and so you have got a question of our own credibility involved in it.

Chairman PROXMIRE. You were head of the coordinating agency that would oversee the entire military assistance program, is that correct?

Mr. KATZENBACH. Well, the reporting system in the Department of State was that group reported to a Deputy Under Secretary, and then to the Under Secretary.

Chairman PROXMIRE. So in that sense you were

Mr. KATZENBACH. So I was not in the day-to-day business but the important problems should have come to me, yes.

Chairman PROXMIRE. Well, since the important problems should have come to you while you were in office, what efforts were made to systematically review all the assistance programs, analyze each part, and measure the effectiveness of the benefits of the program?

Mr. KATZENBACH. We did this both to the military and economic programs on a regional basis through a thing called Interregional Groups which reported to the Senior Interdepartmental Group of which I was the chairman.

Chairman PROXMIRE. This was done when?

Mr. KATZENBACH. This was done at the time of the program, before the time of your budget proposals.

Chairman PROXMIRE. What standards did you apply in measuring the benefits?

Mr. KATZENBACH. The most effective way I found of doing it was to give them three different levels, one that was very low, one that they were asking for, and one in the middle and ask them how they would spend it. It was very quick. You could in that way by looking at what they did with the money on the lowest level, you got an idea very quickly of what they thought the priorities were.

Chairman PROXMIRE. Did you pull in the Food for Peace money that was available?

Mr. KATZENBACH. What?

Chairman PROXMIRE. Was the food for peace money that was spent for military assistance, was this tied in with the whole operation? Mr. KATZENBACH. That was reviewed; yes. It must have been. I was shocked at the figure but it simply must have been.

Chairman PROXMIRE. How about the excess and surplus property? Mr. KATZENBACH. Only in monetary terms.

Chairman PROXMIRE. Well, then, you weren't in position to evaluate that very completely, were you?

Mr. KATZENBACH. No.

Chairman PROXMIRE. Or at all, and this is a very large part of the military assistance program. Shouldn't you have had that information available to you if you are going to have an effective evaluation of the program?

Mr. KATZENBACH. You had it in dollar terms.

Chairman PROXMIRE. What did it tell you? If you had it in dollar terms, you didn't know whether it was going in tanks, ammunition, guns, planes, what would it really mean?

Mr. KATZENBACH. Well, it wouldn't mean very much on that kind of a review. You got in addition, you got reviews of the particular programs when they came up in a more detailed way.

Chairman PROXMIRE. Did you say you were shocked by the amounts of the food for peace program?

Mr. KATZENBACH. The amounts that I read in the paper yesterday or this morning's paper

Chairman PROXMIRE. You read it in the paper yesterday.

Mr. KATZENBACH. The testimony before your committee.

Chairman PROXMIRE. Yes; but you didn't know about this when you were in office what the amounts were?

Mr. KATZENBACH. I was surprised at the amount. I had no idea. it was that high.

Chairman PROXMIRE. How could you coordinate the program when you didn't know a hundred million dollars was coming into it from the Department of Agriculture? Even if you knew something was coming in, how would the evaluation be worth much if you didn't know how much was coming in?

Mr. KATZENBACH. I don't know that I really can respond to that, Mr. Chairman. The figure that I saw was a cumulative figure that was much larger than I thought.

Chairman PROXMIRE. It was $700 million over 6 years, I say a hundred million dollars a year.

Mr. KATZENBACH. And I don't recollect what it was when I was there and I don't even recollect at this point of time which countries it went to.

Chairman PROXMIRE. This is a reflection on how, when we get into a military program, vast amounts don't seem to matter a great deal. After all this was $700 million over a period of 6 years, and I know no more able man in Government than you have been, Mr. Katzenbach, you are a brilliant man, you have done a fine job, but you didn't know what the amount was?

Mr. KATZENBACH. No; I didn't. I think it is also a commentary on management-the Secretary of State and the Under Secretary of State have tremendous amounts of responsibility and it is very, very difficult to expect either of those individually to dig into this kind of problem to the extent that they should. I know of no place that I have ever worked where my time was so eaten up on really less important matters, which is perhaps the way diplomacy runs to some extent, but the huge amount of time that you have to spend on particular crises, the huge amounts of time that you have to spend on noncrises, ambassadors who want to see you, and very difficult to refuse to see them.

Chairman PROXMIRE. Didn't you have the staff to keep track of this?

Mr. KATZENBACH. And a great deal of time when I was there a tremendous amount of time spent on various aspects of Vietnam, trying to get peace negotiations going.

Yes; you have staff to try to keep track of it.

Chairman PROXMIRE. Couldn't you assign a competent staff man to follow this through all the way?

Mr. KATZENBACH. Yes; but the great difficulty in the Department of State, in my judgment, is that because of the inaccessibility of the very top officials there is a great inclination to sign off, coordinate on a compromise basis at a lower level because of the difficulty of bringing all problems up, and it is one of the things that tends to give us a very gray kind of a hedge, all your better policy, and it is a matter of structural organization, and it is just very difficult to accomplish.

Chairman PROXMIRE. Certainly, at a minimum from now on, the total amount involved in military assistance from all sources, foodfor-peace and all sources, it seems to me, should be pulled together and the person responsible for it should have full knowledge of the amount on a month-to-month basis, let alone a year-to-year basis, so that he at least knows how much is going into the program, in what areas and buying what kind of equipment, knowledge we apparently really haven't had over the past 6 years.

Mr. KATZENBACH. Well, I don't know that that knowledge was not available. It may have been available.

Chairman PROXMIRE. It was not available to you and if not available to you, you are the coordinator, I don't see how it is available to any person in our Government.

We have had Mr. Hoopes, who testified he was amazed that there was, or surprised, didn't know there was, food-for-peace money going into this, and Senator Fulbright, who is an extraordinarily wellinformed man, as is Mr. Hoopes, and his excellent staff, didn't know food-for-peace money was going into military assistance. Mr. Brown.

Representative BROWN. I have no further questions.

Chairman PROXMIRE. Thank you very, very much. I don't mean by the line of questioning to imply anything at all about your great capacity.

Let me ask just one last question.

Why not now, under present circumstances, Mr. Hoopes agrees, pull this whole thing back into the State Department, have review of this program by the Foreign Affairs and Foreign Relations Committees, insist on comprehensive records of the amount provided for each country and for what purpose, declassify the amounts of military assistance by country, and, as you have suggested, I take it, phase out grants to the extent that we can and move into credit sales. Mr. KATZENBACH. That would make very good sense.

Chairman PROXMIRE. You would agree with that all along the line, including declassifying?

Mr. KATZENBACH. I would agree; there would be some areas where declassification would be very difficult.

Chairman PROXMIRE. As Mr. Hoopes pointed out, we have

Mr. KATZENBACH. I think most of it could be. I don't think those would be large amounts.

Chairman PROXMIRE (continuing). Five hundred million dollars which the President declassifies; of course, it is a special program needed at the time.

Thank you very much.

Mr. KATZENBACH. I was thinking more probably of base rights. I think that would be probably the most difficult area of declassification.

Chairman PROXMIRE. Yes; we are talking about country by country

amounts.

Mr. KATZENBACH. I would think that could be done.

Chairman PROXMIRE. Fine.

Thank you, sir.

The subcommittee will stand in recess until 2 o'clock this afternoon when we have three outstanding experts on this matter, Edward Fried, Morton Halperin, and William Whitson in this room.

(Whereupon, at 12:35 p.m., the subcommittee was recessed until 2 p.m. the same day.)

AFTERNOON SESSION

Chairman PROXMIRE. The subcommittee will come to order.

Having read your prepared statements, I think they are excellent and contribute a great deal to our understanding of what has been a badly handled program from any standpoint. It has been suggested that we might start off with Mr. Whitson of the Rand Corp., and then following Mr. Whitson, hear from Mr. Fried, and following Mr. Fried, Mr. Halperin, if that is satisfactory.

Mr. Whitson, we are delighted to have you. Go ahead. The prepared statement is substantial and if you would like to abbreviate it, the entire prepared statement will be printed in full in the record, and that will leave time for questioning.

STATEMENT OF WILLIAM W. WHITSON, THE RAND CORP.

Mr. WHITSON. Thank you, Mr. Chairman.

I would like to add the caveat, which I have found in other prepared statements and failed to put in mine, that these views are obviously my own and do not represent the views of The Rand Corp.

I thought that it might be useful in abbreviating the prepared statement to accent very briefly a little history under the title of proliferating premises and perspectives; that is, to discuss the evolution of about 11 purposes in the conception and administration of the military assistance program.

Since 1940 and our first arms agreement which was made early with England, I think a fundamental premise of all military assistance programs has been the belief that a timely provision of strategic weapons, strategic material-that is any weapons and supplies likely to improve the military capabilities of the recipients-might postpone the day when the United States would have to become itself involved in military action. This purpose had to do with defense against an external threat, and from 1940 until 1945 the threat was the Axis Powers. After 1945 it increasingly became Communist aggression.

Now, the first corollary purpose, I think, of that fundamental theme has been the desire to provide a symbolic if not a real U.S. presence as a deterrent, to stand beside each ally.

The second corollary purpose has been to provide a timely arrival