and military considerations, their benefits to the United States cannot be measured by any single set of rigid standards or criteria. We can, however, judge their effectiveness through a process of continual review of programs for each individual country.

For military assistance and credit sales, the annual review process-a joint undertaking participated in by the Departments of State and Defense-is initiated well in advance of program development by re-examination of U.S. objectives in each foreign country involved. Simultaneously, the threat and resultant military requirements are reviewed. From this process, planning guidelines are developed.

Based on these State-Defense planning guidelines, and in accordance with procedures that have been carefully developed over the years, U.S. representatives in the field work with the host government in accumulating and evaluating detailed data with respect to the foreign country's military plans, programs and resources, as well as information as to its economic and financial situation. These data and recommendations are forwarded to Washington, together with proposals for U.S. assistance in the form of either grant aid or credit for military purchases or both, as the case may be.

In Washington, data and proposals from the field are studied by a variety of agencies to determine the extent to which U.S. assistance is warranted on the basis of what the country is trying to do, how this effort coincides with U.S. interests, what it has accomplished, and what the country should be able to do for itself. These proposals are also reviewed to insure that all military assistance programs are both complementary to and compete directly for funds with all other activities of the Department of Defense.

Among the agencies involved in this detailed and meticulous review are the Office of the Secretary of Defense, the Joint Chiefs of Staff, the Agency for International Development, the State Department and the Office of Management and Budget-and, frequently, the National Security Council. The product of their consultation is agreement on a proposed program-or budget-which is then recommended to the President. After budget decisions are made by the President in the context of national resources and the needs for other U.S. programs at home and abroad, programs are revised, if necessary, on the basis of relative priority-again in consultation with other interested agencies-and the process of Congressional presentation commences.

This lengthy process involves extended hearings by the authorizing and appropriations committees of both Houses. During the hearings, executive branch witnesses present prepared statements which set forth in considerable detail the justification for the administration's annual budget request. They also respond to many incisive questions put to them by members of the four committees and, following the hearings, literally hundreds of inserts for the record are submitted which provide even more specific information and statistical data responsive to the interests of the various members. All of these data are taken into consideration by the committees and reflected in their reports to their respective Houses. They are also the basis for much of the discussion which ensues during the course of

floor debate which precedes House-Senate conference and final passage of the authorization and appropriations bills.

I believe it is self-evident, Mr. Chairman, that in such a process the Congress is afforded the appropriate opportunity to make known its views and to incorporate its intent in the final legislation.

When legislative action is completed, a final review is required to effect any congressionally directed adjustments before program implementation is initiated.

The process I have described is the essence of the system by which we measure needs and benefits, judge economic impact and assure coordination. We are aware, of course, that conditions change continuously and that even the best designed programs must be adjusted promptly in response to changing situations. To stay abreast of events, we are in daily contact with our field representatives, the Joint Staff and the Department of State on an endless variety of intelligence reports, inquiries and issues resulting from our mutual objective of minimizing costs to the United States and getting the most for each dollar spent.

These efforts are bolstered by independent inspections and audits carried out in the field by the Defense staff, the Defense Audit Agency, the State Department Inspector General and the General Accounting Office. Based on information acquired from these activities, all programs are updated weekly through an automatic data processing network that keeps all appropriate Defense agencies informed and insures that necessary action is taken promptly. Any savings or "recoupments" as we call them-which result from such program changes are applied to highest priority requirements outstanding worldwide.

As I mention earlier, Mr. Chairman, the procedures I have been outlining are those followed in administering grant aid provided through MAP. Similar procedures govern military credit sales; but, because sales are dependent to a greater extent on the wishes of the foreign country concerned, they are conducted through country-tocountry negotiations over which the United States does not, of course, have unilateral control.

At this point, I should like to mention several trends and developments that are important to a complete understanding of both the Military Assistance Program and Foreign Military Sales and what they have accomplished.

U.S. military assistance in the earlier years was predominantly in the form of grant aid and was concentrated primarily in the countries of Western Europe. Appropriations for the period fiscal years 1950-1959 totaled $26.8 billion with the high point of $5.7 billion reached in fiscal year 1952. Toward the end of the decade, the decade of 1950 to 1960, grant aid to Western Europe began to decline as European economies improved and the countries of that area began to purchase their military equipment, relying to a considerable extent on credit provided under the Foreign Assistance Act.

The shift from grant aid to sales continued in the 1960's as economies improved and more and more countries throughout the world achieved the ability to purchase at least a portion of their needs, again relying initially on credit. At the same time, many countries,

such as those of Western Europe, began shifting from credit purchases to cash purchases. Grant aid appropriations continued to decline from $1.5 billion in fiscal year 1959 to an all-time low of $350 million in fiscal year 1970, exclusive of Vietnam-related assistance.

The decline in grant aid in the late 1960's was not, however, matched by a corresponding increase in the abilities of all foreign countries to meet their defense needs from their own resources. For example, defense capabilities in such critical areas as South Korea and Turkey began to deteriorate with a resulting tendency to rely more heavily on intervention by U.S. armed forces in the event of external aggression in those and other geographical areas.

In July 1969, at Guam, the President first outlined the Nixon doctrine which, in effect, calls for a reversal of the trend toward reliance on U.S. forces to maintain security within the free world. Successful implementation of that doctrine requires at least a temporary increase in grant aid. I should note, however, that such increase will be more than offset by reductions in deployment of U.S. forces abroad. We have, as you know, already taken the initial steps in this direction.

As an example of this offset-or trade-off-between foreign and U.S. forces under the Nixon doctrine, we are proposing substantial increases in programs of grant aid to the Republic of Korea over the next several years. This increased military assistance will enable Korea to modernize its forces sufficiently to preclude a diminuation of overall defense capabilities as U.S. forces are withdrawn. Such withdrawal of U.S. forces will, however, permit reductions in the U.S. defense budget.

Before concluding my statement, Mr. Chairman, I want to touch briefly on two other Department of Defense programs which do not come under either the Foreign Assistance Act or the Foreign Military Sales Act but, nevertheless, constitute significant and direct military assistance to foreign nations. The first of these is servicefunded military assistance to foreign forces, other than those of Cambodia, operating in Southeast Asia against the Viet Cong and North Vietnamese forces. Beginning with fiscal year 1966, when increased North Vietnamese intervention in South Vietnam required greater United States and allied support for the Republic of Vietnam, it was decided to program all military supply activity in South Vietnam through the military services and to charge such activity against the respective service budgets. The following year, for similar reasons, military assistance to Laos and Thailand was transferred from MAP to the regular Defense budget.

This transfer gave the services the flexibility required for an active combat situation, for which the established MAP procedures would have been too cumbersome to administer and too slow in responding to changing requirements. It also provided a direct competition among requirements for U.S. and foreign forces and permitted trade-offs on a cost/benefit basis.

Such service-funded assistance to South Vietnam, Laos and Thailand has totaled $8 billion for the period from fiscal year 1966 to fiscal year 1970, and it is estimated at $2.2 billion for fiscal year 1971. These figures reflect the substantial cost of "Vietnamization"

of the Southeast Asia conflict but, by facilitating the withdrawal of U.S. forces, are more than offset by reductions in other parts of the U.S. defense budget.

The other Defense program I would mention is that under which we loan or lease U.S. Navy ships to foreign governments. These loans and leases are made under authority granted by title 10 U.S. Code 7307 for loan of combatant ships such as battleships, aircraft carriers, cruisers, destroyers and submarines, and title 10 U.S. Code 2667 for noncombatant ships such as amphibious ships and service ships. Under this program, 86 combatant ships and 147 noncombatant ships have been loaned or leased to foreign governments. Significant features of this program include:

Each loan of a combatant ship requires specific Congressional authorization.

Loaned and leased ships are not excess to U.S. Navy requirements, but are not needed for the active fleet.

Costs such as repair and rehabilitation associated with the loan or lease are either paid by the foreign government or programed as military assistance under the Foreign Assistance Act.

By loaning or leasing such ships, the United States is saved substantial costs related to maintaining an inactive fleet.

Loans and leases, I might add, are for a period of 5 years, but the United States may recall the ship at any time if it is needed. It should be noted that these loans are renewable on a 5-year basis through legislation.

In summary, Mr. Chairman, I have identified four ways in which the Department of Defense provides defense articles and services to foreign governments for the sole purpose of assisting them in the development, maintenance and operation of armed forces needed to achieve security objectives consistent with U.S. foreign policy. I have described briefly the processes through which these programs are developed, coordinated, revised to reflect changing conditions, and measured as to effectiveness.

Most important of all, however, is the philosophy that underlies each decision to provide defense articles or services to a foreign country in any of the ways I have described in that we do not knowingly ask any country to acquire, either by grant or sale, anything that it does not need, cannot afford, or cannot put to effective use in its self-defense; nor do we ask that it acquire from the United States anything that it can obtain on better terms from some other

source.

Mr. Chairman, this concludes my remarks. I am providing for the record, however, the more comprehensive prepared statement you requested.

Chairman PROXMIRE. Thank you very much, Mr. Selden.

(The comprehensive prepared statement of Mr. Selden follows:)

COMPREHENSIVE PREPARED STATEMENT OF ARMISTEAD I. SELDEN, JR.

MILITARY ASSISTANCE AND FOREIGN MILITARY SALES

As has been emphasized repeatedly by the State and the Secretary of Defense, the Military eign Military Sales play an essential role in the

President, the Secretary of Assistance Program and Forsecurity of the United States

and its foreign policy. Today, because of a major change in the direction of our national policy these twin instruments of security and foreign policy are more important and have a greater potential than ever before. In his February 18. 1970 Report to the Congress on Foreign Policy, President Nixon cited the following three principles as major elements of that change:

"The United States will keep all its treaty commitments.

"We shall provide a shield if a nuclear power threatens the freedom of a nation allied with us or of a nation whose survival we consider vital to our security of the region as a whole.

"In cases involving other types of aggression, we shall furnish military and economic assistance when requested and as appropriate. But we shall look to the nation directly threatened to assume the primary responsibility of providing the manpower for its defense."

In his State of the Union Message, the President also stated:

"The nations of each part of the world should assume the primary responsibility for their own well being; and they themselves should determine the terms of that well being."

These principles have become known as the Nixon Doctrine and this Doctrine places the Military Assistance Program and Foreign Military Sales in a special position in our foreign policy. It is now more important than ever that these two instruments of U.S. policy be put to optimum use in helping to reduce both the monetary and manpower burden we now carry in honoring international obligations. We believe that the best hope in reducing our overseas involvements and expenditures lies in getting allied and friendly nations to do even more than they are now doing in their own defense. To realize that hope, however, requires that we must continue, if requested, to give or sell them the tools they need for this bigger load we are urging them to assume. That is why, in the interest of maintaining an adequate defense posture at minimum cost, the growing use of credit-assisted sales of military equipment, as well as increased military grant assistance, seem clearly indiIcated for the immediate future. I should note, however, that such increase will be more than offset by reductions in deployment of U.S. forces abroad. We have, as you know, already taken the initial steps in this direction.

In its broader sense, the term "military assistance" could be defined as any expenditure of U.S. resources that contributes in any way to enabling a foreign country to establish and maintain its security. Under this definition. a large number of programs would to some extent, either directly or indirectly. constitute military assistance but this would not be their basic purpose. In other words, the military benefit would be a by-product and, in most cases, it would be difficult if not impossible to measure with any accuracy.

For example, we assist many countries, both unilaterally and through international organizations, to develop their economies and their industrial bases. Such assistance has unquestionably aided these countries, although indirectly and perhaps in a manner not susceptible to exact measurement, eventually to devote more of their resources to the strengthening of their defensive posture. The best example of such indirect assistance is probably the economic aid provided to Western Europe through the Marshall Plan after World War II. Similarly, the stationing of U.S. military forces in Europe, Japan, South Korea and elsewhere obviously represents an important form of military assistance-past, present, and future. Moreover, when we station troops abroad, it usually is necessary that we construct various fixed facilities such as air bases, cantonments, warehouses, communications sites, roads, utilities, and so on. In accordance with appropriate government-to-government agreements covering U.S. troops stationed abroad, these facilities normally are turned over to the foreign government without charge when U.S. units are withdrawn or the facilities otherwise have served their purpose to the U.S. These facilities then are certainly of considerable value to the foreign government (and possibly but not necessarily its armed forces), but we do not classify this as military assistance because the purpose of the expenditure was to support U.S. forces and military activities rather than those of the foreign government. As a final example, the U.S. participates in certain internationa! military organizations, such as NATO, and contributes a portion of the funds needed to support their activities. Again, we do not look upon these expenditures as military assistance to foreign countries, but rather as part of the cost of U.S. participation in multilateral collective security arrangements.