Senator FULBRIGHT. Such as what?

Representative BROWN. Non-strategic material which makes it possible for those countries to develop arms capabilities.

Senator FULBRIGHT. I think a normal sale on commercial terms; certainly I have no objection to such transaction. Again I don't want to be dogmatic about it. If the Russians were as pushy, and had been as pushy, about putting arms everywhere as we have been, I might have a very different view. But it strikes me that we initiated many of these programs, we built up these arms sales programs before they did and in many countries where they did not do it. Now they often respond by doing similar things to counteract what we do. This is natural. This is what the psychologists, I think, often call this a selffulfilling prophecy. We say something is going to take place and then we do all the things that are designed to bring it about.

Representative BROWN. I gather then from your response that strategic materials do not bear the same opprobrium as arms?

Senator FULBRIGHT. It depends upon the circumstances in a country. Take Japan, which is another example. This is very important to Japan if she needed it. I don't think she needs it because she is as ingenuous, if not more so, than we are. If she needed it and needs it to provide for her defense, I wouldn't be against it. I am very interested in Japan's maintaining her own independence. She is capable of doing it financially.

Representative BROWN. What about nonstrategic material like food for nations such as Latin America. This might free the economy of that nation to develop arms?

Senator FULBRIGHT. I think the giving of food should be based upon humanitarian reasons and economic reasons. I don't think it should be simply an adjunct to further militarization of these little countries which, in my view, if we and the Russians did not interfere, would need a minimum of it. Difficulties and internal revolutions they will have, and I am not certainly suggesting they shouldn't have them. Many of these countries need to make changes, and if the only way they can be brought about is by internal revolution, that is their business. I don't think we ought to be the advocate always of maintaining the status quo in all of these underdeveloped countries where change is needed.

Representative BROWN. Would you provide food then?

Senator FULBRIGHT. On a humanitarian basis where they needed it. Representative BROWN. Would you provide food to both sides in a developing country where there is something going on militarily in the way of social revolution?

Senator FULBRIGHT. I think you are going to have to judge each case on its own merits. It is hard to generalize this kind of a problem. If a country's people are really starving and need food in order to keep them alive, I certainly believe that we, as a civilized country, should respond. We have our own hunger program as you well know, and I think the same humanitarian principles should apply. Where it is used simply as an adjunct to a military program; where there is a big military program and sales program and we use food or other aid to enable them to pay for our arms, it is another matter.

Representative BROWN. My time is up, Mr. Chairman.

Chairman PROXMIRE. Thank you very, very much, Senator Fulbright, you have done a superb job, and we are very grateful to you.

Senator FULBRIGHT. I am pleased that this committee is looking into the problem.

Chairman PROXMIRE. You have given us an excellent start.

Senator FULBRIGHT. When I recall what you did with the C-5A and a number of other well-known activities, I think it is a hopeful sign your committee going into this.

Chairman PROXMIRE. Thank you very much.

Our next witness is the Comptroller General of the United States, Mr. Elmer B. Staats.

Mr. Staats, we are honored to have you. You have a very interesting and revealing statement, and you go right ahead in your own

way.

STATEMENT OF HON. ELMER B. STAATS, COMPTROLLER GENERAL OF THE UNITED STATES, ACCOMPANIED BY JAMES A. DUFF, ASSOCIATE DIRECTOR, INTERNATIONAL DIVISION; CHARLES D. HYLANDER, DEPUTY DIRECTOR, INTERNATIONAL DIVISION; AND EUGENE C. WOHLHORN, ASSISTANT DIRECTOR, INTERNATIONAL DIVISION, GENERAL ACCOUNTING OFFICE

Mr. STAATS. Thank you very much, Mr. Chairman. I will not take the time to introduce my colleagues but I will introduce them if we need to call on them for questions at the end of my statement.

We are here today in response to your request to assemble a statement showing various types and categories of U.S. assistance which contributes to military capabilities of foreign countries. We have done this to the best of our ability, but, as you have already indicated, much of this information is incomplete or has not been made available in the form in which we have asked for it.

In your letter of November 25 you indicated that you were asking that the cost and outlay figures be provided by the GAO, and you were not asking at this time that our office evaluate the effectiveness or the efficiency of these programs. However, at the end of my statement, if you wish, I will be glad to list some six studies or areas in which we are currently concerned which bear upon the evaluation. effectiveness question.

In order to prepare this statement, we found it necessary to gather data from quite a number of sources within the executive branch. which we have for purposes of this presentation categorized under the following five headings: (1) Military assistance grants, (2) foreign military sales through U.S. Government channels, (3) U.S. commercial sales of military articles, (4) turnover of real and personal property to other nations, and (5) U.S. economic assistance related to internal security and common defense purposes.

I believe it would be most helpful, perhaps, if I explained each of these items and what they represent, but, first let me just indicate briefly by way of emphasizing the variety of sources of information the assignment of responsibilities under the Foreign Assistance Act

of 1961.

It provides that the Secretary of State under the direction of the President will be responsible for the continuous supervision and general direction of economic and military assistance programs. Section 623 of the act defines the responsibilities of the Secretary of Defense which include (1) determining military end item requirements and

procurement and delivery of the items to the foreign country, (2) supervision of training of foreign military personnel, and (3) establishment of priorities in the procurement, delivery, and allocation of military equipment.

So the bulk of this responsibility is in the Defense Department.

A Department of Defense (DOD) directive (No. 5132.3 dated July 8, 1963, currently under revision), defines Department of Defense policy and responsibilities relating to military assistance. Within the Department of Defense the Assistant Secretary of Defense (International Security Affairs) is designated as the principal staff assistant to the Secretary of Defense in the functional field of international security. As such he is responsible for developing and directing_all aspects of military assistance as it relates to the Department of Defense, including grant aid; service funded support of military assistance: funding support of international military headquarters, agencies and military assistance groups; military sales to other nations; providing of military personal property excess to Department of Defense requirements to foreign countries; and ship loans and leases. Ship loans of major combatant vessels also require, as you know, specific congressional approval.

The Assistant Secretary of Defense (Installations and Logistics) has the primary responsibility for developing the logistic plans required to implement the military assistance programs. He also has authority to act for the Secretary of Defense in respect to turnover of real property-military installations-no longer required for use by the Department of Defense, located in foreign countries. The military departments are responsible for preparing data necessary to develop Department of Defense programs and to implement military assistance and sales programs in accordance with instructions from the Assistant Secretary of Defense, International Security Affairs.

Now, in the Department of State, the Under Secretary has been delegated the authority by the Secretary of State to coordinate the economic and military assistance and sales programs. The continuous supervision of the military assistance program has been delegated to the Director of the Bureau of Politico-Military Affairs, Department of State, while supervision of economic assistance programs is the primary responsibility of the Agency for International Development (AID), Department of State.

Now, turning to table 1, Mr. Chairman, which is U.S. military assistance grants, the amounts presented in our tabulation as military assistance program-grant aid, are funds obligated for fiscal years 1965 through 1969 and funds programmed for fiscal year 1970. (The table referred to follows:)

TABLE 1.-U.S. MILITARY ASSISTANCE GRANTS, FISCAL YEARS 1965-70

Mr. STAATS. I might say here we have attempted to show actual figures to the extent that we possibly could through the period 1965 through 1970 although in some cases it is necessary to show only program information for 1970 because the actual information for that year is not yet complete.

The authority to provide military grant assistance is contained in the Foreign Assistance Act of 1961, as amended. An annual appropriation for the military assistance program is provided by the Congress. This assistance includes training and training support, equipment, construction, technical assistance, repair and rehabilitation, supply operations support, and administrative support.

The military assistance service funded support, which is the second line of table 1, of other nations includes equipment, maintenance and construction and other costs for the support of Vietnamese and other forces in Southeast Asia. These funds are made available from appropriations to the Department of Defense. Their use has increased in recent years as more countries, such as Thailand and Laos, are assisted with Defense funds. The initial authority for the use of such funds was reflected in the supplemental Defense Appropriation Act of 1966. That is the first year in which this was done.

The Defense Appropriation Acts for each year since 1966 have contained similar authority. Also included is a total of about $350 million from fiscal years 1967 through 1970 for a number of projects previously funded by the Agency for International Development (AID) in Southeast Asia, mainly in Vietnam. Under this AID-DOD realignment program, these projects were considered to be of a military nature, such as repairing or rebuilding highways and railroads, establishing communication systems, and other support for outlying hamlets.

The support of international military headquarters and agencies includes administrative, operational and capital expense program costs for the U.S. share of support for the headquarters and agencies of NATO, CENTO, and SEATO. The costs of U.S. general purpose forces committed to NATO and stationed in the European Command, but not directly associated with support of NATO headquarters and agencies, are not included.

The support of NATO infrastructure includes program costs for airfield construction, radar systems, air defense facilities, and other military facilities. The program amounts were transferred from military assistance funding to military construction appropriations as of June 30, 1967, pursuant to Public Law 90-180.

The support of military missions includes manpower authorizations, equipment, facilities, and the associated costs chargeable to military function appropriations, and specifically identified with U.S. military assistance advisory groups, military missions or military groups.

That is the explanation of table 1.

Turning to table 2, which is on foreign military sales programs through U.S. Government channels, the basic authority for the Department of Defense to sell defense articles and services to other countries is contained in the Foreign Assistance Act of 1961, as amended, and the Foreign Military Sales Act of 1968.

(The table referred to follows:)

TABLE 2.-FOREIGN MILITARY SALES THROUGH U.S. GOVERNMENT CHANNELS, FISCAL YEARS 1965-70

Mr. STAATS. Cash sales and Export-Import Bank loans are shown by the year in which the sales were approved and the terms of sale were accepted by the purchaser. These are sales in which the ordering nation or international organization agreed to reimburse the U.S. Government directly with U.S. dollars or from loans authorized by the Export-Import Bank of the United States.

The Export-Import Bank assists in financing exports from the United States to foreign countries, including military articles and services. The Bank's authority is limited, however, by the Foreign Military Sales Act of 1968 which prohibits the Bank from extending credit in connection with sales of defense articles and services to any economically less developed country.

Export-Import Bank reports show their loans by the year of authorization, which does not necessarily coincide with the year or years in which the borrowing country placed specific orders with the Department of Defense. For this reason it has not been possible to show a precise breakdown between cash sales and Export-Import Bank loans. Total Export-Import Bank net loan authorizations for military sales for this 6-year period amounted to $1,559 million.

Other credit sales are those sales where credits or guarantees are made available by the Department of Defense. Credits may be granted directly by the Department, or it may guarantee credits extended by the Export-Import Bank or by private banks. Direct DOD credit sales increased in 1969 after guaranteed credits extended by the Export-Import Bank ceased.

Let's move on then into table 3, which is on the subject of military sales to other nations by U.S. corporations. (The table referred to follows:)

TABLE 3.-U.S. COMMERCIAL SALES OF MILITARY ARTICLES, FISCAL YEARS 1965-70

Military sales to other nations by U.S. corporations.. $274.4 $312.3 $344.5 $334.8 $328.9 $567.2

Mr. STAATS. The data presented in our tabulationChairman PROXMIRE. May I say, without objection, all of the tables in your statement will be printed in the appropriate places.