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Chairman, for your leadership as the ranking Senate member of that committee. The value of the studious, nonpartisan approach maintained by the Joint Economic Committee acting without fear of impinging on the legislative responsibilities of other committees has been amply proved over the last several years in particular. I hope you will not think it amiss if I use this forum to congratulate you personally for your services to the Senate and to the country. Your contribution has been extraordinary and has given hope and confidence to many of us that we can make this system of ours work.

As you know, there has been little time for Members of the Congress to prepare any comprehensive statement or materials for a hearing of this character, both because of the arduous character of the closing days of the 91st Congress, which, as you know, adjourned only last Saturday, and because of the abiding problem of scheduling hearings when the agenda is overcrowded. Accordingly, I have come here today with a relatively brief presentation. Since we shall be opening up a very large area of questioning, however, I do not feel that this is a drawback. Rather, it is an opportunity to share in formulating some of the questions, if not providing the answers, which must seriously concern this subcommittee and the Senate as a whole.

I realize that there will be criticism of this subcommittee's inquiry into the subject of the impact of our military assistance programs abroad. There are those who resist any searching inquiry into overseas military problems on a continuing basis by the Congress. They complain that some fancied automatic disparagement of the military has become the fashion in Washington, and that we who are making inquiries are somehow riding a fashionable trend. On my part, I would suggest that the cries of anguish and alarm should be directed at the political decisions which authorize the programs rather than the military as such.

What we are doing in fact is engaging in a process-overdue for some 25 years of giving the same kind of careful scrutiny to our military and national security legislation as we normally give to the many other programs undertaken by the Federal Government. Because the process is long overdue, and because the public is so unaccustomed to open discussion of items formerly shrouded in secrecy and taken on blind faith, even some sober critics seem to fear that skepticism about our military undertakings will be carried to extremes. I believe that the data likely to result from the inquiries of this subcommittee will show that we are far from the end of the trail when it comes to uncovering much less understanding the various ramifications of our military operations abroad.

Seldom, until now, have we even begun to exercise the independent judgment on military requests that we devote to the budget proposals of such Departments as Agriculture, HEW, Transportation, and State. We cannot blame the Pentagon for this failing, for it has been our own failure to perform the tasks delegated to us by the American people.

It is difficult to reach even the first stage of illumination in this inquiry without examining just what we mean by military assistance programs. Those who believe that military assistance is comprised largely of the military component of our foreign aid program, amount

ing to something in the neighborhood of $375 to $400 million for the current fiscal year before the supplemental bill just approved is added, are only dimly perceiving the tip of this particular iceberg.

In preparing for this session today, I was reminded again of the true magnitude of the sums involved in what we can properly categorize as military assistance in the larger sense of the phrase that is, the total outflow of military equipment and support from the United States to other countries of the world. The total of all the sums involved for estimated proposed fiscal year 1971 military assistance and sales comes to just less than $7 billion-although it is arguable whether that full amount will be reached in terms of both authorizations and expenditures.

At this point, Mr. Chairman, with your permission I would like to include in the hearing record a very rough table illustrating the $6.96 billion figure we have arrived at.

Chairman PROXMIRE. Without objection, that will be printed in full in the record.

(The table referred to follows:)

Proposed military assistance and sales in fiscal year 1971

[Approximate sums in millions]

Military portion (MAP) of foreign aid, including supplemental request

for Cambodia, etc.

Supporting assistance_

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$775. 0

570. 0 1, 824. 5 (1, 173. 4) (235. 0) (416. 1) 500. 0 57. 3 167. 3

190. 2

DOD appropriations for military assistance..

DOD appropriations for economic assistance..

MAP grant excess defense articles (acquisition value).


2,260. 3

117. 0

502. 0

6, 963. 6

Senator FULBRIGHT. Included in that total are the sums of over two and a quarter billion dollars in military assistance and about $117 million in related economic assistance which are part of the regular Department of Defense budget. Beyond that we would have to add a figure of roughly $1.8 billion in foreign military cash and credit sales, and then include the special authority recently given Israel for $500 million worth of military purchases. In the category of foreign assistance as such, under the basic 1961 legislation, there would appear a figure of about $775 million for the military aid program, including the supplemental aid just approved for Cambodia and other countries, and about $570 million for the supporting assistance category. In addition, it is estimated that approximately $415 million would be spent for international military headquarters, MAAG's and military groups, and permanent military construction overseas. Finally, we would count on an estimated $502 million worth of military assistance program grant excess defense articles valued at original, or "acquisition," cost. Figured on the basis of "utility value," these supplies would be listed at $152 million. And thereby hangs a tale.

We talk blithely about tips of icebergs but I do not know what kind of imagery would best describe the fact that-under existing conditions the Department of Defense has access to roughly $9 billion worth of surplus arms and military equipment which, up until passage of a bill last week, could be used without any congressional limitations. This total is stated in terms of "utility value," as distinct from "acquisition value"-the original cost of the excess articles was about $17 billion.

If we assume that 1971 is a more or less typical year, then the total military outflow from the United States since 1945 would be in the order of $175 billion. That figure may be higher than what has actually been done. The truth of the matter is that I don't know what the total figure is, and I doubt that anybody else does. There are so many different ways in which this outflow occurs that it is difficult to be sure one has counted all of them. Mr. Chairman, in your opening address you referred to the Public Law 480 which I have not assumed for this purpose but you will develop that no doubt later on.

Let me, for the moment, address myself to military sales. These increased dramatically in the 1960's. In the period 1952-61, sales averaged $300 million a year. But by 1965, they were $2 billion, and in the current year they may be as much as $2.3 billion. Approximately half of these are for cash, and most of the rest are on commercial credit terms.

One of the arguments made by the salesmen of military equipment is that these sales are an important plus factor in our balance of payments. Indeed, it was the balance of payments that provided a major impetus to the sales program beginning in the early 1960's. But this argument does not stand up under analysis.

Germany is the biggest single buyer-as much as $750 million a year. The Germans, and the Pentagon as well, regard this as a favor to us, as one of the ways in which the Germans offset the cost to the United States of maintaining American troops in Germany. And this is precisely the point. The arms sales to Germany are not a net plus in our balance of payments. They are offset, and more, by what we spend on our own Military Establishment in Germany. If we reduced that establishment, we would do as much if not more to help our balance of payments than we do by selling arms to the Germans. By continuing to keep troops in Germany, we are in effect giving the Germans the money to pay for the arms they buy.

This is a pattern which is repeated around the world. A great point is made that Israel pays for its arms but it gets the money to do so from sources in the United States. Similarly, in most of the less developed countries, U.S. programs of economic assistance supply more money than is spent on arms purchases.

The use of excess equipment in the military sales program-and in the grant aid program as well-also warrants closer analysis. The sale of military surpluses is uncomfortably close to being a Public Law 480 program for the Pentagon, but we don't even get any foreign currency for these arms. As we move to more sophisticated weapons of our own, and as-hopefully-we reduce the size of our own military establishment, our surplus military stocks are bound to grow. The pressure for bigger and better sales programs more accurately,

surplus disposal programs is bound to grow proportionately. We
have already seen proposals for Government financing of the so-
called Freedom Fighter-an aircraft for which the U.S. Air Force
admits it has no use and which is intended entirely for export to less
developed countries and I presume on a grant basis. It is, in effect, a
little SST-a plane produced to serve no practical purpose of the
American people, but only to garner dollars for the U.S. aircraft in-
dustry. If our economy continues in its present unsatisfactory state,
we are likely to be told that we have to do more things like this to
provide employment. It is hard to imagine a greater waste of re-
sources and one which is, at the same time, detrimental to our foreign

Mr. Chairman, it should be common knowledge that our country is
the largest supplier of arms and munitions in the world. Yet, I doubt
the average American is fully cognizant of that fact and its conse-
quences, or would take very much pride in the knowledge if he had
it. We on the Foreign Relations Committee have been keenly aware
of this situation at least since the publication early in 1967 of our
staff study entitled "Arms Sales and Foreign Policy." We have done
a great deal of work since that time in trying to bring the military
sales program under better definition and control. The first evidence of
this was the Foreign Military Sales Act of 1968 itself. It was particu-
larly gratifying that we took the Export-Import Bank out of the em-
barrassing and dangerous position of allowing itself to be used as an
unwitting vehicle for financing the spread of armaments to the less
developed countries.

This past year the Committee on Foreign Relations labored long
and hard on the bill (H.R. 15628) to authorize continuation of the
military credit sales program for fiscal years 1970 and 1971. The
Cooper-Church Amendment relating to Cambodia-which has now
been accepted by the Congress and the administration attached to
another bill-was the best known accomplishment under that head-
ing. But in the process of amendment, the committee and then the
Senate approved a number of very modest restrictions on the Penta-
gon's ability to use the surplus program to circumvent the wishes of
the Congress.

It is a matter of great regret to me that sensible measures to place
more control in the hands of elected representatives of the American
people fell by the wayside in a New Year's Eve conference with the

On this occasion we have neither the time nor the inclination to
repeat much of what I and other Foreign Relations Committee mem-
bers have said about our arms sales over the past year or 2. With
your permission I would like to place in the record a copy of the
1967 committee staff study on the subject along with my statement on
the most recent military sales bill, H.R. 15628.

Chairman PROXMIRE. Without objection, that will be printed in
full in the record.

(The information referred to follows:)



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Printed for the use of the Committee on Foreign Relations



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