our role in our Security Assistance programs is to share our experience, counsel, and technical resources to help them develop adequate strength of their own.

"We provide this support through various programs of Security Assistance: grant military assistance to friendly countries unable to afford equipment which is essential to their self-defense; foreign military sales for cash or credit; and supporting assistance, which provides budgetary support to a few key countries to enable them to sustain their economies in spite of unusually heavy defense requirements.

"These programs have been a part of our policy for more than 25 years. They have met specific needs in a wide variety of cases. Our programs and means have reflected a careful and continuing assessment of our interests and needs in changing conditions.

The

"The success of these programs is strikingly evidenced by the changes over time in the composition of the program. growing self-sufficiency and self-reliance of our friends--which our assistance is designed to promote--are reflected in the declining necessity for grant aid and the dramatic increase in their ability to take financial responsibility for their defense needs. Our grant military assistance has dropped from over $4 billion twenty years ago to less than $1 billion today, exclusive of South Vietnam. Where once our program was almost entirely on a grant basis, today sales make up by far the major portion of the program.

"In 1966 the largest military assistance grants went to the Republic of Korea, Turkey, the Republic of Vietnam, the Republic of China, Greece, and Iran. In 1974, in contrast, Iran will purchase all military equipment, paying fully for everything received. Greece and the Republic of China will receive no grant materiel, and both are turning increasingly to cash and credit sales. The security requirements of South Korea and Turkey continue to require grant assistance, but both are moving toward increased use of credits as their economies continue to expand. The success of our programs in helping South Vietnam and South Korea build capable forces of their own has permitted us to withdraw all our forces from South Vietnam and 20,000 men from South Korea. These are two of the most significant demonstrations of how Security Assistance is

precisely what enables allies to take up more of the responsibility for their own defense.

"The assistance of the United States cannot be effective unless an ally is willing and able to mobilize its own people and resources for its national defense. No country can escape responsibility for its own future. None of our friends would wish to do so. The encouragement, counsel, and assistance we provide can make a crucial difference to their success.

"Resources for National Defense

"Managing Modernization. In today's conditions, maintaining modern forces at adequate levels is a major challenge. General purpose forces now take three times as much of the defense budget as strategic forces. Yet the Soviet Union has made significant qualitative improvements in conventional forces, while many of our essential programs have been deferred because of more pressing Vietnam requirements.

"A major modernization effort is underway to provide our forces with adequate weapons for the decade ahead. Our national technological base is one of the foundations of our national security. But the continual escalation of weapons costs and complexity limits our ability to exploit all the latest technical advances. Even with adjustments for inflation, weapons today cost, on the average, two to three times more than those ones they replace. Sophisticated equipment is often more difficult to repair. Complexity frequently results in higher operating costs and lower reliability. These trends make it difficult to replace older weapons on a one-for-one basis. But the higher performance of new systems does not always compensate for the severe reduction of flexibility caused by fewer numbers.

"This cost problem is most acute with respect to tactical aircraft. New first-line aircraft are four to five times more costly than the older planes being replaced, primarily because of their sophisticated electronics and fire control systems. The same problem arises in modern ship and ground force systems.

"The long lead time for new weapons development has farreaching implications. It is therefore imperative that proposed

programs provide sufficient improvements to justify their expense, and that once adopted they do not exceed planned costs or fail to perform as intended. Unless we improve management performance in this area, we simply will not be able to maintain the minimum force levels necessary to meet the needs of our security without drawing increasingly on funds required for such essential intangibles as force manning, training, and readiness.

"We are taking a number of innovative steps to grapple with this problem. In evaluating proposals for increased technical sophistication, more weight is now being given to cost, and greater care is being devoted to assessing the real gain in terms of mission relevance and military effectiveness. In addition, combinations of high and low cost weapons are being developed for major missions. For example, a less costly light-weight fighter is being developed at the same time as the highly sophisticated F-15 fighter. This approach also has been used in meeting diverse ship requirements. Low-cost patrol frigates are being purchased for convoy duties while more expensive nuclear-powered guided missile frigates are being constructed to escort nuclear carriers as part of a rapid reaction task force.

"We also are improving techniques for closer monitoring of the development process. Benchmarks have been established for more frequent checking of compliance with cost and performance standards. Operational testing is being emphasized to ensure that new equipment is reliable and effective under combat conditions.

"Manpower. Rising manpower costs are one of the most significant factors limiting overall force levels and the resources available for modernization. Even after the large personnel reductions we have made, manpower today takes more than half the defense budget. These rising costs result principally from the effort to make military pay competitive with that of other professions. While the program to attract volunteers and correct past financial inequities is expensive, it is also essential to manning our armed forces at adequate levels.

"Our success in attracting volunteers into the services gives us confidence that manpower constraints will not seriously limit the manning of our forces at peacetime. We are now able to support our military strategy without a draft. When I first

announced my intention to end the draft, many feared we would not be able to maintain the force levels, readiness, and morale needed to support defense needs in an increasingly technical environment. But initial experience under this program suggests these fears were unwarranted. The quality of volunteers has fully met the service needs and compares favorably with the quality in the past.

"Current projections indicate that the portion of the defense budget devoted to manpower should stabilize, but the expense of personnel programs will require continuing attention.

"Defense Spending. Allocation of resources between security needs and domestic requirements is one of the most difficult tasks of the budgetary process. Though the upward pressures of manpower and weapons costs have complicated the problem, defense spending has leveled off in real terms. As a result, we have been able to shift Federal budgetary priorities markedly from security toward domestic needs. Defense today takes only six percent of our total national output, compared to eight or nine percent in the 1960's. National security once took nearly half of every budget dollar; now it requires less than one-third.

"Nevertheless, unless we aggressively meet the management challenge of spiraling weapons and manpower costs, it will be nearly impossible to maintain modern forces at the levels necessary for national security. I have directed the Secretary of Defense to give these matters the most urgent attention.

"In the next four years, we will continue to be faced with important choices concerning national priorities. But I am determined that our military power will remain second to none. The experiences of the past four years have confirmed the wisdom and absolute necessity of a strong and committed America in the world. It is the only sound foundation on which peace can be built.

"Arms Control

"The progress recorded in arms control over the past four years has been unprecedented. Four major agreements have been achieved:

In February 1971, an international treaty was signed that bans the emplacement of nuclear weapons on the seabed or ocean floor.

-- In September 1971, the United States and the Soviet Union agreed on a series of measures to reduce the danger of accidental war.

In April 1972, an international treaty was signed that bans the development, production, and stockpiling of biological weapons and toxins.

On May 26, 1972, I signed for the United States two agreements with the Soviet Union limiting strategic offensive and defensive armaments.

"These accomplishments represent the initial fulfillment of my commitment to limit the most dangerous forms of weaponry as part of our broader objective of moving from confrontation to negotiation. Each of these agreements is important. But their cumulative impact is even greater than their specific merits. They reflect a new political attitude toward arms limitation by the United States and the Soviet Union and within the international community generally.

"Arms control has taken on new significance in the nuclear age and represents an important component of national security policy. When this Administration took office there were several factors that suggested an agreement to limit strategic weapons might be attainable:

In the classical balance of power system, most national leaders were concerned with accumulating geopolitical and military power that could be translated into immediate advantage. In the nuclear era, both the United States and the Soviet Union have found that an increment of military power does not necessarily represent an increment of usable political strength, because of the excessive destructiveness of nuclear weapons in relation to the objective.

The accumulation of strategic power offered no guarantee of achieving a decisive military advantage, since neither the United States nor the Soviet Union would passively accept a change in the