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August 3, 1964
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1964 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 CONGRESSIONAL RECORD ? SENATE 17159 deposited in the Age of Reptiles may be seen in the exposed strata. In 1957, the year be- fore construction of that visitor center, the number of visitors to Dinosaur National Monument was 66,000. By 1959, it had in- creased to 112,000. Now it is over 200,000 annually. The National Park Service has estimated that, by the time Agate is fully developed, in about 5 years, the number of visitors will be at least 120,000, and possibly 200,000 or more. The National Park Service plans a develop- ment program estimated to cost $1,902,000 during the first 5 years, probably 90 percent which can be spent locally on labor and sup- plies and materials. When fully staffed and developed at the end of 5 years, the operating - program for management and protection and maintenance of the area will require about $135,000 a year. The committee unanimously approves the proposal. Mr. HRUSKA. Mr. President, the ac- tion of the Senate in taking up and act- ing upon this bill, S. 1481, to establish the Agate Fossil Beds National Monument, is most gratifying. The purpose of the bill is to preserve and provide for the orderly development by the National Park Service of the paleontological deposits located at Agate Springs in western Nebraska. The site has been described as the most remark- able deposit of mammalian remains of the Tertiary age that have ever been found. They are unique and irreplace- able, and therefore must be protected. We of Nebraska are- particularly proud of the manner in which these fossil remains have been protected and developed to date. By an extraordinar- ily fortunate accident of history the de- posits were first discovered by one who had the imagination and understand- ing to see the tremendous importance of preserving them and investigating their scientific significance in an orderly way. They were discovered in the 1870's by Capt. James H. Cook, Indian scout and frontiersman, and later author of "Fifty Years on the Old Frontier." Captain Cook recognized the potential impor- tance of the deposits and brought them to the attention of geologists and paleon- tologists, and later acquired title of the property on which they were located. Under his ownership and that of his son, Dr. Harold Cook, a noted paleontologist himself, the deposits were carefully pro- tected against destruction or misuse, but were made freely available to scientific expeditions interested in their syste- matic exploration. Dr. Harold Cook died 2 years ago and a danger now exists that, unless timely action is taken to provide for their sys- tematic care, these irreplaceable deposits may be destroyed or dissipated. Fur- thermore, it is intended by the Park Service to develop the quarries on the spot in a manner to permit students, tourists, and others to view the deposits in the condition in which they are found in the ground. Aside from its scientific importance, this monument is of especial significance as part of a developing network of tour- ist facilities in a four-State area com- prising Nebraska, South Dakota, Wyo- ming, and Colorado. The National Park Service has announced that its devel- opment program f or the monument is to cost slightly less than $2 million. The Park 'Service has also projected that, by the time Agate is fully developed in about 5 years, the number of visitors annually will amount to ? between 120,000 and 200,000. It seems certain that this vol- ume of tourist traffic will bring into the area well over $500,000 per .year from outside. Mr. MANSFIELD. Mr. President, that concludes the call of the calendar at this time. Mr. President, with the same pro- viso, that the senior Senator from Ore- gon [Mr. Moan] not lose his right to the floor, I suggest the absence of a quorum. The ACTING PRESIDENT pro tern- pore. Without objection, it is so ordered. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. MANSFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. AUTHORIZATION FOR COMMIT- TEE MEETING DURING SENATE SESSION Upon request of Mr. MANSFIELD, and by unanimous consent, the Committee on Appropriations was authorized to meet during the sessions of the Senate for the week beginning August 3, 1964. ORDER OF BUSINESS Mr. MANSFIELD. Mr. President, I suggest the absence of a quorum under the conditions previously stated. The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. MORSE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. , . ? The PRESIDING OFFICER. (Witjlol4t objection, it is so ordered. AMENDMENT OF FOREIGN' ASSIST- ANCE ACT OF 1961 The Senate resumed the consideration of the bill (1-1.a.-.1.43/10) to amend fur- ther the Foreign Assistance Act of 1961, as amended, and for other purposes. Mr. MORSE. Mr. President, as the 6ONGRESSIONAL RECORD Will show, I an- nounced on Saturday, following the speech of the able chairman of the Sen- ate Committee on Foreign Relations, the Senator from Arkansas [Mr. FULBRIGHT], that I would answer his speech today. First, I wish to make the following brief comment as to what my position will be on procedural questions during the course of the debate of foreign aid. It is my hope, and it will be my in- tention, to cooperate in fulfilling that hope, that the Senate will dispose of the foreign aid bill by the end of this week? sooner, if possible. I have already no- tified the majority leader that I am delighted to cooperate in as many night sessions as he cares to hold for as long as he cares to hold them. This year, as last year, however, I shall insist that the foreign aid bill be debated under the rules of the Senate without any agree- ments to limit time or to fix a time cer- tain to vote. I have also made clear to the majority leader that I hope that those of us in opposition to the bill will receive the cooperation of the majority in our requests for yea-and-nay votes on amendments that we think ought to be made a matter of rollcall record. The time schedule of the Senate is well known. The record on foreign aid in the past several years, both pro and con, has been made over-and over again in the Senate. By and large most Sen- ators probably know now how they are going to vote on the major issues con- nected with the bill, irrespective of what is said during the course of the debate. But that does not in any way diminish the trust that each Senator owes to the country and to his own constituents to make the record. I am hopeful?and my cloakroom discussions with some of my colleagues seem to justify that hope? that in respect to some of the amend- ments that some of us will offer during this week on the bill, all minds have not been made up, and that there are still Senators who will study the record. A good many Senators are absent today because of 'a very sad journey that the funeral group is making to California to pay respects to our beloved Clair Engle. I wish the RECORD to show that I would have taken that trip, but I agreed to remain in Washington today to make the first speech in opposition to the foreign aid bill so that the final vote on tile bill could be advanced by that much time. But bearing out what I have said?that minds are pretty well made up?one need only to look at the attendance in the Senate at the present moment to know whereof I speak. Absentees will graciously say that they will carefully read the I/zoom:a?and I hope they will. Nevertheless, it is some 'ndication, I suppose, that a majority nators would welcome voting to- orrow without any debate at all. Yet ose of us in opposition to the bill in- tend to make a record this week that the proponents of the bill will have to live with, and for which the proponents of the bill will have to answer to their own constituency, not only this year, but also in the years immediately ahead. Mr. President, we have heard it said over and over again that major reforms in the foreign aid program ought to be adopted. Last year, the Foreign Rela- tions Committee, in its report to the Sen- ate, said it thought the reforms ought to be adopted the following year. That year has passed. The reforms have not been adopted. In the debate last year it was argued over and over again, "Pass this bill and we will adopt reforms in the coming year." As of the moment I speak, the policy of foreign atd is about the same as was the policy of foreign aid a year ago. Ten days ago a very high official of the State Department said to me: We have analyzed your minority v1ews, and we find them very disturbing, because Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17160 CONGRESSIONAL RECORD ? SENATE we recognize that so much of what you said Is correct. We want you to know, Senator, that between now and next year the criti- cisms that you have brought out in those minority views?and there are many of them that are unanswerable, in our opinion?will be answered by changes in policy that will be adopted. To that high official of the State De- partment I said: I have heard the same thing over and over again for the last 10 years, and you have not adopted reforms. What makes you think I should place confidence in your statement? Mr. President, that is a sad statement to have to make, but the record is un- deniable. Year after year the State De- partment, the Pentagon, and the AID officials have been brought up to a con- sideration of needed reforms only to urge upon the Congress that it pass the bill and let them work on reforms in the en- suing year. I mean not to be unkind, but I speak out of long experience with the executive branch of the Government. In my judgment, no reforms in foreign aid will be adopted, to any substantial degree, except when adopted by the Con- gress. If Congress is looking for conversion among State Department, Pentagon, and foreign aid officials with respect to for- eign aid and is expecting to have that conversion result in the necessary re- forms essential to eliminating great abuses in foreign aid, the Members of Congress who so think are engaging, in my opinion, in wishful thinking. Neither the State Department, the Pentagon, nor the AID officials will carry out re- forms on their own volition. Such re- forms will be adopted only if Congress adopts them. I shall make the record of the rea- sons for my opposition to the foreign aid program, because the people of this country are entitled to have that record made. As I have said so many times, I would vote for more foreign aid than an ad- ministration in recent years has recom- mended. It is difficult for people to un- derstand that one can oppose a specific foreign aid bill, as I have opposed the foreign aid bills of the past 10 years, in- cluding this year, and still be for foreign aid. But my own amendments have shown the kind of foreign aid I would support. I would vote for more than $3,500 million of foreign aid, if it were a foreign aid program that protected the American taxpayers. It would be a for- eign aid program that strengthened the American image abroad. It would not be a foreign aid program which the Comp- troller General of the United States, in report after report, has pointed out re- sults in shocking inefficiency, the waste of hundreds of millions of dollars, and much corruption in many countries of the world, particularly the underdevel- oped areas. In a broad brash stroke or two, let me say that I am a loan advocate in foreign aid. I am a project-to-project man in foreign aid. I would lend more money for needed economic projects around the world than would this administration, or the previous administration, or the ad- ministration previous to that one, has been willing to recommend. But they would be loan programs, not grant pro- grams. They would not be deceptive loans, as are so many of the so-called loans today. The word "loan" should always be put in quotation marks when used by the AID officials downtown. So much of the loan program in this bill spells the word "de- ception," for they are not loans at all. The so-called loans are made at a cost of three-quarters of 1 percent, with a 10-year grace period, and then they are to be paid, not in American dollars, but in the soft currencies of the countries concerned. To use the word "loan" in that connection is a deception of the American taxpayer. This Senator will not be a party to that deception. The American people are entitled to receive from their Government protection of their money. The "loan" program we have today is not only a grant program, but it is a-give- away program, based upon deceit. That abuse in the foreign aid program must be eliminated before the Senator from Oregon will vote for foreign aid. I will vote for a foreign aid program in- volving more money than this bill calls for, or that the predecessor bill called for, or that the various Eisenhower bills called for, but it must be a program of loans based upon sound economic de- velopment projects that will do some- thing to better the economic standard of living of the people of the underdevel- oped areas that live within the shadows of their economic environments. They must not be so-called loans to govern- ments. Read what the Comptroller General of the United States has said. He is our watchdog. He is an agent of the Con- gress of the United States. His spot- check survey of foreign aid in recent years has brought out the facts. Before the debate is over this year I shall again pile on my desk the reports of the Comp- troller General, some of which are marked "Secret." I have yet to read a single report of the Comptroller General that really is "secret." Every report of the Comptroller General that I have read contains material that should be made available to the taxpayers of the United States. If the taxpayers of the United States could read the shocking reports of the Comptroller General of the United States, they would demand a houseclean- ing in foreign aid, and quickly. Mr. President, I am against so-called "loans" to governments, for too much of that money lines the pockets of corrupt politicians abroad. We ought to put our money in dams, in refineries, in indus- trial plants, in roads, in irrigation-recla- mation pr6jects. We ought to put our money in economic projects which a study shows will do something about the deplorable condition of the standard of living of people living in those sad areas of the world. Until we do it, all the money we pour down the ratholes of those countries will not save them from communism, but make Communists. The State Department, the AID offi- cials, and the Pentagon do not like to hear it said, but it is true. A great deal - August 3 of our foreign aid program has played into the hands of communism abroad, because the people in those areas of the world know that so little of it trickles down to the benefit of most of the peo- ple, and too much of it is absorbed by politicians who function as sponges, soaking up millions of dollars of Amer- ican taxpayer money which have come to comprise the phony "loans" and grants, by the millions, of American tax- payer money. I am also a line-of-credit man. I am not in favor of turning a great deal of money over to any group. To use a hypothetical instance, speaking as chair- man of the Subcommittee on Latin American Affairs, I would vote much more money by way of development loans to Latin America, related to specific proj- ects, than the bill calls for, or any ad- ministration has recommended, if the governments of Latin America showed they are ready to use it effectively. However, I would insist that the money be loaned under a hard money policy, with an interest rate charged that will pay for the use of the money, which at the present time, according to the latest Treasury reports, would be in the neighborhood of -3 percent, not three- quarters of 1 percent. The money would be drawn upon as the dam went up seg- ment by segment, or the refinery went up part by part, or the irrigation-rec- lamation projects proceeded segment by segment. What is wrong with that? That is a pretty good way to build in the United States. What is wrong with building that way in other countries, when we are using taxpayer dollars? Whenever any of us wish to build a reclamation project in our State, or build a great dam in our State, or put up any other public works, what do we have to show? We must show a benefit-to- cost ratio favorable to the project. We should. That is not a requirement in foreign aid. We get a great deal of lipservice from the AID officials. However, Congress has not written that check into foreign aid. I believe that there should be a congres- sional check on the expenditure of tax- payer dollars on individual projects, one by one. We require that kind of check in the United States. It will be said that that would be offensive to the country in which the money would be used. My answer is that it is our money. If a country does not want the money under such reasonable checks, it does not have to ask for it. Senators will note that I said "ask for it." The history of foreign aid is that we often ram a great deal of foreign aid down the gullets of many countries which do not ask for it. That has given rise to many abuses. I shall offer my amendment again, as I did last year, to bring to an end com- pletely all foreign aid at the end of fiscal 1966. Last year I offered it to apply at the end of 1965. Let us start all over. That is the way to bring about a foreign aid program free from abuses. Let us start all over. Let us limit foreign aid to a maximum of 50 countries. We will have a hard time Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 1964 CONGRESSIONAL RECORD ? SENATE finding 50 countries in the world with which we can justify entering into for- eign aid agreements. Let us limit it to 50 countries on their application. I say, on their application, Mr. President. Let us do that, instead of urging them to take the largess of the taxpayers of the United States, as is still being done to a great extent. Let, them come forward and apply. Let them apply for projects which they think they can justify. Let them agree to meet conditions that sound administration of a foreign ,aid program' dictates. What is wrong with that? I am still waiting to hear from the State Department, the AID officials, and the White House as to what is wrong with that philosophy. Do they have good projects? If they- do not have good projects that are self - liquidating?I am talking now about the loan projects?why should I vote to waste American taxpayer money on projects that are unsound? If they have proj- ects that will pay out, and are unwilling to borrow money, they should not be allowed to get it. Later in the week, I shall speak about another abuse. It refers to our pouring out millions of American taxpayer dol- lars at three-quarters of 1 percent in- terest, and a great deal of it in the form of out-and-out grants. Much of that money has been uted by those govern- ments to pay back some of our alleged allies, and some who are not allies even with the "alleged" as a prefix, with whom they have entered into loan arrange- ments at 5 percent and 6 percent inter- est. In that way the American taxpayer assumes the obligation. No jury would approve of such a prac- tice. I am making a plea in my speeches this week that the Members of the Sen- ate at least carry out their duties as leg- islative jurors. If they carry out their duties as legislative jurors, they cannot underwrite the present loan program. Many? Americans like to stick their heads in the sand and engage in the psychologically comforting experience of wishfully thinking that it could not be that bad. To the American people I address this question: "When are you going to get busy and make it perfectly clear to your Government that government by se- crecy must end?" I say to the American people: "You will not remain free in- definitely if you permit administration after administration to deny you the facts, for you are entitled to know about the expenditure of your money under the label 'Secret.'" I repeat what I have said so many times in my 20 years in the Senate; 85 percent of the material marked "Secret" that has come before the Committee on Foreign Relations and that came before the Committee on Armed Services when I was a member of that committee never should have been marked that way in the first place. It is marked "Secret" pri- marily to keep the American people un- informed. But in a democracy, there is no substitute for a full public disclosure of the public's business. One of the great reforms needed in the field of for- No. 149-4 eign aid is to lift the curtain of secrecy that veils it and to give the American people the facts. I wish now to say a word about 'My position with regard to grants. It is a position I have taken for some time. I shall vote for grants. I shall not vote for grants in the amounts that the ad- ministrations, present and past, have sought and succeeded in getting. There are a good many nonloan programs that are as much needed abroad as are the loan programs. I shall vote for grant money for health programs, food pro- grams, programs for the alleviation of starvation, programs for the meeting of disasters, and baby care programs. It has always been interesting to me to ob- serve how the foreign aid advocates use those causes as a justification for carry- ing along other grants that cannot be justified to the tune of hundreds of mil- lions of dollars. Last year I stated in the debate that since 1946 the American people have con- tributed a little more than $100 billion in foreign aid. The latest figures I have received show that the amount is greater than $104 billion. That is a huge amount of money. I do not see how anyone can argue that on the basis of policies that continue to permeate the foreign aid bill, we will not weaken the economy of the country. The economy of the country is the greatest defense weapon we have. The arguments I have made thus far In my speech are merely a recapitulation of the major arguments I made last year. I merely add the statement that there has been no change, in my judgment, in foreign aid policy that would not justify my making the same argument, point by point, that I ,made last year in opposi- tion to foreign aid as it is now devised and administered. Therefore, I incor- porate by reference the major arguments I made last year. I turn now to my arguments and objec- tions concerning the bill that is presented to the Senate this year. PRESENTATION OF 1964 PROGRAM This program is presented to Congress year after year under false pretenses. Economic development remains a second- ary purpose, and not the primary pur- pose of foreign aid. Every public presentation of foreign aid calls it an investment in the econom- ic future of the struggling and impover- ished nations. But that is not the purpose for which we spend most of the money. Until we do, foreign aid is not promoting the real interests of the American people. The chairman of the 'Committee on Foreign Relations told the Senate on Saturday: All that is markedly new about this year's foreign aid bill is the amounts proposed to be authorized, which are greatly reduced be- low the levels of previous years. What a sad commentary on the exten- sive recommendations by the majority of the committee last year for a revised and revamped foreign aid program. _Senator FULBRIGHT is quite right. There is noth- ing new about the program this year ex- cept the amounts, but I am ashamed that 17161 the Foreign Relations Committee would accept such a situation after the report it published last year calling for exten- sive changes. The Committee-on_Foreign Relations voted for the bill. Where are those changes? The fact that the committee year in and year out gives nothing but lip service to reform in foreign aid is exactly why there never is anything markedly new in what the administration sends up. Aid administrators have learned that the committees having jurisdiction over the program are paper tigers, and that the committees are content to confine their misgivings to print, without doing any- thing about them. I have long since come to the conclu- sion that only the Senate and the House of Representatives acting as a whole can make worthwhile changes in foreign aid. We have already made some. Senator FULBRIGHT also bemoans what he regards as an undue examination of foreign aid by Congress relative to space and military programs. But our failures in those areas do not mean that we should fail, too, to give foreign aid the careful examination it needs. In all three areas, the responsible committees are too often the representatives of ad- ministration programs, rather than their critics and reformers. If Congress ever is to give the study it should to international and foreign policy appropriations, it is going to have to start with foreign aid. I remind the committee chairman that a good third of this program?right off the top?is for exclusively military purposes. When are we, in the committee and in the Senate, going to delve into the purposes and administration of the military aid program? When are we going to give it the kind of examination the chairman thinks should be given to the space pro- gram and to Defense Department appro- priations? He knows that year after year the For- eign Relations Committee accepts in al- most dead silence whatever the Defense Department tells it about military aid. We shove the critical reports of the Comptroller General under the table when the Secretary and Assistant Secre- taries of Defense testify because we do not want to embarrass them with chal- lenges to their decisions, even when the challenges come from the Comptroller General, and not even from ourselves. We have yet so much as to question the basis of foreign aid, which is that military solutions are possible for eco- nomic problems. The chairman has questioned that assumption in the ab- stract, but I say it is time we questioned it in its specific,' and the place to start is with the foreign aid program. I con- tinue to hope that someday he will join me in this endeavor. A good deal more of the foreign aid program is for political purposes. Again, I do not believe that political solutions? and they are closely tied to military ob- jectives?are any answer for economic problems. The United States has little or no con- trol over the military forces of the na- tions receiving our military aid, and Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17162 CONGRESSIONAL RECORD? SENATE it has little control over the political ob- jectives to which other countries may put our aid. If We really believe that it is in economic development abroad that the interests of the United States really lie, then why are we so fearful, so timid, so reluctant to reexamine foreign aid and devote the bulk of it to economic develop- ment? COMPARISONS WITH OTHERS Much is made each year of the per- centage of gross national product that other free and Communist nations spend on aid to less developed countries, rela- tive to the United States.. This was one of the favorite argu- ments of the chairman of the commit- tee in the committee sessions. It should be analyzed, because it is a propaganda argument which is being used to pull the wool over the eyes of millions of American taxpayers. I have come to the conclusion that the percentage of gross national product is used because it is the only way that the foreign aid programs of other na- tions can be made to appear even rea- sonably close to that of the United States. The Foreign Relations Committee went into this matter in our hearings. AID Administrator Bell furnished for the printed hearing record a lengthy mem- orandum concerning the aid programs of other nations. ' I particularly invite attention to the table on page 335 of the hearings. It shows the 1962 bilateral aid commit- ments of all developed countries of the free world, and the percentage of such bilateral aid of the gross national prod- uct of each. It indicates that only France, with 1.6 percent and Portugal, with 2.21 percent, extended a larger per- centage of their gross national products in aid to less developed countries than did the United States. Moreover, in the case of Portugal, this aid went to pos- sessions in Africa which, according to Portuguese officials, are part of Portu- gal and by their sights should not be counted as foreign aid at all. In the case of France, a very large bulk of French aid still goes to former French colonies in Africa. As Mr. Bell stated, it takes the form of budget support to the new governments , of these former colonies. In 1962, 86 percent of French bilateral aid was for these grants. There is a "gimmick" even in this, be- cause France is one of the worst of- fenders in the world in discriminating against the legitimate trade interests of the United States. The countries to which France is granting aid are still considered by her to be a part of its economic empire. Furthermore, she still exerts great influence upon them in re- gard to their trade practices. I am not opposed to what France and these other countries are doing. But they are doing it to maintain the direct commercial and political ties with these countries or possessions that were built up over decades of colonialism. It is a rather weak reed which the AID people in the State Department lean on to cite examples of Portuguese and French aid, in order to bring up the average for all countries extending de- velopment assistance. Interestingly enough, France and Por- tugal have been recipients of substan- tial aid from the United States since 1946. The same table on page 335 indicates that in 1962 the United States com- mitted 0.84 percent of its gross national product to bilateral aid to less developed countries, Germany 0.50 percent, Great Britain 0.70 percent, Japan 0.51 percent, Belgium 0.55 percent, and the others on down to 0.01 percent by Denmark. The table for 1963 shows the commit- ments by these countries, but not as a percentage of gross national product for 1963. However, in several cases, the commitments are down from 1962. This is true of France, Great' Britain, Portu- gal, and the Netherlands. The com- mitment by Norway is the same and that of Japan is up only to $268 million from $265 million the year before. Canada, Denmark, Belgium, Germany, and Italy increased their commitments. But all free world aid other than U.S. aid was up, in 1963, only $263 million above the commitment for 1962. And in 1962, their aid as a percentage of their gross na- tional products totaled 0.60 percent, as compared to 0.84 percent for the United States. When we take into account the even more tremendous difference between the American effort for national defense and the defense effort of these same coun- tries?and the U.S. effort was exactly double that of our industrially developed allies?it is evident that they will let Uncle Sam carry the international burden as long as we continue appro- priating the money. On that point, let me stress that our AID program does not begin to cover our foreign assistance program, because the AID program does not begin to cover the expenditures of our own forces abroad. Consider military aid. The military aid program that we make available?I do not care what part of the world is touched?does not include ? the expenses of maintaining our own military forces in that area, under whose canopy of defense all those areas live and have their security. Later in my speech, I shall have some- thing to say about my criticisms of mili- tary aid, but I wish to drive this point home now. The expenditure for aid to South Viet- nam now is somewhere between $11/2 million and $2 million a day. It will go up and up in skyrocketing fashion if we continue our aggressive policies in south- east Asia, and continue to provoke at- tacks upon us in southeast Asia on a unilateral military basis. But even as of now, our military aid program does not take into account the millions of dollars which are being spent on our own military operations in the area. When all is said and done, it is those operations which provide security and protection to the nations of southeast Asia. They all live under the canopy of American milita:ry might. It is our air armada, our 7th Fleet, and our thou- sands of boys who are distributed in that August 3 area of the world, that provide them with their defenses. If we got into a war with Russia to- morrow, in many instances their own military programs would be of no value to us whatsoever. They would become liabilities. We should not be using them, because we all know the kind of war that would be. That is one of the rea- sons?as I shall show later in this speech?why I shall be offering amend- ments on this question, in the course of the debate, to cut drastically American military aid because, by and large, it is a shocking waste of American taxpayers' dollars. That military aid does not strengthen one iota the defense of this Republic. The security of this Republic is dependent, after all, on the nuclear might of the United States, upon our air and naval armada. Another table prepared by Mr. Bell shows the actual disbursements for bi- lateral and multilateral aid in- 1962. Since the table did not show this total as a percentage of each country's gross na- tional product, I asked the aid agency to calculate ,that percentage for me, and have added it to the table III which ap- pears below. It is this figure which shows the pro- portion of their gross national product that developed free world countries spent on aid to less developed countries in 1962, in both bilateral and multilateral aid programs. For France, the percentage was 1.39, for Germany 0.50; for 'Great Britain 0.53, for Japan 0.32, for Belgium 0.76, for Portugal 1.36. For the United States the percentage was 0.65 and for all other development assistance coun- tries it averaged 0.58. Aid commitments to the less-developed countries from development assistance countries other than the United States have risen only $300 million from 1961' to 1963. Their grants as a percent of their total dropped from 55 to 48 percent, while ours dropped only from 66 to 60 percent. If there are those who can find com- fort in these figures, they are easily comforted. Mr. President, I ask unanimous con- sent to have the AID memorandum printed at this point in the RECORD. There being no objection, the AID memorandum was ordered to be printed in the RECORD, as follows: TOTAL FREE WORLD AID A decade ago the United States was the only important source of aid to the develop- ing countries. Today 17 free world coun- tries other than the United States?many of them former recipients of 'U.S. economic aid?conduct substantial assistance pro- grams. Eleven of them?Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Portugal, and the United Kingdom?are members of the DAC. They account for some 95 percent of the bilateral aid from all 17 countries. The other 5 percent comes from six nonmembers of the DAC: Australia, Austria, Kuwait, New Zealand, Sweden, and Switzerland. International agencies such as the World Bank, the International Development Asso- ciation, the European Development Fund, and the Inter-American Development Bank are also channeling large amounts of capital and technical assistance to the developing Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 1964 CONGRESSIONAL RECORD? SENATE world. Ten years ago the World Bank was the only multilateral source of capital for this purpose. There has been a significant growth in the programs of these aid donors. The total volume of free world aid commitments to the less-developed countries increased from $6.5 billion in 1960 to $8.4 billion in 19'62 (the last year for which complete commit- ment figures are available). This represented an increase in commitments from all three major aid sources: the United States, other donor countries, and international organiza- tions. Commitments from sources other than the United States increased at the greatest rate. Whereas U.S. bilateral commitments went up 20 percent between 1960 and 1962 1 commit- ments from multilateral agencies and other donors rose 64 percent and 34 percent, respec- tively. As a consequence, the U.S. share of the total aid bill declined. By 1960 some 40 percent?or $2.6 billion?of aid commitments came either from multilateral agencies or from free world bilateral sources other than the United States. By 1962 this had risen to 44 percent, or $3.7 billion. It should be noted that some of the aid funds committed by the multilateral agen- cies are supplied by the United States. Those agencies finance their aid activitieS partly with Government funds and partly with funds derived from earnings, repayments, and private capital. In 1962, for example, the international agencies received a total of $665 million in Government grants and sub- scription payments from the DAC countries. The U.S. share of this was 42 percent and the other DAC countries provided 58 percent. Therefore, it is clearly in our interest to have these multilateral agencies increase their aid programs so long as every dollar from the United States is matched by a sig- nificantly larger contribution from others. In addition to support from U.S. and other DAC government subscriptions, the multilateral agencies also receive contribu- tions from non-DAC governments, and ob- tain a substantial share of their financing from repayments and from private capital markets. , In 1962, for example, $307 mil- lion?more than half the World Bank's total financing that year?came from the sale of loans to the private sector. One result of the growing volume of aid is that the United States is now bearing a smaller share of the aid burden. Another is that greatly increased resources are available to the developing countries, thereby quick- ening their prospects for growth and stabil- ity. Moreover, we are witnessing the emer- gence of more donor countries. Israel, the Republic of China on Taiwan, and Mexico now provide technical assistance to nations less developed than themselves. We hope this list will continue to grow as more coun- tries approach economic self-reliance. ARE OTHERS DOING ENOUGH? The mere fact that other countries are con- tributing more aid each year does not answer the question of whether they are doing enough. A This is not an easy question to,, answer. There is no internationally agreed standard for evaluating aid performance, and there is even disagreement over what should be counted as aid. The attached table I shows some indications of aid performance for 1962. This year's report by the President's Coun- cil of Economic Advisers suggested several 1 The three main types of economic aid in- cluded in the U.S. aid figures used in this statement are: (1) Economic aid under the Foreign Assistance Act, (2) loans made by the Export-Import Bank to less-developed countries for terms of more than 5 years, and (3) provision of U.S. surplus agricultural commodities under Public Law 480. measures of the ability and the interest of donors to sustain aid programs: their gross national product, the size of their defense burden, and their dependence on trade with the less-developed countries. These indica, tors produce this comparison for calendar year 1962: "The 1962 bilateral aid commitments of the other DAC countries combined amounted to six-tenths of 1 percent of their GNP com- pared with slightly more than eight-tenths of 1 percent for the United States that year. France and Portugal committed a consider- ably larger share of GNP than did the United States: 1.26 percent for France, and more than 2 percent for Portugal. The average for the other DAC countries excluding France and Portugal was only four-and-one-half- tenths of 1 percent. "The per capita GNP of the other DAC countries, however, is far smaller than ours. In 1962 per capita GNP averaged $1,135 for other DAC countries. This is only about 40 percent of the $2,974 per 'capita GNP for the United States that year. "Other DAC countries are not spending as much for defense as the United States. Their defense expenditures in 1962 averaged 4.7 percent of GNP, compared to 9.4 percent for the United States. "Other DAC countries have a greater rela- tive stake in trade with the developing coun- tries than we do. That is, a larger percentage of their GNP-7.5 percent on the average? depends on trade with the developing coun- tries as compared with 2.4 percent for the United States. Despite this, they finance a smaller share of their trade with aid com- mitments than we do. Their aid financed 17.6 percent of their 1962 exports to devel- oping countries, whereas in the same year nearly 65 percent of U.S. exports to develop- ing countries were financed by aid. Only France, with 37.1 percent and Portugal, with 45.8 percent, approached the U.S. per- formance." Weighed together, these comparisons sug- gest that DAC countries other than France and Portugal could reasonably be expected to increase their aid commitments. Some are doing so. Canada intends to raise its aid expenditures 50 percent in 1964, over a level already raised in 1963. Denmark and Nor- way say their target is an eventual aid level of 1 percent of GNP. The United Kingdom and Japan have announced their intention to increase the size of their assistance pro- grams. But some others?notably Germany, which we believe could well afford it?show no signs of doing so. TERMS OF AID We are concerned not only with the vol- ume of aid from other donors but with the financial terms on which it is given. The attached table II shows the terms of bilat- eral aid from 1961 to 1963. In the aggregate the record of the other DAC countries on grant aid is good. In 1962 the 11 DAC aid givers provided 56 per- cent of their total bilateral aid, or more than $1.3 billion per year, on a grant basis. The comparable U.S. figure for the same year was 65 percent, or $3 billion. However, if $1.7 million of Public Law 480 is excluded, 46 per- cent of our 1962 aid was on a grant basis. Two-thirds of the grants of the other DAC countries in 1962 financed capital projects and commodity imports. The remaining one-third financed technical assistance. "Some 26,000 students and trainees from less-leveloped countries were ?supported by the other DAC countries that year, compared to 10,388 financed by the United States. "A total of 75,000 operational and advisory personnel financed by other DAC countries were helping to fill the human resources gap in less-developed countries that year, com- pared to about 8,500 from the United States." The loan programs of the other DAC coun- tries are all conducted on less favorable terms than ours. But the last few years 17163 have seen marked changes for the better, and we anticipate further liberalization in the future. Take maturities, for example: "In 1962, U.S. loans to less-developed countries carried an average maturity of 29.9 years. "No German loans carried more than 5 years' maturity in 1959. By 1961 new Ger- man commitments averaged 14.5 years. By 1962 they averaged 17 years. Preliminary figures show the average climbed to 20.2 years in 1963. "Britain announced a new policy last fall of offering loans up to 30 years' maturity. "Canada has announced its intention to supplement its existing grant and hard loan programs with a new soft loan program on terms approximating those of the Interna- tional Development Association: 50 years' maturity, three-fourths of 1 percent inter- est and 10 years' grace. "In 1962 Italy made no loans for more than a 12-year repayment period. Since then, however, Italy has made one large loan with an 18-year maturity and another of 25 years' maturity." Interest rates on the aid loans of other DAC countries have been high?often, in our judgment, much too high for those of the developing countries with serious balance- of-payments problems. In both 1961 and 1962 they averaged 5.1 percent as against 2.6 percent in 1962 for the United States. Our average will rise in the future because of the higher minimum interest rates on AID loans required by the Foreign Assistance Act of 1963. The interest rates of other aid givers, however, are coming down. For example: "A new British policy provides for a waiver of interest payments for up to 7 years. This lowers the 6-percent-interest rate on a long- term loan to an effective rate of about 3 per- cent. Britain has already granted such a waiver for loans to India, Pakistan, and Tur- key totaling $115 million. "Although the average German rate is 4.2 percent, Germany has been making an in- creasing number of low-interest loans. Last year, for example, Germany made a loan of $13.2 million to Togo at 2-percent interest with a 30-year maturity. "As I have already noted, Canada will begin lending on IDA terms?three-fourths of 1 percent interest, 50 years' maturity, and 10 years' grace." The present softening of aid terms can be traced in large part to a policy agreement reached by the DAC in April 1963. All the DAC members agreed that loan terms should be consistent with the debt-servicing ca- pacity of the recipient countries, that terms should be more nearly comparable among donors, and that these aims should be met by liberalizing the terms of the harder lenders. GEOGRAPHIC DISTRIBUTION OF AID A decade ago, the little aid provided by donors other than the United States took the form of assistance from European coun- tries to their colonies. In 1962, about one- fourth of the aid of the other DAC countries went to dependent areas. Today, with only a handful of colonies remaining in the free world, indications are that this proportion has declined to about 10 percent. Much French, British, Belgian, Dutch, and Italian aid does go to former colonies that are now independent states. The United States has a direct stake in the continuation of this support. It is very much in our in- terest?our political interest, our budgetary interest, and our balance-of-payments inter- est?to have Britain carry on sizable aid pro- grams in Kenya and Uganda, to have France do so in French-speaking Africa, and to have Belgium do so in Rwanda and Burundi. Some two-thirds of all development assist- ance in Africa is now provided by the West- ern European nations. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17164 CONGRESSIONAL RECORD - SENATE European donors are, however, giving more and more aid outside their former colonial dependencies. Both Britain and France have stated their intention of doing so as a matter of policy. France, for example, has made sizable commitments (including soft loans) to Mexico and Greece while Britain is enlarging its technical assistance program in Latin America. Three of the major DAC donors-Germany, Canada, and Japan-have no colonial con- nections. Germany has a worldwide pro- gram. In the last 3 years, Germany made loan pledges to 65 less-developed countries and provided technical assistance to '70. Canada's assistance ranges through the Commonwealth countries and Latin America. Japan aids much of Asia and Latin America. - The broadening of aid relations is exem- plified by the aid expenditures of DAC countries other than the United States in Latin America. In 1960 these totaled less than $50 million. In 1962 they reached $110 million. One factor that has helped draw European aid into new fields has been the formation of aid consortia. Belgium, Italy, France, Germany, and the Netherlands, for example, are members of the consortium for Pakistan, along with Canada. Japan, the United King- dom, and the United States. These same countries plus Austria are also members of the aid consortium for India. The same countries minus Japan but including Sweden and Luxembourg are in the Turkish con- sortium. The attaehed table III shows DAC aid disbursed through multilateral and con- sortia type arrangements in 1962. SINO-SOVIET AID TO LESS DEVELOPED C017NTRIES Total extensions of long-term economic development credits by the Sino-Soviet bloc amounted to more than $4.9 billion by the end of fiscal year 1963. Of this amount, the U.S.S.R. contributed $3.4 billion, Communist countries of Eastern Europe contributed $1.1 billion, and Communist China $0.4 billion. Since the beginning of calendar 1964, bloc countries have extended new economic aid totaling more than $800 million. Major re- cipients include United Arab Republic, India, and several African countries. A signifi- cant proportion of this aid was from Com- munist China. About 5 percent of bloc aid is extended in the form of grants. Bloc credits are gen- erally repayable in local currency, with grace periods on principal extending 1 year beyond completion of projects. Interest rates are generally 2.5 percent repayable in 12 years. Some credits (particularly Chinese Com- munist credits) are extended interest free for up to 50 years. The following table shows commitments and expenditures for 1961-63. Sino-Soviet aid to less developed countries (excluded Cuba) [In millions] , 1961 1962 1963 1964 (Janu- ary to June) - Commitments_ __ $1,000 $325 $310 $800+ Expenditures_ ___ 275 390 475 Soviet aid Total extensions of long-term economic development credits by the Soviet bloc amounted to an estimated $4.5 billion by the end of 1963, of which the U.S.S.R. contrib- uted $3.4 billion and the Communist coun- tries of Eastern Europe about $1.1 billion. Most of this aid has been extended for spe- cific projects. The largest amounts have gone to Asia and the Middle East. Drawings on Soviet bloc aid are almost one- third of the credits extended, amounting to about $1.2 billion from the U.S.S.R. (about one-third of its extensions), and more than $300 million from the Communist countries of Eastern Europe (nearly 30 percent of their extensions). Drawings on Soviet bloc aid amounted to almost $450 million in 1963. August 3 Extensions of long-term economic develop: mental credits by the bloc during 1963 amounted to more than $220 million, most of which was extended by the U.S.S.R. The major commitments were by the U.S.S.R., $100 million to Algeria and $39 million to Iran. There are about 12,000 economic techni- cians from the Soviet bloc in the less-devel- oped countries, of which more than 8,800 were from the U.S.S.R. and more than 2,600 from Eastern Europe. Most of these techni- cians were assisting on Soviet-bloc aid proj- ectTsh.e attached table IV shows Soviet bloc_ aid to underdeveloped free world countries from 1954 to 1963. Chinese Communist aid Total extensions of long-term economic development credits by Communist China amounted to $446 million by the end of 1963. The largest amounts of this aid have gone to countries in southeast Asia and west Africa. Prior to 1962 a number of Chinese Communist aid extensions were grants, but more recently Chinese economic aid has con- sisted primarily of credits. Drawings on Chinese aid amounted to about one-fourth of commitments by the end of 1963; i.e., a little more than $100 million. Many recipients of Chinese aid have received few or no deliveries on their credit or grants. Extensions of long-term economic devel- opmental credits by the Chinese Communists during 1963 amounted to about $89 million, all of which went to African countries. In the latter half of 1963 there were an estimated 470 economic technicians from Communist China in the less-developed countries, of which a handful were in Ye- men and the rest were in Africa and in Asia. Many of these technicians were assisting on Chinese aid projects in either a technical or manual capacity. The attached table V shows Chinese Com- munist aid to underdeveloped free world countries from 1954 to 1963. TABLE 1.-1965 bilateral aid commitments and various measures of donor capacity and interest Bilateral Bilateral commit- Bilateral commit Total Bilateral Bilateral commit- Bilateral commit- Total Bilateral aid Defense ments ments LDC Bilateral aid Defense ments ments LD 0 aid commit- GNP expendi- as per- as per- trade as aid commit- GNP expendi- as per- as per- trade as commit- ments per tures as cent of cent of percent commit- ments per tures as cent of cent of percent ments as per- capita percent exports total of donor ments as per- capita percent exports total of donor cent of (INP' of GNP to LDC's trade with GNP cent of GNP' of GNP to LDC's trade with GNP LDC's LDC's Belgium 2 Millions $70 0. 55 $1, 381 3. 3 12. 8 5. 5 10.0 Portugal Minion, $60 2. 21 $294 7. 4 . 45. 8 20. 3 10. 9 Canada 58 .16 2,009 4.5 13.3 5.2 3.0 United Kingdom_ _ _ 556 .70 1,482 6.4 16.2 7.2 9.7 Denmark 4 1 .01 1,059 3. 1 . 6 .3 4. 1 France' 001 1.26 1,524 6.1 37.1 17.6 7.2 Total, other Germany 428 50 1,558 5. 1 16. 8 7.8 6. 4 DAC 2,445 . 60 1. 135 - 4. 7 17. 6 8. 1 7. 5 Italy 60 . 15 788 3. 5 5. 6 2. 3 6. 7 United States 4,656 . 84 2,974 9.4 64.9 35. 1 2. 4 Japan 265 . 51 547 1. 1 11. 4 6.0 8. 6 .. 7,101 .74 1,766 7.4 33.8 16.3 4.5 Netherlands 42 .32 1.105 4.6 6.0 2.5 12.8 Total, DAC Norway 4 .08 1,423 3. 7 3. 4 1. 3 . 6.0 I Grants and loans over 5 years. 2 GNP at current market prices. Bilateral gross expenditure figures. 4 1961 figure. a Grant component is expenditure figure. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 1964 - Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 CONGRESSIONAL RECORD - SENATE TABLE 11(a) .-1961 bilateral aid commitments: Grants, loans, and average loan terms [Dollars in millions] 17165 Country Total bilateral aid commit- ments Grants Grants as percent of total Loans over 5 years Average matur- ity 1 Average interest' ? Country Total bilateral aid commit- ments Grants . Grants as percent of total Loans over 5 years Average matur- ity 1 Average interest' Belgium 2 $71 $71 100 Norway $1 $1 100 Danada 96 56 58 40 10. 7 6. 0 Portugal 58 3 5 55 22.9 4. 6 Denmark 1 1 no United Kingdom 402 150 37 252 22.9 6. 0 France 3 977 787 81 190 23.9 3. 3 2,419 1,138 55 1,081 17. 8 5. 1 3ermany 401 125 31 276 14.5 4. 7 Total, other DAC__ ftaly 64 29 45 35 7. 5 4. 5 United States 4,418 4 2,910 66 4 1,508 21. 6 4. 1 fapan Netherlands 308 40 81 34 26 85 227 6 12. 2 26.0 6.4 2.4 Total, DAC 6,837 4,248 62 2,589 19.9 4.5 1 Data available lacks some precision or consistency; these average terms should be regarded as rough orders of magnitude. Expenditures. 3 Grants are expenditures; loans are commitments. Includes country use portion of sales under Public Law 480, titleI and commodity grants under Public Law 480, tit es II and Includes Foreign Assistance Act, Export-Import Bank, and Public Law 480, title IV commodity loans. TABLE 11(b) -1963 bilateral aid commitments: Grants, loans, and average loan terms [Dollars in millions] Country Total bilateral aid commit- ments Grants Grants as percent of total Loans over 5 years Average matur- ity I Average interest 1 Country Total bilateral aid commit-, ments Grants Grants as - percent of total Loans over 5 years Average .matur- ity I Average interest' 3elgium 2 )anada )enmark i'rance 2_ lermany_ taly 'span qetherlands $70 58 1 901 428 sa 265 42 $66 44 71 772 154 19 104 11 94 76 - 100 86 36, 32 39 26 4 14 129 274 41 161 31 7. 5 14.0 23.3 17.0 9.8 8. 1 20.0 5. 5 6.0 4.4 4.2 4. 9 6. 1 5.0 Norway Portugal United Kingdom Total, other DAC _ United States Total, DAC_ _ $4 60 556 $4 3 158 100 5 28 57 398 22.4 26.3 4.6 5.6 2,445 4,606 1,336 4 3,025 55 65 1,109 4 1, 631 19.8 29.9 5.1 2. 6 7, 101 4,361 61 2,740 23.8 3.6 1 Data available lacks precision or consistency; these average terms should be re- garded as rough orders of magnitude. 2 Expenditures; interest rate is assumption. 3 Grants are expenditures; loans are commitments. Includes country use portion of sales under Public Law 480, title I, and commodity grants under Public Law 480, tit es II and III. Includes Foreign Assistance Act, Export-Import Bank, and Public Law 480, title IV commodity loans. TABLE II(C).-1963 bilateral aid commitments: Grants, loans, and average loan terms [Dollars in millions] 1 Country Total bilateral aid commit- ments Grants Grants as percent of total Loans over 5 years Average matur- ity' Average interest' Country Total bilateral aid commit- ments Grants Grants as percent of total Loans over 5 years Average matur- ity I Average interest' Belgium Canada Denmark France Germany Italy Japan Netherlands $83 125 7 877 665 128 268 39 $76 44 5 697 155 14 80 9 92 35 71 80 23 11 30 23 7 82 2 180 510 114 188 31 (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) Norway Portugal United Kingdom Total, other DAC United States Total, DAC $4 54 458 $3 9 219 75 17 48 1 45 239 (2) (2) (2) (2) (2) (2) 2,708 4,056 1,311 2,457 48 60 1,399 1, 599 (2) (2) (2) (2) 6,764 3, 768 55 2,988 (2) (2) Preliminary DAC figures. 2 Precise data on interest rates and maturities not yet available for 1963. TABLE III.-1962 DAC multilateral aid and bilateral aid subject to coordination, and percentages, total official aid [Dollars in millions] (I) Total net official aid disburse- (2) Total multilateral aid contributions (3) Total net bilateral aid subject to coordination' (4) Total net multilateral aid and bilateral aid subject to coordination (2+3) (5) Percent col. (1) is of gross national .. ments Percent of Percent of Percent of product Amount net official aid Amount net official aid Amount net official aid Belgium aa .W WWWWW W. ,W4a,.4aWW.lavWW $28.3 29. 2 $65. 31 67. 4 - $93.61 , ,wmcowg,,-4.ocaP 0. 76 Canada 32.8 2.5.4 25.44 50.6 38.24 .13 Denmark 7.8 91.8 7.80 . 11 France 2 116. 7 11. 7 19.90 2.0 136. 60 .39 Germany 102. 3 24. 0 144. 06 33. 7 246.36 . 50 Italy 31. 5 47. 4 10.90 30. 0 51. 40 . 17 Japan 7. 1 4. 3 120. 56 73. 0 127. 66 .32 Netherlands 43. 7 51. 0 .94 42. 76 . 66 Norway . 2 34.3 . 40 28. 6 . 60 . 04 Portugal . 1 . 3 . 10 1. 36 United Kingdom 39. 5 9. 5 102.63 46. 2 232. 13 . 53 Total, other DAC 2,351. 0 390. 0 16. 6 578. 26 25. 0 977. 26 41. 6 , 53 united Statee 3,606. 0 278. 0 7. 7 2, 138. 00 59. 3 2,416. 00 67. 0 . 65 Total, DAC 5, 957. 0 668.0 11.2 2, 725. 26 45.7 3, 393. 26 57.0 .62 'Disbursements of members of IBRD consortia for India and Pakistan, OECD South Vietnam, Philippines, South Korea, China (Taiwan), Argentina, Brazil, and consortia for Greece and Turkey, IB RD consultative groups for Colombia, Nigeria, Chile. and Tunisia, OECD/DAC coordinating groups for Thailand, Indonesia, East Africa 2 French bilateral aid to coordinated efforts includes Laos and Cambodia, and esti- (Kenya, Tanganyika, Uganda). and the Congo (L6opoldville), and DAC meetings on mate for Tunisia. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 17166 CONGRESSIONAL RECORD ? SENATE TABLE IV .?Estimated Soviet bloc credits and grants to the less-developed countries of the free world, 1954-63 [Million U.S. dollars] Area and country: Total Total 4,453 Latin America Argentina Brazil 287 104 183 Middle East 1, 237 Cyprus 1 Iran 45 Iraq 2/8 Syria 193 Turkey 17 Egypt 736 Yemen 27 Africa 718 Algeria 108 Ethiopia 114 Ghana 171 Guinea 97 Mali 78 Morocco 17 Somali Republic_ 63 Sudan 22 Tunisia 48 Asia 2, 207 Afghanistan 507 Burma 15 Cambodia 26 Ceylon 40 India 982 Indonesia 594 Nepal 10 Pakistan 33 Europe 4 Iceland TABLE V .?Estimated economic credits and grants extended by Communist China to non-communist less-developed countries, 1954763 [Millions U.S. dollars] Area and country: Amount Total 446 Latin America 0 Middle East 37 Syria 16 United Arab Republic 5 Yemen 16 Africa 138 Algeria 50 Ghana 20 Guinea 25 Mali 20 Somali Republic 23 Asia 271 ger share of their gross national product on liquor, cigarettes, and gambling than we do, but that does not mean that we must embark on a national effort to out- do them. France, which is the favorite example in this comparison, is not only spending a higher percentage of her gross national product on foreign aid than we are, but she is spending a higher percentage on development of her nuclear weapons systems. Surely this does not mean we must increase our outlay there, too. Yet that is the implication of the comparison. The only important question for us is whether the money the United States does spend on aid is effective and worth- while in promoting the economic better- ment which we advertise as its purpose. I do not think it is, or at least not enough of it is to justify the sum requested for the fiscal year 1965. FOREIGN AID AS A SLUSH FUND Many advocates of aid think they are being sophisticated in recommending foreign aid as a slush fund to buy off other countries. They often say that every great nation has had to do the same thing, and that the United States should now undertake to carry the same burden, with the understanding that it is a waste of money and is spent only to prevent unfavorable things.from hap- pening. Our experience shows that countries do not remain bought off. Pakistan did not remain bought off. Pakistan is en- tering into agreements with Red China. The Foreign Minister of Pakistan stood up in the Washington, D.C., Press Club not so many weeks ago and blatantly pointed out that they have no intention of being of any assistance to us in South Vietnam. Yet we poured millions and millions of dollars of aid into Pakistan. To build up what? To build up her mili- tary forces for a potential war with India over Kashmir. We poured many millions of dollars into India, for the same purpose. The sad, shocking danger is that if Pakistan and India go to war over Kash- mir, they will fight it almost entirely with American military equipment. Does that make friends for us in the world? It makes Communists. Mr. President, it is just such unsound policy on foreign aid that-is strengthen- ing the drive for communism. I want to see it stopped. Our foreign aid program has been a colossal failure as a check upon communism; and I care not what part of the world we name. Our own defense posture has held Rus- Burma 84 sia in check?not the defense posture of Cambodia 50 Turkey, Greece, Pakistan, India, or any Ceylon 36 of the other countries whose military Indonesia 57 power we have developed. What I have Nepal 44 said about Pakistan and India is equally COMPARISONS DO NOT TELL WHETHER U.S. AID applicable to Turkey and Greece. They . IS SOUND would be worthless to us in the event of a Mr. MORSE. Comparisons with other war with Russia. Yet, there is a danger nations, free or Communist, do not tell in the Mediterranean that -Greece and us anything about whether the U.S. aid Turkey might get into a war with each program is sound. If every other na- other?totally equipped on each side tion in the world is hellbent for bank- with American military equipment. ruptcy, that would not be a reason for the Reconcile that with morality. It cannot United States to get there first. No doubt be done. We cannot eliminate moral there are many nations that spend a big- principles from American foreign aid Aqust 3 policy. Much of it cannot be squared with principles of morality. Several things are wrong with the view of using foreign aid as a slush fund. First of all, it assumes that money (or military equipment) buys more than it does. To holders of this view, the giving of money is synonymous with the influ- encing of the recipient; but more often than not, recipients, in the manner of Sukarno, take the money and then do as they intended to anyway. I wonder what America's foreign aid policy would be in Indonesia if there were not in the neighborhood of $2 billion worth of oil investments there. I wonder if the explorations for oil in South Viet- nam and the planned building of an oil refinery in South Vietnam by an Amer- ican oil company might have some indi- rect influence upon foreign aid in South Vietnam. '> The best way to make perfectly clear that it does not have any influence is to ask the United Nations to replace the United States in South Vietnam. I shall have more to say about that later this week. Mr. President, the slush fund to Su- karno did not hold him in line. Slush funds by way of foreign aid have not kept the recipient countries in line. The principle upon which such an approach Is based is not sound. Second, handing out money and weapons with the idea that they will promote political stability, or, keep friendly governments in power, or prop up a bloated military establishment in a foreign country are all efforts to impose a political order from the top down. The underlying causes of unrest- or suscepti- bility to communism are ignored, and sometimes worsened. These uses of foreign aid are justified with such phrases as "forward defense against communism," "vital to the inter- ests of the United States," and "of strategic importance to the United States," concepts that now embrace vir- tually the entire globe. It is semantic "hokum." The Depart- ment of State and the AID officials in the Pentagon have been trying to feed the American people semantic "hokum." But they are getting ready to regurgitate. They will not swallow it any longer. Most of the countries receiving huge and largely unconditional aid on the ground that they border the Communist bloc are already protected by mutual de- fense treaties with us, and by our retalia- tory capacity. The real justification for "forward de- fense" aid is not that the recipient can use it against communism, because a nonindustrial country that cannot sup- port a peacetime army cannot sustain a war effort against Russia or China. Once Europe and Japan were rebuilt and rearmed, military aid ceased to have much practical value for indigenous forces. What "forward defense" aid does buy is entree for American military and intelligence agencies close to Com- munist ) borders. For these privileges, we have paid since World War II a dozen times more than we need to have paid. I shall say something about Turkey later. Turkey is one of the horrible ex- Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 1964 . CONGRESSIONAL RECORD ? SENATE amples. Turkey could'not begin to sup- port its military establishment with its economy. Turkey is not protected by its military establishment. Turkey is protected by the striking power of the United States. We have been pouring hundreds of millions of dollars into Tur- key for the operation of government in- dustry. Plant after plant in Turkey is government-owned. The evidence is perfectly clear?and the Comptroller General's report makes it clear_too?that the government plants are used for the employment of a large percentage of the people over and above the need of the employer to operate an efficient plant. It is a sort of government dole, handed out with American taxpayer dollars. It is a make-work program. Yet when we try to obtain needed assistance in our own country for some of our depressed areas, we see the trouble that we en- counter. But not in Turkey. In my judgment, much of the economic aid, as well as much of the military aid to Tur- key, is a shocking waste of the American taxpayers' dollars. I do not believe we ought to be supporting with an AID pro- gram these government-commercial monopolies in Turkey. Many will say: "Anything that helps us against Russia and China is worth while." But our failure in insist on sound economic standards even for this aid has not helped us. It only means that we are still vulnerable to eviction from these countries without, in the meantime, having improved their eco- nomic prospects. ECONOMIC FREEDOM SHOULD BE BASIC PURPOSE OF AID In the long run, climates and attitudes sympathetic to the United States and compatible with American objectives will have to be created by the creation first of economic freedom in these countries. And economic freedom can only be ad- vanced through the developmental part of the AID program. But, sad to say, of the economic sec- tion of the program, not more than half is devoted to bona fide economic develop- ment. Supporting assistance, the con- tingency fund, and nonproject loans from the development loan fund are but political props and pay-offs to foreign governments. They do not develop; they merely patch over and perpetuate the lack of development. Even the technical assistance program is being used for transportation and communication projects against the day when they may be of use to American forces, and to train small-time police states in emerging countries. The words "economic freedom of choice," without which the security of this country will never be strengthened in this world, are being relegated to whatever is left over in the foreign aid pot. Education, sanitation, vocational training, capital projects, agricultural extension?the activities that our of- ficials trot out to gain support for aid among the unknowing American peo- ple?these constitute at most only about 40 percent of the $3.5 billion being re- quested. Cutting the $1 billion-plus military aid expenditure in half and applying the un- productive economic aid to genuine eco- nomic development projects would do more to strengthen the longrun security of the United States than any other changes that could be made in the for- eign aid program. NO EVIDENCE OF CHANGE IN CURRENT PROGRAM Since January, Congress and the American people have been told again and again that this year the program is being tightened, curtailed, and improved. But there is no hint in any of the ma- terial presented to the committee of where these changes are taking place. All that Congress is given in the annual presentation is a look at on-going pro- grams, started in the current fiscal year or before. Contrary to past efforts and directives from Congress, requested funds for sup- porting assistance have been increased over last year, even without the addi- tional request for Vietnam. This grant economic aid has been a target for con- gressional criticism since adoption of the Mansfield amendment in 1959, calling for its eventual termination. The aid request for this category is a backward step from the Mansfield reform. Unspecified loans called program loans abounded in fiscal 1964, and they apparently are to be used just as freely in fiscal 1965. Project loans finance the importing of commodities for specific projects whose soundness can be verified by AID officials; but program loans go to balance accounts and finance imports in general. In many countries these in- clude imports that contribute nothing to local improvement and development. They only create a debt obligation to the United States whose chances of repay- ment are slim. I warn the American people that, in my judgment, a large bulk?probably the larger bulk?of the 40-year loans at three-fourths of 1 percent interest, 10- year grace period in which no payments will be made, and then payment in soft currency, will never be repaid at all. It would be more direct and honest to des- ignate them as outright grants. Mr. President, they are not psychologi- cally beneficial, either, because?and this is particularly true in Latin America-- many of the people recognize the decep- tion of this approach. We ought not to present that image of the United States to the world. We ought to make either loans or grants. We ought not to pretend that we are making a loan when we give the money on the basis of in- terest of three-fourths of 1 percent, with a 10-year grace period for no payment, and 40 to 50 years in whichto repay, and then in many instances in soft currency. We would win more respect for ourselves if we did not engage in such deceitful semantics. Moratoriums on debt obligations due us from Turkey and Brazil, and the pros- pect of renegotiation of Argentina's ob- ligations, call for a much tighter control by Congress over this type of loan. In the case of Brazil and Turkey, we are making them new soft loans even as we give them moratoriums on repayment of old ones. 17167 These loans, as with aid in general, are touted as creating a future market for American goods. Tommyrot. This theory is based on the advertising gim- mick of giving away free samples. But their cost is absorbed by the American taxpayer, not the manufacturer. Yet testimony to this committee?not from administration sources but from U.S. commercial sources?brought out that in Colombia and Chile, U.S. exports de- clined as these countries received our goods under program loans and diverted the foreign exchange saving into new purchases from the European exporters, not U.S. exporters. Worst of all, the chances that the taxpayers will ever re- cover any of this subsidy to American business are not good. It is no wonder that committees of U.S. businessmen are becoming the ma- jor tub thumpers for foreign aid. So far as Latin America is concerned, the indications are that the aid standards are being loosened, not tightened.. A $50 million loan for no particular develop- ment purpose, but just to balance inter- national payments, has been extended to Brazil. This is despite the suspension Of loans, pending fulfillment of certain economic conditions by the Brazilian Government. There is as yet no more or better economic performance to justi- fy a loan than there had been under the previous government. But once a new junta takes over in Latin America, we rush to curry favor with it, and in Brazil it is costing us already $50 million. In fact, the U.S. aid program in four other junta-ruled countries of Latin America where constitutional govern- ments were pushed out, has been re- sumed. These are the Dominican Repub- lic, Guatemala, Ecuador, and Honduras. This is a full turnback to the evil days of the 1950's when the United States gained a record level of ill will and ill repute among the people of Latin Amer- ica who had to live under the brutal heel of U.S.-supported tyrants. The Alli- ance for Progress was supposed to have changed all that by financing economic reform within a framework of political freedom and domocratic institutions. But today we are merely handing out more money for the same old purposes as before. Having ignored ourselves the political conditions for aid under the Alliance, our partners feel free to ignore the self- help conditions as well. Why should they not when they get this money any- way? Later I shall discuss the President's contingency fund. Why in the world we should go along with the proposal to give him $150 million, to spend at his own discretion, I am at a loss to understand, particularly when we take note of how contingency funds have been spent in recent years. "Slugs" have been spent to help governments balance their budgets, to help them with payments, to help them pay debts. That is a misuse of the Presi- dent's contingency fund. I protested it last year. I shall protest it this year. The purpose of a President's contin- gency fund is to give a President of the United States overnight funds. That is all. It takes 20 minutes to get from the Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17168 CONGRESSIONAL RECORD ? SENATE White House to Congress for the Presi- dent to come before the Congress in an emergency. Any time the President has an emergency to lay before the Congress, he can get the funds, if he shows there is an emergency. It goes back to the point I made earlier about the danger of Government by secrecy. No President?I do not care who he Is?should be allowed to have $150 million to play with any way he wants to play with it in America's for- eign affairs. It is a dangerous power. It Is an unchecked power. It is in violation of the theory of our form of government. No President should be given an un- checked power. Fifty million dollars is ample for any overnight need of any President of the United States. I say respectfully, but the record speaks for itself, that Presidential con- tingency funds have been abused in the past several years, in my judgment, and that abuse should be stopped. FUNDS SHOULD NOT GO ABOVE FISCAL 1964 As reported by the Committee on For- eign Relations, the bill increases the pro- gram for fiscal year 1965 over the pro- gram for fiscal 1964. This has been done despite the overwhelming evidence that the American people are demanding long overdue reductions in the foreign aid burden, that the impact of the aid program is woefully smaller than its size, that U.S. Government funds are increas- ingly needed at home, and that our so- called allies are permitted to shirk their responsibilities because of our often reck- less generosity. Undoubtedly the administration sin- cerely believes its appropriation request for $3,516,700,000 to be a barebones budget. However, the determining fac- tor in shaping this request had to be the judgment of the Agency for Interna- tional Development. And our past ex- perience has made it painfully clear that?at a minimum?there is nothing sacrosanct about the AID judgment. The Congress, on the other hand, is not?or should not be?content merely to accept the arguments of stanch advo- cates, but takes into account a range of other sources of information. Foremost among the latter are the reports by the Comptroller General of the United States, which time after time have severely criticized in detail the planning, the programing, and the implementation of the aid program. On the basis of such information, as well as a full study of the AID presentation material, I can only conclude that there is a great deal of fat clinging to the barebones. The appropriation last year, for fiscal 1964, was an even $3 billion?a cut of almost $2 billion from the original budget request. Judging by the cries of anguish and forecasts of catastrophe which rose from Foggy Bottom during that trim- ming process, one might have envisioned the United States and the rest of the free world sliding irretrievably toward dis- aster. Yet a year later the Republic still stands, and no one is able to point to any foreign policy reverse attributable to a lack of aid funds. Indeed, our set- backs appear to have come in the Medi- terranean and in southeast Asia, areas into which the United States has poured money most lavishly. During this year's hearings and com- mittee discusSions no evidence was pre- sented to justify an authorization for fiscal year 1965 of almost $467 million more than the $3 billion appropriated for fiscal 1964. It might be noted in this connection that a great deal of atten- tion and lipservice was given last year to the so-called Clay Committee report. While I disagreed strongly with that re- port's inflated financial recommenda- tions, it did contain the extremely valid proposition that there should be a grad- ual but steady reduction in the size of the aid program annually in the future. Our experience last year with a program scaled to $3 billion in new funds certain- ly suggests that a cut even below that level could be safely made this year. Because of a carryover from prior year appropriations, the final figure for the fiscal 1964 program was almost $3.4 bil- lion, rather than $3 billion. The carry- over this year supposedly is only to be about $53 million. If true, and if the $3 billion level of new money were-main- tained, the end result would be a reduc- tion of about $344 million under last year's figures. The word "supposedly" must be emphasized. For the admin-, istrators of the AID program are highly accomplished producers of rabbits from their hats, and there is good reason to believe that other funds may in time be brought out of hiding. Indeed, when such a wonderland category as "deobli- gations of prior year obligations" is counted, the understandably confused American man-in-the-street finds that the foreign aid program which he thought was $3 billion last year turned out to be in excess of $3.6 billion. The conclusion that $3 billion in new money would not represent any real reduction from last year is shared by many Mem- bers of the House, who wrote in the minority views in the House Appropri- ations Committee report: Further, it is impossible for the Appro- priations Committee to ascertain with any degree of accuracy the amount of unobli- gated funds which are left at the end of the fiscal year. It has been stated that these figures for any fiscal year are not available until October of the following year. FOREIGN A?SISTANCE ACT ONLY A PART OF TOTAL FORE/ON A/D This leads to another major objection to the character of the foreign aid pro- gram as it now stands. It is only the beginning figure for what we spend over- seas on an annual basis. Many Members of the Congress, much less the American public, have only the haziest idea of how money is involved in our contributions to a large number of international financial and developmental organizations, and in our shipments of agricultural surpluses. Moreover, executive branch requests for the same general purpose in succes- sive years have a tendency to disappear from one bill or category and turn up in another. For example, $135 million for Latin American development?through the Inter-American Bank's social prog- ress trust fund?contained in the 1964 foreign aid -appropriation bill does not recur this year. At first blush this might ifugust 3 appear as a reduction in our total aid. But no, the administration has just sub- mitted a separate new request for $750 million over a 3-year period for the same purpose with a slight change in termi- nology. There is no corresponding cut in this bill. Under these circumstances It is extraordinarily difficult to perceive the overall total of United States foreign aid, and to make intelligent judgments about the validity of its components, such as those contained in this bill. EXCESSIVE NUMBER OF COUNTRIES CONTINUE TO RECEIVE BILATERAL ADD This confusion carries over into the question of how many countries are feed- ing at the American trough. If only aid under the Foreign Assistance Act is counted, then some 83 countries are scheduled to receive assistance in fiscal year 1965. But the total rises to over 99 countries and territories when all forms of assistance are counted. And Indeed they should be counted. The ad- ministration can scarcely claim it is ex- tending little aid to Nasser's Egypt, for Instance, when Public Law 480 supplies are flooding that country. Now it appears that the number of countries getting help under the Foreign Assistance Act has fallen by something like the figure of 10. It is noteworthy that there is no commensurate cut in the administration request for new funds. On the contrary, the AID offi- cials point with pride to the growing concentration of effort in fewer "key" countries. By that standard, no matter how many nonessential applicants are cut off the AID payroll, the level of for- eign assistance requests is likely to re- main unchanged. Anyone reading the majority commit- tee report, supported by the majority of members who voted for this bill, will be struck by the absence of persuasive an- swers to the outstanding questions which . have always surrounded the foreign aid program. It is said that it is unrealistic to expect agreement on the purposes and aims of the foreign aid program. This at least is- refreshing candor, although there is little novelty in the observation. My own experience with AID officials has always been that when I make a valid criticism of an economic project, they say the objective in that case is not economic but political?and vice versa in other cases. In numerous instances those officials have accepted the validity of my criticisms "in principle" but have cited so-called special circumstances which prevent them from taking correc- tive action. It is no wonder that we have difficulty in justifying foreign aid ex- penditures to our constituents. The committee report states that the total of U.S. bilateral aid is declining. Yet, as substantiation, it merely cites the difference between last year's administration request and the one this year. The fact is there is no hard evidence to cite which would back up that statement in terms of last year and this. The majority report then goes on to note that "aid has been terminated in 17 countries." But it ignores the fact that some of these countries were cut Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 /964 CONGRESSIONAL RECORD ? SENATE off several years ago, and liave been trotted out each year since as happy examples. In any event, as stated above, a reduction in recipients means little without a consequent reduction in ex- penditures. A table is inserted in the report which supposedly "should provide some reas- surance" that our development loans will be repaid. The only conclusion I draw from that table is that the World Bank?whose record is not at issue? has done extremely well with its hard loans on stringent criteria. I join Sen- ators MUNDT and LAuscHE in their ob- jections to the easy terms of most of our loans. I call this an obvious fallacy in the misleading statement of the AID admin- istration and I issue the challenge: "Do you want to adopt the World Bank pro- cedures and policies for your loans? If you do, I am all for you." But to cite the World Bank, which Issues hard loans, which charges interest rates that ought to be charged, as an ex- ample or as an argument in support of the fallacious contention that AID loans will be repaid is pure deception. ' Mr. Presidentc I resent such an insult to my intelligence. But that is what we are up against when we deal with the AID administration. The AID adminis- tration ought to be swept clean. We ought to bring an end to the whole pro-, gram and start all over again on the basis of conditions that Congress lays down, instead of always passing the buck to the executive branch of the Govern- ment to determine the conditions. Finally, the majority report meets the criticism that our industrialized friends are failing to take a fair share of the for- eign aid burden by stating: This is a complicated question, for which there is no categorical answer. It is about time that the majority of the Committee on. Foreign Relations set about trying to find some of the answers, instead of passing the buck to the State Department, the AID officials, and the Pentagon. Read the report of the Com- mittee on Foreign Relations of a year ago and compare it with the report of the Committee on Foreign Relations this year. It is almost unthinkable and un., believable that it was written by the same members of the committee, but it was. A year ago, the majority of the Com- mittee on Foreign Relations tried to sell us an unsound report-with the pleading, the rationalization, and the semantics in that report of a warning to the State De- partment and the AID officials, "If you do not do something in the intervening year, you will be in trouble; something will have to be done on the Hill." What has been done? Let the chair- man of the Committee on Foreign Rela- tions take the door of the Senate and give us a bill of particulars as to what has been done to carry out his report of a year ago. I charge now, as I charged a year ago, that what the committee did then, as it is doing now, was to pass the buck back to the administration. When we raise the objections that I raise, we are told, "These are complicated No. 149-5 questions, for which there is no categor- ical answer." The American people are entitled to have some answers. It is about time the majority of the Commit- tee on Foreign Relations started to sup- ply the answers instead of writing the kind of report we have received again this year. Again, the statistical informa- tion contained in the report simply does not support an optimistic conclusion. In the following sections I set forth my own specific conclusions and recommen- dations for cutbacks in funds, which lat- ter are summarized at the end in tabular form. DEVELOPMENT LOANS Congress should reduce funds for de- velopment loans so long as these loans continue to be made for general purposes and not for specific projects. The House Foreign Affairs Committee report, in both its majority and minority views, was critical of the large sums in program loans during fiscal 1964. Yet Congress must be aware by now that mere criti- cism in a committee report makes no im- pact whatsoever on the foreign aid pro- gram. I repeat what I said earlier this after- noon; Do not provide blanket funds; do not provide blanket authority in dealing with development loans. If money is wanted for development loans, the appli- cants should be required to submit spec- ific projects to the committees and to Congress for specific approval, just as every Senator who seeks a project for his own State must submit a specific pro- gram showing that a cost-benefit-ratio formula is being met. We cannot clean up foreign aid if we leave the policy decisions to Foggy Bot- tom. We will not clean up foreign aid until Congress does the job which is clearly its job as the caretaker of the public pursestrings, and passes its valued judgments upon specific requests for specific loans for specific projects. I agree with the House committee. Congress must be aware by now that it will have to insist upon specific projects if foreign aid is ever to be cleaned up. Said the majority report: Nevertheless, the committee believes that countries which progress to the point where they qualify for large development loans should be encouraged to assume increasing responsibility for financing their imports, except imports related to projects for which loans are made. There is danger that de- pendence on the United States for such financing could- result in levels of consump- tion higher than the recipient could normally sustain and could encourage unsound finan- cial and monetary practices. The minority report of the House com- mittee showed program loans in fiscal 1964 as follows: Million Tanganyika $1 Tunisia 10 India 275 Pakistan 100 Turkey '70 Chile 40 Colombia 15 This makes a total of $511 million. Since then, Brazil has received a $50 million program loan. 17169 This means that about a third of all development loan funds available for fiscal 1964 have already been lent for general purposes unrelated to any specific development project. ? Turkey again ranks as the No. 1 failure of the foreign aid program and among the No. 1 recipients of program loans. She is receiving over $100 million in economic aid this fiscal year, and con- siderably more in fiscal 1965, most of it in "program" loans. Both the Organization for European Cooperation and Development, and the General Accounting Office of the United States have found Turkey's economic de- velopment to have stagnated despite the huge American aid program these since 1947. The OECD report of 1963 was pre- pared for a consortium of Western Euro- pean countries that were supposed to join the United States in financing Turkey's development. AID presentations always refer to this consortium but do not men- tion that its total pledges amount to less than the American aid alone, and that the European members are not coming through on their pledges because Turkey has not carried out the reforms required. Let us not forget the lesson of that precedent. If we follow the policy we have been following toward Turkey, we shall be confronted with the argument from many another country, "Well, you let Turkey do it; why not us?" Either we shall operate the foreign aid program on a sound procedural basis, with fair conditions imposed and en- forced, or we shall run into the kind of wasteful expenditure of taxpayers' mon- ey that has occurred in Turkey. Mr. President, our aid program to Tur- key, in my judgment, has involved the waste of many millions of taxpayers' dol- lars. We should stop it. Senators should not get the idea that they are support- ing democracy in Turkey because there is no democracy in Turkey. Although the United States has put $1,670 million into Turkey's economy since 1947?let me repeat: the American taxpayers, through their Government, have poured into Turkey's economy since 1947, $1,670 million?and given her com- bined military and economic aid of over $4 billion, that country's economic con- dition is worsening. The population in- crease has almost entirely wiped out the increase in the gross national product. If anyone wishes an example of the failure of the representation about for- eign aid, while it is supposedly accom- plishing so much, take a look at Turkey. Since 1947, we have poured more than $4 billion into Turkey, and yet there is no democracy there. There is no strong private economy in Turkey. It is, by and large, a state monopoly economy. We are maintaining a military establish- ment there which Turkey could not pos- sibly maintain. It would be much better for us to follow the kind of aid program which I announced at the beginning of my speech I would gladly support, dealing with loans and hard money loans to specific economic projects, which will do something for the people of Turkey and Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17170 CONGRESSIONAL RECORD ? SENATE help their standard of living, then to engage in the kind of wasteful programs we have been engaging in there. If there is any question about my position, read the reports of the Comp- troller General. Senators can read them. So can the public read this one. I do not see how anyone can read the Comp- troller General's reports on Turkey and go along with this bill. Reform of the grossly wasteful state enterprises, and tax reform are the most urgent. The U.S. General Accounting Office reported a few weeks ago: In the absence of a development plan and adequate information about the economy's resources and needs, the commodity import program (which has been the largest seg- ment of United States economic dollar aid to Turkey) was an integrated part of the fi- nancing of Turkey's overall import programs and as such was not geared to specific long- range objectives. Moreover, substantial amounts of local currency generated under the commodity import program were allo- cated for the general support of investment budgets of state economic enterprises (those owned by the Turkish Government). Be- cause neither the Turkish Government nor the misSion exercised adequate control over commodity imports and the operations and investment programs of state enterprises, aid funds frequently were used to nonessential or low-priority purposes. State enterprises also received U.S. dollar aid to finance the foreign exchange cost of facilities which had been poorly utilized or not utilized at all. As- sistance was freely provided some state enter- prises notwithstanding their inefficient op- erations and uneconomical practices. In a supplement to our prior report on the Turkey program: we pointed out that ac- complishments in Turkey's economic devel- opment and support of the country's defense efforts had been accompanied by serious eco- nomic problems with consequent increases in the amount of aid required from the United States. The average level of U.S. aid for the 5 fiscal years (1958-62) covered by our re- cent examination ipereased significantly over the level for the preceding periods. More- over, U.S. officials estimate that during the 5-year period which began March 1, 1963, Turkey will need more aid than heretofore from both the United States and others and that Turkey will not reach self-sustaining growth before 1975. Steps taken since the military coup of May 1960 offer promise that sound and necessary economic control meas- ures may be forthcoming, but much remains to be done. As can be seen from the above there is a need for more effective action to improve operations and increase earnings of state economic enterprises and for more pro- ductive utilization of resources available to Turkey. Some Senator speaking on the floor of the Senate in 1975, if we go through with this prognosis, will be saying, in my judg- ment, just about what the senior Senator from Oregon is saying today. The Turk- ish system will not bring about resulting economic freedom. I shall not vote to waste American taxpayers' dollars in that way. I shall not vote to sink Ameri- can taxpayers' dollars in such bottomless pits as Turkey. A continuation of a wasteful foreign aid program to Turkey cannot be justi- fied. I shall not vote for a foreign aid bill that includes it. Mr. LAUSCHE. Mr. President, will the Senator yield? Mr. MORSE. I yield. Mr. LAUSCHE. I listened to the reading of the report concerning aid that has been given to Turkey. I believe it is stated in the report that there was waste and inefficiency in the governmental enterprises. Mr. MORSE. It was shocking. Read the report of the Comptroller General on that point. Mr. LAUSCHE. Does the senior Sen- ator from Oregon object to the granting of aid to Turkey because of the govern- mental operations as distinguished from private operations, or is it on that ground and additional grounds? Mr. MORSE. Oh, it is based on many additional grounds. I am not taking the position that we should not aid a coun- try that may decide that it wants to con- duct on a governmental, monopolistic basis, certain operations that are vested with the public interest. I do not like them. It happens to be their right. But I shall not vote the taxpayers' money to support grossly inefficient and wasteful industries, be they public or private. And I shall not vote the taxpayers' money to support state monopolies in the fields of what ought to be private enterprise. Mr. LAUSCHE. I thank the Senator. Mr. MORSE. I suppose I am odd about my position in regard to the use of aid. I have said over and over again that we must look at it from the stand- point of our self-interest. We must look at it from the standpoint of whether or not we can really try to export economic freedom. The Senator has heard me say time and time again that there is no hope for political freedom anywhere in the world, in any country that we are trying to help, unless we first prepare the seedbeds of economic freedom. We cannot export political freedom. We have tried to do it. It has been a colossal mistake and failure for years. But we can export the institutions of economic freedom, and the interesting lesson of history is that we cannot cite in the history of mankind a people who were economically free who were not also politically free. We can- not 'cite that any people who were politi- cally free lived under the kind of eco- nomic totalitarianism under which the Turks live. Mr. LAUSCHE. Mr. President, do I correctly understand that the senior Senator from Oregon does not believe that the AID program should be discon- tinued, but does believe that it has been administered in many instances on poli- cies that were wrong, and also adminis- tratively inefficient? Mr. MORSE. Early this afternoon, I stated I would vote more money than this bill calls for if the AID pro- gram were reformed. It makes a great deal of difference to me whether they are asking for hundreds of millions of dollars for so-called loans which are deceptive. As I have stated over and over again, as an experienced teacher, I know the value of repetition in the learning process. I shall repeat, repeat, and repeat until the American people begin to understand what it is that we are driving at when we oppose the AID program. I stated earlier this afternoon that I am against loans of three-fourths of 1 percent interest, 10 years' grace, 40 to 50 years to repay, and repayable in soft currency. That is plain deception. August 3 The American people are fed semantic "hokum." But I would vote more money for hard loans and for loans that go to projects that we have checked. I am not going to leave it to the AID officials to take a total sum of money and spend it in their wisdom for a project. It is time to put a control on that kind of program?the same kind of control that the Senator from Ohio [Mr. LAuscnEl, and the senior Senator from Oregon have to measure up to, and rightly so, when we seek to obtain loans or development grants for projects in our State. Mr. LAUSCHE. Mr. President, will the Senator yield further? Mr. MORSE. I yield. Mr. LAUSCHE. I heard the Senator say that we have made loans most inad- visedly in areas where they would not be of any help to us. My philosophy has been that we cannot discontinue the AID program. However, we can reform the policies under which the program has been ad- ministered. From my own standpoint, I have always felt that we never ought to deal with any country that wishes to auction off its fidelity to the highest bidder. There have been too many in- stances in which countries have said, "You will have to pay us more than Red Russia. Unless you do, we shall go to Red Russia." To those nations I would say, "Go." They will come back quickly, and with the knowledge that what we do is in- tended sincerely to be of help and not to be a militaristic exploitation such as Red Russia is practicing upon them. Mr. MORSE. The Senator from Ohio knows that in the Foreign Relations Committee, on which he and I have had the privilege of serving, I have sup- ported him on that stand. When he has said "Go," I have added the phrase, "And Godspeed." Mr. LAUSCHE. The Senator is cor- rect. Too frequently we give aid to our enemies. We are giving aid to countries whose leaders have publicly declared their affection and support for Red Russia. Mr. MORSE. Pakistan. Mr. LAUSCHE. Zanzibar. Mr. MORSE. Sukarno. Mr. LAUSCHE. Sukarno; Bella in Algeria and Jagan in British New Guiana. Mr. MORSE. And Nasser. Mr. LAUSCHE. I do not believe that +we are serving the interest of our coun- try by giving aid to those who love our enemies and frequently reveal their dis- trust and hatred for us: Mr. MORSE. What they love about us is our dollars. Mr. LAUSCHE. Frequently we hear them say, when they are supposedly speaking without being heard and ob- served, "Beware of the capitalists of the West." They do not mention the United States, but that is the term of oppro- brium that they apply to us, indicating their affection for our enemy and not for our country. ' Mr. MORSE. I thank the Senator. Mr. LAUSCHE. I thank the Senator from Oregon very much for yielding to me. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 1964 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 CONGRESSIONAL RECORD ? SENATE Mr. MORSE. Continuing the discus- sion of the Comptroller General's report on Turkey? twe ,,read that the Turkish Government operates about half of the country's industrial production, includ- ing enterprises in the fields of manufac- turing, mining, trading, banking, trans- portation, and public utilities.' They have steadily lost money due to "poor or- ganization, inefficient operations, and poor pricing policies." ? The report states: Despite these basic management deficien- cies, the United States continued to provide substantial sums of direct and indirect dol- lar aid and counterpart and U.S.-owned local currency to some state enterprises. This aid has contributed 'little toward improving op- erations of the enterprises, relieving their drain on the Turkish economy, and thereby reducing the need for outside aid. Turkey's failure to correct the worst of these conditions has led the consortium to curtail its scheduled aid. But instead of doing the same, the AID presentation indicates that the United States is going to increase its aid substantially over last year. The others who belong to the con- sortium have become so fed up with Turkey's failure to deliver that they have announced they will reduce their assist- ance, but not the United States. We are going to increase ours. When is this mulcting of the American taxpayer go- ing to stop? I say to the American tax- payers, "It will stop when you, the tax- payers, begin to recognize that your most important business happens to be your own government. When you begin to exercise your responsibility of citizen- statesmanship, the politicians will stop it, and not until then." That is why this Senator, difficult as it has been over the years -to face the kind of opposition that following this minority role imposes upon him, has been willing to stand up and challenge ad- ministration after administration. To date no administration has been able to answer the facts that we have presented in opposition to the shocking, wasteful and inefficient foreign aid program that has come 'to characterize our whole foreign aid process. DEBT DEFAULT BY TURKEY Mr. President, the GAO report also found that Turkey was by 1957 in arrears on three loans, with the arrearages amounting to $6.4 million. In May 1959, AID deferred for periods ranging from 28 to 31 years all principal and interest payments originally due be- between 1956 and 1965. When they did it, they did it 'with American taxpayer dollars. I do not intend to continue to vest that kind of bureaucratic power in a group of little bureaucrats down in Foggy Bottom. The Government of Turkey is to make the three interest and principal pay- ments due between 1966 and the orig- inal maturity dates pursuant to the orig- inal repayment schedule, and make the deferred payments after the original ma- turity dates. But. interest will not be charged on the principal and interest payments that were deferred, which rep- resents another grant of $31 million to Turkey. The dreary details of American aid for importation of station wagons, for a meatpacking plant that is virtually un- used, for modernization of the state- owned bituminous coal industry that continues to sink deeper into indebted- ness, and for grain storage silos whose peak loads averaged less than 40 percent of capacity are included in this GAO report. It should be read by every cit- izen who still believes that the foreign aid program is designed to help the world's unfortunate. Much of it helps the politicians, the in-crowd, the tyrants, the dictators that control these countries. It lines their pockets, and a little gets down to the mass of the people. The report states: The Agency (AID) advised us that it had encouraged Turkey to adopt necessary re- form measures for management of its fiscal and economic affairs. However, although ac- tions taken by the Government of Turkey were not satisfactory, the Agency decided to not insist on a greater measure of coopera- tion because of foreign policy considerations. How do Senators like it? They know what he has said is true. AID gave the Turkish Government a slap on the wrist and said, "Now, you must do better. You ought to adopt some reforms." But _ when the reforms were not adopted, AID continued to pour the taxpayers' money in for what it considered to be foreign policy considerations. What foreign policy considerations? There are no foreign policy considera- tions that can justify this kind of waste. It is Turkey that is dependent upon the United States, not the United States that is dependent upon Turkey. If war broke out between Russia and Turkey, we all know that our mutual security obliga- tions would move this country in, and we know what kind of war it would be. It would be a nuclear war, and quickly. Turkey should be required to come in as an applicant for aid willing to meet rea- sonable conditions we impose for the/ granting of aid. I propose to give the Senate an opportunity, before the week is Over, to vote on just such an amend- ment. Primary in these considerations are the extensive intelligence and military Installations operated in Turkey by thou- sands of American personnel. They largely explain why protests about Tur- key's stagnating economy and misuse of aid funds are brushed aside with refer- ences to Turkey's being "vital to Ameri- can security." Our aid to Pakistan is in very much the same category, and we seem to be heading in the same direction with India. The "forward defense" policy of aid is not one of promoting economic freedom of choice at all. What is happening now in Laos and Vietnam is typical of what would happen in each of these peripheral countries should it come under any pressure from within or without. The American aid that we send them now would be only a drop in the bucket of what it would take to prop them up under conditions of war or near war. Program loans to these countries are 17171 little better than outright grants and should be stopped. TECHNICAL COOPERATION For many years, this descendant of the point 4 program has been an almost un- touchable segment of the foreign aid pro- gram. But a close examination of its current projects, and those in the com- parable category in the Alliance for Progress, indicates that technical co- operation is moving far away from the original point 4. Today, a major func- tion of technical cooperation is the train- ing of local police forces in internal security matters. These programs are zealously pursued by American authori- ties even in countries like Panama and Indonesia, where their uses are more likely to be anti-American or anti- British instead of anti-Communist. In short, these programs are being con- ducted in the countries where we have little or no control over the purposes to which they will be put. They include the recent miltary junta-ruled countries of the Dominican Republic, Honduras, Ecuador, and Guatemala. Just what we think we can teach the Dominican na- tional Police that they did not learn for themselves in Trujillo's day is hard to guess. But we are trying. We are undertaking similar endeavors in Somalia, Chad, 'Tunisia, the Central African Republic, Dahomey, the Ivory ?Coast, the Malagasy Republic, Niger, Upper Volta, the Congo, and Ethiopia in Africa. The programs are equally widespread throughout Latin America and Asia. In few of these countries is there the institutional framework that would make them a wise undertaking. All we are do- ing for most of them is making their police ?:z.tes a little more efficient?may- be. But we have not the sligl_test idea to what use this efficiency will be put, and whether it will advan:e any interest of the United States. In many ways, this kind of technical assistance is the most dangerous aid pro- gram ever undertaken by the United States. Any reduction Congress makes in it will be a step in the right direction. The aid presentation for technical as- sistance gives no real reason for the $9 million i-f3rease it plans over fiscal 1964. AID declares that it is moving the capital projects that have been under technical cooperation into the development loan category. But if so, what does it plan to do with the money saved, plus the in- crease over last year? Research is the only explanation for this in the presenta- tion. If one ever had a semantic gimmick, If one ever had an escape hatch, if one ever saw a bureaucratic exit sign, it is the word "research." Whenever we go after them and ask them what they are going to do with the money they save, they say they are going to research something. When we cross-examine them as to what the research is to be, they hedge. It is difficult to get any- thing from them. They do not want to give up the money. They do not want to save money. They want to use it to build another wing in their bureaucratic building. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17172 CONGRESSIONAL RECORD ? SENATE We shall never accomplish foreign aid reforms until the Congress does it. Based upon years of experience, I can say there is no such intention on their part. There is no basis for any assump- tion that we can rely upon the State Department or the AID officials or the Pentagon to save any money or to re- form the waste and efficiency that char- acterize and honeycomb the foreign aid program. Many of the other projects undertaken in the name of technical cooperation and assistance have a similar flavor of political and military intrigue. In the Near East and Asia, many of the trans- portation projects seem to be directed at military rather than commercial use. In Afghanistan, for example, we have a total program of $10 million worth of continuing projects. One of them is to plan a highway to the Iranian border. Its justification is that it would give Afghanistan an outlet in the West. But we had already helped her build a high- way to the Pakistani border for the same purpose; then there were troubles be- tween Afghanistan and Pakistan, caus- ing the border to be closed, off and on. It seems a great hypocrisy to call this "technical cooperation," when it does not appear that Afghanistan is as much interested in having an outlet to the West as we are in insisting that she have one, no matter how much it costs the American taxpayers. Cyprus is another question mark. Cyprus is down for many hundreds of thousands of continuing projects. What has happened to them during the civil war? No one will ever know from read- ing the presentation. Turkey, of course, is the most shame- ful failure of all aid recipients, not only in the technical aid but in all categories of aid. In technical assistance, many of the programs we are maintaining .in Turkey are designed to help Turkey run her state enterprises. Shice it is these state enterprises that are largely re- sponsible for the stagnation of her econ- omy, and the responsibility for their con- tinuation is a political rather than a technical problem, it is hard to see how the United States is helping to improve her economic situation by aiding in the perpetuation of these enterprises. An- other way of putting it is that we are training Turks in socialism, and creat- ing more bureaucrats who will have to be employed in these establishments al- ready suffering from bloated payrolls. As for Thailand, one cannot read the continuing projects there without con- cluding that they are laying the founda- tion for an American military operation in Thailand. The so-called transporta- tion projects include a four-lane high- way from the country's main interna- tional airport to Bangkok. From Bang- kok, a two-lane highway is to continue to the northeast area where the border with Laos is threatened. Much the same pic- ture is seen in the projects for aeronau- tical ground services which are "intended to make several airfields fit for military use, as well as civilian." It is hard to see where any civilian use in Thailand could justify "several" airfields of this nature. In sum, showing people how to live better is on its way to becoming only an adjunct to the technical cooperation pro- gram, as it is to the rest of foreign aid. It is the Peace Corps that is making the greatest contribution to this cause. AMERICAN SCHOOLS AND HOSPITALS ABROAD In my opinion, the funds authorized for this activity -rank high among the most worthwhile expenditures made in the name of foreign aid. Mr. President, I shall vote for more money, not less money, for that program. That program aids people. Indeed, I have made a mat- ter Of record my willingness to support a larger sum for these purposes than the administration requested. A number of my committee colleagues and I expressed great interest during the hearings in providing assistance to Mex- ico City College now renamed the Uni- versity of the Americas. This eminent institution certainly seems to qualify for help under the aid category of American- sponsored schools. Unfortunately, the university had not submitted its detailed application by the time of committee action on the bill. I believe it likely that the majority of members would have voted to increase the authorization for this section had they been in receipt of data from the university which seemed to require such action. However, the committee was assured by the Administrator and other AID offi- cials that the university's application, when forthcoming, would be reviewed most sympathetically. We were also as- sured that the funds requested ifor this general purpose would be sufficient to permit assistance to be granted to the University of the Americas in fiscal 1965. - I take this occasion to express my inten- tion of seeing to it that this project is not lost in the bureaucratic shuffle. THE ALLIANCE FOR PROGRESS As chairman of the Subcommittee on American Republic Affairs, I yield to no one in my deep interest in the countries of Latin America and their progress with economic and social reforms in the con- text of democratic political institutions and practices. I would certainly sub- scribe to the words of the committee re- port: Dramatic breakthroughs and economic takeoffs are unlikely in the absence of a basic social and political reorientation in most of Latin America. But sadly inadequate emphasis has been given to the fact that U.S. policy, father than American public money, is the instrument through which we can best help our Latin American friends to help themselves. It is a truism that a change in the price of a basic Latin American export com- modity, such as coffee, by a few pennies, or a reversal of capital flight from that area, would have many times the effect of all the financial aid which the United States could possibly make available. What is irreplaceable, on the other hand, is a U.S. policy which actively encour- ages democratic constitutional means of governing and of tackling the fearsome social and economic problems of the Latin American countries. Regretfully, one cannot avoid the conclusion that August 3 such a policy still is not sufficiently in evidence in Latin America. Time and again we have reacted to the military overthrow of a constitutional regime by temporarily withholding rec- ognition and foreign aid funds, and then by granting them without any reliable assurances that the new rulers are mov- ing to reestablish constitutional and pop- ular government. It is not merely that such practices evoke justified criticism from all parties involved; they serve to undermine our entire overall policy to- ward Latin America. Until the United States unequivocally alines itself with those democratic elements which are trying to bring about peaceful revolution in the social and economic spheres, the Alliance for Progress will be a pious ex- hortation rather than an instrument for dramatic change. Our "aid as usual" policy toward the Dominican Republic, Guatemala, Hon- duras, and Ecuador is the greatest single threat today to the success of the Alli- ance. At any time when the Dominican Re- public, Guatemala, Honduras, and Ec- uador wish to set up a constitutional sys- tem of government, at any time they wish to return to democratic processes, at any time they wish to announce specific election dates for the holding of democratic elections, the senior Senator from Oregon Will start urging that we give some attention to development loans for those countries; but not until then. Because it is clear that money alone is not the key to the Alliance for Progress, there is no reason why foreign aid re- quests for Latin America should not be scrutinized?and reduced when neces- sary?on the same basis as AID pro- grams in other world areas. Last year's appropriations for the Alliance totaled $455 million, but the administration has requested $550 million under that head- ing for fiscal year 1965. Although the overall foreign aid appropriation should be gradually reduced each year, this should not involve a rigid approach which would inevitably cut each and every com- ponent of the act. Therefore, I am rec- ommending $465 million for the Alliance in the 1965 authorization, or an increase of $10 million over last year. Of this total, $80 million would be for grants? the same figure as in 1964?and $385 million would be devoted to development lending. I would be willing to add to this amount whatever millions of dollars Congress would be willing to strike from the military aid program to Latin Amer- ica. A good many millions of dollars should be stricken from it. I would be willing to add to the development loan program the savings which Congress wishes to make on military aid payments or loans to Latin America. My reasons for cutting $5 million from the administration request for Alliance grants stem from a painstaking exam- ination of the presentation material. On the basis of listing: projects which seemed inadequately justified? unduly extended?often for 15 or 20 years?or otherwise of dubious value, I might have sought a precise cut of $8,243,000 had I Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 1964 CONGRESSIONAL RECORD ? SENATE not again preferred to err on.the side of caution. I would return that cut on the basis of the submission on the part of the AID officials of the type of hard money loans that I referred to earlier in my speech, related to specific projects, to be drawn upon as the projects are built. In two major countries we make tech- nical assistance grants to encourage the production of export items which are sur- plus in the United States. In a number of cases there are projects which involve the United States in paying local ex- penses which could be met by the Latin American country concerned. In other cases the United States is making grants of both heavy and light equipment which properly should be purchased by the local government with the proceeds of a de- velopment loan. The ill-advisability of training and equipping of police forces in totalitarian states is discussed in the section on technical cooperation. It is for these reasons that it seems correct to hold grants at last year's level while providing $10 million more for lending. There should be no confusion about my position regarding technical assistance for Latin America and other regions of the world. So long as this cooperation is extended in terms of working with fellow human beings through education and training in productive activities, it is of supreme value and it is self-justifying. But this fine program must be kept sepa- rate from the provision of capital equip- ment, other material, and commodities. Development loans obviously are required In order to make such provision, but we must also make it as certain as possible that loans are confined to those pur- poses, and not devoted to budgetary and balance-of-payments support. The com- ments made elsewhere in these individual views concerning the Development Loan Fund are equally valid in the Latin American context. One further point about the Alliance for Progress. There is no activity in Latin America which is more important in terms of reaching the people than the construction of decent, low-cost housing. Yet all indications are that there has been too little movement in this sphere, despite the special authority in the For- eign Assistance Act. I strongly urge far greater attention to this subject by AID officials on an immediate basis. SUPPORTING ASSISTANCE It is inexcusable that the administra- tion request for supporting assistance funds should be raised over the amount available last year; even before the spe- cial request for additional money for Vietnam was sent to Congress. The Mansfield amendment of 1959 called for an eventual phasing out of these finan- cial grants. Yet $335 million was ini- tially requested, compared to $330 mil- lion appropriated last year. On top of this, $70 million more was later requested for Vietnam, bringing the total to $405 million. Congress has suffered in the past from the shifting by AID of supporting aid funds away from the purposes presented in the hearings into other uses. If past experience is any guide, it is more than likely that much of the supporting assist- ance requested for Vietnam will be used elsewhere. The $30.3 million reduction in this category by the full Committee is not enough. Three countries in Latin Amer- ica, for example, are scheduled to receive supporting assistance. One of them is Haiti. Although the program being sup- ported is malaria eradication, our pro- gram is in addition to UNICEF and Pan American Health Organization prodams in Haiti for the same purpose, to which we also contribute. The brutality of the Duvalier dictatorship in Haiti is not ex- ceeded even in Castro's Cuba. There is no more reason for the United States to maintain a unilateral health program in Haiti than in Cuba, or for that matter, in Communist China. Supporting assistance aid to Bolivia simply undercuts the requirements of the Alliance for Progress and underwrites- the incredible mismanagement of the government-owned tin mines. As with Turkey, the excuse for this aid is the old reliable Communist bogeyman, and the result is the subsidizing by American tax- payers not only of Socialist enterprises but of outrageously inefficient Socialist enterprises. In ?the case of Bolivia, we have been suPporting these tin mines with their grossly padded payrolls since 1954 and there is no end in sight so long as the word is out that there is more supporting assistance coming from the United States. Why should Bolivia change so long as she can scare money out of us? Jordan and Yemen will account for another large chunk of supporting assist- ance. Despite the pretentious and glow- ing references to Jordan's "progressive" government in the presentation, there are no plans for loan aid to Jordan in this year's budget, and one of the three remaining capital projects under teoh- nical cooperation is also in Jordan. Nothing but grant money is planned for Jordan this year because with her pres- ent policies she is an economic impossi- bility. The presentation uses the phrase: "Eventual viability may be more securely rooted" in Jordan. That is the best outlook. Much of Jordan's poor outlook is di- rectly due to her expenditure of $60 million for defense. Offense is probably the better word. Jordan's army is con- cerned with nothing in the world but Israel, and King Hussein has made it quite clear that he is ready to move against Israel if the Jordan River project goes through. If he does, it will be only because the United States has subsidized his military establishment since 1957 through supporting assistance grants. Jordan is not of interest exclusively to the United States. If she needs subsi- dization to exist, in the same way the Congo does, she should become an inter- national ward, supported- by some kind of consortium. That might also reduce the military threat she poses to Israel. But so long as.the United States furnishes her this wad of money as a military sub- sidy, this willneVer happen. The contri- butions to her budget from Britain are very small, compared to ours, and Jor- dan's other sources of aid are loans, not grants. At the rate we are going in Jor- 17173 dan, it will be the American taxpayers who will repay these loans. The budget support to Jordan should be cut by sev- eral million this year, so a start can be made toward a longrun solution to Jor- dan's problems. In Yemen, we are giving supporting as- sistance to a government that is little more than a creature of Nasser's, and that is still fighting against a royal gov- ernment that is in turn backed by Britain. Unilateral American aid to Yemen is in the same class with aid to Sukarno. Worse yet, a good half of it is for high- way construction that is of far more mili- tary significance to -Yemen now than commercial significance. This aid is nothing but an attempt at political in- trigue. It should be stopped until the civil war there is over. In the Far East, South Korea, Laos, Thailand, and South Vietnam are sched- uled to receive large amounts of sup- porting assistance. Although much is claimed in the presentation for South Korea's economic prospects, no reason is given why supporting assistance to her is being increased over last year. It is all nonproject aid, and although the presentation indicates that it will be re- leased only in increments as the South Korean Government makes good on its promises of economic reform, I see no reason why more should be provided than was provided last year. Moreover, the only other non-Ameri- can aid to Korea is taking the form of loans. As with Jordan, the United States will end -up repaying these loans unless we develop a more effective program in Korea. The Optimistic note in the presentation book about Korea's future depends heav- ily upon its renewing aid and trade ties with Japan. The people of Korea, in- cluding the young people who rioted re- cently against this policy, should under- stand that the United States is not going to underwrite indefinitely their emotional aversion to Japan, however real it may be. We do underwrite it when we raise their budget support considerably over last year. This large sum for Korea is also a re- sult of the 600,000-man Korean Army we are supporting, in addition to the 50,- 000 American troops in Korea. This compares with figures I have seen that the North Korean Army is about 400,000. , No good reason has ever been offered for ? maintaining this vast preponderance of military force in South Korea. The lat- ter's army should be brought down at least to 500 000 and preferably to 400,000. The levels of supporting assistance to Laos and South Vietnam are indicative of what- we face in every other under- developed country where we are main- taining large military aid programs. The presentation books stress over and over again the meager economic resources of these countries and the high concentra- tion of military activity. The result is that the United States finances a West- ern-style war effort, in feudal countries. It costs us a yearly average of about $40 million in Laos, a country of 2.5 million people, exclusive of military aid. In South Vietnam, it has run about $130 million for economic aid, with this year's Declassified and Approved For Release 2014/02/21 : CIA-RDP66600403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17174 CONGRESSIONAL RECORD ? SENATE level much higher, in a country of 15 million. In both countries, much of this money goes for the enrichment of ruling classes and factions that we hire to fight communism. Anyone who thinks the United States gains something by maintaining these indigenous armies in underdeveloped countries around the world should figure out first how much we would have to subsidize any one of them if it became involved in any kind of a war. The figures for Korea, Laos, and Viet- nam should be a lesson to us, because in addition to direct action by the U.S. Armed Forces, it would cost us bil- lions of dollars to subsidize a war effort in such countries as Turkey, Greece, Iran, Taiwan, or any of the others whose mili- tary establishments are creatures of the United States. CONTINGENCY FUND Once again, the uses of the con- tingency fund were advertised as being for unforeseen emergencies. But one of the largest transfers out of contingency funds was $50 million into development loans to make a "program loan" to Brazil. Other uses of the contingency fund have been $38 million for Viet- nam?in addition to its programed funds and the special request of $125 million? and a transfer of $75 million into mili- tary assistance. All those obligations were entered into only in the 2 months before Congress acted on the foreign aid bill. Use of the contingency fund for Brazil's balance-of-payments problem continues to typify the abuses of this fund. This is neither an unforeseen nor an emergency situation. The con- tingency fund only provides the loophole whereby Brazil evades the stipulations of the Alliance for Progress. The use of the fund alone justifies a $50 million cut. MILITARY ASSISTANCE There is no part of foreign aid on which the Congress has received a worse flimflam from the executive branch than on military assistance. One of the major criticisms leveled by both the Clay Committee and the Senate Foreign Relations Committee last year was that we had too many token mili- tary aid programs that seemed to be de- signed merely to give the American mili- tary a presence in most countries out- side the Communist bloc. Figures prepared for the hearings at my request indicate that the total num- ber of countries receiving military grant aid in fiscal 1965 will be 55, compared to 63 in fiscal 1964. However, the March 1964 publication from the Defense De- partment called "Military Assistance Facts" includes an estimate that 62 countries will receive grant military aid in fiscal 1965, and that 10 more coun- tries will acquire American arms through direct or credit purchases. If there is in fact any reduction planned in the total number of countries receiving grant military aid next year, it does not show up in the request for $1,055 million. These is no explanation of why we are sending the same total aid to fewer countries, if that is in fact what we are doing. On March 6 of this year, the General Accounting Office issued another of its periodic reports that have consistently found extensive waste in military aid. This one reported that the Defense De- partment has continued to maintain large military aid staffs in the countries of Western Europe even though military add to them is being phased out. The report also stated that these mili- tary aid missions continue to prepare military add plans even though no more grant aid is supposed to go to these countries. To quote from the GAO report: We found that in 1962, when the value of grant aid deliveries to eight of the countries covered by our review was $190 million, the Military Assistance Advisory Groups in these countries were staffed in total with approxi- mately 345 U.S. personnel or 56 percent of the level maintained to administer programs during the peak year of 1953, when the value of grant aid deliveries was $2.3 billion. * * * The failure to eliminate or reduce the Military Assistance Advisory Groups' func- tions and to make appropriate reduction in the number of personnel assigned, as the military assistance programs were accom- plished or reduced, has resulted in the un- necessary expenditure of millions of dollars overseas; the ineffective utilization of highly skilled, highly trained personnel; and the continued but unnecessary support overseas of the dependents of many Military Assist- ance Advisory Group personnel. * * * The Department of Defense furnished us with comments in response to our findings and proposals for corrective action by letter dated July 25, 1963, classified secret. The Depart- ment of Defense has informed us that a worldwide review is now being made of the missions and functions of Military Assist- ance Advisory Groups to determine the feasi- bility of reducing U.S. representation abroad. We believe that immediate personnel reduc- tions can be made by eliminating or reduc- ing functions now being performed by these groups. We intend to make a followup re- view at a later date, and at that time we will examine into the adequacy of the Depart- ment of Defense's action to reduce or elimi- nate the .staffs of the Military Assistance Advisory Groups in the countries in- volved. * * ? Although virtually no additional grant aid Is to be provided to the eight Western Euro- pean countries, we were advised by the MAAG's that they are continuing to prepare military assistance plans. In France, the plans were being prepared in the same detail and on the same basis as though grant aid were to continue, whereas, in other countries the plans were being updated and revisions were being made as necessary. Secretary McNamara, in his testimony to the Foreign Relations Committee, pointed out that only Denmark and Nor- way in Western Europe are receiving grant military aid in fiscal 1965, and that no new commitments are being made in Europe. Yet the military aid budget does not reflect any curtailment any- where of small aid programs or of over- sea missions. A real deception of Congress took place in connection with Vietnam. The orig- inal 1965 budget reduced military aid to South Vietnam considerably below the level of fiscal 1964, and parcelled it out to other countries. Then the President sent a special message to Congress claim- ing that conditions in Vietnam were so critical that an additional $55 million for military aid was needed- to meet that emergency. The addition only brings August 3 South Vietnam's military aid back to last year's level.- ? Those of us who have'been?through 15 years and more of that kind of shell game from various administrators can no longer take at face value anything about aid that is told us by either mili- tary or civilian officals. In the case of this "bare bones" request, the funds available for military aid this year in- clude not only the $1,055 million in new appropriations, but $25 million which was unspent last year and for which re- appropriation is requested, $135 million which is expected to be recouped from cancellations, price changes, and various slippages, plus a continuing standby au- thority to use $300 million in Defense Department stocks when the President finds it "vital to the security of the United States." In recent weeks, $75 million in contingency funds has also been used for military assistance. This means there is really available not $1,055 million but $1,515 million for military assistance, plus the contingency funds. It is why an eventual cut of $500 million in military aid would be one of the soundest steps that could be taken toward a sound and useful long-range foreign aid program. It is becoming clear from the testi- mony Congress receives year in and year out that the Pentagon has come to con- sider military aid a permanent program. Each year, the requests are justified with accounts of Greece or Pakistan or some other country using obsolete equipment that must be replaced by the United States to keep it current with Bulgaria in the case of Greece, and to keep cur- rent with India, in the case-of Pakistan. It is about time that the Pentagon were required to produce some long-range plans for what it expects of military aid in the future. We should find out wheth- er these countries are going to have their obsolete equipment replaced by us for- ever, and by whose standards it is obso- lete. For example, a perennial favorite is the claim that countries in the Far East need new jet planes. But the only conceivable enemy against which we are arming them is Communist China, whose jet aircraft from the Soviet Union was cut off several years ago and who does not produce its own jets. Published esti- mates put the Chinese jets at the period of about 1956. There is no reason for upgrading the level of any military forces in the Far East above that of Communist China, whose air, naval, and mobile capability is very low. Future Pentagon estimates for milita:7 aid should also include ,an estimate of how much it would cost the United States to finance a war effort in each country receiving military assistance. We are told, for example, that Taiwan no longer receives huge sums-of economic aid, but she continues to receive large quantities of military aid. All this means is that Taiwan still cannot support a large peacetime military establishment. How much would it cost the United States to underwrite a war waged by Taiwan? It continues to be my opinion that any military aid given to a country in peace- time is only a small fraction of what it would cost the United States to support Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 CONGRESSIONAL RECORD ? SENATE that country in time of war, if indeed, we decided to support it at all. Such na- tions are not allies against communism; they are only dependencies. It is worst of all to continue giving large-scale, Western-style military aid to nations that have no prospect of being able to support a modern war out of their own economies in the foreseeable future. It is not these indigenous forces that deter China or the Soviet Union; it is the likelihood of American response to an in- vasion of any one of them. We are having a hard enough time trying to advise the South Vietnamese how to fight, after giving them the most modern equipment, without committing ourselves to the same undertaking with the several million foreign soldiers we keep .under arms under the pretext that they are contributing to free world de- fenses. The most astonishing testimony of all has been that this amount of the request is needed to upgrade the armed forces of Greece and Turkey. Why we should ad- vertise that we cant to do even more than we have in the past to prepare them to fight each other, I cannot imagine. A 20-percent reduction in the military aid for both Greece and Turkey, and for Pakistan and India, would' do more to end the quarrels over Cyprus and Kash- mir than all the high level conferences held to date. The spectacle of stoking their war machines while we beg them to be peaceful is as much a reflection upon Congress as upon the executive branch. CRITICAL REPORTS FROM GENERAL ACCOUNTING OFFICE CONTINUE Reports by the U.S. Comptroller Gen- eral criticizing the aid program in Turkey and the size of military aid missions in Western Europe have already been cited. But there are other reports, too. They continue year in and year out to cite ex- amples of wasted money in the foreign aid program. These reports are in no sense a comprehensive review of aid; they are only reports of practices un- covered in spot checks. On March 5, 1964, the Comptroller - General summarized as follows a report on "Certain Economic Development Projects for Assistance to Central Treaty Organization": Because the availability of local resources was not adequately explored, grant and loan funds aggregating more than $8 million were used for purposes other than those for which they were initially obligated and for financ- ing imports which were not needed or could be produced in the recipient country. Fur- thermore, the economic feasibility of the three projects for which the funds were obli- gated was dubious and, as conditions existed at the time of our review, there was no as- surance that two of the three projects in- volved would ever be completed. In light of the foregoing findings, we sug- gested certain basic policy guides for con- sideration by the Agency. The Agency ex- pressed agreement with the principles of our proposals but claimed that the origin and objectives of the projects were primarily po- litical and that its decisions and actions in the implementation of the projects were con- cerned principally with the achievement of political success. The annual program presentations to the Congress on three of the projects did not fully disclose the unusual circumstances and the problems which have attended the proj- ects. Moreover, the presentations were in- complete and inaccurate and indicated that the aid provided to these projects was more effective than was actually the case. We are repeating our recommendation made in pre- vious similar instances, that the Agency make more informative, clear, and accurate disclosure of significant data in annual pro- gram presentations. On March 12, 1964, a report was sent to Congress on "Unnecessary or Prema- ture Procurement of Sidewinder Missile Training Systems and Their Delivery to Foreign Countries Under the Military Assistance Program." It said in part: Tow target systems costing in excess of $1 million, designed for training pilots in the use of Sidewinder missiles, were uneces- sarily or prematurely delivered to 11 foreign countries because responsible Department of Defense agencies had not given considera- tion to the countries' inability or unwilling- ness to use the systems. Six countries were unwilling to use the tow target systems for reasons of safety and cost, and five countries did not have the equipment, missiles, or. test programs to enable them to use the tow targets at the time of delivery. An addi- tional $240,000 had been expended by the Air Force for tow targets for which no firm requirement existed and which were. never delivered under the military assistance pro- gram. These targets were still in storage at the time of our review. In commenting on our findings and pro- posals, the Department of ?the Air Force advised us that action had already been taken or was underway to recover the excess equip- ment in six countries and that no immediate action was proposed in five cOuntries because utilization had been planned. With regard to the procurement of un- needed tow targets that were never delivered to recipient countries and are now in stor- age, inasmuch as the Department of the Air Force failed to comment on our finding, we are recommending that the Secretary of De- fense require that an appropriate inquiry be made to determine the reasons for the Oyer- procurement and which persons were re- sponsible so that appropriate corrective and disciplinary measures may be taken. Our reports on the military assistance pro- gram over the past 7 years have shown that a basic deficiency in the administration of the program has been the failure of the Department of Defense to limit material de- liveries in accordance with the capability of the recipient countries to maintain and utilize equipment even though this is re- quired by the Department's own regulations. Accordingly, we have recommended to the Secretary of Defense that these regulations-be strengthened by requiring that future de- liveries of major end items included in ap- proved military assistance programs be made only upon a written certification by the Chief of the Military Assistance Advisory Group based on a specific determination that the recipient country has the necessary capability to effectively absorb, maintain, and utilize the item to be delivered. The Department of Defense has disagreed with our recommendations and has main- tained that, under current directives, the Military Assistance Advisory Group Chiefs have the continuing responsibility for screening undelivered military assistance program materiel and for taking timely can- cellation or deferral action where delivery of materiel is not consistent with host country capability to absorb, maintain, and utilize the equipment. The Department of Defense maintained also that certification by the Military Assistance Advisory Group Chief would serve no significant useful purpose. We believe that such a certification re- quirement would encourage a current re- appraisal'of the need for the equipment and 17175 the country's capability to maintain and utilize it before it is delivered and would help to prevent future deliveries of military as- sistance program materiel in excess of the country's capability to effectively absorb, maintain, and utilize the items delivered. Military assistance program materiel has con- tinued to be delivered for a number of years to countries which cannot effectively absorb, maintain, or utilize the equipment and has been the subject of numerous reports to the Congress and the Secretary of Defense, even though during that time the Military Assist- ance Advisory Groups have been charged with the responsibility of preventing this from occurring. We therefore believe that affirmative action by the Military Assistance Advisory Group Chief before delivery should be required. In view of the position of the Department of Defense with respect to this matter, the Congress may wish to consider the enact- ment of legislation requiring additional safe- guards before delivery of military assistance program materiel. We shall be pleased to assist in drafting such legislation if desired. Certainly the inclusion of legislation along this line must be considered at the next drafting of foreign' aid legislation. On June 17, 1964, a report was received on "Ineffective Administration of U.S. Assistance to Children's Hospital in Poland." It said in summary: Our examination into the U.S. assistance to a children's hospital in Poland, for which about $2.2 million in dollars and the equiva- lent of $8.3 million in U.S.-owned Polish cur- rency has been appropriated, disclosed an almost complete lack of U.S. Government surveillance of project activities. Conse- quently, U.S. officials were not aware of cer- tain unfavorable financial and operational factors attending this project. We found that cost estimates submitted to the Agency for International Development did not include supporting details and that the Agency had not made a proper review and evaluation of the estimates. We found also that (1) the Agency disbursed more funds to the private sponsor of the hospital than were provided for in the original grant agreement, (2) the sponsor had incurred costs in excess of the maximum amount provided for in the original grant agreement and in excess of the erroneous amount dis- bursed by the Agency, and (3) the sponsor continued to incur costs even though all available funds were exhausted. We found further that the hospital may not be ade- quately staffed for effective operation at the time of its completion. We believe that this loose administration was caused in good part by a failure to define Agency responsibility. The Agency made a commitment in August 1961 to finance the local currency costs of constructing the hospital on the condition that the sponsor would attempt to raise from private contributions in the United States the dollar funds required for certain mate- rial and equipment not available in Poland. The Agency made this commitment in the face of overwhelming evidence at the time that the sponsor would not be able to raise the dollar funds and that U.S. Government dollar financing would ultimately be neces- ssary to complete the hospital. As far as we could determine, the Agency did not pre- sent this matter for the consideration of the 'Congress prior to making the commitment. At the time of our review, construction was well underway with Polish currency made available by the Agency but the sponsor' had raised only a fraction of the dollar re- quirement and reported that no prospect existed for raising the dollars. Consequently, in order to complete the hospital, the Agency requested $2.2 million in dollars for the hos- pital in its fiscal year 1964 budget presenta- tion to the Congress. The request was made, Declassified and Approved For Release 2014/02/21 : CIA-RDP66600403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17176 CONGRESSIONAL RECORD - SENATE notwithstanding the then existing prohibi- tion against giving dollar aid to Communist countries. The funds were appropriated in the Foreign Aid and Related Agencies Appro- priation Act, 1964, approved January 6, 1964. In requesting funds for the hospital in its budget presentations to the Congress for fiscal years 1963 and 1964, the Agency did not disclose the unusual circumstances and problems which have attended this project, as described in our report, and furnished in- complete and inaccurate information regard- ing some of the financial and operational aspects of the project. Also, because the dol- lars were not available when needed, comple- tion of the hospital will undoubtedly be de- layed considerably beyond its scheduled date. The comments of the Agency for Interna- tional Development, concurred in by the Department of State, reflected general dis- agreement with our findings and conclu- sions. After an analysis of these comments and further review of files and records, how- ever, we concluded that the Agency had pre- sented no information which would causes a significant change in our basic report with respect to our presentation of the facts or the conclusions drawn. We believe that, in addition to the correc- tive actions cited in the report, it is incum- bent on the Agency for International Devel- opment to take steps to assure that arrange- ments have been worked out for adequate staffing of the hospital. Also, we are again recommending that future annual foreign aid budget presentations to the Congress describe projects and other significant ac- tivities in such clarity and specifics as will facilitate a full and correct understanding by the Congress of their scope, status, and administration. On June 29, Congress received a report on "Deficiences in Administration of the Earthquake Reconstruction and Reha- bilitation Program for Chile." It said in summary: On the basis of our review of projects fi- nanced under the reconstruction and reha- bilitation program in Chile following the earthquakes in May 1960, we believe that serious problems were encountered because the Agency for International Development' did not adhere to accepted standards of pro- graming and project planning for the large number of projects included in such a vast program. For the most part, no meaningful review was made of the Government of Chile's plans, specifications, and cost estimates for the projects undertaken. The Agency did not ad- just the size and makeup of its mission staff to meet the tremendous expansion of assist- ance to Chile under the earthquake program. Also, appropriate consideration was not given to the abilities of the various agencies of the Government of Chile to carry out their part of the program. As a result, serious cost overruns and delays occurred in many proj- ects and a number of projects had not been completed, or in some cases had not been started, some 3 years after the earthquakes and substantially after their estimated com- pletion dates. For a substantial part of calendar year 1962, the maximum rate of exchange was not obtained for dollars disbursed under the earthquake reconstruction program. The re- sulting loss to the earthquake program was estimated to be in excess of 26 million Chil- ean escudos, the equivalent of $13.8 million on a most conservative basis. As a practical matter, it can be said that earthquake re- construction funds were used for a period of time to subsidize and help maintain the Chilean escudo at a rate that was known to be overvalued in relation to the dollar. Despite the disbursement of large sums in calendar year 1961 and 1962 under this pro- gram, Chilean imports from the United States declined in those years, both in dollar value and in relation to total imports. Also, we noted that several earthquake recon- struction projects were adversely affected be- cause of Chile's shortage of foreign exchange, despite the fact that $120 million we being supplied under the earthquake program, and the amount of foreign exchange required for earthquake projects was relatively minor. We are recommending that, in future agree- ments providing dollar financing for proj- ects or programs consisting principally of local currency costs, adequate provision be made requiring -the utilization of the dollars so provided for any direct foreign exchange costs of the specific projects or programs be- ing financed. To the extent deemed appropriate, the comments of the Agency on our findings have been included in this report. The Agency's comments on the exchange rate matter, together with our evaluation of such IMIAugust 3 comments, are contained in a supplementary report which has been classified as "confi- dential." In May, two more reports were re- ceived. They concerned waste in the military aid programs to Indonesia and Ethiopia, and both were marked "classi- fied." This year's reports on foreign aid are only typical of those Congress receives every year. The answer always comes back: "Some waste must be expected in a program of this size." But I do not know of any Federal program of any size where so much known waste of money continues with so little action being taken to stop it. So long as these critical reports on foreign aid come in from the General Accounting Office, I shall con- tinue seeking to reduce and tighten the program. CONCLUSION On the basis of the foregoing discus- sion and other information which can- not be made public, I am recommending cuts totalling $466,700,000 less than the figures approved by the Committee on Foreign Relations. This would bring the overall foreign aid authorization to the $3 billion level of new money which was appropriated last year. If this is a barebones request, then at least not a dollar should be asked for above what was asked for last year. Also, when we have received promises that we would move toward reducing, year by year, instead of increasing, we ought, at least, not to vote for more money than was made available last year. This is not a barebones program at all. The administration is asking for more money than it got last year. There is a great deal of fat hanging on the so- called skeleton of this year's program. Mr. President, I ask unanimous con- sent to have printed at this point in the RECORD the table giving the statistical details of my proposal. There being no objection, the table was ordered to be printed in the RECORD, as follows: Appropriation, fiscal year 1964 Administration appropriation request, 1965 House appropriation bill Senate Foreign Relations Committee Reduction by Senate Com- mittee from administration request Recommended further cuts Recommended Senate authorization Pt. I. Economic: . Ch. 2. Development assistance: Title I: Development loans $687, 300, 000 $922, 200, 000 $782, 200, 000 (') $140, 000,000 $782, 200, 000 Title II: Technical cooperation, develop- . ment grants 155, 000, 009 224, 600, 000 204, 600, GOO $215, 000, 000 $9, 600, 000 215, 000,000 American schools and hospitals_ 19, 000,000 18, 000, 000 18, 000, 000 18, 000, 000 18, 000, 000 Title IV: Surveys of investment opportunities (1) 2, 100, 000 2,100, 000 -2, 000, 000 100, 000 2,000, 000 Title VI: Alliance for Progress loans 375, 000,000 465, 000, 000 425, 000,000 (9 80, 000, 000 385, 000, 000 Alliance for Progress grants 80, 000, 000 85, 000, 000 85,000, 000 85,000, 000 5,000, 000 80, 000, 000 Ch. 3. International organizations 116, 000, 000 134, 400, 000 134, 272, 400 134,400, 000 184, 400, 000 Ch. 4. Supporting assistance 330, 000, 000 405, 000,000 405, 000, 000 374, 700, 000 30,300, 000 11,700, 000 363, 000, 000 'Oh. 5. Contingency fund 50, 000,000 150, 000, 000 150, 000, 000 150, 000, 000 50, 000,000 100, 000, 000 Pt. II. Military 1, 000, 000, 000 1,055, 000,000 1, 055, 000, 000 1,045, 000, 000 10, 000, 000 180, 000,000 865, 000, 000 Pt. III. Administrative expenses: AID 50, 000, 000 52, 500, 000 52, 500, 000 52, 500, 000 52, 500, 009 State Department 2, 700, 000 2,900, 000 2, 900, 000 (I) 2, 900, 000 Pt. IV. Other laws: Latin American development 135, 000, 000 , Total 3,000, 000,000 3, 516, 700, 000 3,316, 572, 400 . 2, 076, 600, 000 50, 000, 000 466, 700, 000 3, 009,000, 000 Previously authorized. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 196.4 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 CONGRESSIONAL RECORD ? SENATE 17177 Mr. MORSE. It will be noted that in virtually every category but military as- sistance my recommended figures exceed the amounts appropriated for fiscal year 1964. The fact of this excess should counter the tortuous argument for in- creases based on carryovers, deobliga- tions, and so forth?an argument which plagues and distorts our debates on the subject of foreign aid each and every year. Needless to say, I am convinced that any authorization for a foreign aid pro- gram of more than $3 billion is not in the national interest, and is actually inimical to the individual American taxpayer. The foregoing explains the conclusion I set forth in my individual views on the bill as it came from the Foreign Rela- tions Committee?that it has become one of the most stagnant, unproductive, and misrepresented of all Federal activities. It is stagnant because its objectives are till tied largely to American strategic in- terests of the 1950's; it is unproductive because much of it goes for uses that neither build nor develop; and it is mis- represented because in spite of all the of- ficial handwringing pleas that we help the underprivileged and depilved people of the world, not more than 40 percent of it goes for that purpose. Little of it actually ends by helping them. The basis of my approach to foreign aid is that it must serve the interests of the United States. I believe in "strings" on aid. Congress may spend public money only for the general welfare of the United State's, not for the general wel- fare of any other people, no matter how deserving they may be. My difference with much of the pro- gram is over what really does serve the interests of the United States. I do not believe that aid extended for military reasons, security reasons, or for reasons of political intrigue serves our long-run interests, and this is a long-run program. Foreign aid should be primarily develop- mental and for specific developmental projects, with the short-run considera- tions very secondary, instead of the other way around. Unless and until it is put on that basis, foreign aid will remain a dole, and its recipients will be either dependencies of the United States?like Vietnam?or they will take our military aid and then use it for their own national purposes which may be quite contrary to our own. There is no longer any expectation that the administration will revamp for- eign aid toward these ends. It is there- fore up to Congress to do it. Mr. President, when I say that it is . up t6 Congress to do it, I mean it is up to the Senate Committee on Foreign Relations and the House Committee on Foreign Affairs to assume major respon- sibility in bringing about changed poli- cies in foreign aid. The committee re- port of last year promised it; the com- mittee report of this year did not fulfill that promise.' We cannot square the report of the Committee on Foreign Re- lations this year with the promises of ast year. The committee has given us ir ore of the same. The majority has p ed the buck again. It will be from A No. 149-6 downtown, and not on Capitol Hill, that any reform will come, so far as this year's report is concerned; but we shall wait in vain if we wait for any reform in policy concerning foreign aid from anywhere downtown. I said earlier in my speech that this Is a legislative responsibility under our system of checks and balances. I do not like to stand on the floor of the Senate, year after year, and criticize the body of which I am a Member; but I have been doing so for several years, and I shall continue to do so until the Senate starts to assume its responsibility for a reform of foreign aid as a matter of policy. The Senate did start the job last year; but the Foreign Relations Committee has not advanced the work. It is up to the Senate itself to continue the job. To the American people, I say: "You have a responsibility, as individual citi- zens, of making a study of exactly what the foreign aid policy of your Govern- ment is. I know that many of the facts will be kept from you under the secret label; but enough has already been made public by those.: of us who in the past several years have made the record each year as to the shortcomings of foreign policy. It is for you, the people, to start to demand of your officeholders that if they want your continued support, they had better get on the job in reforming foreign aid as a matter of policy. Before the week is out, I shall offer some policy amendments, at least for educational purposes. Sooner or later? and I hope this might be the year?some of the policy changes will be demanded by Congress by writing them into the bill. Mr. President, that is my case. This Is my first speech this week on the sub- ject. I am pleased to rest on that case. If it meets with the approval of the majority leader, I shall suggest the ab- sence of a quorum. Mr. MANSFIELD. Mr. President, will the Senator withhold that request? Mr. MORSE. I withhold the request. Mr. MANSFIELD. Has the Senator ,frielded the floor? r. MORSE. I yield the floor. AID FOR DEPENDENT CHILDREN OF UNEMPLOYED PARENTS IN THE DISTRICT OF COLUMBIA During the delivery of Mr. MORSE'S speech, Mr. RIBICOFF. Mr. President, will the Senator from Oregon yield to me? Mr. MORSE. Mr. President, I am glad to yield to the Senator from Connecti- cut [Mr. RIBICOFF], with the under- standing that the interruption will ap- pear elsewhere in the RECORD, and with the further understanding that it will not interfere with my rights to the floor. The PRESIDING 0.v.teiCER (Mr. M^INTYRE in the chair) . Without ob- jection, the Senator from Connecticut is recognized. Mr. RIBICOFF. I thank the Senator from Oregon for yielding to me. Mr. President, last Friday, the Senate decided by seven votes not to include the District of Columbia in the national program of aid to families with depend- ent children of unemployed parents. While I am disappointed, I am not dis- couraged by this outcome. The pros- pects for eventual victory have improved since last year. This year, unlike last year, the House of Representatives approved the pro- gram. Further, I note that while the issue was lost by seven .votes, nine Senators who voted in favor of the program last year were absent or otherwise not re- corded- this year. So, I am convinced that the fight must continue. The plight of these needy children will not disappear. The issue of he-ping them will not go away. I can assure the Senate that so long as I have the privilege of serving in the Senate, the effort to help these children will be made. During the debate, the distinguished Senator from West Virginia [Mr: B-Vria], who oppOsed the program, listed 21 argu- ments against including the District in the unemployed parent program. For the benefit of the conferees who still must consider this issue, and for all those who will have to consider it next year if it is not agreed to in conference, I have prepared an analysis of those 21 arguments and an answer to each. I ask unanimous consent to have this analysis printed in the RECORD. There being no objection, the analysis was ordered to be printed in the RECORD, as follows: Argument No. 1: "The House turned down the request in fiscal year 1963, so that it cannot be said, as was said a few moments ago by the distinguished Senator from New Hampshire?who is -now in the chair as the Presiding Officer?that the program has been denied by the Senate Appropriations Sub- committee on the District of Columbia. "That is only ?iartly true. The House turned down the request in fiscal year 1963. The Senate turned down the request in fiscal year 1964. The request last year was never presented to the House. The House acted on the A budget. This item was not in the A budget. This item last year was in the B budget which came to the Senate and it was denied by the Senate when it rejected the Ribicoff amendment. Of course, the Senate Appropriations Committee and the subcommittee last year had, prior to the action taken by the Senate, denied the request. "This year, the House included the item. But I say to the Senate that only 12 ques- tions were asked in the House subcommittee. "This is not intended as any reflection on the House subcommittee, but the record will show that no more than 12 questions were asked: whereas, in the Senate Appropria- tions Subcommittee this year, approximately 100 questions were asked concerning this one item alone, and last year approximately 225 questions were asked by the Senate subcom- mittee concerning this one item." Answer No. 1: No matter what happened in fiscal year 1963, the undeniable fact re- mains that last year, and more importantly, this year, it is the action of the Senate that Is keeping the District out of the AFDC-UP program. This year the House Appropria- tions Committee and the House of Repre- sentatives voted in favor of the program. The number of questions asked in sub- committee is no measure of the need for a program. The Senate subcommittee did ask Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090022-7 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7 17178 CONGRESSIONAL RECORD ? SENATE more questions about the program than the House subcommittee, but it also received more answers showing the need for the program. Argument No. 2: "The program is not jus- tified in the District of Columbia because the unemployment rate is low comparatively speaking." Answer No. 2: The size of the unemploy- ment rate has no bearing on the need for this program. It provides aid for needy chil- dren of unemployed parents. Their needs are just as severe, whether the total number of unemployed parents is large or small. West Virginia uses the program for 11,000 families. Oklahoma uses it even though only 25 families are eligible. Argument No. 3: "The general level of pros- perity is high." Answer No. 3: The high level of prosperity means nothing to the hungry children of parents who cannot find a job. If prosperity is generally high, then surely those who benefit from it would not mind spending a little tax money to help those who do not. Argument No. 4: "The Department of Wel- fare has been unable to prevent a firm pro- jection of cost estimates for the future oper- ation of the program." Answer No. 4: Neither the District of Co- lumbia Department of Welfare, nor its coun- ,terpart in West Virginia, has a crystal ball. Neither can predict how many parents will be unemployed in the years ahead. But we do know that the unemployed rate in the District has been fairly constant and we also know there is a present need that is not being met. Argument No. 5: "The man-in-the-house rule would be nullified, and the Federal Gov- ernment would close its eyes to the presence of the paramour in the home, and he could be included in the benefit plan." Answer No. 5: This is simply not so. The man-in-the-house rule would not be nulli- fied. It would be modified only to the extent that the presence of a man in the home would not render the family ineligible if that man was the father of one or more of the children. But the man-in-the-house rule would continue to apply to every man who was not a father of any of the children in the home. A paramour would certainly not be included in the benefit plan. Argument No. 6: "The ADC caseload, which has been reduced roughly 30 percent over the last 21/2 years, would be increased 271/2 per- cent in the first full year of operation of the program. Our work in reducing the case- load over the past 2% years would virtually go for naught." Answer No. 6: The caseload would increase only if there are needy and hungry children of unemployed parents. There is no virtue in keeping a caseload figure low by exclud- ing hungry and needy children. Argument No. 7: "Additional positions would be needed and additional policing would be required." Answer No. 7: The need for personnel to run the program is no more an obstacle in the District than it is in any other of the 18 States that have the program. Argument No. 8: "Administrative burdens would be increased." Answer No. 8: The administrative burdens are no more an obstacle in the District than they are in any other of the 18 States that have the program. Argument No. 9: "Additional opportunities for cheating would be presented." Answer No. 9: Because a very small number of people cheat is no reason to deny benefits to the vast majority who do not. This, too, is no more an obstacle in the District than in the 18 other States. Argument No. 10: "It has not been shown that a feasible and practicable work pro- gram in the District of Columbia can be established. States which presently partici- pate in the AFDC-UP program have vast opportunities for employment of AFDC-UP recipients and can loan them to municipali- ties and county courts, and use them to clean up after floods, fight forest fires, re- move brush along the highways, and so forth." Answer No. 10: There are plenty of useful work opportunities here in the District. Let us make our streets and parks as clean as any European capital before concluding there is no work to be done. Argument No. 11: "Work training programs already exist in the District of Columbia. Another work training program is not needed." Answer No. 11: If existing work training programs can be adapted for the unemployed parents who would be eligible under the AFDC-UP program, then nothing new would be set up. In any event, this is no reason to deny assistance to the needy. Argument No. 12: "The program is costly .both to local and Federal Government. The first full year's total cost of the program would exceed $2,577,000. What the cost will be beyond that, nobody knows." Answer No. 12: The cost to the community is far less than meeting the need in other ways. The AFDC-UP payment per child is less than the foster home payment and far less than the cost of maintaining the child in Junior Village. Argument No. 13: "If the program is initi- ated it will never be terminated until the Federal law is repealed or permitted to be terminated without renewal. The peculiar circumstances which obtain in this city and in the Congress with regard to the city simply rule out a stoppage of the program if it is once started?barring, as I have said, the re- peal of the Federal authorizing statute or failure to extend its life beyond 1967." Answer No. 13. The program requires funds from Congress each year. Congress can change or end the program any year it wants to. Argument No. 14. "The District has a dif- ficult financial problem now, and the AFDC- UP program would merely compound the problem." Answer No. 14: The funds for this Program were included in the District budget sub- mitted by the President. In any event, the District's financial problem is nothing com- pared to the welfare and potential crime problems caused by failing to provide basic sustenance for these families. Argument No. 15: "The AFDC-UP program would siphon off much needed moneys from other worthwhile programs dealing with edu- cation, and so forth." Answer No. 15: There is no fixed ceiling on what Congress spends for the District. There is no need to siphon this money off from any other program. Argument No. 16: "It could amount to a back-door appropriation approach, in that certain positions could be created without prior authorization." Answer No. 16: The Appropriations Sub- committee is fully capable of making sure that no unauthorized positions are created. Argument No. 17: "This is an unemploy- ment compensation matter, not a welfare matter. Extend the period for unemploy- ment compensation coverage, if you wish, but let us not start a new welfare program of such dimensions." Answer No. 17: This is a popular miscon- ception to which there are several answers: (a) Most of the families in need of the AFDC-UP program are ineligible for unem- ployment compensation. Some have never worked in covered employment. For others the only jobs they can find even on a spo- radic basis are with employers who fail to make contributions to the unemployment compensation fund. (b) The unemployment compensation pro- gram is designed to help those regularly em- 111 August 3 ployed during comparatively brief intervals between jobs. Regardless of their personal assets, they are entitled to the insurance benefits which they and their -employers have purchased. The AFDC-UP program is for those who are hopelessly unemployed and have no assets to fall back on. (c) An unemployment compensation pro- gram does not negate the need for AFDC-UP in the District any more than it does in the 18 other States that have the program. Argument No. 18: "Recipients would re- ceive more, ordinarily, under this program, than would those persons who draw unem- ployment compensation." Answer No. 18: First, most AFDC-UP re- cipients are ineligible for unemployment compensation and so the argument is not true as to them. Secondly, the two kinds of payment serve an entirely different purpose. The unemployment compensation payment is a modest payment to tide a family over where the wage earner is temporarily unem- ployed. The AFDC-UP payment is for a family that has no other means of surviving. Argument No. 19: "Only 19 States have elected to participated and continue to par- was suspended over a year ago. The State of Kentucky 11m5 nine counties operating un- der a pilot program. The State of Arizona originally participated in the plan but it was suspended over a year ago. The State of North Carolina, from which the fine lady commissioner of welfare, Dr. Ellen Win- ston, comes, participated for awhile, but the legislature refused to continue participation as far back as 2 years ago. If the program is so desirable, why do the other 31 States not participate?" Answer No, 19: The main reason the other 31 States do not participate is that most of them can make some provision for the chron- ically unemployed under their general assist- ance programs. But here in the District if a man or a woman is technically "employ- able," the family is ineligible for any wel- fare aid including general assistance regard- less of how long the person has in fact been without work. Argument No. 20: "The incentive of re- cipients to find other work would be im- paired." Answer No. 20: This is not so. Those re- ceiving AFDC-UP payments would be re- quired to report for available training and to accept available work opportunities. If they failed to do so, they would be disquali- fied for assistance. Argument No. 21: "The program will attract to the District of Columbia more of the same element which now constitutes a burden on the taxpayers, which is driving taxpayers out of the city into adjacent areas, which con- tributes to increasing crime costs, to increas- ing welfare and health costs, and to decreas- ing property values and lower tax poten- tial." Answer No. 21: None of the 18 States with the AFDC-UP program has experienced an Influx of people. West Virginia in fact con- tinues to lose population. And if likeli- hood of crime is the worry, the answer is certainly not to keep unemployed people ineligible from funds that can mean the dif- ference between life and death. Mr. MORSE. Mr. President, let me say to the Senator from Connecticut that I shall continue to support the posi- tion he has taken with regard to the desirability of including the District of Columbia in the aid-f or-dependent- children program. Mr. RIBICOFF. I do not believe that the District has a more worthy champion of these children than the Senator fro Oregon [Mr. MORSE], because of the sition he has taken as a member of the District Committee and chairman oST the Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090022-7