STATE DEPT. DEFENSE OF ARMS LOANS RELEASED

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69B00369R000100240002-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 15, 2016
• Document Release Date: April 13, 2004
• Sequence Number: 2
• Publication Date: July 21, 1967
• Content Type: NSPR

Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240002-7
State Dept. Defense of Arms Loans Released
'Zy George C. Wilson
e,,Johnson Administration
cased secret Congressional
te`,, lThony yesterday to defend
itsroTicy of using the Export.
istration's+ first' public
and came amidst new
sclosure about secret
ert '.I. McCloskey, State
ed reporters the test!'
Eugene V. Rostow,
Secretary of State ? for
Fteial Affairs, had given
ay in a.closed meeting of
Committee.
wing the export-Import
to continue lending they are not countered,
foreign nations money for
American arms "is funda-
mental" to U.S. fore I g n
policy objectives, Rostow said.
He said cutting off this
authority, as some members
of Congress are trying to do,
"would be , very serious,"
especially in the Middle East.
As for the whole U.S. arms
sales program, Rostow said
"we have no real alternative
but to carry on" because of
the arms policies of Russia
and China.
He said "a large part of the
burden of maintaining an
equilibrium of power in the
world has fallen on our shoul
ders." .Supplying arms is part
of that effort, he said.
"The level of Soviet and
Chinese arms sales has put the
world in an appalling
dilemma," Rostow said. "If
they are countered, an arms
race may begin, absorbing
resources those countries need
desperately for development."
"We cannot manage this
process single handed," Ros-
tow continued, "so long as
others refuse to cooperate.
But we cannot wash our hands
of the whole problem and
leave arms supply in large
part to the Soviet Union and
Communist China.
Rostow said for the U.S. to
refuse other nations arms
"might make us feel- more
virtuous" but would "mini-
mize" chances of the govern-
ment controlling the world
arms race.
"We pursue a fundamental-
ly negative military sales
policy," Rostow said, "espe-
cially for countries of . the
developing * rltf. Our alin is
not to ' sell arms; we do so
in the overall U.S. national
interest."
Then, in statements bound
to be severely challenged in
Congress, Rostow said arm
sales by the U.S. could achieve
help restore confidence and
thus maintain stability by
correcting arms imbalances
among neighboring states; fos-
ter and improve bilateral po-
litical relations by helping
our friends maintain their
nerve, their strength and their
security."
Given these advantages of
arms sales, Rostow said, it
makes sense to use the "best
qualified organ" to finance
the purchase-the Export-Im-
port Bank.
The, Pentagon serves as a
co-signer on loans the bank
makes to foreign nations
which could not borrow mon-
ey on their own.
There is no public record of
what countries receive such
Pentagon backing and how
much money they get House
in and Currency om-
uut members have com-
plained they were not kept in-
formed about the loans either.
Defense Secretary Robert S.
McNamara-as part of the Ad-
ministration's effort to beat
back attempts to restrict the
bank's arms financing-yester-
day called on Rep. William B.
Widnall of New Jersey, rank-
ing Republican on the House
banking committee.
Widnall said' McNamara as-
sured him the Pentagon had
no intention of hiding the
facts about the Export-Import
Bank arms deals from the
committee.
But McNamara's visit ; to
Widnall came just before Rep.
Henry S. Reuss (D-Wis.) issued
a two-page statement calling II
for "complete disclosure" of
the bank's arms loans since
1962.
Reuss said the figures from
the Pentagon which appeared
in The Washington Post yester-
day did show the full extent
of Country X loans, declaring
the Export-Import Bank "has
become in large part a mili-
tary armaments institution in
the last two years."
Defense and Treasury arms
officials met with Rostow at
the State Department Wednes-
day night to map strategy on
how to save the bank from
crippling Congressional
amendments once the bill to
extend its life reaches the vot-
ing stage within the next few
weeks.
Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240002-7