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August 24, 2001
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March 14, 1973
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Approved For Release 2001/08/30: CIA-RDP75BOO380R000' Calendar No. 86 93n CONGRESS SENATE REPORT 1st Session No. 93-62 FOREIGN ASSISTANCE ACT OF 1973 MARCH 14, 1973.-Ordered to be printed Mr. FULBRIGHT, from the Committee on Foreign Relations, submitted the following REPORT together with ADDITIONAL VIEWS [To accompany S. 837] The Committee on Foreign Relations, to which was referred the bill (S. 837) to amend the Foreign Assistance Act of 1961, and for other purposes, having considered the same, reports favorably thereon with an amendment and recommends that the bill as amended do pass. I. PRINCIPAL PURPOSE OF THE BILL The principal purpose of the bill is to authorize funds for fiscal year 1973 for military and related assistance programs carried out under the authority of the Foreign Assistance Act of 1961 as amended and the Foreign Military Sales Act as amended. The bill also authorizes additional funds for relief activities in Bangladesh. The following table lists the various categories of assistance to be authorized by this bill, compares the Committee's recommendations with the amounts appro- priated for fiscal year 1972, the Executive Branch's authorization request, the current spending rate under continuing resolution authority and provides other data on money items in the bill. Approved or Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : 9A-RDP75B00380R000600170004-8 Senate Fiscal year Foreign Fiscal year 1973 Relations 1972 authori- Continuing Committee appro- zation resolution recommen- Program priation request rate datior S. 837 1. Military grant assistance___________________________ $500.0 $780.3 $550.6 3;500.0 (a) Naval training-Latin America -------------------------------------------- 2.5 -------------- 2. Supporting assistance_____________________________ 550.0 844.0 600.0 550.0 (a) Earmarked sums: (1) Israel ------------------ (50.0)---------------------------- (50.0) (2) Aid toSouthVietnam childrei-------------------------------------------------- (5.0) 3. Military credit sales_______________________________ 400.0 527.0 400.0 400.0 (a) Aggregate credit ceiling -------------------- - (550.0) (629.0) -------------- 1(550. 0) Total military programs__________ _______ 1,450.0 2,151.0 1,553.1 1,450.0 4. Bangladesh assistance____________________ ----------------------------- 200.0 100.0 100.0 100.0 Grand total ------------------------------------ 1,65D 0 2,251.0 1,653.1 1,550.0 CEILINGS 1. Cambodia---.------------------------------------ 2341.0 ---------------------------- 226.3 2. Excess dofensearticles------------------------------ 2185.0 245.0 -------------- 185.0 3. Military aid and salestoLatin America ----------------- 2100.0 3150.0 ______________ 150.0 1 $300,000,000 earmarked for Israel. 2 Existing law. 3 Authority also requested for the President to waive the ceiling. II. OTHER PURPOSES OF THE BILL In addition to authorizir.g appropriations and other limitations as detailed in Table I, the bill also does the following: 1. Requires that impounded funds for certain Federal departments be released by a certain da-;e or foreign aid funds will be cut off; development assistance funds for use for military or supporting assist- ance purposes; 2. Requires that future agreements with foreign countries relating to U.S. overseas military installations be submitted to the Senate for its advice and consent; 3. Prohibits obligation or expenditure of funds to carry out the military base agreement with Portugal until the agreement has been submitted to the Senate in treaty form; 4. Imposes a $226 millior. ceiling for fiscal year 1973 on U.S. obliga- tions in, for, or on behalf )f Cambodia; 5. With the exception of training assistance, it prohibits U.S. Government military assisl,an~e or sales to the nations of South Asia; 6. Requires specific authorization for the financing of any foreign forces operating in Thailand; 7. Prohibits transfer of Agency for International Development development assistance ft:.nck for use for military or supporting assistance purposes; 8. Restricts transfer of foreign assistance funds to other agencies; 9. Prohibits assistance to North Vietnam without specific authoriza- tion and appropriation by Congress and, after. June 30, 1973, prohibits further obligations for assistance to South Vietnam, Cambodia and Laos without specific authorization and appropriation by Congress; 10. Requires financing of military assistance for South Vietnam and Laos out of Foreign Assistance Act appropriations after June 30, 1973; 11. Earmarks $50 million of funds made available for development or supporting assistance to be used for flood relief and related purposes in the Philippines; and Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/303: CIA-RDP75B0038OR000600170004-8 12. Prohibits aid to countries which do not provide access to U.S. newsmen to military bases which were constructed or are maintained with U.S. funds and from which U.S. personnel carry out military operations. This bill is the successor to H. R. 16029 which passed the Senate on September 26, 1972, by a vote of 46-41. The House and Senate conferees were unable to reach agreement on the bill and the programs to be authorized by it have been financed since the beginning of fiscal year 1973 under continuing resolution authority. On March 14, 1972, the President sent a message to Congress transmitting draft legislation concerning funding of foreign assistance for fiscal year 1973. That draft bill was introduced by the Chairman of the Committee on Foreign Relations, by request, as S. 3390 on March 21, 1972. Public hearings were held on it on April 17, 18, and 19, 1972, and it was reported to the Senate on May 31, 1972. The bill was defeated by the Senate on July 24, 1972 by a vote of 42 to 58. No agreement was reached in conference with the House on H.R. 16029, the second foreign aid authorization bill, and the bill died with the expiration of the 92nd Congress. On February 7, 1973, the President submitted to the Senate a draft of new foreign assistance authorizations for the 1973 fiscal year, essentially the same as that proposed in S. 3390 of the 92nd Congress. This draft bill was introduced by Senator Mansfield for Senator Fulbright (by request) on February 8. A hearing was held by the Committee on Foreign Relations on February 22, 1973, at which the following witnesses were heard: Mr. Curtis W. Tarr, Under Secretary of State for Security Assist- ance; Mr. Robert H. Nooter, Assistant Administrator, Bureau of Sup- porting Assistance, Agency for International Development; Vice Admiral Ray Peet, Director, Defense Security Assistance Agency, Department of Defense; Professor George Kahin, Friends Committee on National Legisla- tion; and Mr. Don Luce, Director, Indochina Mobile Education Project. The bill was considered by the Committee in executive session on February 26 and ordered reported favorably by a vote of 12 to 4. These voting in the affirmative were Senators Fulbright, Sparkman, Symington, Pell, McGee, Muskie, McGovern, Humphrey, Case, Javits, Pearson, and Percy. Those voting in the negative were Senators Mansfield, Church, Aiken, and Scott. IV. COST ESTIMATES Section 252(a) (1) of the Legislative Reorganization Act of 1972 re- quires that committee reports on bills and joint resolutions contain: "(A) an estimate made by such committee, of the costs which would be incurred in carrying out such bill or joint resolution in the fiscal year in which it is reported and in each of the five fiscal years following such fiscal year . . ." The Act also requires that the committee's cost estimate be compared with any estimate made by a federal agency. Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : C A-RDP75B00380R000600170004-8 The Committee estimates that the cost of carrying out the pro- visions of H.R. 16029 during fiscal year 1973 .will be $1,550,000,000, the total for the new appropriuitions authorized, plus additional funds which will be available through receipts, recoveries, or other pre- viously appropriated funds. The outlook for the military assistance, military credit sales, and supporting assistance program., over the following five years is murky at best. Based on a straight..lin projection of the levels recommended, not including military aid for South Vietnam and Laos beginning in fiscal year 1974, the costs for fiscal years 1974-78 will total $7,250,- 000,000. The Department of State has projected costs of foreign military aid, credit sales, in d supporting assistance for the period fiscal years 1974-78 within a range from $8,384,000,000 to $12,096,- 000,000, also excluding military aid to Laos and South Vietnam which are now funded out of the budsre.t for the Department of Defense. SECTION-BY -SECT ION ANALYSIS &SYection. 2. Overseas Private Investment Corporation This section amends Section 234(c) of the Foreign Assistance Act of 196i., relating to the Overseas Private Investment Corporation, to permit the Corporation to acquire in its financing operations warrants and other rights to acquire stock. But such rights may not be exercised while held by OPIC. Under present law, OPIC is prohibited from purchasing stock but it may acquire debt securities convertible to stock (for example, convertible debentures) and ..ell them to investors, but may not convert them to stock while th-y are held by OPIC. OPIC has found that rights to acquire stock ar. more flexible and more popular as a financing tool than convertible debt securities and that, borrowers in less developed countries are often reluctant to issue convertible debt securities because of the lega:F technicalities associated with them. Rights to acquire stock may aho spur private participation in OPIC- financed projects as potential purchasers could be offered a choice of an equity or debt position in a project. This would be especially attractive to small financial institutions which might be reluctant to purchase debt securities containing complex conversion features. The amendment also would make it clear that the authority to receive convertible debt securities and rights to acquire stock applies to all of OPIC's financing opera Lions, that is to investment guaranties as well as direct loans. Section 3. Refugee Relief Assistance This provision would authorize $100,000,000 for fiscal year 1973 for refugee relief and humanitarian assistance in Bangladesh. In fiscal year 1972 Congress appropriated $200,000,000 for relief activities resulting from the conflict in what was East Pakistan and is now Bangladesh.. To (late the United States Government has provided $319 million, or approximately one-third, of `he estimated $1.1 billion in assistance from all contributors to tha international relief, rehabilitation and reconstruction effort for Bar.,.giadesh. The U.S. response to the needs of Bangladesh and its people emphasized meeting these priority needs: The combined threats of hunger and malnutrition: $136.8 mi [lion of Public Law 430 food grants. -Rest ration of basic facilities and rehabilitation of the economy: ApprovedLPbk ii*4tW/l nCki4t 80 06M4 004-8 Approved For Release 2001/08/30 CIA-RDP75B0038OR000600170004-8 Critical food transportation and handling operations: $35.3 million in grants to the United Nations. Restoration of the homes and livehoods of thousands of Bangalee families: $21.0 million in grants to U.S. voluntary agencies. Assistance for food transportation and logistical operations, health, nutrition, and related needs: $10.9 million. As the table below shows, the U.S. Government commitments to Bangladesh have been funded principally out of the fiscal year 1972 South Asia Relief Appropriation and the Public Law 480 budget for fiscal year 1972 and fiscal year 1973. Only about $5 million of the fiscal year 1973 South Asia Relief request has been obligated to date for voluntary agency programs. However, it is anticipated that a substantial new grant will be made directly to the Bangladesh Govern- ment in the near future to cover urgent commodity import require- ments, particularly fertilizer and cotton, the rehabilitation and expansion of agricultural cooperative and training facilities, the construction of ferry landings and bridges, and other priority recon- struction needs. This grant is expected to require up to $90 million of the remaining funds. In addition, UNROD has asked the international community for funds to cover its operations on a phase-down basis through 1973. These costs are estimated at $8.6 of which the U.S. will provide up to one-third of the total. Several voluntary agencies are formulating proposals for such activities as vocational rehabilitation of the disabled and agricultural demonstration for farmers. These programs are currently estimated at $2.7 million. TABLE II.-U.S. HUMANITARIAN ASSISTANCE TO BANGLADESH AS OF DEC. 31, 1972 [In million of dollars] South Asia relief Public Law 480 appropriation Conlin- (title II) fun ther Grand gency Fiscal Fiscal fund fiscal Fiscal Fiscal sources total year 1972 year 1973 year 1971, year 1972 year 1973 Public Law 480 (title 11): Bilateral----------------------------- ------------------------ 15.6 39.1 -------------------- Multilateral ---------------------------------------------------75.1 7.0 136.8 Grant to Bangladesh Government: Essential commodities_____________ 40.4 - Rehabilitation projects/activities--_- 74.6 -------------------------------------------------- 115.0 Grants to United Nations (UN ROD)---__- 35.3 -------------------------------------------------- 35.3 Grants to U.S. voluntary agencies: CARE---------------------------- .6 ---------- 4.7 ---------------------------------------- Catholic Relief Services------------ 8.0 ------------------------------------------------------------ International Rescue Committee____ 1.7 0.8 ----------- _______________________________________ American Red Cross--------------- 1.0 ----------------------- -------- -------- -------------- Medical assistance programs------- .9 ------------------------------------------------------------ Foundation for Airborne Relief ------ .9 ________________------------------------------------------ Church World Service-------------- 1.0 ------------------------------------------------------------ Community Development Founda- tion--------------------------- .2 ------------------------------------------------------------ International Voluntary Services -- -- .05 .5 -------------------------------------------------- Asia Foundation---------------------------- .5 --------------- ?--------------------------------- Seventh-Day Adventist Welfare 21.0 Service --------------------------------- .1 ----------------------------- ?---------- World Relief Commission--------------------- ?1 ------------------------------------------------- Other assistance: Food transport and handling, health, nutrition, and related needs ------ 7.4 3.1 -------------------------------------------------- Cholera Research Laboratory--------------------------------------------------------- ---------- Support------------------ 0.4 10.9 ------------------------------ - Total__________________________ 172.0 5.1 4.7 90.7 46.1 .4 319.0 Assistance to refugees in East Pakistan and India March-December 1971 ------ 27.4 ---------------------------------------------------------- Grand total--------------------- 199.4 ----- ApproveA"Por Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 TABLE III.-BILATERFL AND MULTILATERAL AID TO BANGLADESH PRELIMINARY ESTIMATES OF COMMITMENTS AS OF NOV. 30, 1972 (CUMULATIVE TOTALS SINCE DEC. 15, 1971) Voluntary Donor Bilai:rral Multilateral r agencies Total As percent of total Argentina ----------- ..---------.------------------ --- 0.24 --------------- 0.24 0.02 Australia_.--------- _--------------- __ 2.55 4.97 4.43 11.95 1.07 Austria.-._--------------------------- .06 .04 -------------- .10 .01 Belgium ------------ -------- ________ :1.00 .87 .23 2.10 .19 Bulgaria-------_ _------------------ .21 -----_-------------------- .21 .02 Canada- ___- _ --- -------------- 54.50 8.37 4.60 67.47 6.06 Czechoslovakia- ._- ___--_ -------- 25.00 ..____________________ 25.00 2.25 Denmark-_-__ _.---------- .----------- 7.72 2.71 .61 11.04 .99 P.E.C------- -------------------------- 7.92 .-------------------------._ 7.92 .71 France_ ------------------------------ 4:.0O .51 .12 4.63 .42 Germany (FRG) ----------------------- 7.27 7.13 20.92 35.32 3.17 Germany(GDR) --------------------- 1.28 .------------------------ 1.28 .11 Hungary --------------------------- .02 ---------------------------- .02 -------------- India --------- __________-__-___-___ 257.12 -------------- 1.38 259.10 23.27 Ireland ------------- -__----__-___----------------_ .18 .04 .22 .02 Italy --- ----------------- - .. it .01 -------------- .11 .01 Japan 7.40 7.40 10.60 .93 18.93 1.70 Netherlands..-------------------- 5.63 7.21 ----------------- ----------- 1.15 New Zealand ------- --________ ______ .61 .55 1.16 2.32 .21 Norway-------------------- ---- ---------------- 3.02 4.43 7.45 .67 Rumania----------- --------- --- 9.60 -------------------------- 9.60 .86 Sweden__ ____.---------------------- 26.96 5.03 3.04 35.03 3.15 Switzerland ---- ___.-_-__-_________------------- -..._- 1.55 6.54 8.09 .73 United Kingdom---.-------------- -_.._ 13.54 29.88 2.88 46.30 1.16 United States- _.___-_--______-___-_-_ 158.18 134.77 235.06 2328.01 29.46 U.S-S.R ---------------------- ------- 51.00 --------- ------------------- 51.00 4.58 Yugoslavia---`---------------------- 50.(0 ----------------------- ---- 50.00 4.49 Others______________________________ 0.01 4.32 5.12 .45 .04 World Bank (IDA)---------------------------------- ... 107.10 -------------- 107.10 9.62 WFP------------------------------------------... 1.86 --------------- 1.86 .17 UNICEF6------------ --------- ---------------------- 7.63 ------------- 7.63 -68 Total ----------------------- .__ 492.28 334.55 96.49 1,113.32 100.00 Percent___..------------ __-____ 62,18 30.05 7.77 100.00 ______________ i Includes all multilateral aid channeled througl UNROD, UNICEF, IDA, WFP. Includes contributions of voluntary agencies cut of own resources. U.S. Government assistance to Bangladesh totals $318,800,000. 3 Nepal. 4 Chile, Fiji, Holy See, Liechtenstein, Luxembou-g, Sl=ain, Thailand, U.N. Secretariat, Philippines, private contributors, Finland, Israel, Philharmonic Orchestra, Lebanon. 6 International Planned Parenthood Federation. nterriational Social Service. 5 UNICEF out of their own resources. Source: UNROD/Dacca. Section 4. P14lippine Disaster Relief Assistance This provision earmarks $50 million of the funds available under Part I of the Foreign Assistance Act for the purpose of providing flood relief and reeonstructio:i assistance to the Philippines. The U.S. response to the Philippines flood disaster of July and August .1972 has been in the form. of a three-phased program: Immediate emergency rescue and relief assistance; Post-emergency recovery assistance; and long-term reconstruction and rehabilitation assistance. Immediate emergency aid from the United States Government during July and August 1972 totalled $2.4 million. It financed rescue operations and distribution of food, medical supplies, and other relief goods to flood victims. U.S. military ships and aircraft and special U.S. Army Disaster Assistance Relief Teams (DARTs) were employed in this effort in addition to the voluntary efforts of hundreds of Americans ar.d Filipinos. Post-emergency recovery rssistance which began in the latter part of August 1972 included $24 million worth of rice and other Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 7CIA-RDP75B00380R000600170004-8 foods under the Public Law 480 Food for Peace program and $6 million for immediate disaster recovery needs from A.I.D. Contingency Funds. Some of the Public Law 480 rice was diverted from shipments enroute to Korea and additional amounts were shipped from the U.S. A considerable portion of the Contingency Funds was used to help to restore agricultural production, replant rice crops and to finance other activities that will restore the economic livelihood of the flood victims. Total losses due to the floods are estimated to be $500 million. Requirements for external resources for reconstruction needs are estimated to be about $200 million. Of this latter amount, the U.S. is contributing $50 million made available under the current Con- tinuing Resolution. Following restoration of the funds drawn from the Contingency Fund, the remaining $44 million will be used primarily for reconstruction and rehabilitation of provincial roads, irrigation systems, flood control facilities, schools, and other activities essential to ensure full recovery from the effects of the disaster. The attached table shows the estimated allocations of the funds to relief and recovery activities to date. It is expected that almost $45 million of the $50 million appropriation will be obligated by February 28 and the remaining $5 million by June 30. TABLE IV.-PHILIPPINE DISASTER RELIEF ACTIVITIES ]In millions of dollars] Estimated pro ram By period Cumulative y Activit If alle ti ca ons 7. I Feb. 1973 Jun 1973 Jan. 1973 Feb. 1973 June 1973 Agriculture recovery------- Fertilizer 6.00 2.00 3.97 0.03 00 2 5 97 _____________ Rice production------- (1 00) (1 00)------ --- . (1.00) . (1.00) 6.00 (1.00) Provincial infrastructure--- Irrigation systems . 10.15 6 00 . (- 8.48 1.30 ( . 03 ) ?37) (8.48 9 78) 78 10 15) Flood control facilities----- . 18.00 3.60 2.35 23 10 5 05 .2 3.6 7 . 0.75 . 8.00 Saols__________________ Squatter resettlement 3.46 00 00 4 . 3.25 .16 6 .27 7 .25 .27 .05 3.25 13.43 3 41 13.46 3 46 Feasibility studies --------- ------ . ..... .90 200 :90 2.00 ____________ . 2.00 . 4.00 Other ------------------- 1.49 26 60 --------- 63 -------- -- .90 .90 . . 26 . 86 1.49 Total______________ 50.00 17.82 21.78 10.40 17.82 39.60 50.00 Source: Agency for International Development. TABLE V. Philippines disaster relief Estimated contributions from all donors: U Japan nited States ------------------ millions $76.4 Australia Austr 36.0 ----------------------------------------------------- Republic of China 2.0 Peoples Republic of China 1. 5 World Bank .5 Asian Development Bank 45.5 United Nations 6.5 Other Countries contributing less than $500 000 1.5 , and private contributions------------------------------------------------ 5.0 Total --------------------------------------------------- 174.9 bilateral Note.-All basisassistance provided by the United States for Philippine disaster relief has been supplied on a basis. Source: A.I.D. Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : C8IA-RDP75B0038OR000600170004-8 Section 5. 111 hitary Assistance Subsection (1)-Authorization Subsection (1) authorizes the appropriation for fiscal year 1973 of $500,000,000 for military ae,sis3;ance grants. With recoupments, reim- bursements, and reapproprtations of $39,700,000 this will finance a total military grant aid program of $539,700,000 in fiscal year 1973. Congress appropriated $500,0(30,000 for this program for fiscal year 1972 also. rl.'hc table below gives data on the amounts programed originally for fiscal year 1973 and the amounts funded to date. The program as approved at the more realistic level of the continuing resolution is classified. TABLE VI.-FISCAL YEAR 1:173 MILITARY ASSISTANCE PROGRAM-GRANT AID East Asia and Pacific: Cambodia-____ ----- ----- 209,541 Taiwan____ ------- .-7,642 745 Indonesia----- ---- ----- 28,745 Korea--------------- --- -- Philippines--___ --_--------- 20,780 Thailand --__ __ ----------- 59,954 Far East region- -_.____-- -_ 375 Near East and South Asia: Greece ---------- -_. . 554 A2,554 746 Jordan -------------------- 42,746 Turkey-. ---------- - --- .. NESA region ----- .------ - 591 ]Europe: Portugal -------------- --- - 9,2905 61 Spain European region ---------- - 85 Africa: Ethiopia ----------- 12,139 Liberia -__-_-------- 3,703 Tunisia---- _------------ 93 Africa region--- ______ --- Latin America: 4, 873 Bolivia --- Chile__ __ -- 1,114 Dominican Republic ----- --_ 1,435 Ecuador ------ .______ ----- 1,000 E'Salvador __-_-.--.------ 805 Guatemala---- -- _._-_.--- 1,736 Honduras------ -- 734 Nicaragua------------------ 1,045 Panama----------- -_ 527 791 Paraguay------- ~------- --- Uruguay---.------ - ------- 1,460 ion 687 re A 99,034 12,171 32,757 :l1 6, 025 'G, 955 10,153 267 1,144 16, 410 15,031 99 869 3,680 71233 117 1, 272 62 3, 066 919 586 0 464 711 537 669 243 601 314 merica I e g --- - -- 85,246 63, 3,533 General costs--_-.-_- - -- Toial-_-____--- 812,387 434,340 Source: Department of Defense. East Asia and Pacific: Malaysia- 181 178 Near East and South Asia: 215 205 Afghanistan-______ ______ - 234 133 India -------------- -- Lebanon --------------- __ - 230 166 Nepal---------------- - 29 26 Pakistan------ _ 243 282 Saudi Arabia ------- _____.- 484 231 Sri Lanka____15 53 Europe: Austria------ ------------- 24 18 Finland-----___---------- 24 ZO Africa: 55 49 Ghana------------ - -- Mali -------------- ---- 50 26 Morocco --------- -- ------ 956 295 Senegal--------------- - 425 261 Zaire ---------_ Latin America: 550 555 Argentina--------- Brazil 988 669 ------------- Colombia --------- --------- 779 722 M e x i c o - - - - - - - - - - - - - - - - - - P e r u- - - - - - - - - - - P e r u- - - - - - -- - - -- - -- 820 783 Venezuela ----------------- 870 866 Worldwide total program- 819, 700 439, 980 NOA_-___--------------- --- 780,000 413,000 Subsection (2)--Special Authority This subsection amends section 506(a) of the Act to extend through fiscal year 1973 the Pret,ident's special authority to order defense articles and defense services subject to subsequent reimbursement. Subsection (3)-Military Assistance for South Vietnam and Laos This subsection, proposed oy Senator Case, requires that, beginning with fiscal year 1974, all military grant aid to South Vietnam and Laos be funded out. of the regular military assistance program, as authorized under the Foreign Assistance: Act of 1961, as amended. Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 [in tl cusands of dollars) Proposed Fended Proposed Funded program t3 date program to date - - --- -- ------ TRAINING ONLY Approved For Release 2001/08/ : CIA-RDP75B0038OR000600170004-8 Military aid to these countries is currently being funded from the Department of Defense budget, an interim procedure which the Congress approved in 1966 in the case of South Vietnam and in 1967 in the case of Laos and Thailand. This was done at a time when the realities of Southeast Asia were not unlike those that accompanied the Korean war buildup in 1950, which occasioned a similar funding trans- fer for military aid for Korea from the Mutual Security Act to the Defense Department budget. Funding of military aid to Thailand was returned to the regular MAP program by the Foreign Assistance Act of 1971. Return of funding for military aid programs in South Vietnam and Laos to the regular foreign assistance program will permit the ap- propriate committees of Congress to judge our military aid programs in these countries in a foreign policy context. Military assistance to Cambodia and Thailand is now being judged in this way, through funding from the regular military assistance program. This change will ensure that all U.S. military assistance to Southeast Asian recipients is judged against security assistance needs elsewhere-all of which have a direct bearing on this country's overseas commitments and its foreign policy in general., Subsection (4)-Limitations on availability of funds for military operations This provision, proposed by Senator Case, adds a new section 515 to the Foreign Assistance Act which would require specific Congressional authorization before funds from any U.S. Government agency could be made available for the purpose of financing any military operations by foreign forces in Thailand. The requirement of prior Congressional approval in this instance is an outgrowth of the "crazy quilt" financing arrangements that have emerged from U.S. involvement in Indochina and the conduct of cross-border military operations by mercenary forces in that part of the world. Section 6. Security Supporting Assistance Subsection (a) Authorization This section amends section 532 of the Act to authorize the appro- priation of $550,000,000 for security supporting assistance for fiscal year 1973, of which $50,000,000 is earmarked for Israel. The United States provides security supporting assistance to selected countries or international organizations to promote or maintain economic or political stability. The use of supporting assistance funds in a given country depends on the degree of impor- tance of that country to U.S. foreign policy objectives, particularly in terms of potential impact on U.S. national security interests. Since the criteria for providing military assistance and supporting assistance are similar, countries which are principal recipients of supporting assistance are also as a rule significant recipients of military assistance through Military Assistance Service Funded programs (Viet- nam, Laos and Thailand in fiscal year 1972; Vietnam and Laos only in fiscal year 1973), the Military Assistance Program (Cambodia, Jordan, and, beginning in fiscal year 1973, Thailand) or Foreign Mili- tary Credit Sales (Israel). Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 10 Supporting assistance funds normally contribute to some degree to the economic growth or tc the developmental goals of the recipient country, but the current motive in programing these funds is neither economic growth nor development per se; rather, the specific purpose is to stabilize the economic or political situation vis-a-vis a given security situation.. Supporting assistance seeks, therefore, to assist the recipient nation to overcome an immediate security threat while avoiding simultaneous d'terioration of the national economy as much as possible. Following is the Executive Branch's proposed allocation of the fiscal year 197:3 request for suppcrtiing assistance. The following table provides comparative data on the supporting assistance program: TABLE VII.-SECURI''Y SUPPORTING ASSISTANCE, DEC. 31, 1972 -In tl cusands of dollars] Proposed fisca year Country Fiscal year 1973, Revised I fiscal year 1973, Obligations - 1972, actual program program to date Cambodia - -- -------------------------------- aaa,lea b85, 000 332,600 101 246 _____ --------- 37,087 75,000 Israel 70 000 , 32 732 ____---- _____ _ 50,000 50,000 --- ------------------- _______ , 50,000 , _______-___- Laos _ 40,000 40, 000 Laos 40,000 _ 40 000 -- Malta -____--------------------- -- 47,327 49,800 --------------------- 45,000 , 20,248 Thaila Thailandd- ------------- 9,500 14,600 4,597 597 , ----- 14,840 25 600 East Asian Regional Development - ------------ 10,000 4,782 - - - 300 8,400 Philippines----------- - 2,400 282 - ------------------- ---------------------------------- Spain - 50,000 11,934 ---------------- 3,000 UNFICYP 3,000 -------- , Interregional ----------------_ _______ 2400 4,800 and other 2,400 - 2,400- _____________________ 23,400 12:121 13,000 3,989 Total_._______-.____________________- 589,261 874,500 633,000 222,210 1Based on current continuing resolution levels Source: Department of State. a5'ubsnction (b) Assistance. to South Vietnamese children This provision, sponsored by Senator Williams, earmarks $5 million of security supporting assistar-ce funds for the specific purpose of providing assistance to South Vietnamese children who have been dis- advantaged by the war or co i.di,,ions related to it. The funds can be used for two purposes: First, to provide for the establishment., expansion, and improvement of day care centers, orphanages, hostels, school feeding programs, and related programs in health, welfare, and education for South Vietnamese children; and, second, to facilitate the adoption of orphaned and abandoned children in South, Vietnam by American. citizens. However, of the funds avail- able under this provision, no more than 10 percent may be used for adoption assistance. This provision recognizes that Americans want the United States to give proper assistance to help care for the children of South Vietnam who are the unfortunate vicl;irn, of the war. It simply calls upon the United States to do its fair share. The assistance authorized is to be furnished "to the maximum extent possible, under the auspices of and by international agencies or United States or South Vietnamese voluntary agencies." Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 Approved For Release 2001/08/ 0 : CIA-RDP75B0038OR000600170004-8 Section 7. Transfer Between Accounts Section 6 amends section 610(a) of the Foreign Assistance Act of 1961 to prohibit the use of development assistance funds for military aid or supporting assistance purposes. In 1971, following the defeat of the House passed foreign aid bill H.R. 9910, the Committee on Foreign Relations reported two bills to the Senate which separated authorizations for economic or development aid from military aid programs. The Committee has approved this provision in order to give further implementation to its strong view that military and eco- nomic aid matters should be dealt with separately. The law now permits transfer of technical assistance funds, for example to be used for military aid or supporting assistance, a tempting loophole which could be used to augment military aid or supporting assistance in circumvention of Congressional actions on authorization and appro- priation legislation. The Committee recommends that this loophole be closed. Section 8. Prohibitions Against Furnishing Assistance Prohibition on military assistance or sales to the nations of South Asia This paragraph prohibits military grant assistance or credit sales (except training) under the Foreign Assistance Act and the Foreign Military Sales Act to the governments of Pakistan, India (including Sikkim), Bangladesh, Nepal, Sri Lanka, the Maldive Islands, or Bhutan. It would not prohibit commercial sales of either weapons or supplies by private industry. The Committee approved this restriction in order to insure that the U.S. government does not become any more deeply involved in the military affairs of the nations of South Asia. The following is a list of the military aid programs planned for countries in this region in fiscal year 1973: Fiscal year 1973 program [Dollars in thousands] Military Military grant credit assistance i sales South Asia---------------------------------------- $736 - Pakistan------------------------------------- 285 - India ------------------------------------ 143 - ---- Sri Lanka (Ceylon) ----------------------------- 55 - Nepal ---------------------------------------- Maldive Islands ------------------------------- Bangladesh----------------------------------- U.S. training only. Access to U.S.-financed bases This provision, adds a new subsection 620(y) to the Foreign Assist- ance Act, in order to insure that American newsmen have access to overseas base facilities constructed or maintained by United States funds and used by U.S. personnel to carry out military operations. The American public, consistent with security requirements, has a legitimate right to be kept informed about activities conducted from such facilities and they rely on the news media to perform this service. This provision, though general in scope, results from U.S. newsmen being denied access to bases in Thailand, constructed with the tax Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 12 dollars of U.S. citizens, which are manned by U.S. military personnel. As U.S. Air Force contingents have been removed officially from South Vietnam, many of them have been shifted to American-built bases in Thailand. Because the Thai Government has restricted access to these bases by American newsmen, the American public is in turn denied access to information about our air operations in this area. The Committee believes this situation should be remedied. This provision prohibits, furnishing assistance under the Foreign Assistance Act to any country which denies American reporters access to military base facilities constructed or supported by United States fund; and used by our personnel for military operations, The prohibition :is not subject to waiver under Section 614(a) of the Act. Section 9. Allocation and Reimbursement Among Agencies Using the authority of Section 632(a) of the Foreign Assistance Act the Agency for International Development on April 1, 1972, transferred. to ACTION $2,600,000 in technical assistance funds to finance Peace Corps operations abroad, after Congress had appropri- ated $10,000,000 less for -Peace Corps operations than the amount requested. The transfer w,is it deliberate effort to nullify Congress' action in cutting the Peace Corps request. The change in law recom- mended by the Committee will prevent such circumvention o:f the Congress in the future. It prohibits transfers of funds for the purpose of augmenting the appropriations of any agency for any purpose not authorized by the Foreign Assistance Act. This change will still leave ample authority for reimbursement by A.I.D. to other agencies for services rendered, or for commodities procured. Section 10. Limitation on assistance./or Cambodia The Foreign Assistance Act of 1971 imposes a ceiling of $341,000,000 for fiscal year 1972 on United States obligations in, for, or on behalf of Cambodia. This section set,; a ceiling of $226,388,000 on such obliga- tions for fiscal year 1973. The purpose of such a ceiling was described by the Committee in 1971 as follows: '1'lie purpose of section 655 is to establish a ceiling on overall U.S. expenditures, exclusive of air combat operations, in, for, or on. behalf of Cambodia during the current fiscal year and to put the Congress in position to know in the future, when money is being requested for Cambodia, how much is actually being spent and for what purposes. In the past, the cost of United States Government operations in some countries has far exceeded the amounts which have been requested and then authorized and E.pp:ropriated. It is the Committee's intention to see that this escalation of costs, not only un- authorized by the Congress but also unknown to it, does not occur in Cambodia. Section 655 is intended, therefore, to return. to the Congress some measure of control over what is actually spent by setting an absolute ceiling on expenditures, a ceiling which applies to all Executive Branch departments and agencies. Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 Approved For Release 2001/08/30 1,1,IA-RDP75B00380R000600170004-8 The ceiling recommended by the Committee and approved by the Senate was all-inclusive, with the exception of the cost of combat air operations over Cambodia. The table below gives data on estimated spending for certain programs in and for Cambodia in fiscal year 1972 and fiscal year 1973: Fiscal year 1972 Through Dec. 31, 1972 Estimate, fiscal year 1973 1. To upgrade the capabilities of the Armed Forces of the Khmer Republic: r (a) Weapons --------------------------------------------- $22,302 028 74 $1,116 47 931 -------------- (b) Ammunition------------------------------------------- , 21 , 935 3 ------ --- spares and accessories___________________________ (c)) Aircraft 17,0 , ______________ , d) Vehicles ---------------------------------------------- 13,377 420 640 798 -------------- (e) Communication equipment and spares_____________________ 3, 702 1 ___ ------- (f) Support equipment and spares___________________________ 5,759 3 779 , 210 --_----------- (g) Construction ------------------------------------------- , 587 8 107 -------------- (h) Services and training----------------------------------- 16, 087 16 , 114 4 ______________ (i) Supplies----------------------------------------------- , 13 664 , 380 2 -------------- (I) Ship , , -------------- s (k) Missiles----------------------------------------------- 72 --------------------------- Subtotal--------------------------------------------- 186,096 70,933 $133,000 2. To enable Cambodia to withstand the abnormal economic dislocation caused by the North Vietnamese/Vietcong invasion: (a) Security supporting assistance: --- (1) Cash grant------------------------------------- 20,000 -------------------------000 (2) Commodity import program________________ 16,502 20,000 53, (3) Program technical support costs___________________ 585 261 700 (4) Exchange support fund_________________________________________ 12,500 20,500 (5) Refugees and displaced persons ---------------------------------------2- ------- 1,500 (b) Title 1, Public Law 480----------------------------------- 16,562 12,885 z 20,618 (c) Administrative allotments________________________________ 31 35 70 Subtotal --------------------------------------------- 53,680 45,681 93,388 I Includes excess and redistributable materiel valued at 1/3 of acquisition cost. 3 Consists of country-use portion of Public Law 480 Source: Department of State. Section 11. Limitation on Use of Foreign Aid Funds This amendment, sponsored by Senator Fulbright, requires release of impounded funds totalling $4.9 billion (according to the Office of Management and Budget) appropriated for programs under the authority of the Departments of Agriculture, Transportation, Health, Education, and Welfare and Housing and Urban Development. The amendment is a revision of section 658 of the Foreign Assistance Act of 1971. As revised, this section includes the following provisions: It requires a cut-off of funds appropriated pursuant to the Foreign Assistance Act and the Foreign Military Sales Act if by April 30, 1973, the President has not released all funds appropriated during fiscal years 1972 and 1973 for the Departments of Agriculture, Transporta- tion, Housing and Urban Development, and Health, Education and Welfare. It requires a similar cut-off of aid and military credit sales funds if future appropriations for these departments are impounded for more than 60 days. Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 14 It defines the term "impounded funds" to include any action which effectively prevents the creation of obligations or expenditures of appropriated funds, or of authorizations to create obligations in advance of appropriations, for any period of time irrespective of whether such action is taken by the Office of Management and Budget or the agency head. It requires that aid and military credit sale funds be spent on an orderly basis so as to insure that. the prohibitions in the amendment are not, nullified either by 'reiinpoundment" or by it speed up in the obligation of aid funds. It provides for the withholding of funds in accordance with specific legal requirements as may be contained in the authorizing legislation for the departments affected or as is provided in the Anti-Deficiency Act. The Committee recognizes that this Act authorizes reserves in the apportionment process. The Committee wants to emphasize, however, that such reserves are authorized under the Anti-Deficiency Act only (1 for contingencies; and (2) to effect savings whenever savings are made possible by or through (a) changes in requirements, (b) greater efficiency of operations, or (c) other developments sub- sequent to the date on which such appropriation was made available. This latter provision refers r,o unforeseen developments subsequent to the enactment of appropriations which reduces funds required to carry out the program and does not include various other reserves sometimes referred to as being for "routine financial administration." The Committee will look to tie General Accounting Office to pursue this interpretation and to ensure compliance with it. Finally, this provision calls upon the Comptroller General to review the accuracy of the certification made by the heads of the depart- inents with respect to the impoundment of funds of their depa:rt- uients and to issue quarterly reports on his findings beginning with the first quarter in fiscal year 1974. When the Committee considered Senator Fulbright's amendment, .he reported on a letter which he had received from the Comptroller General asking that certain modifications be made in the original text. The Committee ? ccepted these modifications. The text of the Comptroller General's letter, with enclosure, follows: COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., February 22, 1973. R-135564. lion. J. W. FUI.BRIGHT, Chairman ` Committee on Foreign Relations, U.S. Senate. DEAR MR. CHAIRMAN: On February 8, 1973, you offered your amendment No. 7 to the adninistration's foreign aid authorization bill which would amend section 658 of the Foreign Assistance Act of 1971. In explaining the amendment you said that it will bring an end to the expenditure of foreign aid funds if the President insists upo:a impounding funds for high-priority domestic programs. Amendment No. 7 together with explanatory remarks appears on pages 52431-- S2433 of the Congressional Record of February 8, 1973. We are primarily concerned about the proposed subsection 658(c) which contains no exceptions for reservations of funds made strictly Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : pJA-RDP75B00380R000600170004-8 within the authority of subsection (c) (2) of the Antideficiency Act, 31 U.S.C. 665(c) (2) and subsection 658(e) which would provide substantial additional duties for the Comptroller General. In my testimony of January 30, 1973, on Senator Ervin's Impound- ment Control bill, S. 373, 93d Congress, I stated that we are not aware of any objections to impoundments falling squarely within the literal language of subsection (c) (2) of the Antideficiency Act, 31 U.S.C. 665(c)(2), or specifically authorized in other law. This testi- mony was given at a Joint Hearing held by the Subcommittee on Separation of Powers of the Senate Judiciary Committee and an ad hoc subcommittee of the Senate Committee on Government Opera- tions. A copy of my prepared statement and the attachments are enclosed. It was suggested that consideration be given to amending S. 373 to provide that its provisions shall not apply to funds being withheld in accordance with this and other specific requirements of law. As you are aware, section 658 of the Foreign Assistance Act of 1971 presently exempts impoundments made in accordance with specific requirements of law and, as stated in my testimony on S. 373, I interpreted that provision as applying only to section (c) (2) of the Antideficiency Act. We suggest a revision of subsection 658(c) to reinstate that exemption to avoid the burden of reporting impound- ments which involve only contingencies or savings in carrying out legislative programs and which are generally conceded to be not only of a noncontroversial nature but also desirable in achieving efficiency and economy. As now written, subsection 658 (e) would require that the Comptrol- ler General determine if funds of the Departments of Agriculture, Transportation, Housing and Urban Development, and Health, Education, and Welfare have been impounded more than 60 days. The imposition of such a requirement on our Office would result in a workload that would severely tax our resources and even then we could never be assured that all of the impoundments had been found. The impoundments can be made by the head of a Department as well as by the Director of the Office of Management and Budget and documentary evidence thereof, if any, may be difficult to locate. We would therefore much prefer language which would require the head of each Department named to send us a report certifying the amounts impounded during each 60-day period which we would review for the purpose of making our quarterly reports to the Congress. We also suggest that the parenthetical language "(including any authorization to create obligations in advance of appropriations)" which effectively includes contracting authority in the definition of appropriation and which is included in subsection (a) be inserted in subsection (b). This will avoid any implication that contract authority is included with respect to fiscal years 1972 and 1973 but not to fiscal year 1974 and subsequent fiscal years. We have some reservations on one other aspect of subsections (a) and (b). Under those subsections, if the impounded funds are not timely released for obligation and expenditure, no further expenditure of foreign assistance and military sales funds may be made notwith- standing that payments may be due in liquidation of previously in- curred valid obligations. We believe this prohibition against further obligations would accomplish your purpose and avoid some objections which may be raised against prohibiting expenditures in liquidation of valid obligations of the United States. Approved For Release 2001/08/30 : CIA-RDP75B00380R000600170004-8 Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 16 Language to carry out these suggestions is enclosed. I do not be- lieve these suggestions will alter the purpose or impact of your amend- ment. At the same time I fee] that they will: (1) clarify the meaning of appropriation, (2) avoid some needless reporting, and (3) afford it facility for keeping the Con;)~ress informed of impoundments in the four named departments. If we can be of further assistance concerning these suggestions or anything else involving your amendment or the impoundment issue we would, of course, be pleased to provide such assistance. Sincerely yours, [Enclosures.] ELMER B. STAATS, C9m.ptroller General of the United States. (1) Delete the words "or expended" from subsections (a) and the words "or expe aded" and "and expended" from subsection (b). (2) Insert between lines 7 and 8 of subsection (b) paren- thetical phrase "(including any authorization to create obligations in advance of appropriations)." (3) Amend subsection (c) to read as follows: "(c) The provisions of this section shall not apply with respect to funds impounded in accordance with any provision or law specifically authorizinz the impoundment of funds of any such department, if the impoundment is made only with respect, to and in accordance with such provision authorizing the impoundment as interpreted by the Comptroller General."(4) Strike the first sentence of subsection (e) and insert in lieu thereof the following language: "The head of each such department shall certify to the Comptroller General within 10 days after the expiration of each 60-day period in the :'fiscal year 1974 and any fiscal year thereafter (1) the amount of funds appropriated to such department which are impounded, (2) whether such funds have been impounded for more than 60 days, and (3) if, and when, such funds have been released in accordance with this section. The Comptroller General shall review these certifications and take such action as he deems necessary to verify their accuracy." In its report on the initial impoundment provision adopted in 1971, the Committee offered the following explanation of its action: The objective of this arendment is to give the American public some indication that the Committee is just as aware of our domestic needs as it is of the needs of other countries. The provisions of the section say to the taxpayers of this country, "You will be assured of getting the funds appropriated by Congress for domestic programs and projects before addi- tional foreign aid funds tarn be obligated for similar programs and projects in Rio de Jariero, Nairobi or New Delhi." Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 tCIA-RDP75B00380R000600170004-8 In addition to focusing attention on domestic vs. foreign needs in the context of the whole national priorities debate, this section of the bill also addresses the separation of powers issue and the Constitutional responsibilities of the Legislative and Executive Branches of our Government. If the President is left free to impound funds appropriated by the Congress, this could result in an even greater im- balance between the two Branches than has developed in the field of foreign affairs. If the Congress's power of the purse is infringed or restricted in any way-such as through the im- poundment of appropriated funds-Members of Congress might as well pack their bags and go home. This is the only real power the Congress has left and it must be guarded and protected, and kept whole and intact. The Committee be- lieves that the requirements of this section are consistent with this goal. A majority of the Members of the Committee believe this explanation is as valid today as it was then. Section 12. Foreign Military Sales Subsection (2) -Authorization Subsection (1) authorizes an appropriation of $400,000,000 for financing the foreign military credit sales in fiscal year 1973. This is the same amount Congress authorized and appropriated for fiscal year 1972. The Executive Branch requested an authorization of $527,- 000,000. The Committee does not believe that an appropriation of this size has been justified. The military credit sales program is carried out under the authority of the Foreign Military Sales Act. Its purpose is to make credit available to developing countries to enable them to purchase military material and services from the United States, with up to ten years for repayment. Subsection (2)-Aggregate credit ceiling Subsection (3) authorizes a ceiling of $550,000,000 for foreign military credit sales in fiscal year 1973, the same amount that Congress approved for fiscal year 1972. Of the $550,000,000 ceiling, $300,000,000 is earmarked for Israel, as it was in fiscal year 1972. A ceiling is necessary because military credit sales can be financed under the Foreign Military Sales Act by both direct credit extended by the U.S. government and through U.S. government guaranty of credit extended by private banking institutions. Under the guaranty program 25 percent of the amount of the guaranty is set aside in a reserve account. Thus, unless an overall credit ceiling were imposed the $400,000,000 appropriation recommended could, theoretically, be used to finance $1,600,000,000 in credit sales to foreign countries. Following is the Executive Branch's proposed military credit sales program for fiscal year 1973 and the amounts obligated to date under the continuing resolution: Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 :1CIA-RDP75B00380R000600170004-8 TABLE IX.-FISCAL YEAR 1973 FOREIGN MILITARY SALES CREDIT [In thousands of dollars[ Proposed fiscal year 1973 Obligated to dste (:Feb. Proposed fiscal year 1973 Obligated to date (Feb program !2, 1973) program . 22, 1973) East Asia and Pacific: Taiwan ------------------- K 55,000 55,OCO 11700 Latin America: Argentina------------------ 15,000 --------- - orea-------------------- 25, 000 15, 000 Bolivia-------------------- 4,000 - - Malaysia_-______-___`__-_-_ Far East re ion 0 1 10.000 Brazil --------------------15,000 ----------- g ------------- 2,500 ------------ Chile --------- 5,000 - Near East and South Asia: G Colombia----------------- 10,000 ----------- -------- reece----- --- 55 000 140, 750 Guatemala ----------------- 2 000 ----- 600 J d :0 30000 2 126,250 , Mexico-------------------- 2,000 , --------- or an-------------------- 10,000 --------------- Peru---------------------- 5,000 --- ---- Lebanon___________________ 15,000 Uruguay------------------ 2,000 -------- - SaudiArabia_--_____-__-_-_ Turkey------------------ 45,000 15,000 ------------ 20,000 Venezuela ---------- ------- 15,000 ---------- ------------ NESA region_______________ Africa: Morocco------------------- __________________ 3,000 15,000 ----------- ------------ Total ------------------ 629,000 228,300 Zaire ---------------------- Zaire---------------------- 3,500 ------------ Includes $5 750 for a guarantee of $23 000 private crecit. 2 Includes $26,250 for a guarantee of $100,000 private credit. Subsection (3)-Aggregate regional ceiling This subsection amends section 33(a) of the Foreign Military Sates Act by raising from $100 million to $150 million the annual ceiling on the total amount of military assistance, credit sales and ship loans which can be furnished to Latin America. The following provides an ostilnate of all military grant assistance, FMS Sales, transfers of exce,os defense articles, and ship loans pro- grammed for Latin America in FY 1973 as well as an estimate of U.S. commercial sales to the region in FY 1973, which do not count against the statutory ceiling: Latin, America fiscal year 1973 estimate Military grant assistance (includes $2.5 million for Inter-American naval training) -------------------------------------------- $16,400 000 Foreign military cash and credit sales-------------------------- , 141, 400, 000 Transfers of excess defense articles ----------------------------- 4,850,000 tT.S. commercial gales------- ---------------------------------- 44, 925, 000 Country Transfer method Date Genesee (AOG-8)----------------------- Chile--- ----------------------- Lease------------------ July 5,1972 AFDL-28--------------- --------------- Mexico- ------------------------- do----------------- Sept. 15,1972 Kiowa (ATF-72)---------------------- -_ Dominican Republic ------------------- do----- ------------ Oct. 16,1972 2 LCM-6's------------------ -- - ------ Uruguay ---- -----------------------do----------------- Oct. 13,1972 Grant Country (LST-1174) __----------- Brazil__- ---------- _------------ do ------------ Jan. 15,1973 Source: Department of Defense. Section 13. Excess Defense Articles Section 13 amends Section 8 of Public Law 91-672, which estab- lished a ceiling on the amount of excess defense articles which can be given to foreig-it countries eac.,i year under the military aid program without a charge being made against appropriations for the military Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 16;lA-RDP75B00380R000600170004-8 grant aid program. This ceiling, currently $185,000,000 a year, was initiated by the Senate Foreign Relations Committee in 1970 as a means of controlling the amount of excess military arms and equip- ment which could be given away abroad, often in circumvention of reductions made by the Congress in Executive Branch requests for military aid. The current ceiling of $185,000,000 under present valuation practice, permits surplus arms and equipment which originally cost $555,000,000 to be given to foreign countries, in addition to the $500,000,000 in new appropriations for military assistance authorized by this bill. The annual ceiling was set initially at $100,000,000 and, at executive branch urging, the Committee in 1971 recommended an increase to $150,000,000. after the scope of the provision was broadened to cover all agencies. This was increased in conference to $185,000,000. The Committee is concerned about the prevailing practice of the Executive Branch to value all excess material given away at one-third of acquisition cost, regardless of condition. This is not what the Com- mittee intended when it initiated this requirement. It intended that the actual value of the article be counted, but in no case shall that value be less than one-third of acquisition cost. The current practice is not in keeping with the statutory requirement and the Committee expects that appropriate remedial action will be taken. The Com- mittee has also noted that the Congressional presentation materials do not contain any information as to what articles are to be given to each country, only a dollar amount. It expects that this problem, too, will be remedied in the fiscal year 1974 presentation materials. Section 13 is a further step in bringing about greater control over the use of the vast amounts of military equipment and arms now be- ing supplied to nation's around the world. This change, proposed by Senator Pearson, requires that beginning with the 1974 fiscal year all grants to foreign countries of excess defense articles be charged against appropriations for military aid, with the materials to be valued at the rate now specified by law, but not less than one-third the acquisition cost paid by the U.S. Government. It appears from the following list of excess defense articles planned for disposal this fiscal year that much of the equipment to be given away to foreign governments could be put to good public use by states, cities and towns here in the United States. Excess defense articles, fiscal year 1973 [Illustrative list] Ethiopia : Quantity Aircraft trainer T-33----------------------------------------- 14 Trucks 2% ton and under------------------------------------ 20 Trucks 5 ton and over--------------------------------------- 15 Materiel handling equipment---------------------------------- 6 Fire truck-------------------------------------------------- 1 Greece : Trailers, all types-------------------------------------------- - 480 Trucks 23 ton and under------------------------------------ 1,832 Trucks 5 ton and over--------------------------------------- 225 Tanks M-48------------------------------------------------ 200 Communication equipment----------------------------------- 420 Materiel handling equipment---------------------------------- 46 Grader road------------------------------------------------ 18 Ditching machine-------------------------------------------- - 5 Crane truck MTD------------------------------------------- 8 Laundry units----------------------------------------------- 6 Generator-------------------------------------------------- 30 See footnotes at end of table. Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/300CIA-RDP75BOO38OR000600170004-8 Excess defense articles, fiscal year 1973-Continued [Illusirative list] Jordan: Quantity Grader road 6 Crane truck MTD---------------------- 6 Water distribution truck MTD--------------------------------- 2 Road construction equipment-. --------------------------------- 6 Generator----------------------- - ---------------------------- 26 Tower water tank--------------------------------------------- 20 Turkey : Aircraft fighter F-100C------- ---------------------------------- 173 Trailers, all types------------ --------------------------------- 2, 7'50 Trucks 2% ton and under--------------------------------------- 2, 500 Trucks 5 ton and over ------- _---------------------------------- 4:50 Tanks M-48.------------------------------------------------- 350 Communication equipment--- _.-_..------------------------------ 190 Materiel handling equipment ----------------------------------- 7 Grader road...------------------------------------------------- 9 Ditching machine---------------------------------------------- 7 Crane truck MTD--------------------------------------------- 15 Construction equipment --------------------------------------- 14 Generator----------------------------------------------------- 58 Repair shop trucks MTD------------------------------------- 36 Tunisia: Trailers, all types--------------------------------------------- 28 Trucks, 2j; tons and under ------------------------------------- 50 Trucks, 5 ton and over----------------------------------------- 5 Cambodia: Aircraft cargo, C-119 G--------------------------------------- 14 Aircraft cargo, C-47 ------------------------------------------ 113 Trailers, all types---------------------------------------------- 30 Trucks, 2R,' tons and under ------------------------------------ 25 Trucks, 5 tons and over -----._.-------------------------------- 5 Machineguns, .30 cal--------- ----------__-_____________________ 11,801 Machineguns, .50 cal-------------------------------------------- 124 Mortar, 60 mm----------------------------------------------- 1 17 Mortar, 81 nlm---------------------------------------------- 1191 Catridge, 75 mm--------------------------------------------- 1 10, 692 Indonesia: Trucks, 2ij,,; tons and under ------------------------------------- 50 Crane truck, MTD-------------------------------------------- 4 Grader,road ------------------------------------------------ 2 Instrument flight trainer ---------------------------------------- 5 Korea: Aircraft observation, O-ID------------------------------------- 25 Trailers, all types-------------------------------------------- 420 Trucks, 23~4_, tons and under------------------------------------ 4:70 Trucks, 5 tons and over --------------------------------------- 40 Communications equipment ------------------------------------ 90 Materiel handling equipment ----------------------------------- 125 Grader,road ------ ------------------------------------------ 15 Crane truck, MTD -------------------------------------------- 12 Construction equipment---------------------------------------- 20 Welding machine--------------------------------------------- 18 Generator---------------------------------------------------- 98 Test sets, electrical -------------------------------------------- 40 Fire trucks- .------------------------------------------------- 4 Laos: Aircraft observation 0-11) -------------------------------------- 110 Mortar 60mm --------------- -------------------------------- 210 Howitzer 75mm---------------- ---------------------------- 12 Mortal 81mm------------------- -------- ------------------- 1 8 Approved For Release 2001/08/30 : CIA-RDP75BOO38OR000600170004-8 Approved For Release 2001/08/ : CIA-RDP75B0038OR000600170004-8 Excess defense articles, fiscal year 1973-Continued [Illustrative list] Philippines : Quantity Trucks 2% ton and under_______________________________ 50 Trucks 5 ton and over_______________________________________ 2 Communications equipment ----------------------------------- 4 Materiel handling equipment__________________________________ 3 Thailand: Trailers, all types-------------------------------------------- 60 Trucks 2% ton and under____________________________________ 40 Trucks 5 ton and over_______________________________________ 65 Machinegun .50 cal------------------------------------------ 175 Communications equipment___________________________________ 20 Grader road------------------------------------------------ 4 Crane truck MTD------------------------------------------- 2 Water distribution___________________________________________ 1 Construction equipment______________________________________ 12 Generator------------------------------------------------- 70 Taiwan : Trailers, all types-------------------------------------------- 475 Trucks 2iiton and under____________________________________ 1,270 Trucks 5 ton and over_______________________________________ 90 Communications equipment___________________________________ 740 Materiel handling equipment__________________________________ 112 Grader. road ------------------------------------------------ 28 Ditching machine-------------------------------------------- S 3 craper road------------------------------------------------ Crane truck MTD ------------------------------------------- equipment______________________________________ 40 9 125 Welding equipment------------------------------------------ 21 Generator-------------------------------------------------- 480 Test sets electrical___________________________________________ 50 Compressors------------------------------------------------ 112 Fire trucks------------------------------------------------- 14 Bolivia: Trailers, all types-------------------------------------------- 15 Trucks, 2% ton and under__________________________________ 24 Bridge, fixed Bailey_________________________________________ 2 Dominican Republic: Trailers, all types-------------------------------------------- 18 Trucks, 232 ton and under____________________________________ 45 Guatemala : Trailers, all types-------------------------------------------- 26 Trucks, 2% ton and under____________________________________ 65 Paraguay: Trailers, all types-------------------------------------- ----- 15 Trucks, 24 ton and under------------------------------------ 50 Uruguay: Trailers, all types---- 35 Trucks, 2Y2 ton and under_ 175 Trucks, 5 ton and over______________________________________ 25 Construction equipment______________________________________ 6 Generator----------------------------------------------- 5 Tower, water tank------------------------------------------ 18 1 Actually in the program being presented to Congress. Source: Department of Defense. The General Accounting Office has now completed an in-depth study of the excess defense articles program for the Foreign Relations Committee and its report is expected to be made public soon. Hope- fully, this study will lead to further improvements in the program. The tables below provide data on the fiscal year 1973 excess program and the allocations to date, by country. Approved For Release 2001/08/30 : CIA-RDP75B0038OR000600170004-8 Approved For Release 2001/08/30 : CA-RDP75BOO38OROOO6OO17OOO4-8 Fiscal year 1973 excess stocks at value specified in section 8(c) of Public Law 91-672 Country : Value in D9 AP: tlousands Cambodia ------------------------------------------------ $6, 400 Indonesia------------------------------------------------ 3200 Korea -------------------------------------------- ------- 19,000 Philippines----------------------------------------------- 1,400 Taiwan-------------------------------------------------- 29, 900 Thailand------------------------------------------------ 71000 Greece ------------------------------------------ 16,400 Jordan-------------------------------------------------- 3,500 Turkey ------------------------------------------------- 36,400 Spain---------------------------------------------------- 2,000 Portugal-------------------------------------------------- 350 Ethiopia ---------------------------------------- --------- 1,400 Liberia -------------------------------------------------100 Tunisia --------------------------------------------------- 600 Bolivia ------ ----------------------------- 1, 100 Dominican Republic ___--_________________________________ 350 Guatemala---------------------------------------------- 750 Nicaragua----------------------------------------------- 800 Paraguay---------------- ------------------------ 450 Panama------------------------------------------------- 200 Uru,guay.----------------------------------------------- 1, 200 Total MAP-------------------------------------------- 1:32,500 Non-MAP: Vietnam -------------------------------------------------- '507 800 Laos ----------------------------------------------------- 700 Other Government agencies_______________________________ 1,000 Total Non-MAP --------------------------------------- 52,500 Grand total-------------------------------------------- 135,000 Source: Department of Defense. Fiscal year 1973 allocations of excess defense articles as of February 20, j'973 Allocated I Cambodia ----------------------------------------------------- 18. 7 China (Taiwan)----------------------------------------------- 28. 8 Indonesia_________________-._____---____-_____-_-_____________ . 4 Korea------------------------------------=------------------- 3.0 Laos--------------------------------------------------------- 3.2 Philippines-------------------------------------------------- 1.9 Thailand----------------------------------------------------- 9.9 Vietnam------------------------------------------------------ 33. 2 Greece_ ------------------------------------------------------ 7. 8 Jordan-------------------------------------------------------- 4.6 Turkey--------------------?---------------------------------- 52. 1 Spain-------------------------------------------------------- 1.6 Ethiopi.a.------------------------------------------------------ .9 Tunisia------------------------------------------------------- (2) Total------------------------------------------------------ '`166.1 I Allocations constitute authorizations to d