ARMS SALES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69B00369R000100240047-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 15, 2016
• Document Release Date: April 13, 2004
• Sequence Number: 47
• Publication Date: August 20, 1967
• Content Type: NSPR

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Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240047-8
sn derde4e16p9d country it would This argument was unavi
Arms Sales Identif3"only, its "Country X. Ex- ing.. Some Senators, mostly fr(
" Im would g2"arit the loan without urbanized states,, who had want
f"r+Aer ..,,e~t;....r 1.,.......,._ .._ ^, - ---
The Senate Votes No
It was as tense a drama as had
been played out in the Senate in
many a moon.
The issue as posed by the Senate
Foreign Relations Committee was:
Should the Administration finance
arms sales to underdeveloped
'countries, where they divert re-
sources from economic progress
and encourage regional arms races
-all without proper regulation
within the Executive branch or by
Congress?
The issue as posed by the Ad-
ministration: Should the Senate
strike down a mechanism that en-
ables the United States to supply
the security needs of friendly
countries (including Israel) on
terms they can afford-remember-
ing that in some regions, such as
the Arab world, recipients denied
U.S. weapons could buy them from
Russia?
The issue tt7i the
Senate floor t week #nd Oie
Administration, 'With,rictoi ' it t
r .4?
two years. ... _. ACV01 laeuon uiscovere
lesman, Henry nI____t ~._ .. . .. .. that the T-
am ed bd
6-of a given_ un- claimed that appropriate commit- ` evenroaer powers r(
tees of Congress had been kept the Defense Department-to pu
informed, some important mem- chase promissory notes given t
hers of the committees denied it, priva'te' American 'arms supplies
and the Adminstration found 'a re- by foreign governments, and t
bellion on its hands. The charge have the notes discounted at th
of the Congressional rebels was Ex-Im Bank.
that the "Country X" system had A previously undecided Senate
resulted in overly permissive if hurried out of Mr. Mansfield's of
not over-eager arms sales without five saying, "Now they've gone to,
adequate top-level 'examination of farm." On the Senate floor Mi
whether each sale was in the total. Fulbright charged that an attemp
best interests of the United States. had been made to "hoodwink" th,
The first battle ' took'place week Senate. " Eight Senators ' switche(
before last over an amendment by their votes from the week before
Senator Allen J. Ellender, Demo- The Jackson amendment was de
crat of Louisiana, to a bill' ex- feated, 50 to 43.
tending Ex-Im's life by another five John G. Tower, Republican o
years. Senator Ellender wanted Texas, tried to recoup for the Ad
Ex-Im's "Country X" dealings with ministration by offering the Jack
underdeveloped countries banned. son amendment without the or.
The Administration counter-at- fending section. He reclaimec
tacked with intense lobbying., One three of the eight defectors but
of its chief arguments was that was defeated 46 to 45. Later it
the amendment would- hurt Israel, was reported that the "tricky" sec-
which, it was now known, had re- tion had been written in the
ceived ?$88-million in "Country X" Pentagon office of Mr. Kuss.
funds in the past two years. The issue was still to be fought
The retort to that on the Senate out in the Senate-House confer-
floor was that Israel was not an ence on the foreign aid bill. But
underdgvclgped bit i 1 ~cred- in the Senate the Administration
it-worthy~.cOupttj ya had been felled by what one Sena-
ify for dir~G# Itrjo>is for called "the Kuss of death."
Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240047-8
nuoz A V111ce gua1-ui eu repay- ment, decided it was too risky i
ment. Mr. Kuss was able
to pro- domestic' political reasons
Th?
"
.
vide the guarantee because of a votes tilled the amendme.
pocket, lost by one vote because
special revolving fund in the De- 4$ to of what struck many Senators as fens" Department. Th fund was . That set the, stage for the Sena
a. piece of concealment. set up in 1957 and had grown over ' floor" battlelast;vyeek. The imrr
the years to $383 million.
Concealment had been the "? diate ,issue, this time was
heaviest. charga in the controversy fund`s original purpose had a, by Senator Fra
all ,
g Testimony y been to help in a transition from amendment men along.
s in the nd a e had, arms grants to arms sales; it was ten hn into .the.Democrat of g Idaho, wr commit- tee studies in thSenate "new foreign aid b
brought out in recent weeks that to be used as a soarce of credit the, Foreign Relations Comm
omm
the Export-Import Bank, set up or for underwriting by loans by tom tee and. abolishing Relations
the s Pentagor
by Congress to facilitate foreign mercial banks. "Instead, the 1 nd "evolving fund. at the-end of t
trade, had plunged heavily into the in-1965 tdrned to the ,Export-Im year. ,:Senator .Henry M. Jacksc
arms business. About 40 per cent port Bank, which demanded lower Democrat ;ot Washington and
of its loans were now financing interest rates, $ / Or' 6 per cent, Administration stalwart in ti
arms sales, and a third of the arms than commercial banks'' ilncte'r a' controversy, " offered an amen
sales were to the underdeveloped new law that it obtained from inept maintaining the an amen
countries. What was most dis- Congress in 1964-without, , ap- The ar
turbing to many Senators (and parently, "clear ''Congressional . guments' on both sid
awareness of the intent=the Pen- were the same as before. A no
that the e sales Congressmen) s t t both parties was tagon was able to guarantee loans count Indicated ' another narro
that to the rd a by covering only 25 per cent of victory for the Administration.
oped lands were financed by y a Suddenly, they had not been . their totals. Hence it was able to y, just before the sche.
`,underwrite $604-million?"Iil'Ex-Im uled vote Tuesday, the ballot
aware of. loans for arms sales "to 14 under'-- went up. Senators J. W. Fu
s
ecial office in the D
f
e
s
p
e
ens
bright, Mike Mansfield and other
-ehik'ld by the Penta_ developed countries in the past