grinder of final appropriation votes in both Chambers. For a Democratic President, it is not comforting to realize that the fight against foreign aid is being led by other Democrats in the Senate-FRANK CHURCH, of Idaho, WAYNE MORSE, of Oregon, ALBERT GORE, of Tennessee, and ERNEST GRUENING, of Alaska. But the answer to their opposition is that after all these years they have become impatient and frustrated with a program that threatens to go on forever. DOLES FOR 107 NATIONS Although the world presumably is in better economic shape than it was just after World War II, our foreign aid statistics don't show it. Uncle Sam is still doling out dollars to 107 countries, and is continuing to subsidize in whole or in part the military budgets of even the relatively wealthy nations. Japan got $70.5 million in military aid in fiscal 1962, the United Kingdom got $21.2 million, Italy $70.7 million, and little Denmark $44.4 million. France, where De Gaulle has been threatening to go it alone, got $5 million. If peace should break out, military aid presumably can be cut or eliminated, but other aid smacks of the eternal. Senator GRUENING cites the case that "in the year 2003 in Greece our Embassy will still be passing on loan agreements for petroleum storage facilities, service stations, appliance manufacturing facilities, and the like." GIFTS, NOT LOANS These liberals also have reached the conclusion that the foreign aid program has been financially unrealistic in its tendency to concentrate on outright grants rather than loans. Europe could be paying us back the money it received under the Marshall plan if that money had been in the form of loans, and our balance-of-payments deficit would not now pose such a grave problem. But even when Uncle Sam has doled out his substance in the form of loans, he has remained a Santa Claus. Most of the loans are made on a 40-year repayment basis, with interest rates as low as three-fourths of 1 percent, and with no firm insistance on principal repayments. In contrast, the Soviet Union never lends money at less than 2 percent. BLOCKS ERECTED Senator FRANK LAUSCHE, Democrat, of Ohio, has offered an amendment to the foreign aid bill setting a minimum threefourths of 1 percent interest rate for the first 5 years and a minimum of 2 percent for the next 30 years, with a maximum 35-year repayment period. CHURCH has won approval of the Senate Foreign Relations Committee of a ban on further grants-in-aid to selfsufficient countries. And the committee also has adopted an amendment by GORE which would place a $100 million ceiling on American contributions to any project abroad. All these repair jobs on the program make sense, in the enlightened self-interest of the United States. And Kennedy would do well to listen to the counsel of these liberals who in the past have risked disfavor at home by their support of foreign aid. It is these men who will save the program from the meat ax if the administration will let them. Mr. CHURCH. I wish to say a few words about one phase of foreign aid that I believe deserves strong commendation, and that is the program in tropical Africa, which I had occasion to visit 2 or 3 years ago. At that time, many African countries had already achieved independence. Some others were moving toward independence, and the preparations were then well underway. The Government of this country faced a very special challenge in determining what role the United States was to play in helping those countries along the road to stability and freedom as independent states. I believe the record which has been written in the intervening period has been highly constructive. It demonstrates how foreign aid can be used to best advantage. Apart from industrial Europe, those of us who have observed the foreign aid program most closely, who serve on the Foreign Relations Committee, have seen much evidence that the program has proved effective in those parts of the world where it is the most modest, where we have relied chiefly upon technical assistance, the use of surplus food, and the Peace Corps, even though these programs represent the least costly part of foreign aid in general. We have grown to suspect that money is often wasted on large and expensive projects in countries, where the size of our investment cannot be reasonably related to our real national interest. Therefore, I believe it well to say a few words of praise respecting the administration of the foreign aid program in Africa, where principles have been followed which commend themselves to our attention. Mr. CHURCH. Iyield. Mr. GRUENING. I wish to second what the distinguished senior Senator from Idaho has said in regard to certain countries. In an inspection trip of our foreign aid program for the Government Operations Committee, when I studied the program in 10 countries in the Middle East, I found that in 2 of them the program was admirably administered and working well. My recommendation was that it should not merely be sustained at its existing level, but increased. Those two countries, for reasons which I gave in my report, were Jordan and Tunisia. What the Senator from Idaho is saying is that we should be more selective and that we should pick out the countries where the program has a good chance of working, where there is a disposition to work with us, and where the general principles outlined by President Kennedy are being followed. I have held that view ever since I came to the Senate 5 years ago. My hope is that as a result of the current debate we shall be able to eliminate some countries where the money is being wasted and is not being well administered. If we do that, we shall have a much better, more workable program. Mr. CHURCH. I sympathize with what the distinguished Senator from Alaska has said. I am aware of his excellent report. I believe the application of the program in Africa is a good case history of how foreign aid can be administered to advantage. For these reasons, I should like to make a few remarks concerning the program in this region of the world. Before I do so, I wish to stress the fact that it is ironic that the revolt against foreign aid should come to a climax under a President who has done more than any other to reorganize the program. He has placed it within one agency, and has put it in the hands of Mr. David Bell, who, in my judgment, is the ablest Director yet. It is doubly ironic that it should come under a President who has been responsible for the most important innovation in foreign aid that has occurred since President Truman's famous point 4 plan inaugurated technical assistance, years ago. I refer, of course, to the Peace Corps, which has been a Kennedy triumph and has demonstrated that it is possible to reach other countries on a people-to-people basis. Peace Corps has probably done more to improve good feeling toward the United States in the underdeveloped world than any other phase of foreign aid. The So I stress that the reasons for this revolt, if indeed it should be called a revolt, have little to do with the President, who is to be commended for the initiative he has shown both in establishing the Peace Corps and in placing the management of the AID program in such competent hands. competent hands. Rather, the reasons are cumulative in character. They extend back over the years. They represent a gathering impatience and frustration in Congress, due to the inability of Congress in preceding years to effect needed reforms in this program, so as to bring it into better touch with reality, to eliminate excesses, and, indeed, to strike from the program portions that ought long ago to have been sloughed off by the administrators themselves. The very fact that in 1962 we were giving aid, in one form or another, to 107 recipient countries, only 8 fewer than there are in the whole world, outside the Iron Curtain, indicates the degree of the failure of the administrators ever to put an end to aid programs once commenced, even in countries that have long since become self-sufficient and able fully to provide for themselves. I am encouraged that the Committee on Foreign Relations has seen fit, this year, to adopt an amendment which I myself proposed, and have worked hard for over the past 2 or 3 years, an amendment that would prohibit further grants of aid to economically self-sufficient countries, located in Western Europe and including Japan, where we were granting some $400 million in military assistance as late as 1962. This amendment means that we can begin to turn off some of the spigots that have been opened in the American foreign aid barrel, that we can begin to focus the program on regions of the world where it is really needed, and thus put an end to the subsidization of countries that have long been able to take care of themselves-indeed, countries that are now enjoying levels of prosperity unprecedented in their history. Mr. MORSE. Mr. President, will the Senator from Idaho yield? Mr. CHURCH. I yield to the Senator from Oregon. Mr. MORSE. As the Senator knows, in many places I am high in my praise of not only the amendment the Senator from Idaho offered in the Committee on Foreign Relations, about which he spoke, but of a good many other amendments he has offered. I congratulate him again. I was proud to support him there, and I am proud to support him here. I wish to join him in the comments he has made in regard to this bill as they affect the President of the United States. Of course, any of us who do not agree with all parts of the bill will be represented, as the Senator has put it, as being in some kind of revolt. But we are not revolting against the President. To the contrary, we consider that what we are doing is in the best interests of the President; otherwise we would not be doing it. We happen to believe that the amendments we are seeking to have adopted would strengthen the bill, and thereby strengthen the position of the President in carrying out a sound American foreign policy. Let me cite one example of what I mean. When the time comes, we shall be offering amendments that will seek to reduce aid to Europe, because many of us feel there is no justification for a continuation of the aid we are giving to Europe. We believe that if our amendments are adopted, the diplomatic arm of the President will be greatly strengthened in his negotiations in Europe, in connection with NATO. It should be clear to everyone-if it is not, I am at a loss to understand why-that NATO needs to be revised, NATO needs to be reformed, NATO needs to be readjusted to the economic realities of Europe and of the United States. Those economic realities I have made perfectly clear. We should not be called upon to make the expenditures we are now making for Europe. There should be a cutoff. As the Senator knows, I have said that I am perfectly willing to take the savings that would be made in Europe and spend them for economic aid in underdeveloped areas of the world where there is a great need for us to save millions of people from going over to communism. Would that weaken the President? It would strengthen his position as the leader of American foreign policy. But I offer one comment, in case the Senator does not suggest it: There are partisans who seem to think that even though we may disagree with the policy of the President, we should nevertheless go along with a wrong policy. That I will never do. That is not the way to support my President or to support my constituents. I have no doubt-in fact, I know that the President would not cast the same votes that I am casting on some of these amendments; but I also say that if the people believe the President would cast the opposite vote to every vote that I will cast on the bill, I do not believe it. I cannot say more. I think I know what I am talking about. Mr. CHURCH. Indeed, the senior Senator from Oregon does know what he is talking about. I commend him for the leadership he has given to the effort, not to gut the foreign aid program, but to reform the foreign aid program. If it is not reformed while there is still an opportunity to do so, a period of reaction will set in. The pendulum will swing back. If the American people finally feel that they are paying extravagantly for a program they can no longer support, they will rise up in such a way that Congress will ultimately strike it down completely, and thus deprive the President of an essential tool that he needs for the direction of American foreign policy in our contemporary world. Reform is our purpose. I believe that, in the highest sense, we serve the real need of the foreign aid program, if it is to be sustained through the years ahead. Mr. MOSS. Mr. President, will the Senator from Idaho yield? our government, either in this century or at any time in our history. Mr. CHURCH. Mr. President, I appreciate very much the support the Senator from Utah has given to me in my efforts to amend the foreign aid bill, particularly in reference to finally cutting off further grants of aid to rich and self-supporting countries. His endorsement of my amendment and his efforts in its behalf on the floor of the Senate are greatly appreciated. Similarly, Mr. President, I have very much appreciated the support I have Mr. CHURCH. I am glad to yield to received from the distinguished Senator the Senator from Utah. Mr. MOSS. I commend the senior Senator from Idaho for his remarks on the bill before the Senate. As much as any other Member of this body, he has given long and searching study to the problem of foreign aid. I was happy to join the Senator when he presented his amendment to terminate aid to advanced countries, countries which have completely recovered from war devastationprimarily European countries and Japan. I was delighted when the Committee on Foreign Relations accepted the Senator's amendment and made it a part of the bill. I agree with the Senator that in many places in the world we are using our resources to the maximum advantage of this country, by doing for underdeveloped countries the things that are needed to enable them to become independent and free, and not dependent upon and subject to the pressures and whims of other great powers. As I understand our foreign policy, it is to create a world of free and independent nations, each with its own interests to defend, and provide them with enough economic viability and enough national defense to enable this to be done. I think we have made great strides toward that goal. I concur in the views of the Senator that we must refine and improve the bill. My only hope is that in the time we have for the consideration of the bill, and considering the close, two- or threemargin votes, we do not so scramble the bill that we shall have accomplished on the floor of the Senate what the Senator was talking about, namely, ultimately destroying the aid program. I agree that there must be improvement; and I believe we have gone a long way in improving the bill before us. I hope that we can finally conclude with a bill that will permit the program to continue under the excellent leadership that is now being given by the Director of AID, in whose commendation by the Senator from Idaho I concur. I look forward to the time when the program can be tightened and can be program can be tightened and can be made applicable to present-day conditions. Nothing is static; nothing remains the same. What was programed a year meet the present situation. So I hope we ago or 5 years ago must be changed to shall move on. I commend the Senator from Idaho, and I gladly support him in his objective. I hope Congress can enact a bill which will continue what I consider one of the great imaginative movements of from Alaska [Mr. GRUENING). Mr. SIMPSON. Mr. PresidentMr. CHURCH. Mr. President, I know the Senator from Wyoming is a kindred soul in connection with this matter, and I am glad to yield to him. Mr. SIMPSON. Mr. President, I was glad to join in the amendment of the Senator from Idaho. I regard it as one of the most realistic amendments proposed to the bill; and some very good ones have been submitted. The people of the country are becoming disturbed about the great amounts of largesse we are giving many foreign countries, especially the rich and self-supporting countries; and such amounts should be eliminated. As I recall, since the inception of the program we have given approximately $128 billion to the various countries we have aided. It is high time that, instead of continuing these contributions, we begin to eliminate our grants and other forms of aid which really are not needed. So I compliment the Senator from Idaho on his expressions; and I am glad to join him in supporting his amendment. Mr. CHURCH. I thank the Senator from Wyoming for his support. Mr. President, I began by saying a few words about what I consider to be a showcase for good foreign aid administration-in tropical Africa. I have been diverted-happily-from that objective by the opportunity offered me to engage in colloquy with other Senators. At this time, I wish to revert to my original subject, because I think it should be presented as an example of what can be accomplished by means of foreign aid with the expenditure of only moderate amounts of money, in an area of the world of great potential importance to the United States. I believe it can correctly be said that this administration has undertaken a new African policy which has been ex ceptionally successful. From my own observations in Africa 2 years ago, I know how tenuous was the position of the United States at that time in many of the newly independent countries, and how great was the suspicion of the United States, and how large was the criticism of our foreign palicy as being too closely tied to that of Western Europe, and as not giving proper recognition to the legitimate aspirations of the African people. We were suspect; and I believe it is little short of the extraordinary that, in the intervening 2 years, the general attitude toward the United States in so many of these African countries has changed so wholesomely. For this, I give credit where credit is due to the President of the United States, who has shown a keen personal interest in Africa, and has given much personal attention to African leaders who have come to the United States. They are responding to his attention, and they honor and respect the President of the United States-men who 2 years ago were openly and bitterly critical of this country. Second, I think special credit should be given to the Assistant Secretary of State for African Affairs, Mr. G. Mennen Williams, who has done an extraordinarily fine job in building good will toward our country throughout the African Continent. THE IMPORTANCE OF DEMONSTRATING U.S. INTEREST IN AFRICA THROUGH LIMITED PROGRAMS OF FOREIGN ASSISTANCE Mr. President the United States has a a vital interest in the new nations of Africa. This interest can be expressed in many ways. One of the most effective expressions of our interest in the future of Africa is our willingness to invest, in cooperation with the Africans, in programs for helping the Africans to help themselves. While recognizing that large-scale investment is not yet feasible in most of the new states of Africa, it is essential for us to participate jointly with the Africans in limited programs of technical assistance, and, when circumstances permit, in prudent capital development projects. Seventy-two percent of the foreign aid flowing into Africa comes, of course, from Europe. In at least half of Africa our programs consist almost entirely of technical assistance activities. Out of the 34 African countries which received U.S. aid during the past year, 15 countries, formerly French and Belgian colonies, received only token U.S. assistance. Our aid programs in these 15 countries are so small that only 95 foreign aid employees are required. There are no separate and distinct aid missions. The few aid personnel running the program are supported administratively by the American Embassy. Compared to the size of the foreign aid program generally, the amount of U.S. aid money involved in these 15 nations is very modest-amounting during the past year to only $14 million, which is less than $1 million per country, and only 5 percent of our economic assistance to the entire continent of Africa. It should also be noted, in passing, that U.S. aid to Africa is highly selective and concentrated, with 5 of the 34 African countries getting 55 percent of our total African commitments last year. The policy underlying our limited programs in these 15 countries is one of demonstrating, in a prudent and responsible way, U.S. political and humanitarian interests in Africa. It is a policy which backs the aspirations of the African peoples without involving us in longterm or high-cost commitments or precipitating unrealistic expectations on their part. It is a policy of restricting the kind and amount of U.S. economic assistance, so that our programs are purely supplementary to, and do not supplant, those of other free world donors. It is a policy which helps both the Africans and the Europeans to replace former colonial ties with more nearly mutual relationships. It is a policy which has already provided political dividends for the United States in the international community, both in the United Nations, where Africa commands a large percentage of the total votes, and in some ticklish situations last year in Cuba and the Congo. It is a policy which recognizes the Africans' determination to retain their independence by providing them with other friendly commercial and economic ties, so that they do not feel obliged to turn to the Communists to avoid appearing wards of Europe. It is also a policy which, despite its essentially political character, is based on sound principles of economic development. In accordance Iwith section 211(b) of the Foreign Assistance Act, and with various other congressional injunctions, assistance to these 15 nations is largely limited to technical assistance. There are no luxuries, no monuments, no prestige projects. Last year, for example, in Gabon $275,000 of foreign aid funds went for buying American materials for a joint AID-Peace Corps project of assisting in building rural schools. In Senegal, local currency from the sale of U.S. rice was used to construct secondary schools. In Upper Volta, $49,000 was used to demonstrate a new U.S. vaccine which promises to eradicate measles, one of the country's major child-killers. In each case, the project was fully consistent with development criteria prescribed by Congress for self-help, economic and technical soundness, and suitability with respect to the country's development plans. The role of the United States in these 15 countries should continue to be not only limited but also secondary to that of France and Belgium. Contrary to the statement on page 5 of the Foreign Relations Committee's report on the bill, however, I think the United States should continue to maintain its presence in these 15 countries through limited programs of assistance. The word "presence" is both unfortunate and misleading. It is not U.S. "presence" as such which is important; it is the effective expression of U.S. interest in these countries, and the building of relationships for our mutual advantage. For the United States merely to be present in a country in the form of a few technical assistance projects is virtually meaningless unless those projects can produce both direct and indirect results of lasting benefit. ways there is a greater affinity between the United States and Africa than between Africa and Europe. Africans look to the United States for leadership in many fields, such as education, where the American way may be more suitable than the European. What would we gain if we terminated our small foreign aid programs in the 15 African nations receiving limited U.S. assistance? We would save about $14 million a year. Personally, I would rather see that small amount shaved off the program somewhere else than give up our limited program in almost half of Africa. We would also achieve, if it can be called an achievement, a reduction in the total number of countries receiving U.S. assistance. I can appreciate the annoyance of many observers that we are providing aid to far too many countries of the world, including some former colonies which it is generally agreed should be primarily the responsibility of Europe. I share the Foreign Relations Committee's concern for greater selectivity and concentration in the foreign aid program. It was for this very reason that I sponsored the amendment to cut off further grants-in-aid to the rich and self-sufficient countries located in Western Europe and including Japan. But the question of U.S. "presence" is not primarily a question of selectivity or concentration. The aid program in Africa as well as worldwide is now highly concentrated. The transfer of $14 million to some other part of the program would hardly contribute toward greater concentration. I also think, as David Bell, the head of our foreign aid program, has said, that we should work ourselves out of a job as soon as possible. The number of countries receiving assistance should decline as countries become self-supporting. But it would be cutting off our nose to spite our face if we eliminated our small foreign aid programs in half of Africa just to be able to reduce the number of countries receiving assistance. Three years ago the Senate took the initiative in creating a special program for education in tropical Africa—a program which would be ended in almost half of Africa if our assistance to these 15 nations were terminated. The Senate has also indicated in other ways its appreciation of the importance of providing U.S. assistance to the new nations of Africa. Despite objections to the number of nations being aided, and the seeming lack of justification for a U.S. ate will continue to recognize the im"presence" as such, I know that the SenIt is in the interest of the United States limited, where expressions of our inportance of such assistance, even though to help Africa remain free from Com-terest and influence are still essential. munist subversion or domination. also is in the interest of the United States to help African nations to develop along lines, and especially along American lines. In order to influence the course of events in this direction, we not only need to help the Africans to control Communist subversion; we also need to provide an alternative to complete dependence on Europe. In many Western It respect to economic aid in Africa is I believe that what I have said with wholly justified. It can be looked upon as a kind of a showcase of what can be accomplished under the foreign aid program, particularly in conjunction with the activities of the Peace Corps, and for relatively modest amounts of money. But I do not wish what I have said respecting economic aid to be considered an endorsement of the military assistance program that is commencing in Africa. I cannot think of any part of the world where there is less need for starting an arms race, where its effects could be more poisonous, where its end results could be more fraught with mischief, or where the whole process could be more inimical to the national interests of the United States, than the Continent of Africa. I am distressed that we are commencing a military assistance program there which cannot possibly do other than waste the thin reserves of those countries, and might indeed contribute to difficulties, if not open warfare, between them. So, in that respect, I oppose foreign aid in the form of military assistance on the Continent of Africa. But I wish the RECORD to show that programs of technical economic assistance in many parts of Africa which have cost modest amounts of money are a good illustration of a phase of the foreign aid program that is being well administered, and for which the State Department and the administration deserve much credit. Mr. ELLENDER. Mr. President, will the Senator yield? Mr. CHURCH. I am happy to yield. Mr. ELLENDER. Has the Senator named the 15 countries to which he has been referring? Mr. CHURCH. I have not named them in the course of my remarks. I could supply the list of names. Mr. ELLENDER. I presume that those countries are in French Equatorial Africa? Mr. CHURCH. Many of them are. Mr. ELLENDER. And French West Africa? Mr. CHURCH. That is correct-tropical Africa. Mr. ELLENDER. I hope the Senator has not included Nigeria. Mr. CHURCH. I have referred gen agreement having been made with Mr. CHURCH. I believe a careful Mr. ELLENDER. During the course of the debate on the pending bill, I have assumed the same attitude that the Senator is now stating as to assisting certain countries with technical aid. When we speak of technical aid, we do not mean the granting of huge sums of money, in the guise of technical aid, which are more or less for capital investments. Mr. CHURCH. The Senator is correct. Mr. ELLENDER. That is what I have been criticizing. My report is full of such cases, wherein under the guise of technical assistance we have been passing on to many countries huge amounts of money which are really for capital investments rather than technical assistance. That is the bone of my contention. Mr. CHURCH. I agree wholehearted- I invite attention to the fact that the But this argument has no substance. erally to the program in tropical Africa, pose of the contingency fund is. where the primary reliance has been on technical assistance. I shall be happy to provide the names of countries if the Senator wishes them. Mr. ELLENDER. Does the Senator know that under the guise of technical assistance, we furnished to many of the countries to which he has referred, machinery worth thousands of dollars, such as road equipment-scrapers, and things like that? The Senator will no doubt remember that I always felt the Foreign Aid Act should be changed to allow purely technical assistance to be separated from development assistance. As I pointed out in my report, any number of countries received aid which was represented as technical assistance, but which was really large sums of money used to buy equipment that actually represented capital investment. That is where I tried to draw the line. Take the case of Nigeria, where the British own and control-lock, stock, and barrel-the main resources of that area. Someone from the State Department agreed, without consulting Congress, to give to the Nigerians over the next 5 years $225 million. Much of this was to be in the nature of grants and the rest easy loans. I wonder if the Senator from Idaho is in accord with such an to deal with emergencies. Mr. ELLENDER. Unforeseen. the Senate would be the first to call his This is not an argument against the Mr. ELLENDER. Will the Senator from Idaho yield further? Mr. CHURCH. I am glad to yield. Mr. ELLENDER. I should like to comment further on that part of the Senator's statement which refers to 72 percent of the aid money to the 15 countries he mentioned coming from France. Is that a correct statement? Mr. CHURCH. Yes; that is a correct statement-from France and from the United Kingdom. Mr. ELLENDER. Yes. In regard to that 72 percent, does the Senator have any idea how that aid comes about? For his information, I made a study of the subject while I was in that area. Much of it is not a direct aid program; that is, it is not a program in which the French Government furnishes so much money. The French Government buys peanuts or some other commodity at a subsidized price. The commodities could probably be bought much cheaper on the world market than they could from, let us say, Mali, Nigeria, or from Senegal, where peanuts where peanuts grow in abundance. What the Government does is to pay a subsidy so that farmers can receive a sufficient income to make both ends meet. Mr. CHURCH. The Senator is correct. This is one of the major forms of aid extended to this part of Africa by the French. However, as the Senator knows, additional aid is furnished in the form of salaries to administrators or to French technicians or others who are assisting the people and the governments of the new countries. Mr. ELLENDER. There is some in that regard, but the aid of the British amounts to a pittance, compared with the cash furnished by the French or by the Belgians. the Belgians. As I pointed out on several occasions, for every dollar spent by the British by way of subsidies or out of the pockets of the taxpayers of Great Britain, France probably spends $5 or $6. The British have been successful in utilizing the resources of the countries in which they operate to obtain sufficient funds to develop the economy and sustain the people. They have done that in Ghana as well as in Nigeria. Mr. President, what irks me is that the huge amount of assistance that we would not inure to the benefit of the propose to make available to Nigeria masses of the Nigerian people. It would inure to the benefit of a vast number of Greek merchants, Indian merchants, and British nationals who are there and in absolute control of all the resources in that area. It seems to me that we should not agree to furnish the Nigerian Government with $225 million, when the British have agreed to furnish only $50 million, although they own and control those industries. I believe we should look upon that with resentment. It irks me no end when I find instances such as that. On what authority, I add further, does the Secretary of State or any of our AID administrators go into a country and say, "You can depend on it that the United States, over the next 5 years, is going to make available to you, as it did in Nigeria, $225 million." As was pointed out in the justification which I made a part of the RECORD some time ago, half of that $225 million will be in the nature of grants and the other half will be in the nature of loans. I presume those loans will be the "soft" ones, at an interest rate of three-quarters of 1 percent, with 10 years' grace and 40 years to pay. We might as well give the money to them. Mr. CHURCH. This matter of financing very large projects in given countries has become increasingly troublesome to the Senate Foreign Relations Committee. There has been a growing feeling in the committee that these projects are of questionable value to the United States in relation to the cost of the projects. It This led the distinguished Senator from Tennessee [Mr. GORE], who is now in the Chamber, to propose an amendment that I believe would be a first step toward correcting this problem. would write into the committee's version of the bill a provision to establish a $100 million ceiling on the American contribution to any project in any given country without the project first coming to the Congress for its specific consent and approval. This, I believe, is a starting point in dealing with a problem that is of increasing concern to the members of the committee. I supported that amendment in the committee, and I wish to commend the distinguished Senator from Tennessee [Mr. GORE] for its sponsorship. I should like to say one other thing to the Senator from Louisiana, which has to do with the interest rate that he mentioned in connection with development loans. If we derived any lesson from our experience under the Marshall planwhich was probably the most important and successful foreign policy venture of the United States-it was that the bulk of the money we gave away should have been loaned. Had it been loaned, today these amazingly prosperous and productive countries in Western Europe that we helped set back on their feet with the Marshall plan would be paying the principal and interest on such loans, and we would not be faced with the critical balance-of-payments problem that now plagues the Nation. Drawing on that experience, several years ago in the committee the Development Loan Fund was established for the purpose of changing the emphasis in the foreign aid program away from grants toward loans, so that this Fund might be used for financing long-term economic development in the underdeveloped nations of the world. But in setting it up, we gave a certain area of discretion to the administrators because of the great differences between the countries to be dealt with. We thought the discretion would be exercised in such a way as to preserve the loan character of the program. Instead, the great bulk of the funds, as the Senator has suggested, has been loaned for 40-year periods, with a long grace period in which no principal is repaid, following which there is repayment at an interest rate of three-fourths of 1 percent on money which has cost us, or is costing us, 3 or 32 percent to borrow. moneychangers," never gets less than 2 ferred. Mr. ELLENDER. Two and one-half equate taxation, to make needed land percent. reform, we will discourage those other governments that are doing it. On the matter of interest on loans, it is obvious, as the Senator has pointed out, that the judgment of our administrators in granting such loans has been very poor. I was present in Cairo last February at the signing of the $30 mil Mr. CHURCH. I yield to the Senator lion loan to build a powerplant in west from Alaska. Mr. GRUENING. I commend the Senator from Idaho for the clarity and lucidity of his presentation, which is characteristic of all of his presentations in the Senate. I agree very much with what the Sen- I consider foreign aid to be an es- The other day I pointed out that I was not in favor of a meat-ax approach, such as the House used in cutting the program a half billion dollars, but the program should be studied country by country. In Western European nations and in Japan, obviously it is not needed any longer and has not been for several years. But the initiative to suspend it had to come from Congress and not from the agency. Certain other countries, such as Brazil, are not complying with sound fiscal policies. We have tried to induce its rulers to stop inflation and adopt certain reforms. Brazil is not doing so. The consequence is that we have vainly poured $22 billion into a country that is as rich in resources of all kinds as the mind could imagine. There is no reason why it should not be prosperous. It has as many resources as we have in the United States. It has gold, strategic minerals, unlimited water for hydroelectric development, tropical agriculture, temperate agriculture. It should be one of the It should be one of the most prosperous nations on earth. But it does not have prosperity because it does not adopt essential reforms. Unless and until it makes such reforms, it will not be strengthened by our foreign assistance program. sistance program. Not only would we be saving money, but, far more important, we would be giving, by such action, an example to the other countries that are trying to conform to the principles I point out that the Soviet Union, of Punta del Este-the very principles which likes to castigate "Wall Street to which President Kennedy has re So instead of giving money away and calling it a gift, we are now giving money away and calling it a loan-the worst of both possible words. Again, this year, the committee has addressed itself to this problem. A good step has been taken in the committee to shorten the loan period somewhat, and to provide that when interest begins to accrue on the loan, it shall be at not less than 2 percent. Cairo. A powerplant is a revenue producing enterprise. It will be paying for itself the day it starts to operate. Yet the loan provides for a 10-year moratorium on the interest and principal of the loan, and then three-quarters of 1 percent, with the result that we are not only lending $30 million, but are making a grant of approximately $25 million at the same time. That is folly. We are borrowing to make that so-called loan at about a 4-percent interest rate from the American people. Mr. CHURCH. May I interrupt the Senator to say that while we extend credit to underwrite the financing of that kind of electrical generating plant in Cairo, we require our own electrical generating plants, financed by the Federal Government, to repay on the basis of interest which is the equivalent that the United States must pay for its borrowed money. Why the double standard, when we are dealing with a project that, if it is worthy of the money in the first place, if it is a sound project, ought to fully repay the capital investment, with reasonable interest charges? What we expect of our projects at home we should expect of the projects we finance abroad. Mr. GRUENING. I would follow this up by saying that although I believe the committee took a step in the right direction in raising the rates to be effective at not less than 2 percent, it still has failed to meet the issue. We will still, while receiving 2 percent, have to pay interest of 32 or 4 percent. In the future we should charge exactly the rates which the American people have to pay for the money. That is only commonsense. We have now made, at this soft rate of three-quarters of 1 percent, and 10year moratorium, $1,300 million worth of loans. loans. We shall have to give $870 million in concealed grants on those loans. It is difficult to justify that we should do so. One further point. I was much shocked to learn that the United States is now planning a military aid program for African countries. I could not more completely agree with the forthright condemnation of that program by the Senator from Idaho. I hope, feeling as he does, that he will introduce an amendment that would prevent such aid. There is an escape clause in all such amendments that if the President finds it is in the national interest to do so, in a given country, he can do it. I have an amendment which is intended to eliminate our military aid to Latin America, with the same escape clause, because such aid has proved to be destructive, not constructive. It has never strengthened the defense of countries in the |