MUTUAL SECURITY ACT OF 1951 FRIDAY, AUGUST 3, 1951 UNITED STATES SENATE, COMMITTEE ON FOREIGN RELATIONS, Washington, D. C. EXECUTIVE SESSION The committees met, pursuant to adjournment, on August 2, at 10:30 a. m. in the committee hearing room of the Foreign Relations Committee, United States Capitol, Senator Tom Connally (chairman of the Foreign Relations Committee) presiding. Present of the Foreign Relations Committee: Senators Connally (chairman), Green, McMahon, Fulbright, Sparkman, Gillette, Wiley, Smith of New Jersey, Lodge, and Brewster. Present of the Armed Services Committee: Senators Hunt, Stennis, Cain, and Long. (Senator Byrd, acting chairman of the Committee on Armed Services during the absence from Washington of Senator Russell, was absent, presiding as acting chairman at a previously scheduled meeting of the Senate Committee on Finance.) The CHAIRMAN. Come to order, please. Today we are devoting our attention to the Far East, the Near East, and Africa. Dr. Bennett is sick. The first witness is George C. McGhee. Come around, Mr. McGhee, and have a seat. STATEMENT OF HON. GEORGE C. McGHEE, ASSISTANT SECRETARY OF STATE FOR NEAR EASTERN, SOUTH ASIAN, AND AFRICAN AFFAIRS The CHAIRMAN. Mr. McGhee, the committee is considering the foreign aid bill, the Foreign Assistance Act. You are Assistant Secretary and your activities are supposed to be strongest in the Near East and Africa. We will be glad to hear you on this subject. Mr. McGHEE. Mr. Chairman, I appear before your committee in behalf of the Executive's request under the Mutual Security Program covering the states of the Near East and Africa. The CHAIRMAN. At whose request? Mr. McGHEE. The Executive's request, under the Mutual Security Program covering assistance to the Near East and Africa. The CHAIRMAN. What Executive are you talking about, the President? Mr. McGHEE. Yes, sir. The CHAIRMAN. All right. Mr. McGHEE. Mr. Chairman, the area I will discuss is shown here on the map. It includes Greece, Turkey, and Iran, the Arab states, Israel, and Liberia, Ethiopia, and Libya. Liberia is the only independent state in Africa not included in the Middle East area shown here. For simplicity in administration it is included in this part of the program. Senator SMITH of New Jersey. Where do you classify India now? Mr. McGHEE. India, Senator Smith, is handled in the Office of South Asian Affairs in the Department, but it has been included in title III of this act since it is considered to be a part of the general Asian picture rather than that of the Middle East. METHOD OF PRESENTATION Mr. Chairman, I would like, if I may, to describe the method of presentation this morning. We have with us here Admiral Duncan, who was recently made Vice Chief of Naval Operations, to testify as to the strategic aspects of this program. There is also here Major General Arnold, who is Chief of the Joint Military Aid Group to Turkey; Major General Jenkins, who recently was with us in Greece. They will testify on Greek-Turkish military aid. We had Dr. Bennett, who was to testify on the economic aspects of this program in the Arab states, in Israel, and the independent countries in Africa. Unfortunately, Mr. Bennett is ill this morning, but will be glad to testify when he is better. The CHAIRMAN. When he gets well, we will talk about it. Mr. McGHEE. Mr. Chairman, if it suits your convenience, I would propose that those of us here to testify might make brief statements and then hold ourselves open to questioning, if that will be a suitable procedure for you. The CHAIRMAN. Very well. Mr. McGHEE. I might say, Mr. Chairman, that I have a prepared statement here which has been circulated. STATEMENT OF HON. GEORGE C. MCGHEE, ASSISTANT SECRETARY OF STATE FOR NEAR EASTERN, SOUTH ASIAN, AND AFRICAN AFFAIRS Mr. Chairman, I want to present the case for the Near-Eastern and independent African countries for consideration under the mutual-security program. Specifically, I should like to discuss the problems which we face in Greece, Turkey, and Iran, Israel and the Arab Nations, and Libya, Ethiopia, and Liberia. Programs for grant economic aid are proposed for these countries as indicated on our chart, and programs of military assistance are proposed for Greece, Turkey, Iran, Israel, and the Arab Nations. The sum involved for military assistance is $415 million. We also request congressional authority to transfer 10 percent of the funds available for military aid to Greece, Turkey, and Iran for assistance to Israel and the Arab States, under conditions laid down in the draft legislation which you have under consideration. I shall deal only briefly with the problems of military assistance to Greece and Turkey, since this committee is very familiar with them, and devote most of my time to a consideration of the requirements of the other countries. The Greek and Turkish programs, military and economic, have been proved by performance over the past 4 years. Both countries have abundantly demonstrated that they are among our stanchest allies. They have stood firm in defense of the integrity of their own territories. They have supported us in major policy issues in the United Nations. They have made noteworthy contributions to the cause of collective security in Korea. Representatives of the Department of Defense will explain the need for the military programs proposed for 1952, and representatives of ECA have already demonstrated the need for continued economic assistance. Military assistance to Iran represents a continuation of an essential program already under way. While the Iranian situation poses special difficulties for us today, the impelling fact remains that Iran represents tempting bait to Russia in its attempt to forge a chain of satellites along its periphery. Iran's loss to the free world would jeopardize the security of the entire Middle East. Our purpose is to strengthen Iran's will to resist aggression, and to enable the Government to maintain internal stability. I should like to discuss the Iranian situation further in dealing with the economic programs which we propose in the area. The proposal that military assistance may, under certain circumstances, be extended to Israel and the Arab States is a new one. The Department of Defense is not yet in a position to submit precise programs for the use of the funds which might be available for this purpose. Specifically, it is suggested that up to 10 percent of the funds made available for Greece, Turkey, and Iran might be used to provide military assistance to countries of the Near East whenever the President determines that "(1) the strategic location of the recipient country makes it of direct importance to the defense of the Near East area; (2) such assistance is of critical importance to the defense of the free nations; and (3) the immediate increased ability of the recipient country to defend itself contributes to the preservation of the peace and the security of the area and is important to the security of the United States." Events in the Middle East are moving with such alarming rapidity that it may well prove necessary to have authority of this character for use in the very near future. We cannot allow the forces of neutralism and extremism to gain further ground in the Near East. The strategic position of the Middle East is too important to allow its conquest through Soviet subversion as a result of our indifference or inaction. The Soviet intention of dominating this area, a goal expressly stated in documents exchanged between Nazi Germany and the Soviets in 1940 and implicit in Communist efforts to aggravate existing tensions, is all too clear. Throughout the Near East, the proposed program will increase the will of governments and peoples to cooperate in resisting Soviet pressures both now and in the event of war. The program will bolster political stability and security, and thereby reduce area rivalries and tensions. Moreover, the introduction of modern training methods and reasonable quantities of up-to-date epuipment, primarily small arms, is a condition precedent to the effective performance by these countries of their proper role in the defense of the Near East. Their forces could, if properly equipped, participate in the defense of their territories and in protection of lines of communication and vital installations. While these countries could not withstand an all-out Soviet attack, their ability to harass the enemy's lines of communication over exceedingly difficult terrain could be of inestimable value in the event of general hostilities. ECONOMIC AID The program of economic aid represents a significant extension of the point 4 operations that have been conducted during the past year in the Near East. It is designed to complement the proposed military program and to help build "stability in depth" by bolstering the economies of the countries of the Middle East. IRAN The Iranian program, which was prepared before events in Iran had reached the present stage of crisis, is designed to meet the country's long-range problems by increasing agricultural production and attacking poverty and disease in that country at the grass-roots levels. Basic to the program is the concept that the Iranian Government will assume a substantial share of the expense of jointly administered projects, with revenues anticipated from oil operations. This program provides for expert teams of Americans and Iranians specializing in agriculture, sanitation, vocational training, and public health, working at the village level. It provides for improvement in the water-supply systems in the smaller towns. It looks also to the development of basic water resources for irrigation. It provides for a group of experts from the United States Public Roads Administration, which is making such a notable contribution in Turkey, with a view to improving Iran's road network. We continue to regard this as a good program, and we hope that a solution of the current difficulties between the British and the Iranians will permit the Iranian Government to do their full share in carrying it out. With the dispatch of a British Minister to Iran, we are hopeful that the negotiations which Mr. Harriman has worked so hard to reestablish will achieve the objective of restoring the flow of crude and refined petroleum from Iran on terms satisfactory to the Iranian Government and to the commercial interests involved. The amount proposed for economic assistance to Iran is $24,050,000. ARAB STATES AND ISRAEL Israel, as you know, has requested $150,000,000 in grant aid from the United States for the current year. The Israeli request is based on three principal factors its stated requirements for defense; its desire to provide for an additional 200,000 immigrants in the fiscal year 1952; and the obligation which the Israeli Government states that it is prepared to assume in compensating the Arab refugees who left their homes in territory now under Israel's control, during the hostilities which broke out in 1948. An analysis of the Israeli request, which includes an illustrative program of imports to be financed by the $150 million, has led the executive branch of the Government to apply a different approach to Israel's requirements. In cooperation with technicians of the Treasury Department, an analysis has been made of Israel's balance of payments. We have taken into account Israel's import requirements and its probable sources of foreign exchange, including $50,000,000 still available under the Export-Import Bank loans, which totaled $135,000,000. This leaves a dollar gap that will amount to somewhat less than $25 million in fiscal 1952. We have accordingly prepared an illustrative program of grant aid totaling $23,500,000. The illustrative program for Israel is directed toward projects similar to those now being undertaken through funds available to Israel from the ExportImport Bank, namely, the production of food and the strengthening of the industrial potentital of the new nation. As I have already mentioned, the program also includes authority to make grant military assistance available to Israel in addition to the proposed economic aid. In the case of the Arab States, the problem is not so much the "dollar gap" as that of increasing the general level of production and living standards. For the wealthier Arab States which enjoy substantial foreign-exchange earnings through the export of petroleum or cotton, we propose only minor technical assistance. For the poorer states in the North-Syria, Jordan, Lebanon-faced with the problems of assimilating hundreds of thousands of Palestine refugees, we propose programs very similar to those planned for Iran. We are suggesting grass-roots projects looking to increased food production, improved public health, and better use of water resources, together with a small component of industrial equipment. The list of worth-while projects for these countries which can be undertaken in 1952 fiscal totals approximately $24,000,000-the same figure as the requirement for Israel based on a study of Israel's financial position. For presentation purposes, we propose identical amounts of aid for Israel on the one hand and the Arab States on the other. Although Israel, with its plans for development well under way and with its large corps of highly skilled people, can assimilate assistance more rapidly than the Arab States, it is nevertheless in the interest of the United States that Israel and the Arab States be extended aid on an impartial basis. While impartiality does not necessarily mean equality, the illustrative division of aid for 1952 is realistic in terms of our objectives, which are to assure the cooperation of Israel and the Arab States with us in creating a situation of strength in the area. PALESTINE REFUGEES You are familiar with the problem of the Arab refugees from Palestine, which is the principal source of tension today in the Near East. The numbers of refugees on relief have been reduced from a peak of 1,019,000 to approximately 875,000. Little repatriation or resettlement of the refugees has taken place, however, although reports from the field indicate that we may expect further progress. in areas where some of the refugees are now living. Furthermore, a substantial political advance has been made with the acceptance by the Arab states of the principle of resettlement for those refugees who do not choose to be repatriated to Israel. This acceptance is subject to the condition that the rights of the refugees to compensation, or to eventual repatriation if that should prove feasible, are not prejudiced, and to an undertaking by the international community to assure that adequate funds are available to carry resettlement projects to completion. With this background, we propose to expand the refugee program to permit massive resettlement. From the point of view of the United Nations Relief and Works Agency, relief needs for the current fiscal year will total about $25 million, and funds available for resettlement are likely to prove the sole limitation on large-scale resettlement. Resettlement funds, however, will not be spent unless they offer a definite cure for a proportionate amount of the relief burden. We can be quite certain that no resettlement can take place unless funds are available, and the $50,000,000 requested as the United States' contribution will go far toward solving the problem. It has been estimated that $150 million will be required over a 3- to 5-year period to resettle the bulk of the 150,000 families now on relief. Recognition by the Congress of the long-term nature of this extremely difficult problem will be helpful to the executive branch and to those authorities in the United Nations who are struggling with the great difficulties which this mass of homeless people represent. We are hopeful that other countries will contribut a sizable amount. To date, the United States' share of the cost of the program has been approximately 55 percent. INDEPENDENT AFRICA Assistance is also requested for Liberia, Libya, and Ethiopia. Total aid for these three countries is proposed in the amount of $4 million. Programs for these countries are largely limited to technical assistance, and in the cases of Ethiopia and Liberia, these programs will dovetail into the operations of the International Bank and the Export-Import Bank, respectively. Libya will be a new nation on January 1, 1952. Libya will require assistance from the international community to become a viable, self-sustaining nation. Our interest in Libya is enhanced by its strategic location. We anticipate that, in our assistance program to Libya, we shall be cooperating with both the British and the French. AMOUNT REQUESTED FOR NEAR EAST We are here requesting military aid in the order of 415 million dollars, and economic aid in the order of 125 million dollars for this area which I have described. The CHAIRMAN. That is 540 million dollars then. Mr. McGHEE. Yes, sir. Mr. Chairman, in addition to this there is requested for this area sums for Greece and Turkey, but since that is a part of the European program, Greece and Turkey being members of the OEEC, the justification for that request has previously been made by Mr. Foster and the ECA representatives. I will not address myself to those requests except to say that we in the State Department feel that the economic programs in Greece and Turkey have been outstandingly successful in bolstering the economy of these countries in support of their military effort. DURATION OF NEAR EAST PROGRAMS The CHAIRMAN. How long do you think we are going to have to continue doing what you are proposing to do now? Do you think we are going to have to give them 500 million dollars every year for the rest of our lives? |