COMPARATIVE SOVIET AND AMERICAN EFFORTS TO WIN FREE ASIA Senator MCMAHON. You made a statement that of course it was much easier to create disorder than it is order, which is a most obvious thing, and enough attention is not paid to the implications of that very basic proposition. The Soviets, it seems to me, have made all of their gains in the East, or a good part of their gains in the East as you phrased very well, through "pie in the sky" or propaganda; isn't that true? Mr. RUSK. Yes. Senator MCMAHON. It has cost them very little to accomplish a great deal on that basis. On the other hand, it is costing us a great deal to bring about at least the beginnings of order in these rather primitive economies. Will you please tell me what policy our Government has or what our basic policy is that we are offering, what "pie in the sky" we are offering inside the Soviet territories to bring a share of discomfort where they are actually existing now? What is our basic "pie in the sky"? Mr. RUSK. The trouble is the kind of "pi" we are offering is not very cheap, because people expect us to make good on our promise. They expect it of this country in a way that they seem not to expect it of Communist propaganda. I think the kind of thing we are offering these other countries is by and large written into the charter of the United Nations. I think it has in its heart the element of liberty. I think if we do not succeed in engaging the loyalities, and challenge the energies of these other peoples on the element of liberty that we will have a very long struggle ahead of us. It is going to take a long time for them to build up, on any realistic basis, a productive system and a set of institutions which can give them a real rise in their standard of living. Senator MCMAHON. Do you not agree though, that among the teeming millions of the East, there is less concern with ideological concepts of liberty than there is in more rice and more bread? Mr. RUSK. I think, sir, that having put the finger on the idea of liberty and the idea of free life and the kind of a world described in the United Nations charter, you must go on from there to talk about these tangible benefits that come from that kind of system. But to get at that you have to do it in both a positive and negative way. On the negative side you have to show that the Communist promises are in fact empty. Now the basis of experience, of which there is a good deal now in the Balkan countries, in the Far East and in China, continues to hammer home that these promises are empty and that the disillusionment does come and comes quickly under the conditions of a police state. You have to hold out the increase in standard of living brought about by the sweat of the people, and so forth. That is a difficult thing to get across to these people. I think we should in the long run be doing ourselves a great disservice if we held out too easy a prospect because that disillusionment would ultimately come to us in our effort. Senator MCMAHON. Why is it so difficult to offer complete and total disarmament on certain set conditions, with the proposition that the billions and billions we save on armament we will be glad to translate into not only this assistance program but an enlarged program in their territory? In other words, the thing that I tried to do a year and a half ago and that you fellows down in the State Department knocked? I tried to give them a little "pie in the sky" and did not get any encouragement. We are now paying for it and we are going to pay more. The budget. is going up and up and up. NATURE OF FIGHTING IN INDOCHINA Senator GREEN. Do you or do your not believe that in Indochina, the natives, or at least a part of them, are going to continue fighting, communism or noncommunism, until they are satisfied that they have achieved their independence? Mr. RUSK. I think that there will be a continual struggle in Indochina. Whether it is in the way of armed conflict or not, I don't know, but there will be continually a struggle until that problem is overcome. I think there will be fighting for a very long time to come until there is a settlement of the Communist problem. I do not believe you can settle one out of relation to the other. I do not believe that the colonial issue is the elementary problem there in Indochina, at the present time. Senator LODGE. Following up Senator Green's question, is not the crux of the whole thing in Indochina the rapidity with which a native army, an effective native army, is built up? Mr. RUSK. That, and the extent to which the Indochinese themselves, seeing that native army, will really come to believe that the country is theirs. Senator LODGE. That is what I mean. You are not going to get an effective native army unless the natives join it, and the natives will not join in unless they think it is their own army. Mr. RUSK. When they see their own army, we think that will do a lot toward convincing them. Senator LODGE. Is it not true that within a matter of a few weeks or months the native doctors have begun to join the native army, which up to recently had not been the case? Mr. RUSK. In increasing numbers, but they still need more of them in the service. Increased numbers are coming in. Senator GILLETTE. I should like to ask two or three questions of Secretary Rusk, Mr. Chairman, if I may. The CHAIRMAN. Proceed. POLICY AND PURPOSES OF TITLE III Senator GILLETTE. Mr. Rusk, I am having some difficulty here. Mr. Cabot this morning said this bill was "a welding job." I am having some difficulty determining how it is welded and how successfully. In section 2 of this bill: The Congress declares it to be the purpose of this act to promote the foreign policy of the United States by authorizing military, economic, and technical assistance to friendly countries to strengthen the individual and collective defenses of the free world and then the same section embodies that purpose in the existing law -the Mutual Defense Act of 1949, the ECA of 1948 and the Act of International Development-shall hereafter be deemed to include this purpose. Now title I provides that In order to support the freedom of Europe through assistance which will further the carrying out of the plans for defense of the North Atlantic area it provides $5 billion plus for military and $1 billion plus for economic assistance. Title II states that— In order to further the purposes of this act by continuing to provide military assistance to Greece, Turkey, and Iran— and of course Palestine, that certain expenditures are to be made available. But when you come to the area concerning which you have been testifying, you get entirely away from this: In order to carry out in the general area of China the provision of a section of the Mutual Defense Assistance Act of 1949, you propose certain authorizations. Why are you getting away from the main purpose of the bill, which is military assistance and technical assistance, in order to make military aid possible in the countries we are helping? Mr. RUSK. I think, sir, that the policy of the bill is intended to be the same throughout. In putting together the various titles, an effort was made, as I understand the construction of the bill, to rely on previous legislative experience and to put into title III those countries that had stood in some relationship to the general area of China, which has a special legislative history. I do not believe that there was intended to be any different policy implication whatever in the general purposes of Titles I, II and III. UNEXPENDED MILITARY BALANCES UNDER TITLE III Senator GILLETTE. All right. If that is the purpose, now section 301, of this title III, provides that $555 million shall be authorized to carry out the provisions of the Mutual Defense Act of 1949. That is true; is it not? Mr. RUSK. Yes, sir. Senator GILLETTE. And in addition, that unexpended balances shall be made available. Do you know what the amount of unexpended balances for that purpose is that are available? Mr. RUSK. No, sir. Senator GILLETTE. You do not know that? Mr. RUSK. No, sir, I do not. Senator GILLETTE. If you people did not know the amount of the unexpended balances that were available, how could you determine your sum of $555 million that would be necessary to carry out the purposes? General MALONY. I can get you those balances, and will if you desire. Senator GILLETTE. Do you not think it is essential to get them? General MALONY. I am sure they are well known. I do not have them with me. I am sure they were considered when the bill was drawn. Senator GILLETTE. I would hope they were. If they are well known, they are not well known to me and they do not seem to be well enough known here so that they are present at the present time. I really cannot understand, if an unexpended balance is to be added as available for a particular purpose, and a $555 million additional authorization, that in reaching your figure of $555 million, you did not have some idea of what the unexpended balances were. General MALONY. We have it very precisely. Senator GILLETTE. You will have is very precisely? I think, however, that we are stumbling over a technicality here having to do with obligated moneys which have not yet been expended. In other words, the money has been obligated, as it was carried in the previous appropriation acts, but payment has not as yet been made. So that in order to keep those funds from expiring, in the time we had, we have to carry it over to meet bills that have already been incurred that have not yet been settled. Senator GILLETTE. That is readily understandable, but it is of paramount importance, when we are making available sums of money of this magnitude, of the people's money, that we have some idea of what is being done with it, and what has been done with it. General MALONY. We can get those very quickly for you, sir. (The information is as follows:) Status of title III funds available to Defense on June 30, 1951 Total available. Total obligated. Total expended_. Unobligated balance. Unexpended balance__. 1 1 $569, 229, 557 454, 715, 069 160, 543, 633 114, 514, 488 408, 685, 924 1 Programs approved through June 30, 1951, for military equipment, training, packing, handling, crating, and transportation aggregated $577.7 million, but not all of the funds have been allocated to the Department of Defense prior to that date. The total of materials which could be provided through these prior programs has been taken into account in determining remaining deficiencies in equipment required in the 1952 program, for forces in being and to be raised, in this area. These deficiency items at an estimated cost of $555 million have been programed for fiscal year 1952 on the assumption that materials programed in fiscal years 1950 and 1951 will be delivered. The continued availability of the unexpended balances of 1950 and 1951 appropriations is therefore necessary to complete delivery of the programs for those years. Expenditures of appropriated funds normally occur sometime after delivery is accomplished. Stock items that are immediately supplied require early expenditure. Items from long lead-time production may not require final payment for a considerable time. UNEXPENDED ECONOMIC BALANCES UNDER TITLE III Senator GILLETTE. In addition to that, you are asking for authorization for $262,500,000 for economic and technical assistance, which, added to the $555 million, is $817,500,000. In addition, again you provide that funds are appropriated pursuant to authority in this section that shall be available under the applicable provisions of ECA, and from unexpended balances heretofore made available for carrying out the purposes of the China Area Aid Act of 1950. Do you know what amount is unexpended there? Senator GILLETTE. How much? Mr. GRIFFIN. We have a literally unexpended amount in the vicinity of $130 million. However, that represents obligated moneys, including about $14 million of supplies already arrived at destination and over $27 million either en route or contracted but not yet shipped. Senator GILLETTE. Just what do you mean by obligated moneys? Mr. GRIFFIN. For instance, sir, in the last quarter of fiscal year 1951 we secured release from the Bureau of the Budget of funds made available through a 3-percent transfer from ERP, as authorized by Congress, to the area of China. We secured about $42 million for Formosa, $15 million with which to start the program in the Philippines and the remainder for the other countries of south and southeast Asia. All of that, of course, was not expended by June 30. Procurement authorizations were issued for all funds available. The governments of those countries were notified as to the type of materials and the amounts, and so forth, that were being secured. We are in that respect committed to the governments, and our program has become part of their planning. However, these are unexpended funds, and most of our unexpended funds are due to the last quarter commitments. Senator KNOWLAND. Senator Gillette, I think your point is a good one, but if you notice, on page 3, dealing with title I, Europe, there is mentioned "in addition unexpended balances." Would it not be well for this committee to have before us the unexpended balances in each of the titles that are mentioned, so that we will have the world-wide picture and not just the far-eastern picture in that regard? Senator GILLETTE. I thank you, Senator Knowland. I think it is of the utmost importance, and without making any suggestion with reference to you gentlemen who happen to be here, I know of my own experience where executive departments have done this: One executive department had $400,000,000 reported of prior authorization that had not been obligated, and they were notified by the headquarters here of that particular department to get it obligated before they went before the congressional committee. up They said, "We have nothing to obligate it for." They said, "You get it obligated, because we are going up and ask for an authorization for the coming fiscal year, and we must show that obligated," so the question of obligation is important, not only as to the amount obligated but whether they are firm obligations or whether they are just indicated obligations. It is important to us, and you can see why it is. I am not suggesting that you gentlemen have done that, but I know it has been done. (The following information was supplied to the committee:) UNEXPENDED BALANCES OF PRIOR YEAR APPROPRIATIONS 1. In most of the authorizing sections of the bill there is provision for carryover of unexpended balance. This provision carries over funds from previous appropriations (1) not obligated as of June 30, 1951; and (2) funds obligated as of June 30, 1951, but not expended. This language has the same effect as the provisions contained in last year's amendment to section 114 of the Economic Cooperation Act, which carries over "any balance [of previous appropriations] unobligated as of June 30, 1950, or subsequently released from obligation * * |