from Naval Petroleum Reserve No. 1 at Elk Hills, Calif. Proceeds from the sale of this oil will be used to finance further exploration of reserves in Alaska, and the initial costs of establishing a national strategic petroleum reserve. This strategic reserve will provide up to 1.0 billion barrels of petroleum or petroleum products for domestic and industrial use, and 0.3 billion barrels for military use in time of national emergency or serious disruption of supplies.

Support of other nations.-This program includes military assistance for the armed forces of South Vietnam and other nations. For 1976, $1.3 billion in total obligational authority is recommended for military assistance to South Vietnam. Beginning with the transition quarter (July 1, 1976), military assistance for South Vietnam will be authorized under the Foreign Assistance Act, which is discussed in the section on international affairs.

Military assistance.-The military assistance and credit sales programs provide the support necessary to strengthen the efforts of other countries to provide for their own defense. These programs are discussed in the section on international affairs.

Atomic energy defense activities.-The research and development and underground testing of nuclear weapons will increase in 1976 primarily to complete the detailed design and testing of specific weapons already approved for development prior to the effective date of the Threshold Test Ban Treaty. Spending on production of plutonium and tritium related to future nuclear weapons production will rise due to increased labor and fuel costs. Funds for the development of improved nuclear propulsion plants for naval ships will increase primarily because of requirements for the Trident submarines.

Defense related activities.-The Selective Service System will begin major program adjustments in 1976. Local board operations will be phased down while a new standby system is tested. An annual registration system will be evaluated. Alternate induction procedures will be developed for possible use in a major contingency. Classification activity will be deferred until such time as induction authority may be requested by the President. Funding is included for the reconciliation service program for returned Vietnam-era draft resisters and deserters.

Receipts from the sale of excess strategic stockpile commodities are estimated at $1,180 million in 1975, of which $150 million requires enactment of new disposal authority. Stockpile receipts in 1976

should decline to $620 million, reflecting lower demand and the exhaustion of existing disposal authority for certain key commodities. Of the $620 million 1976 receipts estimate, $488 million is dependent on enactment of new stockpile disposal legislation by the Congress.

INTERNATIONAL AFFAIRS

Program Highlights

Continue strategic arms limitation negotiations within the context of the recent agreement at Vladivostok. . Seek lasting peace in the Middle East and Indochina. Participate in a proposed $25 billion special financing facility for industrialized countries with balance-of-payments difficulties due to high oil prices.

• Conduct international negotiations to reduce trade barriers.

• Focus economic assistance on world food problems.

In today's interdependent world this Nation's domestic well-being requires a purposeful and responsible involvement in the search for world peace and international economic progress. Outlays for international affairs are estimated to be $6.3 billion in 1976.

The search for peace is being conducted through arms control negotiations, diplomacy in the Middle East, and continued efforts toward a solution to the problems of Indochina. Foreign assistance. programs are an indispensable complement to American diplomacy and serve as a flexible means for meeting security, humanitarian, and development needs in a world still plagued by hostilities, unrest, and economic dislocations.

The United States is taking steps to strengthen a world economy shaken by increases in oil and food prices. These steps constitute a framework for international economic cooperation and progress.

To assure an adequate energy supply, this Nation joined 15 other industrialized countries last November to form the international energy program which provides for emergency energy sharing, conservation, and development of alternative energy sources. To assure that industrialized countries will be able to finance balance-of-payments deficits resulting from high oil prices and associated financial distortions, the United States has proposed a special $25 billion facility to help finance these deficits when other sources of credit are insufficient. This facility will supplement expanded operations of the International Monetary Fund. Authorizing legislation will be proposed when negotiations are completed. To assure continued trade expansion, the United States, under the authority of the Trade Act of 1974, will participate in multilateral negotiations for reduction of trade barriers.

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Compares with budget authority of $5.3 billion for 1974 and $4.9 billion for 1975. Excludes trust funds. Net of offsetting receipts. Outlays and budget authority for military assistance are classified in the national defense function; they are not included in the totals shown for international affairs. In 1974 outlays for South Vietnam were included in separate Defense Depart

ment accounts.

Under Public Law 92-126, the receipts and disbursements of the Export-Import Bank have not been included in the budget totals since August 17, 1971; they will be included beginning October 1, 1976, pursuant to Public Law 93-646, approved January 4, 1975. The Bank's outlays and budget authority for periods prior to August 17, 1971, are shown in historical table 17 in subfunction 151 "Foreign Economic and Financial Assistance.'

The United States is also supporting several initiatives growing out of the World Food Conference including: greater quantities of food aid to needy countries, additional assistance to improve food production in the poorer countries, and creation of an international system of grain reserves.

Foreign economic and financial assistance.-This subfunction includes foreign aid, the special financing facility, and the Peace Corps. The United States provides aid to foreign countries to enhance self-defense capabilities, to support political stability, to promote economic development, and to provide humanitarian relief. The table on page 83 identifies the programs that constitute foreign aid.

Military assistance.-Military assistance includes grants and credit sales of equipment, training, and other services to support the defense efforts of friendly countries and is administered by the Department of Defense. It is classified in the national defense function along with trust fund outlays which facilitate cash sales of defense articles and services that are not considered foreign aid.

In addition to $790 million in budget authority for military assistance grants in 1976, an appropriation of $250 million is requested for 1976 to reimburse the military departments for stocks delivered to Cambodia in 1974 pursuant to the emergency drawdown provision of the Foreign Assistance Act.

South Vietnam's defense efforts depend upon continued U.S. military assistance. Because the $700 million appropriated in 1975 for this purpose will not meet South Vietnam's critical needs, a supplemental appropriation of $300 million is being proposed. Military assistance to South Vietnam is included in a separate account under Defense Department appropriations. Moreover, the amounts of assistance to Cambodia authorized by the Foreign Assistance Act of 1974 are inadequate for that country's minimum needs. Legislation to remove restrictions on this authorization and a budget amendment requesting an additional $222 million for Cambodia are being proposed.

To highlight the continuing importance of training for foreign military personnel, foreign military training assistance for 1976 is provided in a separate account from the grant materiel program. Outlays for all military assistance (excluding trust fund outlays of $0.2 billion) are estimated at $2.8 billion in 1976.

Economic assistance.-Economic assistance includes funds for: security supporting assistance for the Middle East, Indochina postwar reconstruction, development aid for poorer countries, food aid, refugee assistance, and international narcotics control programs.