Military assistance: For expenses authorized by section 504(a) of the Foreign Assistance Act of 1961, as amended, including administrative expenses authorized by section 636 (g)(1) of such Act, which shall not exceed $23,500,000 for the current fiscal year, and purchase of passenger motor vehicles for replacement only for use outside the United States: Provided, That none of the funds contained in this paragraph shall be available for the purchase of new automotive vehicles outside of the United States, [$1,055,000,000] $1,170,000,000. (Foreign Assistance and Related Agencies Appropriation Act, 1965; authorizing legislation to be proposed.)

Program and Financing (in thousands of dollars)

Financing Continued

17 Recovery of prior year obligations... 21 Unobligated balance available, start of year:

-28,040

-10,000 -10,000

Grant aid..

-22,317

-965

-10,000

Military sales receipts.

-3,450

-3,432

22 Unobligated balance transferred from "Economic assistance" (22 U.S.C. 2360, 2364)

76,135 173,431 9,450 30,233 4,524 252,610

90

Expenditures...

1,485,277 1,200,000 1,100,000

1 Reimbursements from non-Federal sources are derived from repayments of credit extended in connection with sale of defense articles and services to foreign countries (22 U.S.C. 2316).

The military assistance program will strengthen the security of the free world by contributing to the development, maintenance, and training of modern military forces.

Military assistance is now greatly reduced from the programs of earlier years. Major countries in Europe are not receiving new commitments for grant assistance; other countries are increasing their own expenditures on military forces as their economic capacities increase. Military assistance requirements have increased, however, in southeast Asia where serious problems require the providing of equipment and supplies to forces in actual combat with stubborn enemies. A significant part of the 1966 estimate is for these operational needs.

Some countries will receive grant aid under this program. Others will buy their military equipment on cash or credit terms. The combined military forces of these countries are numerically much greater than the U.S. Armed Forces, and provide free-world defensive capability, depth in reserves and flexibility. Many of these countries have joined in regional defense pacts, such as the North Atlantic Treaty Organization or in bilateral defense arrangements with the United States. Most of the U.S. contributions to regional organizations are derived from military assistance program funds.

Most of the military equipment and supplies which the United States provides under these programs are produced in the United States and are obtained by placing orders with the U.S. military services. Military assistance funds are reserved when the orders are placed and the military services are paid when the items are delivered.

The kind of materiel supplied by the United States varies with objectives in each area and the requirements and capabilities of the individual countries. The present emphasis is on the maintenance of existing forces and materiel although modernization is included where possible. Materiel already on hand but excess to the needs of U.S. forces is supplied, whenever possible, at no charge to the military assistance appropriation except for the cost of rehabilitation and transportation.

This appropriation will finance the following require

ments:

Grant aid operations.-Reservations for requirements ordered from U.S. military services

1. Aircraft.-Provision of more advanced aircraft to selected countries on a limited basis and the replacement of obsolete planes.

2. Ships. New construction of patrol, minesweeping and other type vessels is included in the 1966 program, together with the reactivation, overhaul and modernization of some destroyer and destroyer escort type ships of the U.S. mothball fleet to meet naval requirements of our allies. The latter will require specific authority under ship loan legislation.

3. Tanks, other vehicles and weapons. Included is combat and support equipment ranging from artillery, tanks, trucks and bulldozers to small arms and jeeps. The 1966 program includes continuing replacement of wornout or obsolete equipment in the forces of lessdeveloped countries.

4. Ammunition. Most of the ammunition to be supplied will be used for training allied troops; some is for actual combat purposes.

5. Missiles. The 1966 program provides for maintenance of certain guided missile systems previously furnished.

6. Electronic equipment. The 1966 program continues the modernization of military communications systems in less-developed countries.

7. Military public works.-Materiel and equipment directly supplied by the United States for construction of facilities for foreign forces are procured through the military service supply systems. Other U.S. costs for this construction are met directly by the military assistance program and are cited in paragraph 14 below.

8. Other.-Covers a variety of special purpose equipment, and other supplies, and repair and rehabilitation of used equipment.

Obligations for requirements other than through reserva

tions

13. Contributions to international military headquarters and agencies. Included are the assessments levied against the United States in accordance with cost-sharing agreements for the administrative support of the military headquarters and agencies, including the standing group of the NATO, SEATO, and the CENTO.

14. Contributions to construction of facilities in other countries.-Included are construction of military facilities under the jointly financed NATO infrastructure program. Sales operations.-Included are funds to provide credit assistance for the purchase of military equipment and supplies in the United States by countries other than those whose credit purchases are ordinarily financed by commercial sources or by the Export-Import Bank. Authority is also included, pursuant to section 509 of the Foreign Assistance Act, to guarantee exporters, financing institutions, or others doing business in the United States against risks of loss arising in connection with nonU.S. Government financed sales of defense articles and services to eligible foreign countries and international organizations. The basic purpose is to promote private financing of sales of U.S. defense articles and services and thus minimize the utilization of military assistance funds to finance credit sales. Other sales are made under authority of the Foreign Assistance Act but financed through the military assistance trust fund.

Object Classification (in thousands of dollars)

Positions other than permanent..

Other personnel compensation...

materiel.

25.1

Total, obligations for requirements other than through reservations..... 334,915 324,725 358,567

Total obligations/reservations, Defense. 1,208,142 1,133,623 1,202,325

1.195

11.3

Positions other than permanent....

11.5

Other personnel compensation..

Identification code 04-15-1080-01-057

ALLOCATION ACCOUNTS

Total number of permanent positions.. Full-time equivalent of other positions. Average number of all employees. Average salary of ungraded positions..

$1.680

4

ECONOMIC ASSISTANCE

Technical cooperation and development grants: For expenses authorized by section 212, [$204,600,000] $210,000,000, to remain available until expended.

American schools and hospitals abroad: For expenses authorized by section 214(c), [$16,800,000 $7,000,000.

[Surveys of investment opportunities: For expenses authorized by section 232, $1,600,000.]

International organizations and programs: For expenses authorized by section 302, [$134,272,400 $155,455,000.

Supporting assistance: For expenses authorized by section 402, [$401,000,000] $369,200,000.

Contingency fund: For expenses authorized by section 451(a), [$99,200,000 $50,000,000.

Alliance for Progress, technical cooperation and development grants: For expenses authorized by section 252, [$84,700,000】 $85,000,000, to remain available until expended.

Administrative expenses: For expenses authorized by section 637 (a), [$51,200,000] $55,240,000.

Administrative and other expenses: For expenses authorized by section 637(b) of the Foreign Assistance Act of 1961, as amended, and by section 305 of the Mutual Defense Assistance Control Act of 1951, as amended, [$2,900,000 $3,100,000.

Unobligated balances as of June 30, [1964,] 1965, of funds heretofore made available under the authority of the Foreign Assistance Act of 1961, as amended, except as otherwise provided by law, are hereby continued available for the fiscal year 1965, 1966, for the same general purposes for which appropriated and amounts certified pursuant to section 1311 of the Supplemental Appropriation Act, 1955, as having been obligated against appropriations heretofore made under the authority of the Mutual Security Act of 1954, as amended, and the Foreign Assistance Act of 1961, as amended, for the same general purpose as any of the subparagraphs under "Economic Assistance," are hereby continued available for the same period as the respective appropriations in such subparagraphs for the same general purpose: Provided, That such purpose relates to a project or program previously justified to Congress and the Committees on Appropriations of the House of Representatives and the Senate are notified prior to the reobligation of funds for such projects or programs].

[Of the foregoing amounts for economic assistance, $300,000,000 shall be available for obligation only through the apportionment review and approval procedure prescribed by law in such amounts and at such times as may be determined by the President in the national interest that funds otherwise available for the purposes of programs under this title are insufficient to meet the cost of additional authorized projects or programs.] (Foreign Assistance and Related Agencies Appropriation Act, 1965; authorizing legislation to be proposed.)

MUTUAL DEFENSE AND DEVELOPMENT-Con. General and special funds-Continued

GRANTS AND OTHER PROGRAMS-Continued

1. Technical cooperation and development grants. These grants are used in less-developed countries to (1) provide the advisers, teachers, and equipment required for the improvement of human resources, especially in administrative, educational, technical, and professional skills; (2) assist in the control and eradication of major diseases and other menaces to health; (3) establish and improve institutions which further economic and social development; (4) assist in planning and surveys of development programs and projects; (5) establish or improve basic physical facilities such as communications and transport, in those relatively few countries where the economies are unable to carry the obligations entailed by development loans; (6) pay transportation charges on shipments of supplies by approved American nonprofit voluntary agencies; and (7) finance research concerning the problems of economic development.

2 and 3. American schools and hospitals abroad. To further the well-rounded training of qualified leadership in developing countries, the United States provides funds to American-sponsored institutions abroad. The $10.5 million reduction in 1966 largely reflects completion of financing in 1965 of the new medical center at the American University at Beirut.

4. Surveys of investment opportunities.-This program encourages private enterprise to undertake surveys of investment opportunities in the less-developed areas of the world. Up to 50% of the total cost of such surveys is paid by AID in the event that the concern sponsoring the survey does not proceed with an investment. If such payment is necessary, the survey becomes AID property for use in attracting other investors.

5. International organizations and programs.-Voluntary contributions are made by the United States to programs administered by the United Nations and its specialized agencies, and to the Indus Basin Development Fund associated with the World Bank. These programs adThese programs advance U.S. objectives by promoting the economic and social development of the less-developed countries and by maintaining the peace in threatened areas.

Increased contributions will be required primarily for the Indus Basin Development Fund to meet the accelerated tempo of payments to contractors constructing dams and other works. The request includes funds for the establishment of two new international agencies (1) a cancer research center under the aegis of the World Health Organization, and (2) an institute at UN headquarters to train personnel for service in international organizations and in the governments of newly established nations and to conduct research on problems involving the United Nations.

assistance requirements are in Korea and Viet immediate periphery of the Sino-Soviet bloc.

7. Contingencies.-These funds are used to requirements which cannot be foreseen at th budget is prepared. They are available not vide emergency assistance in disasters, but a important international situations which cre for immediate response in the U.S. national in 8. Alliance for Progress: Technical cooperatio opment grants.-Grants for technical services ment are made to Latin American countries the joint Alliance for Progress program.

9. Investment in Social Progress Trust I Inter-American Development Bank administe Progress Trust Fund, financed by the Uni from which loans and technical assistance gran American countries are made to improve land u for low-income groups, community water and facilities, and advanced education and training economic and social development. A total of $ has been committed to the fund. No more co are planned. Beginning in 1965, it is antici the Bank's fund for special operations will a type of activity heretofore carried on by the (See international financial institutions below

10. Administrative expenses (AID). These used by the Agency for International Devel Washington and overseas missions to administe programs.

11. Administrative expenses (State).-Adminis pense funds are requested for the Departmen for support of personnel involved in the adm of the foreign assistance program and of the

Loans. A major portion of U.S. resources through foreign economic programs in lesscountries is in the form of loans. Data on l under the development loan activity, under th for Progress, and under the authority of the A Trade Development and Assistance Act are separate schedules. A small portion of economi granted. These loans are made for economic funds available for grants are loaned each year r ment or essential support purposes, and may be either in dollars or foreign currency. The tal show the current status of these loans.

The following table gives summary data on lo from current obligational authority, repayable and foreign currencies (in millions of dollars a equivalents).

Loan obligations incurred:
Repayable in dollars..
Repayable in foreign currency.
Loan disbursements made:
Repayable in dollars...
Repayable in foreign currency.
Loan principal repayments:
Dollars....
Foreign currency.
Interest collections:
Dollars..

Foreign currency -

1963 1964 19 actual actual esti

The table below shows the status of loans in of dollars at the end of the respective years. the loans outstanding were made to European during the early years of the European recovery and are repayable in dollars.

Loans outstanding Undisbursed loan obligations....

196

1963 actual

1964 actual

eslim