Captain HAGERMAN. Being in military assistance, I don't think I am qualified to speak on the 7th Fleet.

The submarines that are assigned to the 7th Fleet have specific operational missions which they carry out, and, of course, the submarines for Taiwan and Korea and other places have to come from the CINCPAC assets.

Senator INOUYE. I would like to know what sort of activity is being carried on by the 7th Fleet in relationship to Taiwan in protecting that area. I gather from your testimony that the Communist Chinese have 30 submarines.

Captain HAGERMAN. Yes, sir. (An insert subsequently furnished for the record is classified.)

Senator INOUYE. Have any of our merchant ships or Republic of China merchant ships been engaged or threatened by these submarines?

Captain HAGERMAN. Not to my knowledge, sir.

Senator INOUYE. There is no danger there, but we need ASW activities? I have never heard of a merchant ship being sunk in the Straits of Taiwan or that part of the world-at least not since World War II.

Captain HAGERMAN. I think that is a true statement, sir.

Senator INOUYE. So possibly the threat has been overblown, blown out of all proportions.

Captain HAGERMAN. As a personal observation, perhaps the reason that there weren't any ships sunk has been because the 7th Fleet and the Taiwan Navy has been a relatively potent force.

Senator INOUYE. So my question was, is the 7th Fleet still in that area?

Captain HAGERMAN. Yes, sir, to a degree.

Senator INOUYE. Do we have a State Department representative here?

STATEMENT OF MR. CHRISTIAN A. CHAPMAN, DIRECTOR OF THE OFFICE OF MILITARY ASSISTANCE AND SALES, BUREAU OF POLITICO-MILITARY AFFAIRS

Mr. CHAPMAN. Yes, sir.

Senator INOUYE. Can you tell me what made the State Department. suddenly change its mind on the three submarines?

Mr. CHAPMAN. I don't think there has been any change. As Captain Hagerman has emphasized, this is a very fluid situation in the Far East stemming in part from Southeast Asia, but also because of the budgetary cuts in the Department of Defense, the Defense Department is going through a review of its requirements and is obliged to retire quite a few of its ships.

As of January last, both Departments had looked at this Chinese request for four submarines and at that time we had determined that there was no requirement and I believe there has been no change in that position since then. But the House introduced this amendment and as the captain has indicated, since it is permissive and not mandatory, both Departments are interposing no objection.

Senator INOUYE. In other words, your position has not changed? Mr. CHAPMAN. No, sir.

Senator INOUYE. You are still not for it?

Mr. CHAPMAN. That is right.

Senator INOUYE. Captain Hagerman, I would like to proceed further. Thank you very much.

In the House Armed Services Committee last November and February, the chairman of that committee brought up the issue of the U.S.S. Isherwood.

Captain HAGERMAN. Yes, sir.

Senator INOUYE. It is in the possession of Peru. What is the current status of the Isherwood?

Captain HAGERMAN. The Isherwood is still in Peru and still a unit of the Peruvian Navy.

Senator INOUYE. Has an extension been negotiated?

Mr. CHAPMAN. We have not concluded an extension of the loan. Senator INOUYE. I note that the loan lapsed on October 8, 1966. Mr. CHAPMAN. Yes, sir. The President was given authority to renew the loan in December 1967.

Senator INOUYE. So, in other words, Peru is exercising control over the ship without authorization.

Mr. CHAPMAN. The Department of State has asked the Peruvian Government to renegotiate the loan.

Senator INOUYE. What do we do when they refuse-just sit by? Mr. CHAPMAN. The relations between Peru and ourselves the last 3 years, as you know, sir, have been very difficult. There have been a series of developments that have caused a good deal of tension. There has been our refusal to sell them jet aircraft in 1967. There has been the overthrow of the government in 1968. There has been a seizure of the IPC and there have been these seizures of American fishing vessels inside of the 200-mile zone which Peru claims as territorial waters, and this claim of the 200-mile zone is the heart of the difficulty in this particular area.

We have been seeking for the last 3 years to bring Peru as well as two other countries of Latin America, Ecuador and Chile, which have made the same claim, to negotiate to see if we can arrive at an agreement on the fishing within the zone that they claim.

Senator INOUYE. This is a question of mechanics. In the simple life of most of us here, if I should purchase a car or lease a car and I fail to make payments or live up to my obligations, someone would come by and get hold of that automobile. In the case of Peru they have refused to negotiate. Obviously they are hanging onto the ship without any renewal of obligation.

What sort of mechanism do we have to take possession of it, or can Peru just hang on to it indefinitely?

Mr. CHAPMAN. There is no mechanism as such. We could ask for the recall of that ship. But it has been the judgment that to do so would undermine the effort to arrive at a larger objective, which is an agreement on the fishing problem and the territorial water problems. This has been the basic issue and this is the reason that we have not pushed on this issue further.

I might add just yesterday it was announced publicly that the

Fisheries Conference with the CE countries, Chile, Ecuador, and Peru, would be resumed September 10 in Buenos Aires.

Senator INOUYE. I note, Čaptain, in your testimony that one of the main reasons for having a program of this sort is to provide these small countries with a naval capability so that they can carry out certain defense activities which we would have to perform if they didn't.

Captain HAGERMAN. That is right.

Senator INOUYE. What sort of a naval activity in behalf of our security is Peru carrying out?

Captain HAGERMAN. Well, I think as with many of the Latin American countries, naval presence. Since 1967 the number of ships rounding South America, the number of ships rounding South Africa has tremendously increased. The shipping lanes, the merchant shipping, of course, there is an increase in that regard and of course

Senator INOUYE. I don't think it is fair to be asking you these questions because I suppose it involves policy. But if I may ask Mr. Chapman here, isn't it true that these ships serve no American security purpose at all?

Mr. CHAPMAN. Not in the immediate situation. But I think you have to recall

Senator INOUYE. For example, jet fighters in Peru, what sort of security would they serve in our behalf, or submarines for Chile and Peru?

Mr. CHAPMAN. I think we have to go back a few years to the 1950's when this program was launched and when these ships were first provided to Latin American navies. At that time it was the general judgment in this country and elsewhere that we were faced by a very aggressive enemy and that in the event of a new major conflict the U.S. Navy could not discharge all of its roles and missions.

Senator INOUYE I presume this enemy was the Soviet Union?
Mr. CHAPMAN. Yes, sir.

Senator INOUYE. And the threat was felt in Chile and Peru?

Mr. CHAPMAN. It was felt that the U.S. Navy-the U.S. Navy at that time considered that there was a mission to protect the sea lanes on either side of the Panama Canal.

Senator INOUYE. What is the rationale now?

Mr. CHAPMAN. Now, the threat appears certainly to have lessened and certainly the political context has changed, but the fact is these navies have a tradition, they have these ships, and to withdraw these ships at this time without any obvious motives would be considered a political gesture inimical to these countries without any particular benefit to the United States.

Senator INOUYE. This is what I wanted, an honest appraisal of what is happening there because I will have to report to the full committee. It is fine to have an official statement saying that these ships are needed for security purposes, but I hate to kid my colleagues here. Captain HAGERMAN. May I make a statement?

Senator INOUYE. Primarily political, isn't it?

Mr. CHAPMAN. One of the ships we are talking about today, a submarine for Greece, is an assigned vessel to NATO. It has a NATO role.

Senator INOUYE. We are going to come to that later on.
Captain HAGERMAN. May I make one additional comment?

When you talk about security, I think you have to talk about internal security, and I think we all will appreciate the fact that in Latin America particularly, the military is a very powerful force and in many ways is the stabilizing force of most governments. Whether we like it or not, this is true. And these ships are used for internal security and civic action work.

We recently loaned an APD to Colombia and this is a sort of DE made into a transport for underwater demolition teams. They put dental chairs on board and they run it up and down the coast to the various remote areas.

Senator INOUYE. They don't do that on submarines, do they?
Captain HAGERMAN. No, sir.

Senator INOUYE. Or destroyers.

Captain HAGERMAN. No, sir. But I was trying to make a point of some of the use made of these ships. Chile does the same sort of thing, transportation up and down their long coastline where there are many islands. The statement here is applicable to the ships in this particular bill also.

Senator INOUYE. Mr. Chapman, maybe you can help me here. We now have the U.S.S. Brown and the Bradford on loan to Greece for a period from September 1962 to September 1967. And I note that this extension was just negotiated this past February. Why this delay of 3 years? Does it take that long to negotiate?

Mr. CHAPMAN. [Deleted.]

Senator INOUYE. Are you suggesting to this committee that as of this February the regime in Greece is democratic?

Mr. CHAPMAN. No, sir, we have never said that, sir. It is still authoritarian. We deplore it and regret it but we continue to believe that the best way of influencing it are quiet influence and quiet pressure rather than public scolding and public lecturing.

Senator INOUYE. Would you think that if we withheld the extension of this one submarine as a symbolic gesture on our part of our opposition to that regime it might help?

Mr. CHAPMAN. [Deleted.]

Senator INOUYE. I gather that at the present time we are about the only ones who are friendly with Greece among the NATO allies. They have been unceremoniously thrown out of the Common Market and Council of Europe and they have been snubbed here and there.

Mr. CHAPMAN. They are still a member of NATO in good standing, and we note that Germany, France, the United Kingdom are selling considerable amounts of equipment to Greece. There is economic investment from Western Europe in Greece. So while there is a good deal of criticism with the nature of the regime, I think there is a realistic appraisal among the NATO governments.

Senator INOUYE. Won't it be helpful to your efforts if the Congress of the United States also assisted you in expressing our concern on what is happening in Greece by just withholding one ship?

Mr. CHAPMAN. I think the debates in the Congress of the United States, particularly in the Senate, have been brought to the attention of the Greek regime and they are fully aware of the broad concern as felt here in Congress and throughout this country.

But on this subject of our policy in withholding a ship loan, to be quite specific, just within the last month some senior State Department people have met with the leadership of the Democratic parties, excluding the extreme left, but including the old Papandreou party, and they told our people that while they didn't like the regime they as Greeks, were concerned about the security of their country and about the suspension policy that we initiated. And I would think that the withholding of a submarine like this would only, as I said, degrade further their capability, and that it would contribute to the concern of many Greeks regarding their country's security.

Senator INOUYE. You are not suggesting that one submarine can make or break NATO, are you?

Mr. CHAPMAN. I have never said that. But there is always a marginal point.

Captain HAGERMAN. May I comment?

Senator INOUYE. Yes.

Captain HAGERMAN. I would also like to point out on this particular loan, as with all loans, before the loan itself is actually negotiated, the JCS, Joint Chiefs of Staff and Department of Defense must make a military determination and justification to the State Department and to the President. So going to the Greek submarine, when it was originally loaned there was a military requirement for it.

Now, I think if anything since that time the military situation in the Eastern Mediterranean with the increase Soviet presence is certainly more of a threat than it was at the time of the loan. So the military requirement is still there. And from a Navy point of view, I appreciate we don't succeed 100% in this, but these ships are made to fulfill a military requirement and we are reluctant to see them being used as a political tool because we have ships on loan to 17 nations. These are really borrowed navies and if we get involved in this for political reasons this tends to undermine to some degree our situation throughout the world because we are allowing something which is to fulfill a military requirement to become a political implement.

Senator INOUYE. Captain, this is hypothetical because I don't suppose it has happened. What if the ship which we have transferred to Peru is used by the Peruvian Navy to attack our fishing fleet? What do you do with that ship?

Captain HAGERMAN. Sir, I hate to duck the issue, but this becomes a matter of national policy. We would be told by the State Department what to do and we would carry out this.

To my knowledge, this particular ship has not been used in the seizure of fishing vessels. But at this point this would get above the Navy level and we would do what we were told to do and if this included the recall, this is what we would do.

Senator INOUYE. Would the State Department recall the ship? Mr. CHAPMAN. I just can't answer that, sir. It has not happened. yet. The vessels that the Peruvians have used to seize American shipping vessels are smaller vessels over which we have no control.