U.S. AID FOR THE CONSTRUCTION OF FRENCH MILITARY AIRCRAFT

Mr. ADAIR. John, is there anything in this bill that you know about similar to a provision for the French Mystérè [a type of French fighter aircraft]?

Mr. VORYS. I do not know.

Mr. ADAIR. Has anyone that information?

Mr.VORYS. I understand the Mystérè has gone sour.

Mr. WESTPHAL. In the breakdown that appears in the back of the classified volume, there are only six countries specifically mentioned out of the $1.4. France is not one of those. Whatever moneys are for France will be used out of previously appropriated funds to carry on a program. It is not part of a specific country request as in the case of the United Kingdom.

Mr. ADAIR. From that you would assume there is no money in there similar to the Mystérè money of last year?

Mr. WESTPHAL. That is right. No new money. Anything that is being done-and I am not certain anything is or is not-if it is, it is under already appropriated money and not any new money.

Mr. ADAIR. Did we get any of those Mystérè planes or are they in or out of production now? Do we have information on that? Mr. WESTPHAL. No.

PROVISION ON REIMBURSABLE MILITARY ASSISTANCE

Mr. DONOVAN. Will the staff please explain the question of the repeal of 103 (c) and the new language starting on line 6 on page 2 of the Senate print?

Mr. BULLOCK. The repealer is to strike out the limitation on offshore procurement and the new language is to permit a new kind of reimbursable military assistance.

The old, what has come to be known as reimbursable military aid, is the sale of military equipment to another government under the MDAP program. Under that, they can sell on credit terms up to 3 years. The money comes out of the Defense Department, out of their regular appropriations. Under the MDAP program, the military aid program, the law permits you to supply military end items on either grant or a loan basis. Those loans under the law may be almost any length and so on. The loan provisions are very good.

There is one other important difference: the reimbursable, where we actually sell the goods. The country does not have to enter into those agreements under section 142 as to all the things they will do. They just have to agree not to use them for aggressive action, but they do not have to agree to cooperate in using their resources and various things. Under the MDAP Act provisions, with that type of provision of assistance, they would have to enter into all the agreements. What the Defense Department wants by this new language is to be able to sell under credit terms up to 10 years, which you cannot do under the reimbursable part, and they want to be able to make such sales without requiring all the agreements under 142.

The third thing is that they want those 10-year sales to be financed by MDAP funds and not regular funds.

Mr. WESTPHAL. One of the chief items is submarines to Latin America.

AMENDMENT TO COVER ADMINISTRATIVE EXPENSES OF DIRECT

FORCES SUPPORT

Chairman RICHARDS. Did the Department not have a suggestion as to an amendment there? We might mention it now.

Mr. CRAWFORD. Mr. Herter 15 brought up one. It is not very long. On page 2, line 4, insert a new subsection (b) and reletter the following subsections. It would read, "In section 103(b), after the word 'chapter,' insert 'and of section 124.'

If I recall correctly, he discussed this when he was before the committee the other day, and he has given an explanation at the bottom of this, stating, "Through inadvertence this change was omitted from the bill originally proposed by the executive branch. The change is necessary to permit the Department of Defense to pay administrative and operating expenses of carrying out the fiscal year 1956 program of direct forces support authorized by the proposed new section 124 of the act. It is expected that this function will be assigned to the Secretary of Defense in the forthcoming Executive order of the President implementing the fiscal year 1956 mutual security program. Section 8(j) (2) of the bill as passed by the Senate, which authorizes the appropriation of administrative funds for nonmilitary programs, does not permit those funds to be used for section 124 programs. Therefore, section 103(b), relating to administration of military assistance programs, should be amended to make funds available for this purpose.' Chairman RICHARDS. In simple words. it is just to allow an essential transfer to the Department of Defense. It allows them to pay it and it was formerly paid by FOA, is that correct?

Mr. CRAWFORD. That is correct.

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Chairman RICHARDS. These are operating expenses on account of the transfer of these items to the Department of Defense. I cannot see where there could be any objection to that.

Mr. VORYS. I could see no objection to it, but just bear in mind that when anybody asks us the amount of administrative money in this budget, that we've got to say, "God knows: we don't." We have an increase of a couple of million dollars in administrative costs proposed for this year in the part explained to us.

Mr. DONOVAN. In other words, the Department of Defense pays that out of their budget?

Mr. VORYS. No. The lump sum for direct forces support, any and all parts of it under this amendment, could be spent for administrative costs and we have no way of presenting to the floor, based on our hearings, anv estimate of the cost of administration of this thing. Mr. DONOVAN. Mr. Vorys, is not that generally true of the whole bill? It is a blank check.

Mr. VORYS. In prior years, we have had a pretty definite figure. Mr. WESTPHAL. That is all declassified.

Mr. VoRYS. Do we have any figures on direct forces support administrative costs?

Mr. BULLOCK. We never put anything in the bill on those.

Christian A. Herter, Jr., General Counsel, Foreign Operations Administration, testified before the committee later on this day.

TOTAL ADMINISTRATIVE EXPENSES IN THE BILL

Chairman RICHARDS. There is one thing that I do not understand about that. I think what they want done here should be done in the name of efficiency, but I understand from the staff that they are asking for more administrative funds in the other outfit this year than they asked for the whole thing last year.

Mrs. KELLY. That is right.

Chairman RICHARDS. I cannot understand that.

Mr. BULLOCK. It is not for the whole thing, sir. It is just for the other part. Over on page 11, the nonmilitary administration this year was larger than it was last year.

Mrs. KELLY. It was an increase of the $24 million, was it not, from $18 million?

Mr. VORYS. Some 32 to 35. Nearly $3 million additional they are asking.

Chairman RICHARDS. It is almost $3 million, I believe.

Mrs. BOLTON. What do they say about that?

Mr. VORYS. Expenses in the Far East; new missions.

Chairman RICHARDS. They base their whole increase-and it may on sound ground-they are opening up a lot of new things out there, and they have to have more people out there.

Mr. JUDD. In Cambodia and Laos.

Chairman RICHARDS. That is something to think about.

Has anybody else any money amendments in this section we have read?

I hope you are keeping a record of these amendments in order, because that is the way we are going to take them up later.

Mr. CRAWFORD. We are keeping a careful record of them, Mr. Chairman.

I thought Mrs. Kelly had one on page 2, but apparently I have an earlier draft.

Chairman RICHARDS. We will read if there is nothing further.

SECTION 3 ON TRANSFERABILITY OF DIRECT FORCES SUPPORT FUNDS

Mr. CRAWFORD. On page 3, line 9 [reading]:

Page 3:

9 SEC. 3. Title I, chapter 2, of the Mutual Security Act 10 of 1954, which relates to southeast Asia and the western 11 Pacific, and direct forces support, is amended by adding, after section 123. the following new section:

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13

"SEC. 124. DIRECT FORCES SUPPORT.-There is hereby 14 authorized to be appropriated to the President for the fiscal 15 year 1956 not to exceed $317.200.000 to provide assistance 16 in the form of direct forces support to be delivered or ren17 dered directly to the military forces of nations eligible for 18 military assistance under chapter 1 of this title. The Presi19 dent may, notwithstanding the provisions of section 501, 20 consolidate all or any part of appropriations made pursuant 21 to this section with appropriations made pursuant to section 22 103. Programs authorized by this section may be adminis23 tered in accordance with the provisions of chapter 1 or 24 chapter 3 of this title."

Mr. VORYS. What does that consolidation add up to?

Mr. BULLOCK. There is a very important-the last two sentences amounts to 100 percent transferability between military end items and

direct forces support. It says he can consolidate direct forces support with military end items and "programs authorized by this section may be administered in accordance with the provisions of chapter 1 or chapter 3," chapter 3 being defense support. So you could use all the military money for defense support, if you wanted to do so, under that language, as I understand it.

Mr. DONOVAN. Does that mean that $317 million is to be added to the $1,278 million on the previous page?

Mr. BULLOCK. That is right, and all of it could be used for defense support.

Mr. DONOVAN. Then put it anywhere they want?

Mr. BULLOCK. That is right.

Mr. VORYS. The question I was trying to figure out, the "and so forth money" we have in this bill, where it is not earmarked, as to what it is to go for

Mrs. KELLY. Will the gentleman yield?

Mr.VORYS. Yes.

Mrs. KELLY. I asked that very question of the Secretary. I asked if that wasn't global authority he asked for in this bill for transferability, and the answer was "No."

Mr. VORYS. This language gives the answer as "Yes," because so far as defense support is concerned-you have Asian development, $200 million; special Presidential fund, $100 million; military emergency fund, $145 million. There is $345 million, and we have no idea as to what it is to be spent for, and here is $317 million in addition that can be spent for anything as long as it is an MDAP country. Is that not right, Roy?

Mr. BULLOCK. You can also take the $1 billion figure and spend it under that language. You can add the two together and use it under chapter 1 or chapter 3. That is what it says.

Chairman RICHARDS. Do we have testimony on that particular point? Mr. BULLOCK. No.

Chairman RICHARDS. Well, I think we should have somebody here. They may have a contrary view on that and may be able to sustain it, I do not know.

Mr. BULLOCK. They do have a section-by-section analysis in which they say that.

Mr. JUDD. This comes under Hensel's statement the first day that it was not possible to put out illustrative programs with any degree of accuracy and we just had to give them the money and then ask them to account for it next year. That is what he told us.

Mr. VORYS. Hensel says that, but this has $317 million that can go over under Hollister [John B. Hollister, Director, International Cooperation Administration].

Mr. JUDD. But all of Hollister's can come back under this, too. They can consolidate them.

Mr. MORANO. There is no definition any more of military assistance and for direct forces support.

Chairman RICHARDS. I think we will have to have some of the brethren in on that, and you might just as well alert them on it.

Mr. MORANO. Is there anything in the Senate report which explains that?

Chairman RICHARDS. How about Mr. Paul? Ask him to come in and let us see what he says about that.

Mr. MORANO. Is there anything in the Senate report on that?
Mr. WESTPHAL. At pages 16 and 17. They endorse it.

Mr. JUDD. Do they explain actually what it accomplishes?

Mr. WESTPHAL. In your volume 1, it gives you the breakdown of the countries program.

Mr. LECOMPTE. It leaves it wide open.

Mr. ADAIR. Do they comment on that?

Mr. WESTPHAL. They say, "It is contemplated the direct forces support will be handled by the Department of Defense," and the bill authorizes direct forces to be consolidated with military assistance. We have Mr. Paul and Mr. Herter here.

This is section 3 of the bill. It has been pointed out here that the President would have 100 precent power of transfer from one category to the other.

STATEMENT OF CHRISTIAN A. HERTER, JR., GENERAL COUNSEL, FOREIGN OPERATIONS ADMINISTRATION

Mr. HERTER. That is correct, under this language, sir.
Chairman RICHARDS. And that is what you want?

Mr. HERTER. The Department of Defense would like very much to have this. The President has not indicated he would exercise the power in any way, but it would permit the President to do so.

Chairman RICHARDS. How about FOA? You have it, too, Mr. Paul?

STATEMENT OF NORMAN S. PAUL, DEPUTY DIRECTOR FOR CONGRESSIONAL RELATIONS, FOREIGN OPERATIONS ADMINISTRATION

Mr. PAUL. This particular provision, Mr. Chairman, refers only to the direct forces support and the other types of military aid, all of which will be handled by Defense. We have no such authority to consolidate, let us say, defense support, with any other funds.

Chairman RICHARDS. And it does refer only to direct forces support. Mr. JUDD. It says chapter 3. They can consolidate them and then move all of the military over to defense support, or all the defense support over to the military, can't they?

Mr. PAUL. This provision, Mr. Judd, was in order to permit the use of the administrative mechanisms of FOA. Let's say some of these common-use items were more easily procured through FOA channels, or it would be administratively easier so to do.

Mr. HERTER. This is the exact language, sir, taken from section 123 of the present law, the common-use item. This ability to administer either under the provisions of title I or title III.

Mr. PAUL. It is the same provision we had last year.

Mr. MORANO. Is it reversible?

Mr. PAUL. This doesn't mean we can use this money for defense support purposes. This does not permit that.

Mr. HERTER. This simply says it would be administered, which means that