Ours is the annual per capita gross national product is $2,749 against which our private consumption figure is $1,730, which leaves us $1,000, so this is approximately the figure which is only a little under the figure for the total gross national product of the individual German, and that is what we have left over after our private consumption.

The CHAIRMAN. Isn't it strange that our people, particularly the military, rather like the standard of living in Germany as compared to that here? They do, don't they?

Mr. KOHLER. I think they maintain their own standard of living,

sir.

The CHAIRMAN. They do much better in Germany than we do here. We, of course, spend a large part of that $1,730, a larger part than the Germans, I suppose, on tranquilizers, cigarettes, whisky and Cadillacs, and so on.

Mr. KOHLER. I do not know the relative figures on that, Mr. Chair

man.

The CHAIRMAN. You could guess.
Mr. KOHLER. I could guess.

The CHAIRMAN. I am not sure these figures mean very much. It is a burden taking care of these 250 million people over there, when we have poverty here in this country. The per capita income of my State is approximately what it is that you mention in Germany, $1,218.

Mr. KOHLER. Yes.

The CHAIRMAN. And yet you ask us to make twice the contribution, according to our per capita GNP, that you ask them to make.

Mr. KOHLER. On the other hand, Mr. Chairman, I would repeat my statement that if in your State you had this lower income, then under our progressive system of taxes the contribution from each of those is much less than in a State where it is high.

The CHAIRMAN. Yes. But that is not the only source of taxes; that is only part of it. Many of our taxes are excise taxes, direct taxes.

Mr. KOHLER. That is true, Senator.

Senator SYMINGTON. Will the Senator yield there?
The CHAIRMAN. Yes.

DOMESTIC EFFECT OF FOREIGN COMPETITION

Senator SYMINGTON. We have another problem; our desire to help their economies in every other way possible. For example, we have a plant in my State, almost on your border, Mr. Chairman, that produces certain products. Five years ago their foreign importations were 15 percent of what is bought in this country. Today it is 80 percent. This company says it has to quit unless it gets more protection.

So whatever their figure is, $1,200, $1,800, it would be lower if we did not do so many other things; the spending of all those dependents who spend money over there, and foreign military and economic aid, plus making it possible for them to ship in a lot of goods to this country, is hard to justify to some of my constituents who have lost jobs or their businesses because of this competition.

Mr. KOHLER. Well, Senator, this is a complex problem.

Senator SYMINGTON. Yes.

Mr. KOHLER. But I just do want to point out that while you might have a specific small segment of something hit, the trade balance figures are overwhelmingly in our favor, which means that most of our factories are producing things that are sold abroad.

Senator SYMINGTON. They may not be so overwhelming if you take out what we have already.

STANDARD OF LIVING IN JAPAN

The CHAIRMAN. I do not think the figures that you give are very significant. Take Japan, for instance; you translate it into dollars and their standard of living is very low. It is lower than our people on relief. Yet they live far better than our people on relief in actual purchasing value. It is a very complex matter.

I do not think you can translate their standard of living into dollars. You cannot measure the real benefits or pleasure that you get from the same amount of money. I do not think these figures are of particular significance. I do not think they are a very good justification for your program.

Mr. KOHLER. Well, Mr. Chairman, I would agree that this is very difficult, and yet I think some way you have to get some guide by which to measure our own thinking about it.

The CHAIRMAN. When this program started we were in favor of it because of the desperate situation of the security of Western Europe.

I do think it is time to reevaluate.

UNEMPLOYMENT IN KOREA

We discussed Korea yesterday. We started in that country because of the war, and no one has the imagination to figure out any way to disengage ourselves.

We discuss figures. There are many weaknesses in this kind of thing, unemployment being one of them. Korea has one of the highest unemployment figures of any of the industrialized countries, has it not?

Mr. KOHLER. Yes, sir.

The CHAIRMAN. It is growing, and we do not seem to have any cure for it. But the programs go on regardless and do not seem to be related to our own capacity, relative to the others.

REEVALUATION OF U.S. CAPACITY TO CONTINUE PROGRAM

The people in Europe are not so badly off now at all. Certainly they are not in Germany and in France. The poor people, the farmers in France, live very well compared to our farmers. There are many parts of this country, even in the big industrial States, where the standard of living is low.

I think some reevaluation of our capacity to carry this kind of a program indefinitely should be made. I do not believe anybody has really made it. We just continue the same program.

Mr. KOHLER. Well, Mr. Chairman, in the terms in which you are presenting this, I think it could be argued that, in fact, this program is an aid to our own economy, because most of it is spent right here.

The CHAIRMAN. But this is nonproductive equipment. In the long run you do not think manufactured weapons really add to the resources of a country, do you?

Mr. KOHLER. Well, these particular weapons go abroad.

I would say that your well-being does not mean much if you are not

secure.

DOMESTIC NEEDS SHOULD BE CONSIDERED

The CHAIRMAN. This program is related to the economic situation here. This country is running down. Our schools, for example, are bad. There are many things we should be doing here.

Mr. KOHLER. Mr. Chairman, I do not disagree with this at all, but I think that is our problem and I do not see how it relates to this problem.

The CHAIRMAN. Well, I do.

Mr. KOHLER. I think we have got a lot of problems to solve here, but that is another question, in my mind.

The CHAIRMAN. The pressure on the budget is so great from these programs that a tremendous agitation takes place in the Congress on a program of education. We have been trying for 15 years to get an education bill, yet the main argument against it is that we cannot afford it. Yet it is nothing compared to this program.

Mr. KOHLER. Well, on the other hand, I would remind you that we are out of the economic business in the European field. We put billions into the Marshall plan, and they accomplished their job, and that is reflected today both in a healthier and a more stable alliance.

It is also reflected in the increased defense expenditures of our allies, and it is reflected in the great reductions and the consistent reductions we have been making in our aid program.

The CHAIRMAN. You are getting ready to apply all those reductions on other places like Africa and Latin America. We are starting in far larger programs in Latin America.

This is not a net reduction, only a shift of emphasis.

Mr. KOHLER. Well, in this particular instance I think there is more going into economic.

On the other hand, someone said to me the other day that the relationship between economic and military programs is the relationship of the fence to the corn field, and just because you have a better corn crop is not a reason for tearing down your fence which, I thought, put it rather graphically.

The CHAIRMAN. I guess we cannot solve that right now. I think this whole series of commitments needs very serious restudy as to whether or not we are capable of carrying them on indefinitely.

The same point was made and highlighted by Korea, which is merely an example, I think, of what I have in mind.

During a period when we were relatively more prosperous and more powerful than those countries, we assumed these obligations. Now, the obligations continue when all these other factors have undergone drastic changes.

Mr. KOHLER. So has our program, Mr. Chairman.

The CHAIRMAN. Not the overall program. It is around $4 billion this year. This has been the average year after year.

The cost of the Marshall plan ran into somewhere around $4 billion or $5 billion, was it not, per year; totaling about $14 billion, $15 billion for four years, was it not? We did not stop after the Marshall plan, just kept on going. The result in these other areas is not as encouraging as has been in Western Europe, has it?

Many of these countries, such as Korea, are no better off after our spending a great deal of money than they were 10 years ago.

The CHAIRMAN. The committee is adjourned until 2:30. (Whereupon, at 12:25 p.m., the committee recessed, to reconvene at 2:30 p.m., the same day.)

AFTERNOON SESSION

The CHAIRMAN. The committee will come to order.

The witnesses this afternoon on the military aid program will be General Palmer; Rear Adm. E. B. Grantham; Phillips Talbot, Assistant Secretary of State for Near Eastern and South Asian Affairs; and Mr. Henry J. Tasca, Deputy Assistant Secretary for African Affairs. Who wishes to start? Admiral?

Admiral GRANTHAM. Yes, sir.

The CHAIRMAN. You may proceed, sir.

STATEMENT OF REAR ADM. E. B. GRANTHAM, JR., DIRECTOR, NEAR EAST, SOUTH ASIA, AND AFRICA REGION, OFFICE OF ASSISTANT SECRETARY OF DEFENSE (INTERNATIONAL SECURITY AFFAIRS); ACCOMPANIED BY GEN. W. B. PALMER, DIRECTOR OF MILITARY ASSISTANCE, DEPARTMENT OF DEFENSE; HON. PHILLIPS TALBOT, ASSISTANT SECRETARY OF STATE FOR NEAR EASTERN AND SOUTH ASIAN AFFAIRS; HENRY J. TASCA, DEPUTY ASSISTANT SECRETARY FOR AFRICAN AFFAIRS; AND A. GUY HOPE, DIRECTOR, OFFICE OF NEAR EASTERN AND SOUTH ASIAN REGIONAL AFFAIRS, BUREAU OF NEAR EASTERN AND SOUTH ASIAN AFFAIRS, DEPARTMENT OF STATE

Admiral GRANTHAM. Mr. Chairman, I request permission to insert in the record my prepared statement, which I will summarize. The CHAIRMAN. Permission is granted.

COMMUNIST THREAT IN THE NEAR EAST AND SOUTH ASIA

Admiral GRANTHAM. Mr. Chairman and members of the committee, it is a privilege to appear before this committee for the purpose of discussing our military assistance programs in the Near East, south Asia, and Africa regions.

This area confronts the menace of Communist Russia on one northern flank and Red China on the other. Iran and Turkey have long common borders with Soviet Russia. Greece has Communist satellite

Bulgaria on one flank, and Albania on the other. Pakistan lies athwart the historic land approaches to the Indian subcontinent from the northwest.

The fall of any of the countries of this region to international communism would have immediate and far-reaching effects upon the security of the free world.

It is to our advantage to assist these countries as necessary to achieve or maintain conditions which will bolster their will to resist Communist subversion and aggression. Military assistance makes a major contribution to this end by making possible a degree of security essential to the achievement and maintenance of economic and political stability. The Soviet Union has given very convincing evidence that it is anxious to use military and other types of assistance to advance its interests wherever possible in the area. In fact, Soviet behavior toward some of these countries indicates that the area is high on the Communist schedule of conquest.

I believe that the military hardware provided and the operational effectiveness achieved with the help of our military assistance program have had a great deal to do with the willingness of Iran, Turkey, and Pakistan to stand so resolutely against repeated Soviet threats and blandishments.

Other witnesses have made known to you the broad policy aspects of our worldwide military assistance programs as well as facts related to the cost of these programs.

You will note by reference to page 117 of the presentation book that for fiscal year 1962 we are requesting $453.5 million which represents an increase of $46.9 million over the approved fiscal year 1961 program. About 32 percent of the requested funds for fiscal year 1962 will be used to finance high performance aircraft required to modernize MAP supported air squadrons, and for the continued maintenance of MAP furnished aircraft now in tactical squadrons. About 20 percent of the requested funds will be devoted to force improvement of of the ground forces in the form of tanks, vehicles, weapons, and spares in order to improve the mobility and firepower of such forces. About 27 percent of the funds requested will be used for other materiel such as engineering equipment; construction; packing, crating and handling: and training. The remaining 21 percent of the funds will be devoted to the overhaul and modernization of some ships; missile system ground equipment; training missiles; new vessels; ammunition; and electronics and communications equipment.

The largest share of the funds requested are proposed for Greece and Turkey, most of the rest for Iran and Pakistan, the small balance will be devoted to small programs, principally training, for other recipients.

TIDE OF NATIONALISM IN AFRICA

Turning now to Africa-during the past 18 months, with the emergence of 18 newly independent nations, events in Africa have moved rather swiftly. Today in Africa there are 46 different administrative areas. Of these 28 are independent countries; 6 are territories which may become independent; and 9 for which there are no plans for independence.

It is highly important that we do whatever is necessary to insure that the tide of nationalism in Africa does not result in significant