Foreign Relations of the United States, 1955–1957, Korea, Volume XXIII, Part 2

178. Memorandum From the Director of the Office of Northeast Asian Affairs (Parsons) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)¹

Washington, November 1, 1956.

SUBJECT

• Robert Macy’s Report on Korea²

Mr. Robert M. Macy, Bureau of the Budget, has returned from his month’s visit to Korea and has provided us with the attached report,³ the principal observations, conclusions, and recommendations of which are:

Observations

1. Considerable progress has been made since 1953—consumption has returned to the 1949–50 levels, the economy is more stable and the ROK Army has developed into an effective fighting force.

2. Many of our activities, nevertheless, are still based on the assumption that Korea is an “active theater of war.”

3. The objectives of the present program for the ROK forces are not clear. There are widely divergent views among our own military as to the objectives and capabilities of these forces.

4. There is great dissatisfaction among the Americans in OEC due to their inability to bring their dependents to Korea and poor housing.

Conclusions

1. There is no agreed economic plan for South Korea.

2. Economic “viability” is not possible in the foreseeable future.

3. The ROK forces are too weak in the air to meet the U.S. objective of being “capable of defending ROK territory short of attack by a major power.” On the ground they are stronger than necessary to preserve internal order and provide border defense.

4. The danger of a new Communist attack is no greater in Korea than in a number of other spots around the world.

5. Chang Myon will succeed to the presidency if he is not assassinated meanwhile.

6. Unless ROK forces are sharply curtailed, military expenditures will rise over the next few years.

7. The dollar trade gap is tending to widen rather than decrease.

8. NSC review of Korean policy is urgently needed.

Recommendations

1. There should be a conscious shift in our programs from concentration on defense to greater emphasis on the internal situation.

2. More emphasis should be placed on small business and especially on restoration of full commercial relationships with Japan.

3. The objectives of the military forces in South Korea should be restated in more specific terms after which their levels and character can more easily be determined.

1. Source: Department of State, Central Files, 795.00/11–156. Secret. Drafted by Nes.
2. Robert M. Macy, Chief of the International Division, Bureau of the Budget. A marginal notation on the source text by Sebald reads: “Long, but well worth reading”.
3. Not found attached. A copy of the report, dated October 25, is in Department of State, S/P Files: Lot 62 D 1, Korea, U.S. Objectives and Courses of Action (NSC 5514).