820.24/10–548

The Director of the Office of American Republic Affairs ( Daniels ) to the Secretary of State

confidential

Subject: Policy regarding transfer of arms to Latin American countries from United States Government sources.

Problem:

Should the Department seek enactment by the next Congress of the Inter-American Military Cooperation Bill?

Background:

1.
The Inter-American Military Cooperation Bill would authorize the President to enter into agreements with other American States providing for the training of foreign nationals by the United States Defense Establishment, and for the transfer of United States military equipment to those countries. There is no question over the desirability of the training program, the principal issue having to do with the transfer of armaments.
2.
The proposed Bill would apply to Canada as well as to Latin America. It is understood that the urgent and special needs of Canada are to be discussed in a separate memorandum being prepared by the Office of European Affairs for submission to your office. This paper deals with the problem from the viewpoint of Latin America.
3.
Moderate amounts of arms were sold to the Latin American countries under the Surplus Property Act. The use of this Act for that purpose has been terminated by Congress, and surplus supplies have largely been exhausted, except for certain larger naval vessels. Latin American countries are being informed that under present conditions, virtually the only source of arms in this country is the commercial market, and the Service Departments are preparing to render special technical assistance to them in their procurement problems. Licenses are granted for the export of commercially procured arms, under existing Departmental policy, so long as the amounts are considered “reasonable and necessary” for the self-defense of the purchasing country.
4.
The Inter-American Military Cooperation Bill was drafted on the assumption that a large amount of surplus military equipment would be available for transfer to Latin American countries at a low cost or in exchange for present non-American equipment in their possession. Under this program standardization was to be achieved without disrupting relative military strengths of the Latin American countries. Since surpluses have now been largely exhausted (except for certain larger naval vessels) the exchange feature of the proposed [Page 223] bill is rendered virtually inoperative, at least for the present, and Latin American governments would be required to pay approximately full procurement cost for any equipment they acquired from this Government under the terms of the Bill. The higher costs would be expected to restrict the total amounts of arms purchased, and they will obviously make achievement of military standardization in the Americas slower and more difficult. Higher costs will also tend to increase the differences in armed strength between the wealthier and poorer countries.

Main considerations:

The following principal considerations bear upon this problem:

1.
It is desirable, from a military viewpoint, to have the Latin Americans acquire U.S. equipment, and use U.S. military missions, in preference to those of other countries.
2.
It is possible that Congress may be requested to enact legislation authorizing arms transfers to European countries. In that event there might be advantage in consolidating all such proposals in one law, rather than requesting a separate law for Latin America. Enactment of general legislation would provide the Executive with the necessary authority to transfer arms to Latin America, leaving discretion as to the actual use of that authority in the light of future world conditions and relative needs of different areas.
3.
Representatives of the Service Departments continue to favor the Inter-American Military Cooperation Bill, pointing out that the training program would be facilitated thereby, and suggesting that at some future time it may again become possible to utilize the provisions regarding transfer of surplus equipment.
4.
From a political viewpoint, it is questionable whether the United States Government should become directly involved in sales of arms to Latin American Governments if, owing to high prices, there is little possibility of avoiding a disproportionate arming of wealthier nations. Under Lend Lease, varying rates of payment were accorded the Latin American countries to enable all to participate; under the original standardization program cheap surplus prices were to achieve the same objective. Neither of these conditions would now apply to the Inter-American Military Cooperation Bill unless Congress were willing to subsidize arms sales.

Recommendation:

The following course of action is recommended:

1.
To cover the needs of the American republics for military equipment and training in any broad legislation, such as Title VI, which may be proposed to Congress for the purpose of providing military assistance to foreign nations.
2.
In the event that broad military assistance legislation is not enacted, to seek enactment of the Inter-American Military Cooperation Bill, possibly deleting or modifying, as being no longer pertinent, the clause referring to exchange of non-standard arms for United States equipment.

Paul C. Daniels