Foreign Relations of the United States, 1949, National Security Affairs, Foreign Economic Policy, Volume I

800.24/3–1649

Memorandum by the Chairman of the State–Army–Navy–Air Force Coordinating Committee (Rusk) to the Secretary of State

top secret

Washington, March 16, 1949.

SANA–6333

Forwarded herewith for the information and guidance of the Department of State is a copy of SANACC 360/11 as amended by SANACC 360/12 and 360/13 and approved by the State–Army–Navy–Air Force Coordinating Committee on 15 March 1949.

Copies of the approved paper have also been forwarded to the Secretary of Defense and the Departments of Army, Navy and Air Force for information an guidance, and to the National Security Council for information.

For the State–Army–Navy–Air Force Coordinating Committee:

Dean Rusk

[Annex 1]

Note by the Secretaries of the State–Army–Navy–Air Force Coordinating Committee

top secret

[Washington,] March 15, 1949.

1. By informal action on 15 March 1949 the State–Army–Navy–Air Force Coordinating Committee approved SANACC 360/11 as amended by SANACC 360/12 and SANACC 360/13.

2. Holders of SANACC 360/11 are requested to substitute the attached revised pages 385, 386, 387, and 394 for the ones contained therein and destroy the superseded pages by burning.

3. In considering SANACC 360/11 the Joint Chiefs of Staff made the following comments on points of particular interest from a military viewpoint which were transmitted through the Office of the Secretary of Defense to SANACC:

• “1. The Joint Chiefs of Staff have considered SANACC 360/11, a report by the State–Army–Navy–Air Force Coordinating Subcommittee for Rearmament on the subject of Military Aid Priorities, and are of the opinion that the report is generally sound and will form a basis for decision and action with respect to military aid priorities in peacetime.
• “2. The following comments are offered on points of particular interest from the military viewpoint:
  • “a. Although the principles regarding priorities are well reasoned and logically set forth, the Joint Chiefs of Staff view with concern the fact that so many countries are listed. It is appreciated, of course, that the report does not undertake to determine whether military supplies should be transferred to foreign countries, but examines only the relative priorities of requests coming within the principles of present and future policies on the subject. It is also appreciated that ‘substantial’ military aid is listed only for the Benelux countries, Canada, France and the United Kingdom and that ‘limited’ and ‘token’ aid naturally would not in practice be given to all of the other countries listed. Nevertheless, even consideration of substantial military aid for six countries, limited aid for sixteen other countries, and token aid for thirty-seven more can result, in terms of granted requests, in tremendous commitments. There cannot be too much emphasis, therefore, on the necessity for the most careful consideration of the great potential overall scope of military aid commitments in relation to our national financial and industrial limitations and our own military requirements before specific decisions are made. Also, it must be borne in mind that limited military aid may well prove difficult to limit once it has been begun and that token aid, by definition, bears to the recipient the implication of more to come. Further, aid spread too thin may not be adequate anywhere, whereas concentrated aid where it will best serve the ultimate objective of our own security may be all or even more than we can provide.
  • “b. The following additional comments are offered in support of the views set forth above and in support of the portions of the report that give recognition to the practical aspects of the military aid problem:
    • “(1) Paragraph 22 of the Conclusions and paragraph 14 of the Discussion state, correctly, that it will be necessary to consider the existing situation when decisions are made regarding military aid, so that priorities proposed in the report must be subject to flexibility in their application. There should be, further, periodical review of any aid program to assure its continuation only so long as this is in our national security interest.
    • “(2) Paragraph 14 of Facts Bearing on the Problem and paragraph 15 of the Discussion are correct as to the magnitude and importance of the problem of adequate expansion of our production of war materiel and supplies. Without such expansion the furnishing of military assistance will, as stated in the report, be impracticable on any significant scale.”

G. H. Haselton
M. Baumgartner
J. B. Cresap
M. V. Brokaw
Secretariat

[Annex 2]

Report by the SANACC Subcommittee for Rearmament

[Washington,] August 18, 1948.

SANACC 360/11¹

Military Aid Priorities

the problem

1. From the viewpoint of national security of this country in the present world conditions, to determine an order of priority for United States military aid to foreign nations.

facts bearing on the problem

2. The United States is engaged in political, economic and ideological conflict with Soviet-dominated world Communism.

3. Requests for United States military assistance are being received from many nations.

4. The United States is committed to assist in the economic recovery of Western Europe.

5. The United States is committed to provide military assistance to certain foreign countries:

a. By Congressional authorization: To Greece, Turkey, China.²

b. By governmental bilateral agreements on a reimbursement basis: To Iran.

In addition, training and advisory missions are being furnished to fourteen Latin American countries³ and to Greece, Turkey, Iran, the Philippine Republic,⁴ China and Saudi Arabia,⁵ and arrangements for missions are pending for five other Latin American countries (Annex to Appendix⁶).

6. The President has approved the recommendation of the National Security Council that

“In measures of military assistance additional to those already provided for in specific legislation or in existing governmental undertakings, first priority should be given to Western Europe.” (Par. 13, NSC14/1)⁷

7. The United States Senate in the “Vandenberg Resolution” has advised that this country should pursue as an objective

“Association of the United States, by constitutional process, with such regional and other collective arrangements as are based on continuous and effective self-help and mutual aid, and as affect its national security.” (subpar. (3) S. Res. 239)

8. United States occupation forces are stationed in Germany, Austria, the Free Territory of Trieste,⁸ Japan and Korea (evacuation of Korea by United States forces is foreseen in the near future).

9. There are current military understandings with Brazil, Canada and Mexico which affect defense coordination with the United States.

10. By its ratification of the Rio de Janeiro Treaty the United States is committed to the general principle accepted by the signatory nations of common defense against aggression.

11. Present reduced war surplus stocks can not support substantial balanced military assistance programs.

12. United States war reserve stocks are insufficient to meet Mobilization demands.

13. The conversion of United States wartime industry to peacetime production precludes immediate supply of many military items from new manufacture.

14. United States industry will not reconvert to substantial production of war materiel and supplies without one or more of the following:

a. Appeal to patriotic motives; and

b. Assurance of reasonable profit; or, most effectively,

c. Institution of mobilization of industry plans.

15. The President has approved the recommendation of the National Security Council that

“The United States should at the earliest feasible time:

a. Enact legislation which will broaden the authority of the President to provide military assistance for foreign states under appropriate conditions. Title VI (not enacted) of the Foreign Assistance Act of 1948 would be a suitable basis for such legislation.

b. Under this authority, appropriate funds for military assistance to selected non-communist nations to meet urgent requirements consistent with an over-all program.” (par. 10, NSC 14/1)

16. The supply and demand relationship with respect to military assistance as set forth in the foregoing statement of facts (paragraphs 2–15) necessitates careful consideration of the priority in which military assistance should be furnished to applicant nations.

17. The President has approved the conclusion of the NSC that any United States military assistance program should be predicated to the maximum practicable extent upon the self-help and mutual assistance of recipient states, (par. 11, NSC 14/1)

discussion

18. See Appendix.

conclusions

19. The needs of the National Military Establishment normally should be accorded continuing highest priority. An essential step in reaching decision as to projected military aid for any country should be an evaluation by the Joint Chiefs of Staff of that project with reference to the minimum materiel requirements and operations of the National Military Establishment.

priority of areas

20. From the long-term military point of view the order of priority for United States military aid to various areas should be as shown in Column A below.

21. From the long-term political point of view the order of priority for United States military aid to various areas should be as shown in Column B below.

22. The relative weights of the military and political factors vary from area to area and within the same area from time to time. Therefore, any combined appraisal must be considered in the light of the existing situation, political and military, when decisions are made. The areas shown in Column C are arranged in the over-all order of priority at the time of this paper.

Column A	Column B	Column C
Military (long term)	Political (long term)	Combined (as of 1948)
1. Europe, Near and Middle East	1. Europe, Near and Middle East	1. Europe, Near and Middle East
2. Far East	2. Western Hemisphere	2. Far East
3. Western Hemisphere	3. Far East	3. Western Hemisphere
4. Southern Africa	4. Southern Africa	4. Southern Africa

priority of countries

23. Certain countries, based on their capacities for self-help and on strategic location, should be extended substantial assistance. Others, not so capable of self-help; should nevertheless be extended limited assistance, either for purposes of strengthening internal security and will to resist Soviet aggression or to enhance their capabilities of performing limited, but important missions. The order of priority of such countries, by groups, is at the present time as shown below (listing is alphabetical within groups).^*

Priority	Countries			Degree of Assistance
1	Benelux			Substantial
	Canada
	France
	United Kingdom
2	Greece			Limited
	Italy
	Turkey
3	Denmark			Limited
	Norway
	Portugal
	Spain	}	when and if political orientation is with Western Europe
	Sweden
4	Iran	}	after lifting of arms restrictions	Limited
	India
	Pakistan
	Saudi Arabia
5	China			Limited
6	Brazil			Limited
	Mexico
7	Union of South Africa			Limited

24. Countries presently occupied by United States troops have been omitted from the priority list. In case it appears necessary to allot other than token military aid to such a country, that country will be assigned a place in its geographic priority grouping of countries.

25. Certain factors, such as the need for strengthening the morale and internal security of recipient nations and protecting various United States interests abroad may in exceptional cases become overriding political considerations modifying the strict application of the above priorities. The decision as to whether a case falls within this exceptional category should be approved by SANACC, which may refer the problem to the National Security Council,^† Likewise, there will probably occur cases in which a small amount of aid will be particularly remunerative to the interests of the United States. All free nations should be considered eligible for such token aid without regard to priorities and whether or not they are listed above.

26. Countries Without Priority With in Areas (arranged alphabetically).

Europe, Near and Middle East	‡ Western Hemisphere
Afghanistan	Argentina
Eire	Bolivia
Egypt	Chile
Ethiopia	Colombia
Iceland	Costa Rica
Iraq	Cuba
Israel	Dominican Republic
Lebanon	Ecuador
Switzerland	El Salvador
Syria	Guatemala
Transjordan	Haiti
Yemen	Honduras
	Nicaragua
Far East	Panama
Australia	Paraguay
Burma	Peru
Ceylon	Uruguay
New Zealand	Venezuela
Philippines
Siam
Southern Africa
Liberia

27. Foreign nations should not be informed of this Government’s concept of military assistance priorities or of any priority status which may be accorded to them in these projects.

recommendations

28. It is recommended that:

a. This paper be forwarded by SANACC to the Joint Chiefs of Staff for comment from a military point of view.

b. SANACC approve this paper after consideration of the views of the Joint Chiefs of Staff.

c. After approval by SANACC this paper be submitted to the Secretaries of State, Defense, Army, Navy and Air Force for information and guidance and to the National Security Council for information.

Appendix

discussion

1. Many factors and various definitions of specific factors are applicable in a study of this problem. Selection of guiding factors is dictated by the purpose of the present consideration, which stripped to its essentials is to answer this question: To what country or combination of countries, and in what priority, should United States military aid be accorded to enable them to further the security interests of the United States by military, political, or economic action.

2. This paper does not undertake to determine whether military supplies of United States origin should be transferred to foreign countries but examines only the problem of the relative priorities to be granted to requests from foreign countries once those requests have been determined to come within the principles of SANACC 382/6,⁹ NSC 14/1, the Vandenberg Resolution, and subsequently approved policies of over-riding importance.

3. Definitions

For purposes of this paper, the term “Military Assistance” includes:

a. Procurement of materials from any source, including government stocks;

b. Manufacturing, processing, storing, transporting, repairing, or rehabilitating materials or performing any other services, including provision of technical assistance and information.

c. Transfer of materials or services.

4. Assumptions

a. The only nations of the world with whom any likelihood of war exists are the U.S.S.R. and its satellites.

b. The outbreak of a war in which this country may be involved might occur at any time but is improbable in the immediate future.

c. At this juncture, in view of the complex interdependence among nations and specifically the interdependence between the United States and nations linked to it by their common cause against Soviet-inspired Communist expansion, a workable approach to the problem must include consideration of all countries Outside the Soviet orbit, from the viewpoint of their strategic relationship to the United States. Strategic determinations include military, economic and political considerations.

d. The Military Factor. Military operations of undetermined magnitude may take origin without warning in one or more of several areas vital to or closely bound to our national interest by reason of their geographic position, economic importance or political relationship. United States military aid will enhance the capabilities of the recipient countries to resist armed aggression.

e. The Political Factor. Foreign nations which apply to the United States for military assistance, or accept such assistance, will strive to preserve their governments against inroads of Communism, will cooperate with the United States vis-à-vis the U.S.S.R., and will use such assistance as is furnished in accordance with the purposes and principles of the Charter of the United Nations. Foreign nations which receive such assistance will derive therefrom substantial support in their determinations to resist direct and indirect Communist aggression.

f. The Economic Factor. The European Recovery Program will meet the economic requirements of the participating countries for assistance. The United States will meet its commitments under this program. The participating countries will achieve a major portion of the goals set for themselves, with resultant significant accomplishment towards rehabilitation of the Western European economy within four years and steady progress throughout the interim period unless interrupted by hostilities.

5. The United States is now engaged in the political phase of a conflict with the Soviet-dominated world. Under these conditions, the security interests of the United States, insofar as action by other countries is involved, may be advanced most effectively by preventing Soviet Communist expansion, which may take place either by political means or by direct military action. The purpose, then, of military aid is to prevent indirect and to deter direct Soviet-inspired aggression. Politically, United States military aid will strengthen the determination of recipient countries to resist aggression. By strengthening internal security forces, such aid will act as a preventive of Communist political expansion. Further, United States military aid will enhance the capabilities of the recipient countries to resist armed aggression. Events have indicated that political or indirect aggression is most likely to succeed in the proximity of the Soviet Army. These concepts suggest a broad approach to the problem by giving general precedence in assistance to those countries on the periphery of the Soviet world, subject to modifications required by obvious strategic considerations, such as keeping open lines of communications through the Mediterranean and preserving the United Kingdom for use as a source of production and as an advanced base.

6. The criteria to be used in arranging a list of areas and countries in order of priority to receive United States military assistance apply three major factors, namely military, political and economic, to each group and country. Consideration of these criteria makes it apparent that the economic factor is so closely related at times to both the military and political factors that it is not feasible to consider the economic factor separately. Consequently, the military and political factors here include economic considerations where and when such considerations are believed to affect these two major factors.

7.a. Political conflict exists between the Soviet Union and the United States as a result of basic differences in ideology. United States success in this political conflict will strengthen the position of this country and may preclude general military conflict. Therefore the elements of the political factor include consideration of each country’s inherent internal political stability and doctrine; the prestige of the United States on the political front; the strengthening of anti-Communistic activity within each country through its own political effort; the strengthening of internal political conditions through improvement of the economic stability therein; and the degree of orientation of each country toward the United States in, its own political philosophy.

b. On the assumption that, essentially, Russia is our only enemy, the principal elements of the military factor comprise the strategic location of each area and each country therein; the terrain within each country; the economic ability of each country to support a military program; and the purpose of the military assistance program.

8. To avoid unprofitable scattering of effort and so that conclusions may be arrived at on the basis of general reasoning, it is necessary first to apply the foregoing factors to geographical areas. The resulting priority of areas is shown under Conclusions (par. 22). Having arrived at the priority of areas, the countries within the areas are then subjected to the same analysis (par. 23).

9. When all countries within each area are considered and arranged according to priority, it is apparent that the lower portion of each list is either of indistinguishable priority between the several countries or of little importance. Such countries are therefore shown separately in the Conclusions (par. 27).

10. In determining the priority positions assigned to certain countries, consideration was given to current United States Government commitments, implied or actual, such as support of Western Union countries and aid programs to Greece and Turkey.

11. In the recital of pertinent facts, understandings with Brazil, Canada and Mexico as to defense problems have been noted (paragraph 9). Under the United States policy of according equal treatment to all of the other American Republics no differentiation of the Latin American nations into categories of primary or secondary political importance is feasible. With respect to efficient Western Hemisphere defense coordination and the corollary policy of arms standardization, continuing procurement by the other American countries of United States type material is essential. The priority position of countries outside the Western Hemisphere should not exclude relatively small transfers of United States arms and equipment from commercial sources or from available government surplus to the other American countries. See paragraph 25, page 387.

12. Some countries are more logically considered in groups, such as Benelux, or in sequence priority, as in the cases of Norway and Denmark, Spain and Portugal. This has been done in the light of political, economic, geographic, or cultural affinities relating to the concerned nations.

13. Autonomous states or dominions in the British Commonwealth, such as Canada and New Zealand, are considered separate countries. Countries with a colonial status do not appear in the priority lists; their needs will be reflected in those of the mother countries.

14. The considerations set forth in this paper have been thoroughly weighed as of the present, with attention to reasonably foreseeable future trends. It must be strongly emphasized that the course of economic and political developments and their potential turbulences cannot be satisfactorily charted in advance, and that the projection of an economic or political analysis cannot be sufficiently dependable to warrant present decision beyond setting up a flexible general planning framework in determining the practicability or advisability of military aid to other nations. The balance of factors must be studied in the light of conditions at the time of determination with respect to the recipient nations.

15. Careful consideration is being given by the National Military Establishment to the industrial coordination problems involved in increased production of military supplies and materiel. Without expansion of production the furnishing of military assistance as envisaged in this paper will be impracticable on any significant scale.

16. For reasons of national security it is desirable that the needs of the National Military Establishment be accorded continuing highest priority, to the extent that approval of foreign aid proposals should be secondary to the minimum procurement and training requirements of our own services.

17. It is most undesirable that foreign nations be informed of this government’s concept of military assistance priorities or of any priority status which may be accorded to them in these projects. Such information to other countries would be a source of embarrassment to this government.

1. As amended by SANACC 360/12 and SANACC 360/13.
2. For documentation on United States aid to China, see vol. ix, pp. 509 ff.
3. Regarding agreements providing for U.S. military missions in certain American republics, see vol. ii, pp. 470 ff.
4. For documentation on United States cooperation with the Republic of the Philippines, see vol. vii, Part 1, pp. 591 ff.
5. Documentation on Saudi Arabia is scheduled for publication in volume vi.
6. Not printed.
7. For text of NSC 14/1, “The Position of the U.S. with Respect to Providing Military; Assistance to Nations of the Non-Soviet World,” July 1, 1948, see Foreign Relations, 1948, vol. i, Part 2, p. 585.
8. For documentation on United States policy regarding the Free Territory of Trieste, see vol. iv, pp. 497 ff.
9. Negotiations are currently in progress looking toward a collective defense arrangement for the North Atlantic area in which the United States, the countries in Category 1 and certain other countries would be full participants. When such an arrangement comes into force first priority should be extended to meeting the coordinated defense requirements of the countries participating in it. [Footnote in the source text.]
10. In view of the current project for the preparation and presentation to Congress of the military assistance program, and the limited time schedule available to complete that project, any such decision during the period of work on that project should be made through the mechanism of the Ad Hoc Committee on Foreign Assistance [Foreign Assistance Steering Committee], consisting of the Secretary of State, as Chairman, the Secretary of Defense and the Administrator for Economic Cooperation Administration. [Footnote in the source text.]
11. See Appendix, par. 11. [Footnote in the source text.]
9. For text of SANACC 382/6, “Policy Concerning Transfers to Non-Soviet Countries of Military Supplies of U.S. Origin,” June 18, 1948, see Foreign Relations, 1948, vol. i, Part 2, p. 577.