700.5 MAP/4–2550
Memorandum by the Assistant Secretary of State for Far Eastern Affairs (Rusk) to the Under Secretary of State (Webb)
Subject: Budgetary Plans for Fiscal Year 1951 for Assistance to Countries Eligible Under Section 303 of the Mutual Defense Assistance Act.
For purposes of presenting to the Bureau of the Budget estimates of funds necessary to carry out the Mutual Defense Assistance Program for fiscal year 1951, it is necessary that S/MDA be provided with a firm estimate covering the cost of military assistance to countries eligible under Section 303 of PL 329.
The Joint Chiefs of Staff, in a memorandum recently forwarded Thy Secretary Johnson to the Department,1 has recommended that the Administration seek obligational authority in the amount of $100 million for fiscal year 1951 to cover the cost of military assistance to certain countries in the Far East. This estimate of requirements by the Department of Defense assumes that such funds will be devoted to military assistance only.
As you know, out of the existing $75 million fund appropriated under Section 303 for this fiscal year, $36.5 million have been reserved by the President for military assistance projects in Indonesia, Indo-China, Thailand and Japan. These projects are moving forward. In addition, we are seeking an allocation of $5 million from 303 funds for the first installment of ECA operations in Indo-China, to complement the military assistance program by means of rural rehabilitation [Page 84] projects in liberated areas, in accordance with the Griffin Mission recommendations. Present tentative plans for the use of the remainder of the $75 million fund are as follows: an increase in the amount reserved for military assistance to Indo-China; allocations to initiate economic assistance projects in Burma, Thailand, Malaya, and possibly Indonesia, in accordance with the recommendations of the Griffin Mission.
As in the case of the proposed ECA project in Indo-China, it is contemplated that the funds to continue economic programs in these other countries during fiscal year 1951 will come from the unexpended balance of the China Aid fund, approximately $60 million of which will be available for use in the general area of China if legislation now pending is approved.
It is recommended that S/MDA be authorized to insert a figure of $100 million Apr fiscal year 1951 in the estimates to the Bureau of the Budget for MDAP in countries in the general area of China, upon the understanding with the Department of Defense that this amount, if appropriated, will be used primarily for military assistance and for the financing of any covert operations undertaken by the Central Intelligence Agency. Such an understanding between the Departments of State and Defense would not preclude the possibility that at a later date, after consultation between the two departments, this fund might be used for purposes other than military assistance or covert operations, if circumstances so required; and the requested legislation should be drafted so as to admit this possibility.
It is further recommended that you authorize the planning, together with ECA, for the utilization of the approximately $60 million unexpended China Aid funds for economic purposes in the general area of China during fiscal year 1951.
With regard to the portion of the existing $75 million fund unobligated as of June 30, 1950, we are planning to ask for a carryover under the general terms of the present legislation (Section 303 of Public Law 329), which would permit the expenditure of these monies for either military or economic projects.