Foreign Relations of the United States, 1951, National Security Affairs; Foreign Economic Policy, Volume I

Under Secretary’s Meetings, Lot 53 D 250

Record of the Under Secretary’s Meeting, Department of State, June 22, 1951, 10:15 a.m.

June 22, 1951, 10:15 a.m.

secret

UM N–360

Progress Report on MDAP ¹

1. Mr. Bell² explained that MDAP has been in existence for about two years. However, it was almost the first of 1950 before the program actually began to operate. We have had three appropriations during fiscal years 1950 and 1951. The first was $1.3 billion, the second $1.1 billion, and the supplemental appropriation was $4 billion. All but $500 million has been obligated. The program has been primarily grant aid, including end-items, training, and aid to production. The end item program has been divided among EUR, FE, and NEA. For Europe, or Title I, $4.6 billion has been programmed and $1/2 billion has been programmed from excess. Of the $5.1 billion, 65 percent has been obligated as of April 30, and $600 million has been shipped. The recipients have been Belgium, Denmark, France, Italy, Luxemburg, Netherlands, Norway, Portugal, and the UK. Included in this program has been money for the Yugoslav food program and for the development of three stockpiles for Austria, Germany, and Yugoslavia. Title II includes Greece, Turkey, and Iran. $495 million has been programmed, with the addition of $48 million from excess. Of the $543 million, 63 percent has been obligated as of April 30, and $125 million has been shipped. Title III includes Korea, Philippines, Burma, Indochina, Indonesia, Formosa, and Thailand. $562 million has been programmed plus $25 million from excess. Of the $587 million, 45 percent has been obligated as of April 30 and $121 million shipped as of that time. $56 million has been obligated for four special projects. All but $25 million of this amount has been programmed and this will be handled this week.

2. Mr. Bell explained that 17,500 officers and enlisted men have been trained or are in training, including 5,000 officers and 12,500 enlisted men. About 5,000 men have been trained overseas and 12,500 men in this country. As between titles, 13,500 from Title I countries have been trained; 2,936 from Title II; and 1,180 from Title III. As between the services, 5,298 have been trained for the Army; 8,326 for the Navy; and 3,861 for the Air Force. The Army and Air Force figures will probably increase in the future.

3. On the economic side, Mr. Bell explained that we over-anticipated our needs. Approximately $230 million has been programmed and will be obligated by June 30 for Belgium, Luxemburg, Denmark, France, Italy, Netherlands, Norway, and the UK.

4. With respect to reimbursable aid, 43 countries have been given such aid, and 530 requests for such aid have been requested. $171 million sales have been made and $368 million are in process. The bulk of the aid has been given to Canada.

5. Mr. Bell explained that during the past six months, we have worked very closely with ECA on economic aid. We have handled European countries as a single package. This approach has made our negotiating position much more effective. We have made some efforts to relate economic aid to the increase in production in the individual countries. Mr. Bell explained that we have attempted to give assistance to countries requiring imports for their defense effort. In other words, we have attempted to get adequate priority treatment for certain countries. We have also attempted to refine the economies of some of our operations. For example, we have set up two depots to serve as common overhaul bases which have saved the U.S. Government $200 million. We have also made some contribution to the expansion of plants in the United States. Mr. Bell explained that we are attempting to resolve the problem of buying military equipment in Europe, but so far no substantial volume has been produced by these efforts.

6. Mr. Bell stated that the forecasts for delivery had to be taken with many reservations, depending upon Korea, production, etc. The 1950 program should be delivered by June 30, 1951; the 1951 program should be delivered by June 30, 1952; and the 1952 program may be delivered by the end of 1952. We have worked with the military, and we have been assured that 7 percent of the Army items will be given to MDAP and 30 percent of Air Force items. Of course, this percentage will vary among the individual items. Mr. Bell explained that the Defense Department is giving MDAP a concurrent priority with Korea.

7. In response to a question by Mr. Webb, Mr. Bell explained that the slowness of delivery in the initial stages of the program was serious. However, recent deliveries have had a definite impact, especially on the morale of foreign troops. The upswing in deliveries should continue to have a favorable impression upon the countries involved.

8. Mr. Rusk asked whether it was possible or necessary to have some inter-governmental action to control trade in arms. Mr. Bell explained that there is a general system in Europe whereby governments will check with the Defense Production Board of NATO to see whether countries need military equipment which is in excess in a given country. However, basically, the problem is inadequate government control.

9. Mr. McFall³ pointed out that congressmen are worried about the lag in the delivery of equipment. He suggested that we be prepared to explain the lead-time required for deliveries and the reason for certain lags. He also suggested that it might be wise to put pressure on the North Atlantic Council to develop a method of clearing defense budgets through NATO. He felt that if we could develop such a plan, which would be similar to EPU, this would affect the reaction of the Congress to the program. Mr. Martin⁴ pointed out that the sales of military equipment are now cleared through EPU. The basic problem is one of availability of money which makes the countries disinclined to procure outside of their own economies. Mr. Nitze pointed out that the Europeans are putting up a large share of the manpower which places a severe burden on their defense budgets and makes them have less money available for procuring military equipment. Mr. Bell pointed out that we would not be reluctant to have the defense budgets go up insofar as the manpower problem is concerned. For example, the pay scale for officers and noncommissioned officers in France is so low now that it is difficult to recruit a good force.

10. Mr. Webb asked whether our problems within the Government on this program were working out satisfactorily, including adequate machinery and organization for executing the program. Mr. Bell explained that our relationship with the military on end-items has been good. He believed that the amount of detail which we were requiring was excessive but this is now being changed. The economic side is more difficult since we are dealing with a poorly defined area. However, now we are approaching a rational distribution of functions and our desire is not to go into detail with ECA. However, we can not dissipate our bargaining power with countries involved in the MDAP program. Mr. Webb asked how our relations were with other countries and whether it would be to our advantage to develop a multilateral distribution system for the aid. Mr. Bell explained that we are moving rapidly toward a multilateral distribution system for economic aid but no definite agreement has been reached on the military side. Mr. Webb pointed out that we need to develop a strong U.S. overseas team so that they could do a large share of the job abroad. In effect, he was suggesting that we decentralize as much of the program and operations as we can with adequate backstopping in Washington. Mr. Bell stated that we were attempting to move in this direction. Mr. Martin added that Defense has been reluctant to delegate or decentralize powers to responsible officers overseas.

1. Additional information on MDAP operations is contained in the four semiannual reports by the President to Congress covering the period October 6, 1949—October 9, 1951; see Report to Congress on the Mutual Defense Assistance Program (Semi-annual) (Washington, Government Printing Office, 1950-1952).
2. John O. Bell, Assistant Director for Program Management, Office of International Security Affairs.
3. Jack K. McFall, Assistant Secretary of State for Congressional Relations.
4. Edwin M. Martin, Director of the Office of European Regional Affairs.