Current Economic Developments, lot 70 D 467
[Extract]
Current Economic Developments
Issue No. 449
Mutual Security Program. Just before adjourning the Congress appropriated approximately $2.8 billion to carry out the Mutual Security Act of 1954,1 some $650 million less than the President requested. (See page 6, April 27, 1954 issue.2) The Congress approved the use of nearly $2.5 billion in unobligated funds from previous years, bringing the total to $5.2 billion. The bulk of the new funds are for military assistance ($2.4 billion), reflecting the shift in emphasis away from economic aid, for which only $184.5 million is appropriated in contrast with $4.4 billion appropriated for that purpose in the peak year of 1948. Further, the Mutual Security Act specifically provides for termination of development assistance by June 1955. Not less than $200 million of the aid funds are to be used for loans. These are repayable in dollars, local currencies or materials, and are to be administered through the Eximbank.
The program is divided by functions into the following categories:
| Mutual defense assistance—Title I Military assistance | $1,192,700,000 |
| Southeast Asia, Western Pacific and direct forces support | 795,000,000 |
| Defense Support | 431,098,195 |
| Development Assistance—Title II | 184,500,000 |
| Technical Cooperation—Title III | 116,457,621 |
| Other Programs—Title IV | 61,744,000 |
Transfer of funds is permitted up to 10% of the funds from any provision to any other, provided the amount for the latter is not increased by more than 20%.
The amount of $700,000,000 was included for support of forces of free nations in Southeast Asia, including furnishing, as far as possible, of direct assistance to the Associated States of Cambodia, Laos and Vietnam, as well as for other expenditures to accomplish in Southeast Asia and the Western Pacific the policies and purposes of the Mutual Security Act. So far as possible, aid is to be given directly to the peoples of the area. Broad discretion is given to the President in use of these funds. Provision is included, however, that none of the funds may be used for assistance to any nation which in the opinion of the President is not cooperating in common defense efforts against further Communist penetration and/or aggression.
The amount of $205,000,000 is appropriated for defense support, relief and rehabilitation, and other necessary assistance for Korea. In addition, $3 million is authorized for US contributions to the UN Korean Reconstruction Agency plus the $16 million of the unobligated balances heretofore made available for this purpose.
Development assistance appropriated includes $115 million for the Near East and Africa, $60.5 million for South Asia, and $9 million for the American Republics and non-self-governing territories in the Western Hemisphere. For the US technical cooperation program, $105 million is appropriated. In addition, approximately $9.9 million is appropriated to cover the amount pledged by the US to the UN expanded program of technical assistance for the calendar year 1954. Provision is included, however, that no commitment for the calendar year 1955 or thereafter shall be pledged on behalf of the US until the Congress appropriates for this purpose. The amount of $1.5 million is provided for the US contribution to the technical assistance program of the Organization of American States.
Of the total funds appropriated, not less than $350 million are to be used to finance export and sale for foreign currencies of surplus agricultural commodities, in addition to commodities transferred under the Agricultural Trade Development and Assistance Act of 1954. Stipulation is included that these sales are to be in accordance with the standards as to pricing and the use of private trade channels expressed in that Act (see above). The appropriation legislation further stipulates that $55 million of the unobligated balances shall be available only for the procurement and sale of surplus [Page 746] agricultural commodities as assistance to Spain during the current fiscal year. It is further provided that 80% of the foreign currencies generated thereunder shall be used to strengthen and improve the civilian economy of Spain, the balance to be available for use of the US, provided however that this provision should not be construed as a precedent or as an abrogation of any agreement heretofore entered into.
The Act specifically provides for abolition of the Foreign Operations Administration by June 30, 1955. The President may transfer aid administration to any agency he chooses, except that the Act specifically states that technical cooperation is to be administered by the State Department following termination of FOA. The Congressional objective is that further aid programs necessary in the US interest will thereafter be administered by permanent executive departments.
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- The Mutual Security Act of 1954, signed by President Eisenhower on Aug. 26, 1954, is printed in 68 Stat. 832.↩
- Not printed; the issue of Current Economic Developments under reference contained a summary of the President’s initial and tentative request to Congress for financial authorization for the Mutual Security program for fiscal year 1955. (Current Economic Developments, lot 70 D 467, Issue No. 440)↩