S/PNSC files, lot 61 D 167, NSC 5413/1

No. 359
Memorandum by the Executive Secretary (Lay) to the National Security Council

secret
NSC 5413/1

U.S. Policy Toward The Philippines

References:

  • A. NSC 54131
  • B. NSC Action No. 10842
  • C. NSC 84/23
  • D. NIE–66–544

The National Security Council, the Secretary of the Treasury, Assistant Secretary of Commerce Anderson and the Acting Director, Bureau of the Budget, at the 191st Council meeting on April 1, 1954 adopted the statement of policy on the subject contained in NSC 5413, subject to the changes therein which are set forth in NSC Action No. 1084.

[Page 591]

The President on April 1 approved the statement of policy contained in NSC 5413, as amended and adopted by the Council and enclosed herewith; directs its implementation by all appropriate executive departments and agencies of the U.S. Government; and designates the Operations Coordinating Board as the coordinating agency. The Financial Appendix and NSC staff study5 originally enclosed in NSC 5413 are also transmitted herewith for Council information.

Accordingly, NSC 84/2 is hereby superseded.

James S. Lay, Jr.

[Enclosure]

Statement Of Policy By The National Security Council On U.S. Policy Toward The Philippines

general considerations

1.
The Philippine Republic is important to the United States and the free world.
a.
Strategically, it forms a principal link in the Far East defense perimeter, of special value at this time because of its geographic relation to Communist China, Japan, Formosa, Indonesia and Indochina.
b.
Its independence and progress are daily reminders to other Asians of the value of Western democratic systems, and concrete evidence of the U.S. attitude toward progress from colonial status to self-determination.
c.
It is our principal source of copra and hemp, and an important source of sugar and chrome.
2.
Political power in the Philippines now rests with a coalition of parties, in which the Nacionalista Party under the leadership of President Ramon Magsaysay is the major factor. Magsaysay, like the majority of Filipinos, is strongly pro-American. Some influential Nacionalista Party leaders are seeking to reduce cooperation with the United States under the guise of promoting closer association with other Asian states. However, these leaders are not likely to bring about a significant change from the basic Philippine pro-U.S. and pro-free world position recently restated by Magsaysay. It is important that the Filipinos act to the maximum extent possible on their own initiative and that other countries, particularly in Asia, recognize that the Philippines are truly independent.
3.
Although the Communist Party has never been outlawed by legislative action, it has been declared illegal by the courts. The Communist Party apparatus was badly impaired following the arrest and conviction of a number of Communist leaders in 1950 and 1951. Communist influence in the labor movement is now of relatively minor importance. The estimated strength of the Communist-led Hukbong Mapagpalayang Bayan (HMB) has been reduced from about 12,000 in 1950 to 2,500 today.
4.
The principle of gradual transition to complete economic and commercial independence of the Philippines from the United States was established by the Independence Act of 1934 and is inherent in the 1946 Trade Agreement, which was based on the 1946 Trade Act. The request of the previous Philippine Administration on May 5, 1953, for reconsideration of the terms of the present arrangement, contained proposals implying a review of this principle. The United States has now rejected these specific Philippine proposals, but has agreed to consider with the Philippines possible modification of all aspects of the 1946 Trade Agreement, as well as commercial matters not covered by the Agreement. At the request of the Philippine Government, it has also been agreed to seek Congressional approval of deferment of the imposition of tariffs on a reciprocal basis for a period of 18 months.
5.
The Philippine economy is not developing fast enough to meet the needs of the growing population. Increased production and diversification in agriculture and industry are essential to provide employment and increase living standards. Substantial mineral deposits exist on which development work is in progress. Agricultural production is restricted by outmoded practices, by the limited area under cultivation, and by other factors which reduce incentive. Industrial production is restricted by insufficient investment and low worker productivity. Major expansion of government efforts to improve the economy and provide public services is handicapped by insufficient revenues. U.S. economic and technical assistance is designed to encourage and assist the Philippine Government in its efforts to meet these problems.
6.
Since assuming office Magsaysay has reiterated his determination to improve the status of the peasant and steps have already been taken to raise the level of political morality in the government. It is in the U.S. interest that these efforts be successful. However, government action can be effective only if clearly taken on Philippine initiative. American agencies have so far limited their role on social reform measures to technical assistance in the preparation of plans and the administration of approved measures.
7.
External threats to the Philippines appear to be relatively remote at this time. Under the terms of a Mutual Defense Treaty [Page 593] (signed August 30, 1951, effective August 27, 1952), the United States and the Philippines recognized that an armed attack in the Pacific area on either country would be dangerous to the peace and safety of the other, and each agreed to act to meet the common danger in accordance with its own constitutional processes. The further development of United States naval and air force installations in the Philippines will be the subject of negotiations to begin shortly. Although an increase in the combat effectiveness of Philippine military forces would be desirable, no appreciable increase in the present level of such forces would be advisable, under current conditions, in view of the present projected economic development program in the Philippines.
8.
President Magsaysay has stated that while first concentrating on domestic problems he will also work to promote closer relations with Southeast Asian states. Through improved diplomatic relations with Asian countries, the Philippines could assist in improving economic and cultural cooperation in the area, but its leadership in a regional political or defense arrangement does not appear likely in the near future. However, even though the obstacles to development of a strong regional non-Communist community of interest in East Asia are formidable, it is clearly in U.S. interests to encourage the eventual emergence of the Philippines as a major force in the creation of such a community, bearing in mind that success of this idea depends in large part upon its indigenous nature.
9.
An intense Filipino animosity toward the Japanese, kept alive by the failure to reach a reasonable agreement on reparations, acts to the detriment of the economies of both countries. Reduction of this animosity could be expected to lead to better trade relations and to an atmosphere favorable to Asian non-communist unity.

objectives

10.
An effective government which will preserve and strengthen the pro-American and democratic orientation of the country, and serve as an example to the Far East of the application of Western ideas and institutions to Asian problems.
11.
An expanding and diversified economy capable of furthering domestic stability and progress and of competing successfully in the world market.
12.
A military establishment capable of providing internal security, and of contributing to the defense of the country and of the free world.
13.
A foreign policy which is based upon the traditional close relationship with the United States and which at the same time draws the country into a position of influence in non-Communist Asia.
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courses of action

Political

14.
Support the present government so long as it remains friendly to the United States and seek to ensure that any successor government is effective, friendly and non-Communist.
15.
Conduct U.S. relations and activities in the Philippines in a friendly and helpful manner, while avoiding actions which appear to “direct” or “control” Philippine activities or leaders.
16.
Encourage Magsaysay’s expressed desire to carry out reforms which will strengthen his domestic position and contribute to the growth of his prestige in Asia.
17.
Encourage closer relations among the non-Communist Asian nations, leading to the eventual emergence of the Philippines under Magsaysay as a major force in the creation of a cooperative community among them, bearing in mind that success of this idea depends in large part upon its indigenous nature.
18.
For the present, encourage the Philippines to:
a.
Increase the size and improve the quality of Philippine diplomatic representation in non-Communist Asia and establish missions where none now exist.
b.
Recognize the Associated States of Indochina.
c.
Reach a solution of the reparations problem with Japan and conclude a peace treaty with that country looking toward increased trade and friendly relations.
d.
Develop a better appreciation among the Philippine people of the value to them of the struggle being conducted against Communist imperialism by other nations of East Asia.
19.
When it becomes appropriate, consider encouraging Magsaysay to call or participate in conferences of some or all of the countries of non-Communist and anti-Communist Asia to examine matters of common interest in political, military, economic and cultural affairs.
20.
Foster an expanded program of educational exchange between the Philippines and other free Asian countries by means of improved facilities and increased scholarships at the University of the Philippines and other qualified institutions.
21.
Develop an improved program for educational exchange, with emphasis on bringing Filipino students and leaders to the United States.
22.
Continue information programs to combat communism and furnish advice and support to Philippine and indigenous Chinese organizations combating communism.
23.
Encourage and assist, particularly through USIA, public and private organizations working toward a stable democracy in the Philippines.

. . . . . . .

Economic

25.
Encourage the Magsaysay Administration to prepare and carry out plans for the development and diversification of the Philippine economy. To this end provide economic and technical assistance and encourage private investment for the purpose of facilitating (a) light industrial development, (b) increased production of strategic and basic raw materials useful to the free world, and (c) increased agricultural production.
26.
Encourage and support with technical assistance realistic Philippine programs to reduce the social and economic inequities which encourage the development of Communism.
27.
Encourage and support with technical advice revision of the tax system and other measures to increase Government revenues and draw foreign and domestic capital into useful investment.
28.
Consult with the Philippine Government on possible modification of all aspects of the 1946 Trade Agreement, as well as commercial matters not covered by the Agreement which may be of mutual interest to both countries.
29.
Attempt to negotiate a treaty of Friendship, Commerce and Navigation, and a double taxation agreement with the Philippines, to clarify commercial relations between the two countries and encourage American private investment.

Military

30.
Continue military aid, training and advice necessary to assist in maintaining the Philippine armed forces at approximately present levels and to improve their combat effectiveness.
31.
Endeavor to acquire land needed for the expansion of our military bases under terms which satisfy U.S. defense requirements with due regard to Philippine nationalist sensibilities. Be prepared to relinquish lands under U.S. control for which no need is foreseen.
32.
In the event of overt attack on the Philippines the U.S. should take military and other appropriate actions to fulfill U.S. obligations under the Mutual Defense Treaty with the Philippines.
33.
Seek under circumstances compatible with paragraph 15, to improve the arrangements which provide for unrestricted access by [Page 596] the United States to military bases in the Philippines for its own and allied forces.6

Financial Appendix

summary

1.
Estimated expenditures for FY 1954 through FY 1957 total $175 million. (Table I)
2.
At the beginning of FY 1954, there was an unexpended carryover of $84 million available for proposed programs. Based on the current programming of appropriations already made for FY 1954 and requested for FY 1955, new funds of $62 million would be provided in these years, compared with expenditures of $104 million. There would be an unexpended balance of $42 million at the end of FY 1955 available for future expenditure. (Table II)

Special Notes: (a) All estimates are subject to the following assumptions, footnotes and detailed comments.

(b) In order to cover the lead time required for many Military Assistance items, sums must be made available well in advance of expenditures.

assumptions on which estimates are based

1.
The pacification campaign against HMB will be successful.
2.
No further payments by the U.S. on Philippine war claims.
3.
No further collections by the Philippines on reparations from Japan.
4.
In order to permit the Philippine Government to implement its projected economic development program, the present level of Philippine military forces will not be increased during the period of this program.
5.
The Philippine Government will increase its efforts to expand the Philippine economy, with the result that U.S. economic aid can accordingly be reduced.
6.
Amounts shown as funds available are subject to future Executive decisions to transfer funds from one program to another, and to Congressional decisions on current appropriation requests.
[Page 597]

estimated cost of proposed policies

Table I. Expenditures by Programs

FY 1952–FY 1957

(Millions of Dollars)
Actual Expenditures Estimated Expenditures
1952 1953 1954 1955 1956 1957 Total
Military Assistance7 $12.0 37.4 31.7 27.0 23.9 4.6 87.2
Economic & Technical Assistance8 12.0 24.1 22.0 20.0 20.0 20.0 982.0
Information Services 1.9 2.2 1.4 1.3 1.1 1.1 4.9
Educational Exchange .5 .4 .3 .3 .3 .3 1.2
Totals 26.4 64.1 55.4 48.6 45.3 26.0 175.3

Table II. Availability of Funds in Relation to Expenditures

FY 1953–FY 1955

(Millions of Dollars)
Total Military Assistance Economical & Technical Assistance10 Information Activities Exchange Activities
Unexpended Carryover into FY 1954 84.0 54.5 28.8 .7 .0
Plus: FY 1954 Funds 30.6 13.9 15.0 1.4 .3
Equals: Total available for expenditures 114.6 68.4 43.8 2.1 .3
Less: Estimated expenditures FY 1954 55.4 31.7 22.0 1.4 .3
Equals: Unexpended Carryover into FY 1955 59.2 36.7 21.8 .7 .0
Plus: FY 1955 Funds 32.1 10.5 20.011 1.3 .3
Equals: Total available for expenditures 91.3 47.2 41.8 2.0 .3
Less: Estimated expenditures FY 1955 48.6 27.0 20.0 1.3 .3
Equals: Unexpended Carryover into FY 1956 42.7 20.2 21.8 .7 .0
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comments on programs listed in table i

Military Assistance

1. The United States is assisting in the equipping of Philippine military forces, detailed in the Staff Study (paragraph 31).12

2. Military aid currently programmed for the Philippines from military assistance funds appropriated through FY 1954 should, if deliveries are completed in FY 1956 as presently planned, essentially provide the initial equipment required for the JCS recommended forces (except for maritime aircraft) as well as limited attrition equipment for these forces, limited maintenance for equipment on hand, and a 90-day war reserve of ammunition for the Philippine Army. The question of providing a squadron of maritime aircraft, as originally recommended by the Joint Chiefs of Staff, is being restudied.

[Page 599]

Economic and Technical Assistance

3. The Economic and Technical Assistance Programs include activities in the fields of agriculture, health and sanitation, education, transportation, mineral development, and public administration.

a.
In FY 1954 Economic and Technical Assistance total approximately $22 million. The Agricultural Assistance Program is aiding the Philippines to increase food production, to improve rural conditions, and in training agricultural leaders. The Health and Sanitation Program is assisting the Philippines to control malaria, establish rural health units, increase well construction, and improve health training. The Educational Program is assisting the Philippines to establish vocational, professional, and teacher-training. The Transportation Program is aiding in the construction of roads, harbor improvement, and in the making of a comprehensive transportation survey. The Mineral Resources Program is aiding in the development of the country’s basic mineral resources and providing technical advice to prospective investors and government officials. The Public Administration Program is aimed at increasing the government’s ability to operate effectively. Provision has been made for a budget and accounting survey and a government-wide wage and classification survey. A Labor-Management Relations Center has been established by the Government Institute of Public Administration.
b.
In FY 1955 Economic and Technical Assistance will total approximately $20 million. The Programs will continue and expand the development and improvement in the fields mentioned above.

Information Services

The Information Services Program includes the following:

4. 4 Information Services centers employing 13 Americans and 111 local inhabitants are maintained. The estimated annual attendance at these centers is 230,000, 80% of whom are students.

5. During FY 1954 the lack of funds made it necessary to reduce the services of the libraries by 40% and caused elimination of 2 or 3 libraries as well as the dismissal of some library personnel.

6. Press material is furnished daily and weekly to 122 newspapers and magazines, 18 radio stations, and 65 government officials. During FY 1954 these services were reduced by approximately 65% because of lack of funds.

7. USIA has contracts with Philippine motion picture companies to produce anti-Communist pictures which present positive democratic themes. These films are shown throughout the Philippines by commercial theaters, mobile units, and television stations. Television is a young industry in the Philippines but the USIS films are a major source of its programs. During FY 1954 a reduction in the USIS film program by 50% will be necessary because of lack of funds.

[Page 600]

8. USIS utilizes approximately 80 to 90 hours monthly to each of 18 radio stations. 10 hours of this time is devoted to materials in Chinese. All of the programs are in native dialect and produced locally. A new Voice of America transmitter has begun both medium and short-wave transmission in northern Luzon. The general program has been reduced during 1954 to keep within the available funds.

Educational Exchange

9. The Educational Exchange program is authorized under Public Law 584 (Fulbright Act) and Public Law 402 (Smith–Mundt Act). Under this program 344 Philippine nationals have come to the United States and 81 Americans have gone to the Philippines. The Fulbright Act provides for an exchange of lecturers, teachers, students, and research specialists. The Smith–Mundt Act provides for an exchange of civic leaders from the Philippines. Under the latter Act, 54 Philippine civic and industrial leaders came to the United States and 8 American specialists went to the Philippines.

10. Expenditures under the Fulbright Act are financed from local currency derived from the surplus property agreement with the Philippines. Under this Act the amount of the program is limited to a maximum of $1,000,000 annually and the total period is limited to 20 years. Expenditures under the Smith–Mundt Act are financed by the United States dollar appropriations made available by Congressional action.

  1. Dated Mar. 16, NSC 5413, prepared by the NSC Planning Board, was transmitted to the Council on that date for consideration at an early meeting. NSC 5413 did not differ substantially from NSC 5413/1 except as indicated in footnote 2, below.
  2. NSC Action No. 1084 was taken at the 191st meeting of the National Security Council on Apr. 1. The changes made in NSC 5413 were minor with the exception of the revision of paragraph 4 to take into account the joint statement of Mar. 22 (see footnote 3, Document 355) and the revision indicated in footnote 6, below. (611.96/4654)
  3. For text, see Foreign Relations, 1950, vol. vi, p. 1514.
  4. See Document 356.
  5. The staff study is not printed.
  6. This paragraph was proposed by the representatives of the Departments of Defense and Treasury and the Joint Chiefs of Staff. The first version of the paper (NSC 5413, Mar. 16) did not contain the words “under circumstances compatible with paragraph 15”, which were added after it was referred back to the NSC Planning Board at the insistence of the Department of State and were approved for inclusion by NSC Action No. 1084, Apr. 1. (Memorandum of discussion at the Apr. 1 NSC meeting; Eisenhower Library, Eisenhower papers, Whitman file)
  7. Value of materiel shipments, plus expenditures for training, and packing, handling and crating, and transportation. [Footnote in the source text.]
  8. Authorized and conducted as a single unified program for economic and technical assistance to the Philippines. [Footnote in the source text.]
  9. This figures does not include possible Philippine participation in a U.S. Surplus Agricultural Commodities Program which may be developed. [Footnote in the source text.]
  10. Authorized and conducted as a single unified program for economic and technical assistance to the Philippines. [Footnote in the source text.]
  11. This figure does not include possible Philippine participation in a U.S. Surplus Agricultural Commodities Program which may be developed. [Footnote in the source text.]
  12. Paragraph 31 of the staff study reads as follows:

    “31. The Armed Forces. The Philippine Armed Forces consist of approximately 53,000 officers and men as follows:

    “Army—39,000 (26 BCTs)

    “Navy—3,300 (no major combat vessels)

    “Air Force—3,800

    “Constabulary—6,900

    “The Air Force has approximately 40 F–51D fighters, 20 transport planes (largely C–47s) and about 100 miscellaneous trainer aircraft. The Philippine Navy consists of approximately 5 escort vessels, 19 sub-chasers (5 of which are inactive), 3 patrol craft, 7 amphibious craft, 13 auxiliary vessels and service craft, and 1 minesweeper.”