11. Memorandum From the Executive Secretary of the National Security Council (Lay) to Members of the Council1


  • Review of Military Assistance and Supporting Programs


  • A. NSC 5434/1
  • B. NSC 5525, part 2

The enclosed draft NSC action on the subject, prepared by the NSC Planning Board after review of U.S. military assistance and supporting programs pursuant to NSC 5434/1, is transmitted herewith for consideration by the National Security Council at its meeting on Thursday, December 8, 1955.2

Also enclosed for the information of the Council is an Annex showing foreign aid and other national security expenditures in FY 1955 and 1956 and the distribution of foreign grant aid in FY 1955.3

James S. Lay, Jr.4


Review of Military Assistance and Supporting Programs

1. a. Note that a high proportion of U.S. military and economic assistance is received by Turkey, Iran, Pakistan, Vietnam, Formosa and Korea; and that in each of these countries the armed forces (1) “do not represent total military requirements,”5 (2) cannot be supported by the local economy now or in the foreseeable future, and (3) require U.S. subsidies at an annual cost ranging from $100 million to $800 million to each of these countries

b. Direct an appropriate group or agency to proceed urgently with a study of the assistance programs for these countries; and direct the NSC Planning Board, in the light of such study, to review the relevant NSC policies. It is understood that such study and [Page 42] review will not delay preparation and presentation of the FY 57 budget now in progress.6

Majority Proposal Budget–Treasury Proposal
2. Agree that in the interest of greater flexibility the Congress should be requested to make available to the President, in addition to the specific appropriation for military and economic assistance, a fund of the order of several hundred million dollars which may be used, in his discretion:
For unforeseen and essential military assistance needs arising from changes in the international situation.
For economic assistance for development and related purposes wherever new or expanded programs appear in the U.S. interest.
2. Agree that, in order to provide flexibility to meet unexpected developments or take advantage of future circumstances, a substantial portion of the total FY 1957 foreign aid program should be in the form of a contingency fund.

3. Agree that in present circumstances, it may be desirable to seek greater latitude in the granting of military and economic assistance than is permitted by existing statutory requirements relating to commitments or policies of the recipient countries; and accordingly request the departments and agencies concerned, without delaying preparation and presentation of the FY 57 budget, to study existing restrictions applicable to their respective programs and advise the Council of the results of such study.

4. Request the responsible Departments and Agencies to devise programming, clearance and allocation-of-funds techniques for military assistance programs aimed at reducing the time span involved between the initiation of a new fiscal year programming and the clearance for delivery of the first items to be shipped.

5. Recognize that the nature, scope and objectives of U.S. economic aid are matters requiring urgent review, particularly in the context of current Soviet moves in the economic field in the underdeveloped areas; request the International Development Advisory Board, chaired by Eric Johnston, to review U.S. economic aid programs [Page 43] and to report to the Council through the Director, ICA, on the level and types of economic assistance required in the underdeveloped areas in order best to achieve the long-range objectives of the United States.

[Here follow sections entitled “General Questions,” “Questions Relating to Particular Countries and Areas,” “Organizational Questions,” and the annex, “Foreign Aid and Other National Security Expenditures.”]

  1. Source: Department of State, S/PNSC Files: Lot 61 D 167, MSP Procedure for Periodic Review. Top Secret.
  2. See Document 13.
  3. Not printed.
  4. Printed from a copy that bears this typed signature.
  5. See NSC 5525, Part 2, Annex 2, page 1. [Footnote in the source text.]
  6. JCS Adviser proposes deletion of para. 1. [Footnote in the source text.]