295. Memorandum From the Director of the Office of Philippine and Southeast Asian Affairs (Young) to the Assistant Secretary of State for Far Eastern Affairs (Robertson1
SUBJECT
- Letter to Mr. Stassen on Support of Lao National Army
I should like to provide the following background information for use in today’s meeting with Mr. Hoover and Mr. Murphy during which they will discuss financial assistance to the Lao National Army.2
[Page 652]1. The specific subject of discussion is a letter to Mr. Stassen, prepared in PSA on May 9 for Mr. Nolting’s signature,3 requesting that FOA provide financial support for maintenance of the Lao National Army at the current strength of 29,000, with the understanding that the Army will be reduced to the 23,650 level which U.S. representatives deemed adequate for the maintenance of internal security.
2. This letter, originally drafted in the first week in March, is intended to serve as the basis for FOA’s disbursement of large aid sums justified on political rather than economic or strictly military grounds, and in effect also as a definition of responsibilities of the several agencies in the establishment of the civilian group being sent out to supervise the military assistance program. Delays were at first occasioned by lengthy inter-departmental wrangles over responsibilities and latterly by differences on language within the Department. After some two months, the letter was finally cleared by PSA, PSA/E, L/MSA, FE/EX, FE (Mr. Baldwin and Mr. Parelman), Defense and informally by FOA.
3. On May 13 Mr. Nolting, feeling unable to sign the letter because of remarks made by the Secretary on May 5 at a meeting to determine the U.S. position on the Cambodian training formula (in preparation for the NATO Council discussions in Paris),4 requested that Mr. Murphy and perhaps Mr. Hoover review the question of military assistance to Laos. I understand that Mr. Murphy, in forwarding the letter to the Under Secretary, noted that the sum involved seemed unrealistically high.
4. I am sure that you will agree that the Secretary’s side remarks at the meeting were not intended to mean a reversal of the NSC policy of supporting the armed forces of the three Associated States. Without U.S. financial assistance on which the Lao Army is entirely dependent, strategically important Laos would be fair game for further Communist aggression. To withdraw U.S. support would be politically disastrous in Laos itself.
5. In Washington, failure to transmit the letter to FOA has caused considerable uneasiness as an indication of Department wavering on Laos and indirectly on Cambodia, and has consequently placed the military assistance program in jeopardy. FOA, always chary of this large aid program for a country of 1.5 million people, has depended upon the Department’s support for political justification of the expenditure. Evidences of disagreement within the Department have apparently been the largest single contributing factor to the recent FOA decision to obligate funds sufficient only to carry [Page 653] the Lao and Cambodian armed forces through August, depending upon an uncertain Congressional reappropriation to cover the last four months of the calendar year. In addition, establishment of the civilian group to assist Minister Yost and FOA in assuring the most effective use of U.S. funds is hindered by what appears to be the Department’s questioning of the basic concept of financial support for the Army.
6. Aid tentatively allocated for Laos is as follows (in millions of dollars):
| Direct Forces Support (common use items) | Defense Support | Technical Cooperation | Total Country Program | |
| FY 1955 | $11.5 | $40.4 | — | $51.9 |
| FY 1956 | 10.5 | 46.5 | 1.0 | 58.0 |
Of the above amounts, $46 million in FY 1955 and $42 million in FY 1956, are presently intended as military assistance (Direct Forces Support plus that element of Defense Support which is budgetary support for the armed forces) to Laos. It should be noted that although $46 million is still carried on the books, $40 million is actually set aside for Laos in FY 1955. Under FOA’s latest plan, only $25 million will be obligated before June 30, support for the rest of the year, particularly the last four months, being left uncertain.
7. As you know, the Department has maintained the position that the $40 million figure should not be considered sacrosanct but should be used until a realistic cost study can be undertaken in the field by the qualified personnel … soon to be assigned. Telegrams received this week from Minister Yost report that the Lao Government has submitted a military budget of $43.3 million; the Legation and USOM/Vientiane have in turn once more recommended that the allocation for FY 1955 (to cover Calendar 1955) should be not less than $40 million.
8. It is recommended, if you approve, that FOA be advised the Department prefers that the total allocation be obligated for both Laos and Cambodia in order to insure our ability to provide the necessary military support throughout Calendar 1955, since this support cannot be assured under the latest FOA proposal.
- Source: Department of State, Central Files, 751J.5/5–2755. Secret. Drafted by Byrne.↩
- See Document 300.↩
- for the final version, see infra.↩
- See Document 200 and 201.↩