Foreign Relations of the United States, 1961–1963, Volumes VII, VIII, IX, Arms Control; National Security Policy; Foreign Economic Policy, Microfiche Supplement

401. Steering Group Report Conclusions, December 12¹

December 12, 1961

CONCLUSIONS

7. In many free world countries, Military Assistance Programs inaugurated since World War II have helped to create, equip, and maintain significant indigenous military establishments which have contributed importantly to a sense of local security. These forces, particularly in the six countries covered by this study, are far beyond the ability of the recipient country to maintain from their own resources at present levels of forces and equipment.

8. Moreover, the continuing military threat which MAP aid has been primarily designed to meet is a less serious long-term threat to these underdeveloped countries than the failure of their governments to meet, in an acceptable degree, the expectations of their citizens for improved standards of living, education opportunities, and national development.

9. If social and economic progress is not accelerated, some of these governments are certain to fall and the ensuing redistribution of power might well cause these countries to choose neutralist or pro-communist courses.

10. The Group believes, therefore, that since U.S. and local resources will be inadequate to cover all aspects of the threat spectrum, we must make some difficult decisions, accepting greater risks if necessary in meeting the less likely threats. Although sufficient military strength must be maintained to help deter local aggression and to assure internal security, the main thrust of U.S. aid in the 1960’s should be to further economic development and nation-building. This requires that total US aid be directed more toward dynamic growth in the economies and toward developing more resilient domestic political institutions capable of dealing creatively with the social ferment incipient in most of these countries.

11. As a consequence, we believe that the risks which may be involved in some reduction or stretch-out of MAP are outweighed by the risks involved in not concentrating a larger share of US aid and local effort on economic and social development. If we confront special crises that affect individual countries—as the Iraq crisis did for Iran in 1958 and the Offshore Islands crises have done for the GRC—we would do much better to treat them as aberrations rather than to plan now in terms of aid for them.

12. Although the local forces in these six countries have a substantial military potential, the main deterrent to overt aggression from across the borders has been the realization that an attack on any of these countries would inevitably bring into play the UN, regional defense arrangements or in all likelihood U.S. forces. In gradually shifting the emphasis of our aid program, neither the communist Bloc nor the countries themselves should be allowed to gain the impression that we are any less resolute in our intent to assist them in maintaining their independence nor that their military establishments are being so emasculated as to invite overt aggression or internal revolt.

13. Thus our programs should be planned to stretch out modernization, to provide more gradual and selective equipping of existing forces, and to avoid introduction of advanced and sophisticated matériel in countries whose finance, manpower and skills resources are inadequate to absorb them. Economic supporting assistance to local military budgets should be phased downward as rapidly as is consistent with a realistic assessment of local resources and the effect of development aid. Recipient countries should be urged to devote only that part of their total resources to military budgets which would permit acceptable development budgets.

14. In connection with the new emphasis of our AID programs on nation building, integrated economic development programs and self-help, we should exert every effort to convince local governments that the primary focus of their efforts should be on building viable societies which can resist cold war pressures. They should be urged, and our programs should be planned, to give increased consideration to the potentialities of civic action and similar measures by which local forces can contribute directly to the nation building process; where appropriate, greater emphasis should be placed on the creation of counter-subversion and counter-guerrilla capabilities.

15. Redirection of our military assistance programs will of necessity be gradual. But the significant characteristic of U.S. aid in the 1960’s should be that it is clearly moving with determination toward greater emphasis on economic development. For this purpose, gradually increasing proportions of U.S. aid and local resources will need to be shifted from military to economic and developmental programs. As our economic programs grow in size, within what we hope will be a larger total aid program and budget, some part of this proposal will take place of itself. We believe, however, that carefully considered reductions in the military side can be made as indicated in the country recommendations set forth at the end of this paper. This conclusion must be related to evolving political situations in each of the countries, and of course to any possible sharp changes for the worse in the world situation.

16. Balancing all the foregoing considerations, the Steering Group recommends a significant net reduction in MAP ceilings for the six countries. For example, if all the country alternatives discussed were approved, and were carried out right away for the full period FY 1962–67, total defense expenditures for the six countries as a group would be reduced by approximately 9% below the current rate and 36% below rates projected in the Six-Year Plan, and manpower would be reduced by 25%, within a six-year period. Military and related defense support aid would decrease more, by 25% from current rates and 37% from the Six-Year Plan. While there would be increases in local budgets somewhat in excess of 15% above the total of the past six years, this would be 10% under those projected in the Six-Year Plan. However, the Steering Group believes that such reductions could be carried out only gradually, and in the case of the GRC could not be carried out at all pending resolution of overriding political issues. Therefore, the above orders of magnitudes represent a reduced level which could only be reached, if at all, in the later years of the FY 62–67 planning cycles. In those countries where force reductions are not recommended it was assumed that local defense budgets would rise as projected in the Six Year Plan to cover gaps left by decreased Supporting Assistance. Where significant force reductions are recommended both local defense budgets and Supporting Assistance decrease.

17. Nevertheless, for illustrative purposes it is useful to summarize the six-country alternatives assuming that the reduction could be carried out in full for the entire period FY 62–67.

Six Countries

	Deliveries for 1956–61	Deliveries for FY 1962–67 Plan	Suggested Alternative
		(in $ millions)
MAP	$ 4,897	$ 5,533	$ 3,525
Supporting Assistance	991	1,463	850
Local Budget	4,079	5,250	4,725
Total Defense Expenditures	$ 9,967	$12,246	$ 9,100
Manpower	2,111,000	2,047,000	1,587,000

18. The purpose of these proposed MAP cuts is to provide the U.S. greater flexibility in the use of aid resources, either by transferring military aid to other geographic areas or by seeking to redirect MAP dollars to economic assistance. If the resources saved merely resulted in a reduction of over-all U.S. aid levels, instead of more optimal utilization, however, the Group would not recommend such cuts. Moreover, to the extent that reduced MAP is offset by increased local defense budgets at the expense of social and economic development budgets there is little benefit to achievement of broader U.S. objectives, though certain advantages in political terms may accrue from the posture of emphasis on civil activities.

19. The significance of total defense data for the six disparate countries is limited since for each item the significant changes are concentrated on one or two countries. Manpower reductions are a feature in the alternatives for GRC, Korea, and Iran; MAP reductions are most important for Korea but significant also for the others with the exception of Pakistan; supporting assistance would remain a large budgeting element in the case of Korea.

1. MAP policy guidelines. Secret. 6 pp. Department of State, S/S–NSC Files: Lot 70 D 265, Guidelines for Military Aid Program.