Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

33. Memorandum From the Administrator of the Agency for International Development (Bell) to President Johnson¹

Washington, April 6, 1965.

SUBJECT

• Proposed Transfer of $55 million of Contingency Funds to the Military Assistance Program (FY 1965)

I recommend that you determine (1) that the transfer of $55,000,000 of contingency funds to the military assistance program is necessary for the purposes of the Foreign Assistance Act; and (2) that a transfer of contingency funds without regard to the usual 10% limitation is important to the security of the United States.

The Secretary of State and the Secretary of Defense concur in this recommendation.²

Section 610(a) of the Foreign Assistance Act authorizes transfers between appropriations, but places a limitation of 10% on transfer from any one appropriation.³ Section 614(a) authorizes you to waive provisions of the Act, including the 10% limitation, when you consider it important to the security of the United States to do so. These are the authorities we are recommending that you use.

For Fiscal Year 1965, the Administration requested a military assistance appropriation of $1,055 million which the Congress appropriated. In addition it was estimated that approximately $117.8 million will be available from recoupments and reappropriations. Following Congressional action on appropriations in October, 1964, joint reviews by Defense, State and A.I.D. concluded that a military assistance program for fiscal 1965 of $1,172.8 million would be seriously inadequate, particularly in view of increasing demands from the combat operations in Southeast Asia, and that a program totaling at least $1,222.8 million should be planned for, contemplating a $50 million transfer from the contingency fund at a later date in the fiscal year assuming that programmed requirements did not decline, and that availabilities from anticipated recoupments did not increase to any significant extent.

Program requirements in fact have not declined. It was our combined judgment in December, and is our combined judgment today, that even a program totaling $1,222.8 million is inadequate for Fiscal Year 1965. An additional requirement of $5 million for Morocco military grant aid has been added to current funding shortfalls. Increasing demands from Southeast Asia, now estimated at well over $100 million above Congressional Presentation levels, has required withholding funding of a major portion of long deferred modernization programs for the military forces of key forward defense countries on the periphery of the Soviet Union and Communist China. The programs proposed to the Congress for Greece, Turkey, the Republic of China and Korea for Fiscal Year 1965 have already been seriously reduced. These repeated deferrals are aggravating serious deficiencies in the equipment of allied forces, and in the event of emergency, missions planned for such forces may be required to fall upon U.S. forces in increasing degrees.

To avoid further reductions, the proposed transfer of $55,000,000 of contingency funds is therefore in our judgment a minimum and necessary step in the interest of the security of the United States. We foresee the need to examine the possibility of recommending additional transfers later in the fiscal year to meet urgent or special requirements, such as those in Southeast Asia. We are not making such a recommendation at this time, pending further review of competing economic assistance priority demands on contingency funds, of progress in realizing recoupments from prior year military assistance funds and other possible sources of funding.

It is, accordingly, recommended that you sign the attached memorandum making the determination under the Act which will permit transfer of $55,000,000 of contingency funds to the military assistance program.⁴

David E. Bell

1. Source: Johnson Library, National Security File, Subject File, Presidential Determinations, Vol. II [1 of 2], Box 40. Secret.
2. Director of the Bureau of the Budget Kermit Gordon, in an April 12 memorandum to President Johnson, also recommended the approval of the $55 million transfer. (Ibid.)
3. 75 Stat. 442; P.L. 87–195, the Foreign Assistance Act of 1961, as amended, approved on September 4, 1961.
4. Not attached. A signed copy of an April 15 memorandum from President Johnson to Bell indicating the President’s approval of Presidential Determination No. 65–11, transferring up to $55 million of contingency funds to the military assistance program, is in the Johnson Library, National Security File, Subject File, Presidential Determinations, Vol. II [1 of 2], Box 40.