Office of the Historian

131. Telegram From the Department of State to the Embassy in the Republic of China1

Washington, March 9, 1966, 6:50 p.m.

884. Ref: Taipei’s 837.2 Joint State/Defense message.

1.
Country Team’s concern expressed in reftel fully understood and appreciated here. We recognize some lessening of overall GRC capabilities is implicit in the revised MAP dollar guidelines. It has been judged here however that this is consistent with established US objectives and security.
2.
The revised MAP guidelines are based on the Secretary of Defense draft Memorandum for the President on MAP FY 67–71, elements of which will be reflected in forthcoming revision to Military Assistance Manual. Following planning guidance derived from draft Memo to President has State Department concurrence and is expected to be published in revision of Part I, MAM:
  • “a. The size and nature of the forces which the US would support through MAP can be properly determined only after comprehensive analysis of (1) the US ability to augment local forces against the threat, and (2) the types of forces that can be more effectively produced and maintained by the recipient country than by the US.
  • b. Our major MAP programs should take larger account of the growing mobility and combat power of US general purpose forces, while realistically reflecting the degree of commitment of those forces. This should, of course, be done in the context of other US objectives, particularly those of a political nature.
  • c. US military assistance will not be designed to support the GRC objective of returning to the mainland.
  • d. Estimates regarding the type and size of GRC forces required to defend Taiwan and the Penghus against serious attack should be based on the firm premise of major participation, from the opening day of hostilities, by US naval and air forces.
  • e. While the US is firmly committed to the defense of Taiwan and the Penghus, US policy leaves to Presidential discretion whether to treat an attack on the offshore islands as an attack on Taiwan. The US is not committed to the defense of the offshore islands.
  • f. It would be in the US interest to maintain a continually modernized GRC air force of roughly the current size, and a navy similar to the one now in existence but with a reduced amphibious capability. Such forces are necessary both to supplement US capability and, in the event of a limited ChiCom challenge or probe, to provide the GRC with a capability to engage alone, permitting the US time to assess the situation and determine whether to commit its own forces or reserve them for a more serious challenge.
  • g. Planning will be based on reducing the GRC force level from the present 612,000 to 458,000 at the end of FY 1971. The major change from the present will be a reduction in the Army of 146,000 men. Particular emphasis should be put on modernization of the GRC Air Force and the pattern of expenditures for the services should work toward the proposed force goal of 458,000 men. Such a force can be sustained and kept reasonably modern, particularly as to its Air Force, with MAP aid in the range of $90–100 million for the early years of the planning period. Thereafter a total grant military assistance of $70 million will be sufficient, particularly if combined with a relatively modest sales program. During this entire period, efforts will be made to integrate grant military assistance with the sales program.
  • h. We should make clear to the GRC our view that their forces are too large in relation to the threat, and that the US is not prepared to underwrite modern GRC forces at their present level, in part owing to the stringency of military assistance funds. It is recognized that the GRC will probably attempt to maintain a larger force structure than we deem desirable, and may well increase their defense spending in order to purchase additional military equipment. We should, as appropriate, argue the merits of a smaller GRC force.
  • i. The GRC will be encouraged to assume some of the operating costs presently borne by grant military assistance so that a higher proportion of grant military assistance can be applied to force investment.”
3.
The dollar guidelines are based on the assumptions that: (1) MAP investment, starting with FY 67, will be limited to that required in support of end-FY 71 objective levels of forces, (2) adequacy of current inventories of equipment will be judged against end-FY 71 force objectives, and (3) MAP operating cost support will be phased down on straight line basis from actual MAP-support levels of FY 66 to end-period objective levels in FY 71.
4.
In context of above guidance, dollar guidelines are deemed sufficient to (1) provide MAP support for operating costs of the reduced numbers of supported forces on same basis as contemplated for forces in current MAP plan, (2) provide complete replacement of F–86F and C–46 aircraft, (3) provide average of about six million per year FY 67–71 for [Page 268] investment in Army/Navy/Marine forces. This, plus modest sales program, would seem to provide adequate support for GRC forces.
5.
Also of significance is the outlook presented by delivery figures as contrasted to program figures used in reftel. Total deliveries FY 64–67 estimated $390 million for four-year shortfall of $110 million from NPP objective, rather than $152 million shortfall between NPP and program figures shown in reftel. Looking to future, deliveries expected to average about $95 million through FY 70 with shortfall of deliveries against NPP averaging $30 million per year FY 63–70.
6.
Impact on GRC militarily, politically, and economically of a reduced MAP is likely to be gradual since the reduction itself is spaced over a number of years and MAP level for FYs 66–69 would still be higher than FYs 63–65. Consequently, we do not expect GRC reaction to take extreme or dramatic form.
7.
We agree that as reduced MAP gradually becomes apparent, GRC would probably seek offset by increase in its own military expenditures. We also agree that economic effect this added expenditure would be increased by MAP shift and disappearance of military budget support. Yet, leaving aside the question of desirability of supplying under US military sales program military hardware which we were unwilling supply under MAP, the question remains whether extent of additional GRC military spending would actually cause serious economic setback or extensively undermine economic development achievements. We believe that regime is sufficiently aware of importance of economic viability to security of state that it would seek to avoid this. In final analysis of course, there is little US could do to prevent GRC from allocating whatever funds it believed necessary to maintain its military establishment but this is a choice the GRC itself must continually make and not a choice which we force upon it.
8.
We do not believe gradual reduction MAP will cause GRC reluctance to support Viet-Nam related proposals. GRC leadership has consistently identified Viet-Nam conflict as matter of vital GRC national interest. Stationing of US aircraft and visits to Taiwan of R&R personnel provide substantial economic windfall. Improvement of US facilities and additional US deployments all contribute to GRC security.
9.
We do not believe that reduction of GRC MAP combined with increasing commitment US military forces in area to Viet-Nam conflict would necessarily lead to increased ChiCom aggressiveness in the Taiwan Straits as long as military assistance to GRC continues at a level adequate to insure defense in combination with available US forces. In view of general US military buildup in Pacific area we believe US military strength will remain sufficient to insure ability of US to continue to meet obligations under Mutual Defense Treaty.
10.
We recognize that cost estimates which form basis for dollar guidelines have not had benefit of comprehensive analysis by country team and CINCPAC and we look forward to such analysis in planning cycle now underway. While policy remains firm that MAP dollar levels must be minimum required to serve US security interests, your comprehensive evaluation will be given full consideration in our continuing reviews. Many questions and details remain to be resolved such as what strength in armor is to be MAP supported, to what extent will MAP support the modernization of GP vehicle fleet, etc. In meantime, MAP planning should proceed in such way as to enable all concerned to identify easily those forces and programs which are and those which are not MAP supported. For example, we consider it essential to base computations on adequate support for specific divisions and none for others, rather than to plan inadequate and indefinable level of support for all divisions.
11.
We appreciate your comprehensive analysis set forth in reftel and assure you that your opinions will be given continuing consideration as US objectives and total strategy are constantly under review.
12.
It would be useful for Country Team to explore with Bundy question level credit sales program. Taiwan may well be one of the candidates for early application of President’s policy (1 Feb 66 Foreign Aid Message) to shift gradually from grant to sales basis in military assistance program when this can be done without jeopardizing security interests or progress of economic development. GRC has substantially increased foreign exchange reserves in recent years. According to DOD, GRC has under current consideration significant purchases of items from Germany, including materiel to support objective of returning to mainland. Would therefore seem appropriate that US should seek to influence GRC to direct foreign exchange materiel procurement toward high-priority items included in grant MAP short-fall list.
Rusk
  1. Source: Department of State, Central Files, DEF 19 US–CHINAT. Secret; Priority. Drafted by Colonel Berry in DOD/ISA/FER and by George L. Warren in G/PM; cleared by Fearey, Director for Operations in G/PM Howard Meyers, and in draft by Adam Yarmolinsky in DOD/ISA; and approved by Berger. Also sent to CHMAAG CHINA and COMUSTDC and repeated to CINCPAC and CINCPAC for POLAD.↩
  2. Telegram 837 from Taipei, February 4, urged reconsideration of proposed reductions in the military assistance program for the GRC. (Ibid.)↩