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proposed in the fields of international health, education, and agricultural assistance. These programs will assist other nations in areas critical to economic development, improve mutual understanding, and strengthen American capabilities in these fields. Our agricultural assistance will be reoriented and expanded as part of a comprehensive effort to help meet the growing food needs of the developing nations. Agency for International Development assistance and the Food for Peace Program will be more closely related to each other in support of the efforts of the developing countries to raise their agricultural production.

Total expenditures by AID are estimated at $2.2 billion in 1967, an increase of $100 million over 1966. This rise is entirely the result of the heightened conflict in South Vietnam. Exclusive of special Vietnam costs, AID expenditures will remain level at $2.0 billion in both 1966 and 1967. These amounts will cover only the highest priority requirements and reflect a continuing effort to increase the effectiveness and efficiency of our assistance programs. Within a constant level of expenditures, assistance in the fields of education, health, and agricultural production will be increased. To promote development through better planning, legislation is being recommended to authorize AID activities for a period of 5 years.

Continued progress is being made in tying economic assistance programs to the purchase of goods and services in the United States. More than 80% of AID expenditures in 1967 will be for purchases of U.S. goods and services compared to about 42% in 1960. This minimizes the effect of our assistance program on the U.S. balance of international payments. In addition, the foreign aid program assists the longterm growth of U.S. exports by stimulating new trade patterns and opportunities.

Development loans and technical cooperation. Most expenditures for development assistance are in the form of long-term loans, repayable in dollars. Expenditures for these loans will total an estimated $654 million in 1967, $15 million less than in 1966. This total excludes loans under the Alliance for Progress, discussed separately.

The development loan program is concentrated in a limited group of

countries. It finances the dollar costs of capital projects and critical imports upon which economic growth depends. In these countries, U.S. assistance is part of an overall program of economic development carried out in accordance with a well-defined set of plans and domestic policies.

To complement development loans, the United States provides fundslargely through grants-to cover part of the costs of furnishing U.S. advisers. The experience and technical skills of these advisers assist in dealing with complex problems in the fields of education, health, agriculture, public administration, internal security, and other areas essential to economic and social development. Expenditures for technical cooperation are expected to be $200 million in 1967, about the same as in 1966.

Alliance for Progress.-This program is a cooperative, long-term effort of the United States and the Latin American nations to promote economic and social reform and development. U.S. participation consists largely of development loans and technical assistance, related to selfhelp performance by the recipients.

Expenditures for the Alliance for Progress will total $430 million in 1967, an increase of $10 million over 1966. The activities financed by AID are coordinated with the InterAmerican Committee on the Alliance for Progress and the Inter-American Development Bank.

Supporting assistance.-In several countries where there are immediate threats to political and economic stability, the United States provides grants and loans. While these programs contribute to development, they are particularly designed to counter dangers to free world security. Expenditures for supporting assistance are estimated at $642 million in 1967, compared to $509 million in 1966. This increase largely reflects higher expenditures in South Vietnam.

Other AID programs.-The Agency for International Development will continue to guarantee private investment abroad, thus encouraging increased participation by the American business community in the developing countries. The total value of guarantees outstanding is expected to rise in 1967 to $4.6 billion, about $1.6 billion more than in 1966.

The efforts of international agencies such as the United Nations Development Program complement our own bilateral activities by enlisting the coordinated support of other nations. The budget proposes expenditures of $110 million to support the important role of these organizations, an increase of $10 million over 1966.

Other economic and financial programs.-New obligational authority of $250 million is requested for 1967 to complete a 3-year, $750 million increase in the U.S. contribution to the resources of the Inter-American Development Bank's (IDB) Fund for Special Operations.16 This contribution will bring to $1.2 billion our total subscription to this Bank for strengthening the Alliance for Progress during these 3 years. New obligational authority of $104 million is also requested for 1967 to finance the second installment of the 3-year, $312 million increase in the U.S. subscription to the International Development Association, an affiliate of the World Bank.16 The $104 million U.S. contribution will be accompanied by contributions of $146 million from other developed countries. Legislation will be sought to authorize additional contributions to the IDA when future needs and an appropriate sharing formula have been determined. Both the IDA and the IDB's Fund for Special Operations were set up to make long-term loans to developing nations, repayable on relatively easy terms.

Legislation will be proposed to authorize the United States to become a charter member of the Asian Development Bank-to be formally established in 1966-and to subscribe $200 million of the Bank's $1 billion capital stock.17 The budget includes new obligational authority of $120 million for 1966 and $20 million for 1967 for this purpose. Of the 1966 request, $100 million will be held in the U.S. Treasury as backing for borrowing by the Bank in private capital markets. No expenditures against these funds are now contemplated. The remaining $20 million in 1966 and the $20 million in 1967 will provide the first and second of five equal annual installments toward the U.S. share of the Bank's paid-in capital. Expenditures estimated at $10 million in each year.

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The Export-Import Bank will continue its efforts to expand U.S. exports. Its insurance and guarantee programs-undertaken in cooperation with insurance companies and commercial banks-by the end of 1967 will protect more than $1.7 billion of U.S. exports against both political and commercial risks. Its direct loans to foreign borrowers to pay for U.S. exports are expected to increase from $403 million in 1965 to $658 million in 1966 and $906 million in 1967. Sales to private buyers of $1 billion in loans and certificates of participation in the Bank's portfolio of loans will contribute to an estimated net excess of Bank receipts over expenditures of $309 million in fiscal year 1967.

The Peace Corps is expected to continue to expand the number of volunteers overseas or in training in response to requests from foreign nations for their services. Peace Corps volunteers will be active in about 46 countries in 1967. This budget provides for 16,000 volunteers and trainees by the end of 1967, compared to an estimated 14,500 in 1966. Expenditures are estimated to increase to $88 million in 1967.

Food for Peace.-The Agricultural Trade Development and Assistance Act of 1954 (Public Law 480) 18 is the foundation of the existing Food for Peace program, through which U.S. agricultural abundance is used to feed hungry people and promote economic development abroad. However, food production in the developing countries has not been keeping pace with the requirements of expanding populations. Legislation will be proposed to authorize a new Food for Peace program. The new program will be closely coordinated with economic assistance directed at increased agricultural production in the less developed countries themselves.

About two-thirds of the existing Food for Peace program consists of sales of agricultural commodities to foreign nations for their own currencies. The local currencies are then available in the recipient countries to pay U.S. obligations, to finance loans to U.S. private enterprise, and to support local development projects. Most of these currencies are inconvertible, and considerable balances are lying idle in a number of countries. In order to use these currencies more effectively, special foreign currency authorizations are proposed for applying

18 7 U.S.C. § 1691.

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1 Compares with new obligational authority for 1965 and 1966, as follows: Administrative budget funds: 1965, $6,703 million; 1966, $5,497 million. Trust funds: 1965, $21 million: 1966, $156 million.

Document I-4

Address by the Secretary of Defense (McNamara) Before the American Society of Newspaper Editors, Montreal, May 18, 1966 20

The Problem of Security in the Contemporary World

Any American would be fortunate to visit this lovely island city, in this hospitable land. But there is a special satisfaction for a Secretary of Defense to cross the longest border in the world and realize that it is also the least armed border in the world. It prompts one to reflect how negative and narrow a notion of defense still clouds our century.

There is still among us an almost eradicable tendency to think of our security problem as being exclusively a military problem-and to think of the military problem as being exclusively a weapons-system or hardware problem.

The plain, blunt truth is that contemporary man still conceives of war and peace in much the same stereotyped terms that his ancestors did. The fact that these ancestors, both recent and remote, were conspicuously unsuccessful at avoiding war, and enlarging peace, doesn't seem to dampen our capacity for cliches.

We still tend to conceive of national security almost solely as a state of armed readiness: a vast, awesome arsenal of weaponry.

We still tend to assume that it is primarily this purely military ingredient that creates security.

We are still haunted by this concept of military hardware.

But how limited a concept this actually is becomes apparent when one ponders the kind of peace that exists between the United States and Canada.

It is a very cogent example. Here we are, two modern nations, highly developed technologically, each with immense territory, both enriched with great reserves of natural resources,

20 Department of State Bulletin, June 6, 1966, pp. 874-881.

each militarily sophisticated; and yet we sit across from one another, divided by an unguarded frontier of thousands of miles, and there is not a remotest set of circumstances, in any imaginable time frame of the future, in which our two nations would wage war on one another.

It is so unthinkable an idea as to be totally absurd. But why is that so?

Is it because we are both ready in an instant to hurl our military hardware at one another? Is it because we are both zeroed in on one another's vital targets? Is it because we are both armed to our technological teeth that we do not go to war? The whole notion, as applied to our two countries, is ludicrous.

Canada and the United States are at peace for reasons that have nothing whatever to do with our mutual military readiness. We are at peacetruly at peace-because of the vast fund of compatible beliefs, common principles, and shared ideals. We have our differences and our diversity-and let us hope for the sake of a mutually rewarding relationship we never become sterile carbon copies of one another. But the whole point is that our basis of mutual peace has nothing whatever to do with our military hardware.

Now this is not to say, obviously enough, that the concept of military deterrence is no longer relevant in the contemporary world. Unhappily, it still is critically relevant with respect to our potential adversaries. But it has no relevance whatever between the United States and Canada.

We are not adversaries. We are not going to become adversaries. And it is not mutual military deterrence that keeps us from becoming adversaries. It is mutual respect for common principles.

Now I mention this-as obvious as it all is-simply as a kind of reductio ad absurdum of the concept that military hardware is the exclusive or even the primary ingredient of permanent peace in the mid-20th century.

In the United States over the past 5 years, we have achieved a considerably improved balance in our total military posture. That was the mandate I received from Presidents Kennedy and Johnson; and with their support, and that of the Congress, we

have been able to create a strengthened force structure of land, sea, and air components-with a vast increase in mobility and materiel and with a massive superiority in nuclear retaliatory power over any combination of potential adversaries.21

Our capabilities for nuclear, conventional, and countersubversive war have all been broadened and improved; and we have accomplished this through military budgets that were in fact lesser percentages of our gross national product than in the past.

From the point of view of combat readiness, the United States has never been militarily stronger. We intend to maintain that readiness.

But if we think profoundly about the matter, it is clear that this purely military posture is not the central element in our security. A nation can reach the point at which it does not buy more security for itself simply by buying more military hardware. We are at that point.

The decisive factor for a powerful nation-already adequately armedis the character of its relationships with the world.

In this respect, there are three broad groups of nations: first, those that are struggling to develop; secondly, those free nations that have reached a level of strength and prosperity that enables them to contribute to the peace of the world; and finally, those nations who might be tempted to make themselves our adversaries. For each of these groups, the United States, to preserve its own intrinsic security, has to have distinctive sets of relationships.

First, we have to help protect those developing countries which genuinely need and request our help and which, as an essential precondition, are willing and able to help themselves.

Second, we have to encourage and achieve a more effective partnership with those nations who can and

Secretary McNamara had stated, on Jan. 25, before a sub-committee of the House Armed Services Committee that "without any use of [U.S.] bomber forces, the strategic missile forces recommended for the Fiscal Year 1967-71 period would provide substantially more force than is required for an assured destruction capability against both the Soviet Union and Communist China simultaneously." (The New York Times, Jan. 26, 1966.) See post, doc. VI-1.

Principles and Objectives

should share international peacekeeping responsibilities.

Third, we must do all we realistically can to reduce the risk of conflict with those who might be tempted to take up arms against us.

Let us examine these three sets of relationships in detail.

First, the developing nations. Roughly 100 countries today are caught up in the difficult transition from traditional to modern societies. There is no uniform rate of progress among them, and they range from primitive mosaic societies-fractured by tribalism and held feebly together by the slenderest of political sinewsto relatively sophisticated countries well on the road to agricultural sufficiency and industrial competence.

This sweeping surge of development, particularly across the whole southern half of the globe, has no parallel in history. It has turned traditionally listless areas of the world into seething cauldrons of change. On the whole, it has not been a very peaceful process.

In the last 8 years alone there have been no less than 164 internationally significant outbreaks of violence, each of them specifically designed as a serious challenge to the authority, or the very existence, of the government in question. Eighty-two different governments have been directly involved.

What is striking is that only 15 of these 164 significant resorts to violence have been military conflicts between two states. And not a single one of the 164 conflicts has been a formally declared war. Indeed, there has not been a formal declaration of waranywhere in the world-since World War II.

The planet is becoming a more dangerous place to live on, not merely because of a potential nuclear holocaust but also because of the large number of de facto conflicts and because the trend of such conflicts is growing rather than diminishing. At the beginning of 1958, there were 23 prolonged insurgencies going on about the world. As of February 1, 1966, there were 40. Further, the total number of outbreaks of violence has increased each year: In 1958, there were 34; in 1965, there were 58.

[Doc. I-4]

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