RELIEF ASSISTANCE TO COUNTRIES DEVASTATED BY WAR TUESDAY, FEBRUARY 25, 1947 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10:30 a. m., Hon. Charles A. Eaton (chairman) presiding. Chairman EATON. We have met this morning to consider House Joint Resolution 134, providing for relief assistance to countries devastated by war. The first witness will be our very distinguished Under Secretary of State, Hon. W. L. Clayton. I will ask Mr. Clayton to make a state ment. STATEMENT OF HON. W. L. CLAYTON, UNDER SECRETARY OF STATE FOR ECONOMIC AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, D. C. GENERAL PURPOSE AND OBJECTIVE Mr. CLAYTON. The purpose of the resolution now under consideration by this committee is to provide relief to millions of persons in war-devastated countries who are still dependent upon outside assistance for food and other essentials of life. Through UNRRA and the military programs several billions of dollars have been made available to the peoples of the liberated areas for food, clothing, medicine, and other essential supplies. Great progress has been made in these countries in their struggle to return to a normal life. The United States can be justly proud of the part it has played in helping these millions of unfortunate people get back on their feet. Yet the task is not quite finished. The assistance still required is small relative to that already given, but without it many of these people will perish by starvation and millions will be seriously undernourished. We cannot hope to achieve permanent security and prosperity in a world where such conditions exist. Even with the minimum of assistance which has been planned, the peoples involved will still have barely enough to eat. The UNRRA pipe lines soon will run dry. The great bulk of UNRRA supplies will have been shipped to Europe by the end of March and shipments will practically cease during April. The committee is, I am sure, aware of the position taken by the Department of State and the President regarding post-UNRRA relief. It has not seemed wise or proper to meet the remaining needs through an international agency. Instead, it is believed that the problem which remains can best be handled directly between the individual contributing countries and the recipient countries. The Secretariat of the United Nations will be useful as a clearing point for the exchange of relevant information. One of the major arguments advanced by the United States representatives in making clear this position regarding relief in 1947 was that the problem, although of utmost urgency and seriousness, was not of the magnitude of past years and could be handled more efficiently and expeditiously without the cumbersome mechanism of an international relief agency. That argument is still valid. Some of the UNRRA countries no longer require free assistance; others, not as fortunate, need relatively small amounts of additional assistance to carry them through another year. Thereafter, it is expected that they will be able stand on their own feet. In addition we feel that we can more effectively adapt our program to meet changing needs and can maintain better supervision over the use of our funds and supplies by dealing directly with the countries needing assistance. RELIEF NEEDS IN 1947 The State Department estimates that the minimum relief requirements for the calendar year 1947 of needy countries amount to about $610,000,000 exclusive of remaining UNRRA shipments. The following European countries appear to have need of outside assistance: Austria, Greece, Hungary, Italy, and Poland. It is anticipated also that China may have emergency needs for food imports to prevent suffering and starvation in certain areas and that some financial assistance may be required for this purpose. Relief needs have been calculated as that part of a country's minimum import needs which cannot be financed out of its own resources, including current earnings of foreign exchange and existing and anticipated foreign loans and credits. The minimum import needs have been determined on the basis of the definition proposed by the United States representative and adopted by the General Assembly of the United Nations, namely: imports required to provide the basic essentials of life and to prevent economic retrogression which threatens the supply of these basic essentials. In making our estimates we have included food imports which, together with quantity locally produced, would give urban consumers a diet of an average of from 2,000 to 2,200 calories per day. This compares with 3,400 calories in the United States. Imports of raw materials, fuel and industrial supplies, in amounts sufficient to maintain the production of essential goods and to prevent economic retrogression from approximately present levels, have also been included. in the calculations. To the extent that food and other relief supplies are furnished by the United States and other contributors the foreign exchange resources of the needy countries will be freed for the procurement of other imports included in the list of minimum needs. The need for assistance in food imports is particularly acute, in most of the areas involved, during the spring and early summer months prior to the harvests, and suffering and a serious economic set-back will occur if help is delayed. On the other hand if sufficient assistance is provided promptly there is every reason for anticipating that, with the possible exception of Austria, these countries will not need further free relief after 1947. In the case of Austria some further help, although on a reduced scale, will probably be needed during the calendar year 1948. CONTRIBUTIONS TO MEET NEED The President has recommended that the Congress appropriate $350,000,000 as the United States contribution to help meet these needs. This sum represents, in our opinion, our fair share of the total requirement, bearing in mind our capacity in relation to that of other supplying countries. It is 57 percent of the estimated need, compared with our UNRRA proportion of 72 percent. The British Government has already announced a program for assistance of Austria, amounting to $40,000,000 and is currently considering what assistance can be rendered to other countries. Other governments are likewise studying the matter at this time. We are hopeful that through the efforts of all governments which are in a position to help, the minimum needs will be met. I should like to emphasize at this point what we consider to be a fundamental principle; that is, that the total amount we would allocate to any country not be determined finally at this time. We should avoid a situation where any country might assume that it had a vested interest or right to a particular amount of money. We found in the case of UNRRA that whenever an amount was allocated even on a tentative basis to a recipient country, any attempt to reduce it in order to take account of changing needs caused resentment and consequent embarrassment. In making estimates of relief requirements we must necessarily make assumptions regarding future crop and weather conditions, export possibilities, the probability of credits and loans from private or public banking institutions and many other factors which are not susceptible of definite determination at this time. Emergencies may arise requiring an increase in present estimates for some countries whereas in others recovery may occur at a more rapid rate than we now anticipate. Furthermore, the assistance which will be provided to each of the countries by other contributors must be considered in determining how our funds should be allocated. We are not now fully informed in regard to this matter and should be in a position to adjust our program in collaboration with other contributors to prevent duplication of effort. METHOD OF OPERATION The resolution under consideration provides that the control of the program remain firmly in American hands and that this control be exercised to the end that these supplies be shipped where they are needed and that they are used within the receiving countries in a manner consistent with the purposes of the resolution. We would also take steps to assure that the people of the countries receiving our help would be fully informed as to our interest in their welfare and the extent and nature of our contribution. It is our intention to limit the items which would be procured with our funds to a few basic essentials, primarily food, medical supplies, seeds and fertilizers. We might also find it necessary in some cases to include such things as clothing or raw materials for the production of clothing, fuel and similar basic supplies. We would not attempt to provide machinery and equipment for rehabilitation purposes. UNRRA has already imported those items of this nature which were needed for the resumption of basis economic activities after the dislocation and destruction caused by the war. Further reconstruction and development of the productive and transport facilities of these countries should be provided through loans from the International Bank and other sources. If this program is approved by the Congress we plan to reach an agreement with each recipient government regarding all necessary aspects of the operation. Such an agreement would cover the methods of procuring, shipping, and accounting for supplies, the right of observation by our representatives in the country, and freedom to report, without censorship, by the press and radio. We would also require guaranties that not only our supplies but all similar supplies produced locally or imported from other sources will be used to meet the needs of the people without discrimination on political or racial grounds. The agreement would also prescribe conditions governing the use to be made of local funds arising from the sale of supplies to those people who can afford to pay for them. After conclusion of such an agreement we would approve from time to time target programs covering the type and amount of commodities which could be procured over say a 2- or 3-month period. The recipient government would then be authorized to procure these goods either through commercial channels or the appropriate government procurement agency, and to arrange for their shipment. Full reports, including copies of contracts, invoices, and shipping documents would be made available to us. As funds are needed to meet accruing obligations, we would transfer cash to the recipient government to be set up in a special account. We would maintain a small staff in the State Department which would make the necessary arrangements with the recipient government, would keep closely informed in regard to all procurement and shipping activities and would receive and analyze reports from our missions in the recipient countries regarding current relief needs and compliance with the agreements. We also plan to attach to the United States Embassy in each of the recipient countries a small well-qualified staff. These persons would supplement the work of the Embassy staff in maintaining controls in the country, observing the relief program and reporting to the Ambassador and the Department in regard to the progress of the distribution of our supplies and others of similar types in the country, the extent and nature of relief needs and the effective utilization of locally produced supplies. CONCLUSION I have already pointed out that the immediate problem is to maintain the flow of relief supplies. To stop that flow would be disastrous; to interrupt it would be almost equally disastrous. If we fail to provide the relief now when it is needed, much of the humanitarian work heretofore done by our Government and others will be undermined, much suffering and economic deterioration will undoubtedly occur, with political and economic consequences to the rest of the world, ourselves included, not pleasant to contemplate. The President stated the problem clearly, when he said in transmitting this request to the Congress: The United States, in keeping with our traditions of immediate and wholehearted response to human need, has stood in the forefront of those who have checked the forces of starvation, disease, suffering, and chaos which threatened to engulf the world in the wake of the war. The task is nearly finished. I urge the Congress to act promptly to insure that we do not stop short of the goal; that we do not endanger the permanence of the gains we have so largely helped to achieve. Mr. Chairman, the committee may be interested in a little more detail with reference to the kind of agreement that we would propose to enter into with each of these recipient countries. That agreement would state the purpose of the relief, the needs to be met, it would outline the methods and controls of procurement, shipping, the methods of distribution, and would deal with the utilization of funds accruing from sales of United States supplies. The committee will understand, of course, that much of these supplies would be sold and not given away. They would be sold for the local currency of the country in which they are being distributed. Many of these people are able to pay in their local currency. The difficulty arises from the fact that their government has not the foreign funds with which to import the supplies, but once they have been imported, many of the people who need food have the local currency of the country with which to pay, and they should pay. Neither we, nor the country would want to make paupers or indigents out of people who would want to pay. Therefore, it is anticipated that, as in the case of UNRRA, many of these supplies would be sold for local currency. Our agreement with the country would provide for the utilization of the funds accruing from the sales of these supplies in the way in which I have described. It is our expectation, of course, that we would provide that those funds would be used for relief activities within the country. At any rate, they would be completely subject to agreement with the United States as to their use. The agreement would provide for the proper utilization of all of the supplies which we would ship, as well as the locally produced supplies, and relief supplies that might be imported from other sources than the United States. In other words, we do not propose to enter into an agreement here which would cover only the methods in which our supplies are to be distributed, leaving perhaps the locally produced supplies and sup |