Near East, and we have an equally clear interest to maintain our relations with the Arab countries on friendly terms, and to enable the Arab peoples to prosper and become strong elements in the free world. The requirements of Israel and the Arab States differ in their nature. Israel which is struggling to assimilate a very substantial population of recent immigrants numbering approximately 800,000, has not yet been able to stand on its own feet economically. Israel's requirements in past years have been recognized both by the Congress and by the executive branch and it will be recalled that special legislation enabled Israel to receive approximately $65 million in grant funds under the Mutual Security Act of 1951, and a further $70 million under the act of 1952. Justification for aid on this scale was based on analysis of Israel's import requirements to enable its people to maintain an austerity standard of living and to make some progress on the development of its resources, agricultural and other. These provisions for Israel were made in the light of judgment of its import needs on the one hand and its probable sources of revenue, which included substantial support from the Jewish community abroad.

In making provision in current legislation, similar calcluations have been made and an illustrative figure indicating Israel's approximate needs will be justified to the committee in executive session. This calculation does not indicate substantial progress by Israel in meeting the gap in its foreign exchange payments.

In the case of the Arab States and of Iran, we necessarily apply different standards of measurement. While the lot of many millions in these countries is a depressed one, and by and large the states in the area have not achieved maximum development of their resources, we cannot measure needs of these countries in terms of balances of foreign exchange requirements.

In Iran, it is hoped that funds available under the provision for special economic aid will serve to maintain the going program conducted by the Technical Cooperation Administration at substantially the same levels of operation which have been in practice during the current fiscal year.

In all of the Arab States, there are great opportunities for development in fields of land reclamation, water utilization, and transport to meet the needs of depressed peoples. Naturally, the justification for financial assistance is difficult to make for those Arab countries which possess substantial petroleum resources.

Saudi Arabia, Iraq, Kuwait are, as is well known, wealthy in this respect, although the living standards of millions of their people must be ameliorated if we are to provide the "foundation of a more dependable defense structure" of which the Secretary has spoken. We are not advocating that special economic aid funds should be centered on such countries, although it is not in our interest to disqualify them as possible partners in programs of mutual security.

From the point of view of oil production, we must list as "have nots" such countries as Syria, Lebanon, and Jordan, as well as Egypt. Our interest in the welfare of these countries is manifest, but none of them can hope to make the progress that is necessary for the security and stability of the area without assistance from abroad.

It would, therefore, be our design to be able to fund, in whole or in part, through cooperative arrangements made with these countries, large-scale development projects designed to meet the purposes which the Secretary of State has in mind.

In Egypt, there will be opportunities in the development of the River Nile, the resources of which are now under close study. It may well be that we can to advantage assist the Egyptians as well in road construction. The experience of the Bureau of Public Roads in Turkey has been so satisfactory and the effect on the Turkish economy of improved inland transport has been so great that this is a field which it is in our interest to explore fully.

In Syria, our plans might well center on assistance to Syria in the development of water resources of the Euphrates and Orontes Rivers and also include inland transport.

In Jordan, there are possibilities for further irrigation through the intensive use of the waters of the Jordan River and its tributaries. While we hope that in Jordan it will be possible to use funds provided for the Arab refugee program, in large measure, the fact that the citizens of Jordan other than the Palestine refugees, and Jordan's neighboring countries, have legitimate interests in such development suggests that such programs should be financed not solely by refugee funds.

In the case of Lebanon, it may well be in our national interest, to meet the criteria laid down by the Secretary of State, to assist in the development of the water resources of Lebanon and in its regional highway programs.

There may well be justification to extend the use of such economic aid funds to the development of local civil aviation as well.

As the committee knows, the Arab refugee problem is one of the most thorny with which we are confronted.

The requested authorization for $30 million for a contribution to the UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East) is recommended to you as a measure of our continued interest and concern for the Arabs displaced from their former homes in Israel. It is essential that the intent of the United States to continue its participation in the settlement of the refugee problem be on record if we are to progress toward the attainment of our objectives in the region.

The current efforts of the United Nations are made within the framework of a 3-year program which began July 1, 1951, and runs until June 30, 1954. This 3-year program calls for a fund of $250 million from the participating countries, $50 million for relief and $200 million for rehabilitation.

In prior years we indicated to this committee the intention to limit. United States contributions to no more than 70 percent of the total fund.

The UNRWA has made considerable progress, in the face of difficult political and economic problems in the Near East, in planning and negotiating with near eastern governments for rehabilitation-development projects designed to take the refugees off the relief rolls. These projects include: General projects in Jordan, development of irrigation and reclamation in the Jordan Valley, and other projects in Syria, Libya, and Egypt.

Against these projects, the U.N. Agency has reserved approximately $120 million of the $200 million rehabilitation fund. Projects thus far programed will, under present estimates, remove from the relief rolls approximately half of the refugees; and this fact will, of course,

require the agency to continue to pursue a vigorous search for additional projects.

With respect to expenditures by the U. N. Agency for relief purposes, the strain on the budget for the three-year program has been severe. The $50 million budget for relief for the 3 years will have been used up by June 30, 1953, the end of the second year. Relief requirements for the year from July 1, 1953, until June 30, 1954, must be met in cash.

In terms of commitments, including an allowance for fiscal year 1954 relief, the Agency will be facing obligations of approximately $144 million as of July 1, 1953, and its assets, including unpaid pledges from the United States amounting to $44 million from 1953 funds, and from the United Kingdom of $9.8 million will approximate $88 million. The necessity to be able to back up the Agency's negotiating position, and to take advantage of further projects which the Agency must seek and to encourage other contributions are reasons for this request.

Such legislation would enable the President to seek an interim appropriation at the next session of the Congress, if circumstances so required. Failure to express our interest will discourage progress and convey an impression of lack of further concern.

While our 70-percent share of the total $250 million fund would require a further contribution of $65 million, it is considered that the authorization of $30 million will prove adequate for the present.

The carry forward of $44 million unspent from 1953 appropriations is an essential requirement, and is provided for in the draft legislation you are considering.

The United States share of the contribution to date, May 1, 1953, amounts to 61 percent of total receipts in cash, kind, and services. The UNRWA must plan for the future, as it cannot be allowed to lapse on June 30, 1954. We consider that it may be well to propose at the next session of the General Assembly an extension of its life for a further 2 years, until June 30, 1956; that it should maintain its program of $200 million for rehabilitation, and be authorized to seek further funds for relief expenditures.

I would like to file a statement by the Acting Secretary of State on the Palestine refugee problem. It would be well to have it in the record at this point. This has been released, but I think it would be useful in the record at this point.

(The statement by Acting Secretary of State Walter Bedell Smith is as follows:)

As this is a public hearing, it is necessary to review certain matters already well known to this committee.

I shall not document our interest in the near eastern region, which is fully understood in responsible circles within the executive and legislative branches of Government.

It is my purpose to outline the nature of the refugee problem and the efforts of the United Nations Relief and Works Agency to rehabilitate the unhappy Palestinians who lost their homes and property in what is now Israel.

Our conclusions are that this is a world problem which it is proper for the United Nations to deal with; that we should continue to support the United Nations Relief and Works Agency in its efforts. We think that the United Nations has done a good job under difficult conditions. We appreciate the full support that Congress has given in the past to this effort. We hope that we can look to Congress for continuing support. Past concern for this unfortunate group is justified on grounds of our national interest and on grounds of common humanity.

Difficult conditions have hindered progress, stemming from the background of hostilities in Palestine. Furthermore, large-scale projects require detailed planning, and there are inevitable delays in putting major reclamation and irrigation plans in hand.

This in brief is the situation:

As a result of hostilities, upward of 750,000 Arabs living in the British mandate of Palestine in 1948 left their homes and possessions. The vast majority of these people have received no compensation for their property, and many express the desire to be repatriated.

While 100,000 or more of these people have been able to find means of selfsupport in Arab communities, the registry rolls of the United Nations now list about 865,000 needy refugees, to whom 810,000 "rations," the equivalent of 1,600 calories daily, are being distributed.

This problem is not static, as our best evidence indicates that the refugee population is growing at the rate of 25,000 annually, as births exceed deaths. Present projects for the refugee population, which Mr. Gardiner can describe in greater detail later, and which will take some years to implement fully, hold out hopes for a living for only about 400,000 souls.

The simple fact is that the agricultural, industrial, and financial resources of the Arab nations concerned cannot cope with this problem unaided.

As you know, Israel occupied territory during the conflict considerably beyond the boundaries allotted to it by the United Nations partition plan of 1947. From the lands so occupied many thousands became refugees.

The refugee problem is the principal unresolved issue between Israel and the Arabs; outstanding issues are generally listed as compensation to the refugees, repatriation of the refugees, adjustment of boundaries, and the status of Jerusalem and the Holy Places. None of these issues can be separted from the refguee problem.

Against a background of frustration and hostility, the United Nations Relief and Works Agency has done two things: Maintained a program of relief-food, shelter, medical care-and developed in the Arab countries, programs of selfsupport for the refugees.

The Department of State considers that this United Nations Agency is the correct instrument for these purposes. Through the establishment of such an organization by the General Assembly, widespread support of the program has been secured from many nations.

At the same time the direct relationship between the Agency and the principal contributing governments, through the Agency's Advisory Commission, has enabled us to keep in close contact with its operations, and to have a direct voice in its policies.

As for the general policies of the Agency, its standards for relief must be conditioned by the fact that poverty prevails among nonrefugees. There must be left incentives for those who choose to work rather than to receive a dole. This makes for hardship in a population which had achieved, during the past 30 years, higher material standards than those of its former neighbors and its present hosts. We cannot in any case right the wrongs of the Arab refugee by relief payments; but if the United Nations can help maintain adequate levels of health and nutrition we shall have some cause for satisfaction.

On the side of rehabilitation, we have witnessed slow but steady progress in attitudes among the Arab Governments enabling the development of specific plans to permit substantial numbers of the refugees to improve their lot.

The United Nations Relief and Works Agency for Palestine Refugees has conducted its operations in a framework of humanitarian and economic cousiderations, and has attempted to avoid any direct connection with outstanding political issues. Within these limits, and without prejudice to final solutions of political issues, it has negotiated agreements to benefit the refugees by substituting employment for relief.

The General Assembly of the United Nations, with Arab support. voted in 1952 a 3-year program estimated to cost $250 million, divided as to $50 million for relief and $20 million for projects. Funds to start this program have been available since late in 1951.

The Agency has earmarked funds for the irrigation of the Jordan Valley. A project is now under close study by the United States engineers attached to the Government of Jordan. Intensive irrigation of the valley might provide for 200.000 people not now living there. This is a bold and imaginative proposal.

In Jordan, whose resources of water and arable land are limited, it is the main hope. Technical problems both of water utilization and of land settlement lie

ahead. More than ony other nation, Jordan has been the sufferer of the Palestine hostilities. Jordan nevertheless represents a stabilizing influence in the Near East and needs and welcomes outside aid.

The Egyptian Government has made a proposal for aiding refugees now concentrated in Gaza, through developments in the Sinai Peninsula. Preliminary engineering advice is favorable to such a proposal, involving use of water from the Nile.

In Syria, work is underway on land reclamation, carried out by refugees on lands made available by the Government. Proposals for rehabilitation of the urban refugees are under study.

The record of the UNRWA has until recently consisted chiefly of prospects. It is now possible to report that projects are the subject of continuing collaboration and concrete planning between UNRWA and governments. This marks a great step forward.

You may recall that 3 years ago when the problem was first studied by Mr. Gordon Clapp on behalf of the Palestine Conciliation Commission, it was impossible for him to find responsible Arabs willing to discuss more than a program of work relief. We now are in the phase of economic development from which refugees and host countries can secure permanent benefits.

It is unreasonable to expect Arab countries to accept refugees as workers unless means are found to improve conditions of their own citizens at the same time. The refugees cannot be the sole beneficiaries of new opportunities, nor can they hope to elbow settled people aside. Here lies the case for general economic development of the host countries, which deserves to be considered on its own merits as well as in the context of providing opportunities for the refugees. From the conclusion of hostilities in Palestine, until today, little tangible progress has been made in such development in Syria, Jordan, Lebanon, and Egypt. The interest and plans of these countries hold out hope for the future, but they will need help from the banks and from our own Government as well as from the UNRWA, if their plans are to mature.

It is clearly not in our national interest to accept responsibility for the welfare of the refugees, for either a long or a short period of time. It seems equally clear that to abandon this program of relief and rehabilitation now would have serious repercussions on our national interests.

Such action would involve profound unsettlement in the Near East, prejudicial to the well-being of all our friends there. It is equally clear that the goals of the present program cannot be achieved by its present terminal date of June 30, 1954. It is our view that the date for termination of the program should be extended for a further 2 years, until June 30, 1956; that we should endeavor to maintain the target of $200 million for work projects, and as circumstances dictate continue relief expenditures for at least a further 2 years. This will necessitate an increase of the relief fund originally projected at $50 million.

The success of other programs included in current MSA legislation for the area will have a great effect on the progress of this Agency, as would a settlement of other issues in the Near East.

Mr. GARDINER. Mr. Chairman, I believe it is our duty at this point to put forward the case for this particular area of the world. I realize that you have many burdens and problems. I would point out, sir, that this request for funds has been most carefully screened by the administration; that it represents the considered judgment of the executive branch of what is needed to help put out fires in this very critical part of the world; that it bears a very small relationship to the total sum requested in this bill before you.

I think that there is a sense of proportion to be observed here though I fully realize, sir, that $170 million is a very great deal of money and that you will consider it most carefully.

I think that it should be considered in the context of the importance of the Middle East to the United States.

(Discussion off the record.)

Mr. GARDINER. Now, we were instructed by the Secretary and by Mr. Stassen regarding this program-they have taken a very great