There are a lot of people over there in the United States aid organization who are not so happy about some of the things that have happened. As a matter of fact, a great deal of this information came from people in the ECA organization.

Mr. BENTLEY. As well as Government officials?

Mr. PETERMAN. Our Government officials and foreign government officials. I have been back and forth over there 11 times since the war and I know a few people in Europe.

I went down for example to see 2 French generals, Members of the Chamber of Deputies down on the Riveria where they were having their vacations. I spent a couple days down there. I went through the Mystere aircraft plant where I saw airplanes being made. Up to that time none of our military advisory people would let us into any of these foreign plants. However, I got into the most restricted place of all and saw how they are building these very fine fighters and jets on licenses supplied by the British and the Americans. In fact, we went out to lunch with members of the North American aircraft factory in attendance and went all through the Dassault plant. Strange to say, there is not nearly as much hush-hush when you get in with the foreign government officials as there seems existing among our own people. I do not know why that is.

Mr. BENTLEY. As I say, I would like to have the opportunity of looking at these articles, if either you could leave this copy that you have or send some others.

Mr. SMITH. I can tell Mr. Peterman, I have a set or most of them, I think, and they are available and are in my office.

Mr. BENTLEY. You said the Germans were the only people out there who were not afraid of the Russians.

Mr. PETERMAN. I would not say not afraid, but they were not awed by them particularly.

Mr. BENTLEY. The other peoples, you did find a certain amount of fear existing among them?

Mr. PETERMAN. I noticed a sort of fatalistic attitude among people like the French that I talked to and some of them seemed to be a little bit more inclined to appease or make every concession possible. They were a little resentful of the fact that we the United States, seemed to be upset about what the Russians have been doing. Particularly is this to be found among newspapermen from the British Isles.

Mr. BENTLEY. The only point I was making was, if the other European peoples do have more fear than the Germans, why are they not willing to do more for their own defense.

Mr. PETERMAN. Well, if you want to take France as an example of that, they have the same sort of attitude-the citizens I talked to; these are not Government officials-these are people who seem to think that wars are going to happen and that they are going to be overrun and the best thing to do is not to get too badly mauled around in the process. Mr. BENTLEY. Do you speak any languages?

Mr. PETERMAN. I speak French and I speak German.

Mr. BENTLEY. Go ahead, please.

Mr. PETERMAN. This will interest you. I am a taxpayer in addition to being a newspaperman and there were several little things that irritated me. I met a man in the Frankfort railroad station. Just sitting at the table where I was eating and he talked English and with

a British accent. He was going to Bonn as was I. We decided to ride together. He turned out to be the man in charge of our Government-projected movies all over Germany. This fellow was a British citizen but he was a refugee from Austria, and on the way there he made a statement which I do not think is the sort of philosophy which should be in our ECA.

He said, "How long do you think we can hold Berlin?"

I said, "If we lose Berlin we might as well get ready for the whole works, then, because I have always been told that Berlin is the pivot." He said, "I do not think we can hold Berlin. It seems to me this whole thing is a loser."

That was his attitude. He was more consumed with the holdover hatred of the Nazi regime than he was with the job he was doing in trying to prevent the same thing happening under the Communist flag. I do not know whether that man is still over there or not but he was in charge of our ECA moving-picture operation in Germany, to get these things of ours into theaters and he said he was not having much success, that nobody wanted to look at the sort of American Government production that was being sent around. He was just sort of upset and worried and troubled.

We went to dinner and I thought at the time, well, there is not much of a dividend in that fellow as a member of our staff, and yet he was in charge of a rather important part of the propaganda end of it. Now, that is not general, but it is there.

Mr. BENTLEY. Thank you, Mr. Peterman.

Mr. SMITH. Mrs. Kelly

Mrs. KELLY. I have one question: In your recommendations, did I understand you to say you recommended trade, not aid, or was that the wish of the people over there?

Mr. PETERMAN. I found it the wish of the people, generally.
Mrs. KELLY. Have you any recommendation?

Mr. PETERMAN. Well, I certainly think that we ought to get down. to trade and to make these foreign-aid operations more like bargains because in my contacts with their news correspondents which we have at the United Nations they say that certainly down in this Middle East and the new Asian field, that should be the case. The MiddleEastern people are very proud and they do not want to be handed something as an outright charity.

Mrs. KELLY. Do you mean in the Near East and the Middle East we should cut off any assistance?

Mr. PETERSON. Well, even if it is aid, it ought to be somewhow or other made to seem to be a deal or a bargain, because otherwise it will not be appreciated.

Mrs. KELLY. Could you give us the name of the man you traveled with from Frankfurt to Bonn?

Mr. PETERMAN. I could give it to you but I would not want it stated here because it was a confidential sort of a thing.

Mrs. KELLY. Were these moving-pictures news?

Mr. PETERMAN. The sort of thing that would show life here in America, and so forth.

Mrs. KELLY. Was it under the Voice of America?

Mr. PETERMAN. No; it was not at all. His headquarters were in Germany.

Mrs. KELLY. There were several of us here who investigated those programs while we were in Europe. We were acquainted with several of those in charge and we did not come across that gentleman. He might have represented private industry.

Mr. PETERMAN. No; he told me his position. Of course, we do, as you know, employ a great many Europeans over there. Some of them are eager and capable and some of them are not.

Mr. SMITH. Mr. Fulton

Mr. FULTON. After your investigation, you must have come up with some overall judgments. What is your judgment on the $5,600 million proposed in this program? Is it too large?

Mr. PETERMAN. Only about half of that is going to Europe, is it not? Mr. FULTON. Yes.

Mr. PETERMAN. I would say "Yes," unless the emphasis in most of that aid is on things that will definitely go to start security measures and rearmament in some of those countries, and that would be better than if it was camouflaged economic aid as in the past.

It seems the more we prop these people up the more they are going to want to be propped up, and the more they will expect from us. The more they will fill in their budgetary shortages and continue a lot of socialist government upkeep and will not get down to collecting taxes and making economies that they could.

Mr. FULTON. Would you cut this whole program at this time? Would you cut the program for Europe? That is my question. Mr. PETERMAN. I think I would.

Mr. FULTON. By about what percent would you cut the program? Mr. PETERMAN. It would have to be a country-by-country proposition, I think. I do not think I would cut it much to Germany if there is going to be any more given to Germany.

Mr. FULTON. Did you find any country in Europe which would not stand up with us on the side of freedom so that it would not be worth while to give them any aid in the fiscal year 1954 program?

Mr. PETERMAN. When I was over there I would not bet much on the French standing with us. I felt that neutralism was on the rise over there. As a matter of fact, they did not seem to be too concerned about defense or NATO in France.

Mr. FULTON. Would you say you have some doubt about France, but all the other countries you have little or no doubt about, that they would stand up with us?

Mr. PETERMAN. Well, the Germans will stand with us and the British will stand with us. The Greeks and the Turks will stand very definitely with us, though I think we could certainly improve the situation on aid in Greece. That was one of the bad spots.

Mr. FULTON. Western Germany would probably stand with us, would she not?

Mr. PETERMAN. Yes. They will stand, with the Turks and the Greeks in my private estimate, ahead of all others. Spain will unquestionably stand with the United States, too.

Mr. FULTON. And you have confidence in the Benelux countries, do you not?

Mr. PETERMAN. Up to the point of what they can do.

Mr. FULTON. So far as their ideas of freedom are concerned? Mr. PETERMAN. Yes, but at the time I was there the Belgians were debating whether they should draft for 18 months or not and were

causing an uproar over the longer term draft laws of the other

countries.

Mr. FULTON. In trying to arrive at your final judgments that are conclusions based on the facts you have seen, your opinion then would be that most of the countries of Europe will stand with us in this fight for freedom and the aid program should be continued during the fiscal year 1954 to those countries. As to France, you have some doubts and you might watch the program more closely. You likewise would continue the program there, too?

Mr. PETERMAN. Yes, but with definite conditions.

Mr. FULTON. So that your recommendation, then, is, finally, on these things you have seen, that while there are defects, you nevertheless would continue the program of mutual aid for our security of the United States in Europe for the fiscal year 1954?

Mr. PETERMAN. Yes.

Mr. FULTON. Thank you.

Mr. BENTLEY. What about the Italians, Mr. Peterman, as long as we are getting specific on these countries?

Mr. PETERMAN. That is a difficult thing to solve because of the population problem, as you know, and it is probably right with France in that bracket of needing something to improve the economic status of a lot of people, that is not happening very rapidly, even now.

Mr. FULTON. You had spoken of the Middle East area. In your opinion is that a strategic area which vitally concerns the defense of the United States, and one in which we should be interested?

Mr. PETERMAN. Yes, indeed. I think everyone agrees to that. Mr. FULTON. Under those circumstances, then, realizing the difficulties that there have been between various nations and groups in that area, you nevertheless would recommend that the Mutual Secur ity Program for the year 1954 be comtinued in that area for our own strategic defense?

Mr. PETERMAN. Yes.

Mr. FULTON. You would likewise favor a Middle East command if we could work one out, would you not?

Mr. PETERMAN. Well, I am not a military thinker, primarily, but I do think in all these dealings, as Mr. Dulles pointed out the other night, when you crack down and tell these people what has got to be done, they are more apt to do it than if you just keep on going as we have for several years saying "Won't you do this? Won't you do this, please?" I think that has been part of the trouble.

Mr. FULTON. If we are giving countries free assistance and military aid as well as technical programs and special economic assistance, we have more of a right to request that they do certain things which things are for their own benefit than we would if we made an outright bargain such as you suggest. Because certainly if we are making a bargain with a quid pro quo, there is no right for us to attach conditions.

Mr. PETERMAN. Yes, but we do not. We do not do it. We give them the things. We do not give them any strong directives, and it is not a bargain, so we lose out in two directions.

Mr. FULTON. Do you think we should go to the point of putting specific conditions on the aid which we give that would have a bearing on the foreign policy in the Middle East area?

Mr. PETERMAN. That is a very tricky question.
Mr. FULTON. They all are carefully phrased.

Mr. PETERMAN. If you get into some of that Middle Eastern squabble, I would like to see them spelled out before I would give an answer on that, because those people are pretty hard to please and as you know, there is an underlying battle going on down there which interests them more than containing communism, and I am only now paraphrasing the Secretary of State.

Mr. FULTON. Then, don't you think it is much better for us at this time not to put specific conditions on the aid to respective countries, but try to deal with the problem as an area and see what would be best economically and militarily to the security of the area as an overall program?

Mr. PETERMAN. Militarily I do not know what is planned in this program in the Middle East. I do not think you have to give directives to the Turks any more. They are in this things as deeply as we are. But some of these other people, I believe, even if you gave military aid, for example, to Saudi Arabia, it ought to be in some form of a deal. They are very proud people. I have had a whole afternoon's interview with Prince Feisal, the Foreign Minister, over here not long ago, and it was emphasized to me that they want things done in a trading way and on an equality basis.

Mr. FULTON. Would you agree with the approach of this committee, then, if we decide on it finally, that this Middle Eastern program should be an overall program, and should be aimed toward the benefit of all the peoples of the Middle East, without any specific and binding commitments or conditions being attached for each country or each group?

Mr. PETERMAN. I think when you give military aid to any country or group, it is a binding commitment. We are not going to give fighting hardware to any government and then have them declare themselves neutral. Unless that is understood, I do not see much point in giving it to them. Give more to those who are willing to stand with us. Give more to the Turks, then.

Mr. FULTON. Within the middle eastern program, then, you would have an area of discretion that during the time that fiscal year 1954 expires we could nevertheless make changes between those who cooperate and those who do not cooperate.

Mr. PETERMAN. Yes. I would certainly leave myself an out on this thing.

Mr. SMITH. Thank you, Mr. Peterman, very much.

(The following has been submitted for inclusion in the record:)

[From the Philadelphia Inquirer, October 17, 1952]

BUNGLED BILLIONS-ANONYMOUS SANTA CLAUS RIDICULED FOR SOFT POLICY
By Ivan H. Peterman and Alfred M. Klein

(Copyright, 1952, by the Philadelphia Inquirer)
CONCLUSION: CASE OF THE INDEFINITE EXIT

There is no definite plan for extricating the American taxpayer from Europe where $17 billion has been invested for global security. Nor from Asia, Africa, any foreign area where, for good, bad, and mediocre measures his money is being spent.

It is absolutely certain that militarily, United States forces are not going to be withdrawn from Europe in the foreseeable future. They may be stationed