also need to be given to the extent to which changes may be effected in the internal organization and performance of the Department of State and the Foreign Service. 2. A further organizational possibility should be considered that would seek to meet both points of view as fully as possible without detriment to either through the establishment of a new executive department modeled somewhat on the pattern of the Department of Defense. This would be a Department of Foreign Affairs, an executive department, within which there would be a department of foreign economic affairs as one of a number of subordinate administrative departments. 3. These questions regarding permanent organization cannot be wisely settled at this time in view of the uncertainties resulting from the present national defense emergency, and especially the uncertainty as to how long the United States Government will continue to carry on large-scale programs of foreign economic aid. Accordingly, organization for the administration of foreign economic programs during the emergency should be determined on the basis of short-range considerations. Present action should be taken in such a way as to prejudice later permanent decisions no more than necessary; but the requirements for effective organization under present conditions must be given overriding consideration as long as the conditions persist. 4. We conclude that the Economic Cooperation Administration should be continued as an emergency agency for the administration of the economic aspects of foreign assistance and for such other closely related foreign economic activities as are of special importance during the emergency. The agency should not be considered permanent, but for efficient operation it will be essential to remove the statutory terminal date of June 30, 1952. We do not favor the substitution of any other terminal date in view of the unpredictable duration of the emergency, but the emergency status of the agency should be made clear in the legislation. 5. We believe that the activities to be continued in or to be newly assigned to the Economic Cooperation Administration should include the following: (a) Completion of the European recovery program. (b) Economic aspects of the mutual defense assistance program, and of any successor program, such as the proposed mutual security program. (c) Aid to southeast Asia and the Philippines, and other programs of economic assistance currently administered by the Economic Cooperation Administration. (d) Technical assistance, including the point 4 program currently administered by the Technical Cooperation Administration of the Department of State and the Institute of Inter-American Affairs. (e) Procurement and development of strategic materials abroad. (f) Export controls. (g) The foreign claimancy function. In addition, adequate arrangements should be made to insure full consistency between the lending activities of the Export-Import Bank and the other elements of foreign economic assistance. The minimum requirement is full consultation between the Bank and the Economic Cooperation Administration, with an opportunity for the Administrator for Economic Cooperation to have a voice in the determination of the policies of the Bank. If necessary, further steps should be taken. 6. The Department of State should continue to be responsible for leadership in the formulation of foreign economic policy and in the coordination of foreign economic policy with general foreign policy. It should remain responsible under the President for providing foreign policy guidance for programs of economic aid. The further problems that will arise in the coordination of a more fully unified program of military and economic aid are considered in chapter VI. 7. Leadership in securing the coordination of foreign and domestic economic policy is a complex assignment of the greatest importance. Responsibility for such leadership within the executive branch should be centered in the Executive Office of the President. The permanent assignment to the President's Council of Economic Advisers of a more specific responsibility than it has at present should eventually be considered. Under present conditions of defense emergency, the Office of Defense Mobilization in the Executive Office of the President is concerned with these matters and should continue to have major responsibility. 953820-51-10 CHAPTER V THE DEPARTMENT OF DEFENSE AND THE STATEMENT OF THE PROBLEM The inadequate liaison that existed between American foreign policy and national military power in 1948 was a source of grave concern to the Eberstadt Task Force of the Hoover Commission. It referred to the "fatal gap which so often in the history of nations has led to their undoing" and commented that Within slightly more than a score of years, at great cost of life and property, we have won two wars, only to lose the peace both times through lack of clear and consistent national policy objectives *. Our foreign and military policies are not yet firmly tied together. * * In the making of major decisions on foreign policy, the military voice should be heard even if it cannot always be heeded. For unless the military have an opportunity to advise, foreign policy commitments and military support for them may get dangerously out of balance. It is equally important that the civilian voice be heard in the formulation of strategic plans and of military policy generally. Otherwise military policies may be conceived without relation to the tasks set by national policy in which military strength may be required. There is a critical interdependence between foreign policy and military strength. The Department of Defense has at least three major responsibilities that are directly pertinent to the formulation and execution of foreign policy. First, it advises the President, the National Security Council, and the Department of State on the military implications and feasibility of the policies they are formulating; second, it prepares strategic and tactical military plans in support of national objectives, taking foreign policy considerations into account; and third, it plays an active part in the execution of foreign policy when military operations are required, as in Korea, and in the operation of military aid programs and other foreign programs requiring military participation. All three of these responsibilities indicate the need for continuous relationships with other agencies of the National Government concerned with foreign affairs. Within this general area, the present study has been focused primarily upon the relationships between the Department of Defense and the Department of State. The mechanisms for providing liaison have been reviewed, together with the arrangements for the administration of foreign programs requiring the joint participation of the military and civilian agencies of the Government, notably military aid to other countries and the administration of occupied areas. Special attention has been given to the participation of the Department of Defense in the National Security Council and in relations with the North Atlantic Treaty Organization. No attempt has been made to deal with questions of intelligence administration, military planning, military operations as such, or general problems of internal organization within the Department of Defense, these having been excluded from the terms of reference under which the study was undertaken. In examining the specific areas of experience that have been reviewed, however, consideration has been given to broader aspects of the situation in order to keep those areas in perspective, and the problem of the chapter has been stated accordingly. The problem is to review the responsibilities of the Department of Defense in the field of foreign affairs and to determine the relationships it should accordingly maintain with other foreign affairs agencies. BACKGROUND AND DEVELOPMENT OF THE PROBLEM The United States has made a number of pledges in recent years to supply forces or military assistance for the maintenance of international peace and security. Legislation has also been enacted, authorizing military assistance programs for certain foreign nations. The principal commitments have been contained in (1) the United Nations Charter (June 1945); (2) the Truman Doctrine of aid to free peoples resisting aggression (Greek-Turkish Aid, March 1947); (3) the Inter-American Treaty of Reciprocal Assistance (Rio Treaty, September 1947); (4) the North Atlantic Treaty (April 1949); and (5) the Mutual Defense Assistance Act (October 1949). Although these commitments form an over-all pattern reflecting American interests, they actually emerged out of varying situations and were designed to meet different requirements. From these commitments have come a number of special activities in the area of politico-military affairs. The most important have concerned the United Nations, the North Atlantic Treaty Organization, and the mutual defense assistance program. Each of these activities in some manner or other has required the use of military strength, and each of them has therefore required the active participation of the Department of Defense. As a consequence the internal arrangements of the Department of Defense to deal with politico |