LONG-RANGE PLAN

I mentioned last year that the Government of the Ryukyu Islands and the U.S. Civil Administration were developing a formal longrange planning system and a long-range plan. This was done to insure that long-range goals and objectives were identified and relative priorities were established between programs to provide the optimum application of available resources. The first phase of the plan was completed on March 18, 1965, in time for us to aline the fiscal year 1966 budget request in support of the long-range goals. Since then the Ryukyuan Government and the U.S. Civil Administration have continued to identify those program elements that needed acceleration to achieve the U.S. goals for the Ryukyus and meet the reasonable desires of the inhabitants. The goals of the long-range plan are derived from the U.S. goals set forth in Executive Order 10713 and in the White House statement of March 19, 1962. They are to insure that:

1. The public sector contributes all it can to optimum economic development and promotes cultural advancement; and

2. The levels of public health, educational, and welfare services advance toward levels obtained in comparable areas of Japan and reach them, to the extent possible, by the end of fiscal year 1971.

The initial analyses of the education, social welfare, and public health programs were completed in the summer of 1965 in time to revise the long-range plan for use in the simultaneous preparation of the proposed United States and Japanese Governments aid programs for fiscal year 1967 (Japanese fiscal year 1966).

Gentlemen, annually we have the difficult but most interesting problem of developing programs and budgets that will be acceptable to three separate governments. We attempt to insure that the total annual program for the Ryukyus is consistent with the goals of the long-range plan. The Ryukyus lag behind comparable areas of Japan in such important programs as public health, education, and social welfare.

In view of the foregoing, we proposed for fiscal year 1967 that the United States and Japan provide more needed financial assistance to the local government of the Ryukyu Islands, particularly for education, public health, and welfare services. Since then, two significant actions have occurred.

The first action was on September 20, 1965, at a meeting of the United States-Japan Consultative Committee in Tokyo when the Japanese Government was invited to assist in raising the levels of public health, education, and welfare to those prevailing in comparable areas of Japan by the end of fiscal year 1971, and to continue to contribute to the economic development of the islands. The Japanese Government agreed to provide $16.1 million for Japanese fiscal year

1966.

The second is that the Congress of the United States is considering the bill H.R. 12617, to raise the authorization for U.S. aid at the request of the executive branch in order that the U.S. contribution can be increased to be commensurate with the situation today. Last year when I appeared before this committee on the 31st of March, I stated that I did not know whether an increase in aid above $12 million was needed. I stated also that my personal opinion was that eventually

an increase in the ceiling should be considered and that later I might see fit to so recommend. Further, that I could not then make a prediction that I would be here this year for increased aid. After subsequent study, I recommended to Secretary of the Army Resor, that the $12 million authorization be requested. After due deliberation the executive branch authorized me to announce in August 1965 that it would seek the increase.

I will now describe programs of major importance which would be financed with the requested U.S. aid program. Also, I will point out the Japanese contributions to be made to the same activities. For that purpose, table I has been furnished as an appendage to this statement. I recommend that it be inserted into the record at this point. A discussion of its contents follows:

The table is arranged by U.S. budget subprojects in column (1), and key budget activities and items in column (2). Columns (3), (4), and (5) show the United States and Japanese aid for fiscal year 1966. Note on page 2 that the U.S. total is $12 million, and the Japanese total is almost $8 million.

For fiscal year 1967, column (6) shows the proposed U.S. aid program under the current $12 million Price Act authorization. Column (7) shows the supplemental estimate to be submitted under the proposed authorization in the bill, H.R. 12617, which would increase the authorization to $25 million. Hearings on that bill are scheduled for the near future. Column (8) is the total of the two. This is compared to the Japanese program in column (9), and the total external aid is shown in column (10).

REIMBURSEMENT FOR GOVERNMENT SERVICES

The first subproject is No. 8731, which provides U.S. funds for reimbursement to the Ryukyuan government for public safety, public health, and sanitation services performed on behalf of and because of the presence of U.S. forces in the Ryukyus. The levels proposed are the same as for the past 2 fiscal years which are fair shares of the total costs to the government of the Ryukyu Islands of these services.

CONTRIBUTIONS TO GOVERNMENT PROJECTS

The next subproject is No. 8732, contributions to projects and activities of the Ryukyuan government. The first three activities listed are the three key programs into which our proposed funding policies for fiscal year 1967 would channel increased United States and Japanese aid.

EDUCATION

The first activity under subproject 8732 is education. The Japanese Government was invited to assist in paying the cost of teachers' salaries and related benefits, item (a) in the table. It was proposed that in fiscal year 1967 the United States and Japan share these costs with the local government, with each Government contributing one-third or about $5 million. The Japanese Government's counterproposal was that, in conformance with policy in Japan, it contribute 50 percent of the salaries of schoolteachers of the first nine grades. Since the dollars involved were practically the same under each

proposition, the United States accepted the counterproposal, particularly since the Government of Japan agreed to assist in financing certain social insurance cost as proposed by the U.S. side. Under our budget request, we would continue as the administering authority to provide one-third of the cost of teachers' salaries, which would increase the U.S. contribution from $1 million in fiscal year 1966 to $5 million in fiscal year 1967. This increase depends upon the change in the Price Act.

The Japanese Government has agreed also to assist in financing the cost of a much-needed expanded school construction program, item (b), and school equipment, item (c). A special study of the education program was made by the local government. It projected school population at the end of fiscal year 1971 and then developed requirements for the physical plant at that time under Japanese National Government standards. It then deducted facilities that would exist through fiscal year 1966 funding to determine the indicated gaps, making allowances for depreciation replacement. The indicated gap is a staggering $65.5 million. While it has not been possible for the civil administration to validate this total, spot inspections of existing school facilities reveal very high student-teacher ratio, overcrowding of classrooms, and substandard facilities and equipment.

Our initial plan for fiscal year 1967 included a $5 million construction program but we reduced this to $3.6 million because the limited civilian construction capability in the islands is already being taxed by large military as well as other requirements.

This budget request provides that the United States, as the administering authority, contribute 50 percent of the cost of school construction program. The Japanese Government is providing most of the remainder; the principal portion will be used for construction of compulsory school facilities: the elementary and junior high schools. The proposed U.S. contribution is earmarked primarily for government schools: the high schools and special schools.

This budget request provides also that the United States and Japan share approximately equally the costs of a $2.1 million school equipment and supplies program, item (b) in this table. This would parallel the increased construction program.

In item d. of the table under column (6), the principal item is the construction of a science building at the University of the Ryukyus. The increase in column (7) provides for a music hall at the university, and general science equipment for the proposed new science building. Most of the Japanese aid for this item is to provide scholarship loans to worthy university and high school students.

SOCIAL WELFARE

The second activity under subproject 8732 is headed social welfare. In the long-range plan, a social insurance system patterned after the existing one in Japan is programed. Coverage will be complete by the end of fiscal year 1971 provided funds are available. For fiscal year 1967, the United States proposed and the Japanese Government accepted a proposition that Japan and the United States share the estimated contribution of the central government that Japan would provide if Okinawa were a prefecture. These are shown in items a. and b., the GRI retirement annuity program for its Government employees, and the medical insurance costs, respectively.

In item c. for other social welfare activities, Japan would continue to contribute 20 percent of the total cost of a government of the Ryukyu Islands public assistance program designed to insure a minimum sustaining income to needy families.

Not shown in the table is the dollar value of the food provided for school lunches and needy persons under title III of U.S. Public Law 480. The estimate for fiscal years 1966 and 1967 is $2.3 million each.

PUBLIC HEALTH AND MEDICAL

Activity 3 under subproject 8732 covers public health and medical activities.

In disease control, item a., remarkable progress has been made in the elimination of malaria. Present efforts include malaria surveillance and control of filariasis, trachoma, and Japanese "B" encephalitis.

In item b. the request for facilities and equipment is less than in fiscal year 1966. We had a nonrecurring item in fiscal year 1966 of $550,000 for the construction of the Okinawa Central Hospital. In fiscal year 1967, the request, among other things, provides funds for equipment for the hospital.

The major item in the Japanese Government contribution is a trash disposal facility in Naha.

For treatment of patients, item c., the Japanese Government will provide for Ryukyuan tuberculosis cases in Japan; 500 mental cases in Ryukyus; and atomic bomb patients.

PUBLIC SAFETY

The next activity is No. 4, public safety. The U.S. amount will augment the fiscal year 1966 program for additional traffic lights and will complete the replacement of blinker lights by pushbutton lights at pedestrian crossings.

PUBLIC WORKS

In item 5, public works projects, the proposed U.S. contribution decreases in fiscal year 1967 by about $1.2 million while the Japanese amount remains the same.

The United States and Japanese proposals for roads and bridges, item a., remain the same. As the committee is aware from past hearings, many miles of road improvement and construction are needed. This will take many years and millions of dollars.

For the next item, television for Sakishima Islands, the Japanese Government has included the first increment of construction funds in fiscal year 1967, based upon a feasibility survey in fiscal year 1966. The total construction cost is estimated to be $2 million.

For the Okinawa sewer system, we are proposing another increment of $1,430,000. This will be used for additional interceptor and gravity sewers for Naha and Koza; additional pumping stations and sewage disposal facilities for Koza; for the engineering design of the Sukiran treatment plant and interceptor sewers and pumping stations for that plant; and the second unit of the Naha treatment plant. The completion of the design of all critical facilities in the approved master plan for central Okinawa is programed in fiscal year 1967.

In addition to the $1,430,000 programed under this appropriation, we have budgeted for fiscal year 1967 in the USCAR General Fund $2 million for the sewer system. That amount will be used to partially finance the expansion in Naha and Koza. Projects proposed included additional advance planning and design and the construction of force mains, gravity sewers, interceptor sewers, pumping stations, and other ancillary facilities.

Under item 5d., other projects, the U.S. request would continue contributions to construction of seawalls, piers and harbors, and municipal housing. New construction includes airfield improvements, principally for Miyako Island, and rural electrification.

The program of the Japanese Government is decreased because of the discontinuance of Japanese funding for a land survey project.

ECONOMIC DEVELOPMENT

The last activity under subproject 8732 is economic development. Here the Japanese and local governments provide large amounts. The United States would continue our assistance in agricultural land development, a most important activity to which the Japanese Government provides support to the building of farm roads and retaining walls. The largest Japanese contribution for economic development, item c., is to the Central Bank for Agriculture, Forestry, and Fisheries, called CBC. Through fiscal year 1967, Japan will have contributed $4.3 million to that bank.

In the "other" economic development item, the Japanese Government continues to support such projects as livestock research and improvement, fishing port facilities, and forestry development, and mountain conservation.

TRANSPORTATION OF COMMODITIES

Subproject 8733 contains the usual $5,000 for the transportation of welfare supplies donated by U.S. charitable groups.

TECHNICAL EDUCATION AND TRAINING

In subproject 8734, the technical education and training programs of the United States and Japan are continued at slightly increased levels to meet expanded workloads and increasing costs. These provide for scholarships for training in the United States and Japan, and other recurring education and training activities.

TECHNICAL COOPERATION

The activities under subproject 8735, technical cooperation, also show minor increases in both the United States and Japan budgets. The principal increase in the U.S. program is for the second year of the contract with the University of Hawaii for training of interns and resident physicians at the new Central Okinawa Hospital. The fiscal year 1966 contract was for part of a year only, and for an accelerating program. It amounted to $137,000 while the fiscal year 1967 contract is estimated to cost $410,000.