Mr. PASSMAN. The committee will come to order.

We will take up the fiscal year 1967 budget request for the Department of the Army, Administration of the Ryukyu Islands. We have with us this afternoon General Watson, the High Commissioner, and the Honorable Thaddeus Holt, Deputy Under Secretary of the Army for International Affairs, and other supporting witnesses.

I mentioned more or less humorously before we called the committee to order that this was getting to be a small world. I will now have to make the same statement seriously because we have thought of Okinawa as a far-off place and we thought that the habits and practices of the Great Society would be a little slow reaching Okinawa. Evidently communication is a lot faster than I thought because you, too, have acquired the habits of the Great Society. That is, to spend money you do not have for things you do not need, having to borrow most of it, no doubt, from unborn generations.

But that is the age in which we are living and I do not guess there is anything we can do about it but recognize what happened here; and what is advocated here in the United States soon gets out to Okinawa.

We have many important witnesses. I assume we will hear from the Deputy Under Secretary of the Army first and then from the High Commissioner, General Watson.

Is that the way you would like to proceed?

Mr. HOLT. I will proceed now with my statement, if I may.
Mr. PASSMAN. You may proceed, Mr. Secretary.

STATEMENT OF THE DEPUTY UNDER SECRETARY OF THE ARMY FOR INTERNATIONAL AFFAIRS

Mr. HOLT. Thank you, Mr. Chairman and gentlemen, I thank you for the opportunity to appear before you today in support of the Army's budget requests for the Ryukyu Islands.

I have served as Deputy Under Secretary of the Army for International Affairs since December 10 last. In this position, one of my responsibilities is to monitor the administration of the Ryukyu Islands

for the Secretary of the Army-since, as you know, the Department of the Army is responsible for the administration of the Ryukyus on behalf of the Department of Defense. I visited the Ryukyus in November while serving as special assistant to the Secretary of the Army. What I saw then, and what I have seen in my daily contact with the affairs of the Ryukyus over the last several months, confirm the need for approval of the budget requests now before you.

Here with me today is Lt. Gen. Albert Watson II, the High Commissioner of the Ryukyu Islands. General Watson, who has been in Okinawa as High Commissioner for more than 18 months, is uniquely qualified to describe the needs of the Ryukyus and the background of the budget requests being made. But before asking General Watson to describe these requests, I should like to discuss their background and the reasons why the Department of the Army is so convinced of their importance.

I believe that anyone familiar with events in the Far East since Korea would agree that the Ryukyu Islands have been, and are now, our most important military base in the Western Pacific. Our continuing administration of the Ryukyu Islands is based on the treaty of peace with Japan. We recognize the residual sovereignty of Japan over the islands, and we do not intend to retain them permanently. But we must stay there as long as conditions of threat and tension in the area require the maintenance of military bases with respect to which we enjoy freedom of action without any risk of restriction of that freedom by a foreign government. This may be a long time.

In the meantime, the Department of the Army feels a continuing responsibility to seek those means by which, through cooperation with the Ryukyuans and Japanese, the military effectiveness of the basewhich in large part depends on the continued acquiescence of the population in our administration-can be secured, and the welfare and well-being of the Ryukyuans advanced. The Congress has recognized those policies and written them into law. Public Law 86-629 directs that "every effort shall be made to improve the welfare and well-being of the inhabitants of the Ryukyu Islands and to promote their economic and cultural advancement, during such time as the United States continues to retain authority over the Ryukyu Islands." The appropriation for "Administration of the Ryukyu Islands, Army" is the only source of continuing direct U.S. assistance to those basic programs of the Ryukyuan Government which are designed to provide facilities and services which a central government is expected to supply. (Indirect assistance is also provided in the form of Public Law 480 programs, a loan for construction of power facilities, and the revenues from the instrumentalities of the general fund of the U.S. civil administration.) In recent years, the Government of Japan, as a result of the U.S. policy of implementing a cooperative relationship between the United States and Japan in providing economic assistance to the Ryukyus, has made sizable contributions for this purpose.

Improvements in the Ryukyuan economy are obvious to anyone who examines the statistics. But the average Ryukyuan can still point to fields in which he does not enjoy basic benefits and protections which would be his if he were once again under Japan such as social security coverage, educational facilities, and the number of doctors and other medical personnel.

Vocal elements in the Ryukyus and Japan maintain that reversion of the islands to Japan is the only way in which the Ryukyuan can secure benefits obtaining in comparable areas of Japan. We, in cooperation with the government of the Ryukyu Islands and the Government of Japan, hope to attain such a level within the existing administrative arrangements for the Ryukyus. I believe that our program for doing so is essential to insure that our base on Okinawa continues to operate at maximum effectiveness. The "Administration Ryukyu Islands, Army" budget requests for fiscal year 1967 are an essential element in this program. I believe that those requests deserve your favorable consideration.

To describe these requests in more detail, I would like to introduce Lt. Gen. Albert Watson II, the High Commissioner of the Ryukyu Islands.

Mr. PASSMAN. Thank you very much, Mr. Secretary.

I think we all recognize the importance of Okinawa. I guess it is about the most important real estate we could think of other than the United States at this time. That has been true for some time.

I do not know how long you can be with us but we are not going to drag out the hearings. We do want to hear from the general and we have many questions to ask with respect to this estimate.

IMPACT OF AMERICAN ASSISTANCE

I would like to just comment on one statement, Mr. Secretary, that confuses me a bit. That is your statement on page 3, second line from the top, where you say:

Improvements in the Ryukyuan economy are obvious to anyone who examines the statistics.

Certainly that is a very factual statement. Continuing:

Put the average Ryukyuan can still point to fields in which he does not enjoy basic benefits and protections which would be his if he were once again unger Japan such as social security coverage, educational facilities, and the number of doctors and other medical personnel.

This statement causes me some concern because I have been going to Okinawa off and on since 1949, and observed on my first trip to Okinawa that the courthouse was a little wooden shack with a wooden door that only had one hinge. As you entered you had some wooden benches and the judge had to sit on possibly a dollar or a dollar and a half homemade chair.

You may remember that, General. You had these wooden benches and it made you think of one of these old country schools I attended as a youngster. Do you remember that?

Mr. BURNS. I have seen pictures of them.

Mr. PASSMAN. Other buildings were simply dilapidated and it looked like a very poor economy. The educational facilities were something that we all recognized had to be improved. That is why I was very much enthused over the possibility of the United States being of some assistance out there. I want the record to be corrected if I am not making a statement of fact.

I have been returning there at frequent intervals and observing the tremendous improvements-typhoonproof buildings and residences, our own administration building, the beautiful new courthouse, and

the many new schools. It would appear to me that there has been a tremendous improvement in a short period of time.

If we compared their lot today with their lot under the Japanese, it would appear that there is hardly anything in the annals of history that would show where any people made as much progress in such a few years as the people have made out in the Ryukyu Islands.

I do appreciate very much your frankness on this, but I do not know whether I could agree that they would not have these benefits, because it would appear from the record that they did not enjoy the same benefits prior to World War II as the Japanese did. I am still inclined to believe that they are very happy to be under the jurisdiction of the United States. Of course, I must say I made my living in the same field as some of those people. That was selling. I think those people are doing a selling job. More power to them, but they have not sold me on the fact that they want to go back to Japanese control. I have been there many, many times and I think the witnesses remember the days when I talked about those facilities.

General WATSON. I was out there in 1945. When I came back 19 years later I was amazed at the changes. I was told about the old courthouse and other matters. While I am not firsthand familiar, I think I know they were in dire straits.

Mr. PASSMAN. I am glad I had something to do with recommending at the time, and the committee supported me, these needed improvements. I still feel the same way now. I thought we should indicate for the record the tremendous improvements that have been brought about since 1949.

General Watson, it is good to have you back before the committee. You have always been a very excellent witness and it has been a pleasure to this committee, and I am sure they would echo my views, to work with you.

You have always been forceful, forthright, and very cooperative with the committee. I am sure that the members of the committee that accompanied me on this last inspection trip would want to thank you personally for the many courtesies that you extended to us when we arrived there maybe within seconds of being baked alive. That was an experience I hope I never have again.

General Watson, if you have a statement we would be very pleased to hear from you at this time.

General WATSON. Mr. Chairman, may I say before I start with the presentation that I appreciate the kind remarks you have made. It was a pleasure to have you and your party with us in Okinawa on the last visit and the one before that. I would like to say that sometimes the most welcome visitors are the most unexpected. Anyway we are delighted that you were there with us and that you could join us in the festivities in progress that night. It was a historical occasion for that military headquarters.

Mr. PASSMAN. Thank you, General.

I hope that you correct the record on that point. A lot of people think that these congressional trips are a party from the time we leave here to the time when we get back.

General WATSON. Mr. Chairman, I have a prepared statement here which I can read completely or I can go through and brief it. I have certain key points marked to mention them alone in my presentation.

The questions could follow. If you wish, I will go through it page by page.

Mr. PASSMAN. General, I know that time is important. However, we will be pleased to hear from you at this time.

STATEMENT OF THE HIGH COMMISSIONER

General WATSON. Mr. Chairman, gentlemen, and madam, last year when I appeared before this committee in support of the fiscal year 1966 budget request, I was relatively new at my job as High Commissioner. Now that we are three-quarters through the fiscal year 1966, I have confirmed my belief of last year that the current $12 million U.S. program and the Japanese Government aid contribution of $8 million represent well-balanced and timely contributions to the total annual program of the Government of the Ryukyu Islands for the economic development and social betterment of the Ryukyus. However, I recognized that these sums would not move us significantly forward in our objective of bringing the Ryukyuan economy to parity with comparable areas of Japan.

The past year has seen an increase of threats and tensions in Asia. This is caused primarily by the situation in Vietnam. The Okinawa military base is vitally important in the defense of the United States, Japan, and our other allies in the Western Pacific. This was demonstrated during the past year when we were able rapidly to redeploy troops and supplies from Okinawa to Vietnam. Our unilateral flexibility of decision and movement lies in the exclusive administrative rights held by the United States under article 3 of the Treaty of Peace with Japan. The continuation of this unilateral flexibility is essential.

The United States is responsible for promoting the welfare and well-being of the Ryukyuans, and we are in no position to shirk this responsibility today. We have made considerable progress in this respect over the past year. Economic growth, increases in national income, and the general standard of living have continued at a high level. Specific figures are shown in charts A, B, and C appended to this statement, which I will later discuss. The political situation, which was somewhat agitated by the attempted resignation of the Chief Executive when I first arrived, has become relatively stable. It is an uneasy stability, and must be recognized as such, since for 20 years our tenure in the islands has been considered to be indeterminable, with the ultimate goal of returning the islands and the people to their status as a prefecture of Japan.

Additional authority and powers have been granted to the local Government. With this growth in autonomy the local government has become more effective and responsible over the past year. A particular signal step forward on the road to increased autonomy occurred on the 20th of December, 1965, when the President signed Executive Order 11263. Now the Ryukyuan Chief Executive shall be elected by a majority of the Ryukyuan legislative body. This replaced nomination by the legislature and appointment by the High Commissioner.