MUTUAL SECURITY ACT EXTENSION THURSDAY, MAY 28, 1953 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met in executive session pursuant to call in room G-3, United States Capitol, at 10: 50 a. m., Hon. Robert E. Chiperfield (chairman) presiding. Chairman CHIPERFIELD. The committee will come to order. STATEMENT OF HON. C. TYLER WOOD, DEPUTY TO THE DIRECTOR Mr. Wood. I had thought that we would plunge right into special economic assistance for the Near East. On this subject our witness would be Mr. Arthur Gardiner, of the State Department. Since Mrs. Bolton is here, and Mr. Harrison, I suggest we start in with Mr. Gardiner. Mr. Gardiner will discuss two items in this program. One is a request for $140 million for special economic assistance for the Arab States, Israel, and Iran, and second is a $30 million contribution to the United Nations for Palestine refugees. I would like to point out, before Mr. Gardiner starts, that we are requesting only an authorization for this last $30 million item, not an appropriation. Chirman CHIPERFIELD. Mr. Wood, before Mr. Gardiner proceeds, would Mr. Andrews wish to make any statement about those tractors? Mr. WOOD. I had thought, Mr. Chairman, in view of the fact that certain members of this committee could not be here this afternoon, that it would be well to start with Mr. Gardner. Then later we could have Mr. Andrews put in his correction of the record. If we start with Mr. Andrews we might not finish with this other subject this morning. Could I say one other thing before I call on Mr. Gardiner, Mr. Chairman: As you will recall, yesterday there was a request by the committee for an appearance by Admiral Radford. Admiral Radford, I am informed is today appearing before a joint session of the Senate and House Armed Services Committees. It is impossible to say at the moment whether or not those committees will have finished with him by the end of the morning session. If they should do so, Admiral Radford would be pleased and eager to appear before this Committee this afternoon. He is, unfortunately, leaving for the Far East tonight, so if he should not be able to appear this afternoon there is a problem of when and how he can be brought before this committee. I was therefore about to suggest that the Defense Department advise us as soon as it is known whether or not the Senate and 33064-53-52 811 House Armed Services Committees wish him to return this afternoon. If not, he will appear before this committee, if the committee would like to hear him. Mr. HARRISON. When will he be back from the Far East? Mr. WOOD. He has no definite plans for returning from the Far East immediately. He takes over as Chairman of the Joint Chiefs sometime in August. We are hoping, and so is he, that he may be finished in the Armed Services Committee this morning. As soon as that is known, the Pentagon has promised to inform me. I thought I would inform the committee of that possibility. I assume you would like him to appear if this prior engagement is finished in time. If we may, we will have Mr. Gardiner proceed with his testimony on special economic assistance in the title II area which, as you know, covers the Near East and Africa. His testimony will cover our aid proposals for the Near East-$140 million for the Arab States, Iran, and Israel, and $30 million for Palestine refugees. STATEMENT OF ARTHUR Z. GARDINER, POLITICO-ECONOMIC ADVISER, BUREAU OF NEAR EASTERN, SOUTH ASIAN, AND AFRICAN AFFAIRS, DEPARTMENT OF STATE Mr. GARDINER. The request for the Near East and Africa of a total of $194 million is included on page 11 of the Basic Data Book. The sum of $24 million for technical assistance and development in the African dependent overseas territories will be separately justified by representatives of the Mutual Security Agency. This statement is directed specifically to the request for $140 million for the Arab States, Israel, and Iran and for an authorization, not an appropriation, of $30 million which may be required for contribution to the United Nations under the terms of the Palestine Refugee Aid Act of 1950. In his testimony on this bill, the Secretary of State made the following statement regarding the program for the Near East: We believe that that area can best be treated as a whole and that it is not very realistic to think of building a defense within that area against possible Soviet aggression, let us say, as long as the area is torn by conflict and indeed a technical state of war within itself. We hope that with the discretion which would be allowed us if this legislation is passed in the form proposed, to initiate a program for the entire area which would include among other things, the prospect of a peace between Israel and the Arab States, and that that would provide a foundation upon which a more dependable defense structure could be erected than under present conditions. We do ask for a negotiating power in that area, with the understanding that the purpose will be to bring about the result to whch I alluded. With this background, it may be well to review the criteria underlying justification for the total sum requested and an indication as to the purposes to which we would expect the funds to be directed. In the first place, it is in the interests of the United States and of all Near Eastern countries to consider the needs of the region, not separating out individual states for special treatment. This is the approach which has been made by the Congress in making provision for assistance in other areas of the world. Opportunity to conciliate issues in the Near East will be enhanced if our record is clearly directed to needs of all concerned in the area. We have an interest, which has been expressed many times, in the support of Israel and in its maintenance as a stable community in the 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. |