INSIDE REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69B00369R000100240001-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 15, 2016
• Document Release Date: April 13, 2004
• Sequence Number: 1
• Content Type: NSPR

',k1 A-S K Qo cr '-?t Sii L G I
Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240001-8
Inside Report
i ? ? By Rowland Evans and Robert Novak
The Arms Trade Backfires
THE SUDDEN discovery
that the Export-Import Bank
is deeply entangled in the
Pentagon's sale of U.S. arms
abroad will result in a con-
gressional veto of arms sales
financed by the Bank-and
much more.
The Ex-Im Bank probably
will suffer in ways not re-
lated to arms trafficking. Its
request for new lending
authority of $13.5 billion
over the next five years
likely will be reduced by at
least. $2 billion for a period
of only three years. Its
reputation won't r e c o v e r
from the arms expose for a
long time. Considering the
fact that the Ex-Im Bank's
worldwide le n din g opera-
tions is Washington's most
effective foreign aid opera-
tion, this Is considerable loss
indeed.
All this results from the
super - secrecy that has
cloaked the use of the Bank
by Pentagon arms brokers.
members of the Senate
ouse Ban
ttees.i which had tentatively
approved the $13.5 billion
extension before we reported
the Bank's arms dealings
Last week, now compare the
arms expose to the bitter
political reaction following
revelation of the CIA's
financing of private or anl-
rations.
"The Bank's latest annual
report was calculated to con-
ceal the full extent of its
financing of arms sales
Novak Evans
abroad," one House Demo-
crat told us. It is axiomatic
that no Congressman likes
to be bamboozled.
BEYOND THIS, members
of the House Committee, in
an unusual, nonpartisan con-
sensus, were far from
pleased with the explana-
tions given at a closed hear-
ing last Tuesday by top Ad-
ministration officials called
on the carpet. Instead of
playing on obvious national
security implications of sell-
ing arms abroad, the empha-
sis in the secret session was
on the value to the American
economy.
Deputy Secretary of De-
fense Paul Nitze, for ex-
ample, listed several reasons
why the arms sales were
beneficial, including the fact
that they helped U.S. busi-
ness, U.S. labor, :and the U.S.
balance of payments. Nitze
did not exclude the security
factor, but his emphasis on
economic reasons nettled
Congressmen who felt they
were being had.
."Nitze may have been tell-
ing the truth," one Republi-
can told us, "but it's a truth
that plays right Into the
hands of the Russians who,
have always claimed that
our economy would collapse
without our armaments in-
dustry."
Moreover, Nitze and Under
Secretary of State Eugene
Rostow were less. than ef-
fective in trying to explain
arms sales to Latin America
to the congressional inter-
rogators.
THEY TESTIFIED U.S.
arms are essential for Brazil
and other Latin countries to
offset Castroite Cuba's grow-
ing power and Castro's ex-
panding operations in Latin
America.
That brought an immedi-
ate congressional question
at the hearing: If that's what
Cuba is doing, the U.S. re-
sponse should be far more
direct than peddling a few
millions in arms. But that
fundamental question went
unanswered.
Still another fundamental
question raised on Tuesday
but not answered concerned
U.S. arms sales to Jordan.
To keep this Arab state
friendly to the West and to
make it independent of So-
viet arms, the Committee
was told, it was necessary
to supply it with U.S. arms,
including tanks and other
heavy equipment. But when
the chips were down in the
Arab-Israeli war last month,
the Congressmen p o i n t e d
out, Jordan joined Egypt's
President Gamal Abdel Nas-
ser and used American tanks
against identical tanks sup-
plied Israel by the United
States.
Quite apart from the basic
question of foreign policy
involved in the storm over
using the Ex-Im Bank as an
arms conduit, the Adminis-
tration's handling of the af-
fair is the subject of con-
gressional criticism. Period-
ic, off-the-record briefings
should have been given the
top Democrats and Republi-
cans in both Senate and
House, keeping them in-
formed on the full extent to
which the Bank was being
used.
The policy of conceal-
ment, once exposed, was
bound to backfire. Quite
beyond cutting off the Ex-
Im Bank as an open tap to
finance arms sales, it is now
bound to lead to a full-scale
congressional probe of the
o n n son Administration's
arms policy. What will come
out of that, no one now can
predict.
01967, Publishers Newspaper ---
Approved For Release 2004/05/05 : CIA-RDP69B00369R000100240001-8