HEARING BEFORE THE COMMITTEE ON FOREIGN RELATIONS UNITED STATES SENATE NINETIETH CONGRESS

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP69B00369R000200020030-9
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• Document Release Date: April 7, 2004
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• Publication Date: April 10, 1967
• Content Type: OPEN

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NOMINATION OF RUTHERFORD M. POATS
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
NINETIETH CONGRESS
FIRST SESSION
ON TRE
t NOMINATION OF RUTHERFORD M. ?OATS, TO BE
DEPUTY 4.MINISTRATOR, AGENCY FOR
INTRUNATIONAL DEVELOPMENT
APRIL 10, 1967
Printed for the use of the Committee on Foreign Relations
U.S. GOVERNMENT PRINTING OFFICE
77479 WASHINGTON : 167
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COMMITTEk'07S7
J. W. FULBRI
JOHN SPAREMA.B, Alabama
MIKE MANSFIEL1?), Montana
WAYNE MORSE, Oregon
ALBERT GORE, Tennegiee
FRANK J. LAUSCHE, Ohio
FRANK CHURCH, Idaho
STUART SYMINGTON, Missouri
THOMAS J. DODD, Connecticut
JOSEPH S. CLARK Pennsylvania
CLAIBORNE PELL, Rhode Island
EUGENE J. McCARTHY, Minnesota
CARL MARC4 Chief of Staff
Anima M. Kum, Chief Clerk
REIGN REI.fATIONS
Arkansas, Chairman
BOURKE B. EggaINLookim, I wa
GEORGE D. AIKEN, Veraiont
? FRANk 'CARLS0/7, Kansas
?RAIN 1. WILX,IA.gtS, Delaware
KARL E. MIJINpN, South Ditkota
CLIFFORD P. CABB? New jersey
JOIRT,SECERNLAN COOPER, Kentucky
II
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CONTENTS
Statement of: Page
Bayh, Hon. Birch, a U.S. Senator from the State of Indiana_ 30
Poats, Rutherford M., nominee to be Deputy Administrator, Agency
for International Development 3
Insertions for the record:
Biographic sketch of Mr. Poats 1
Letter from Hon. Strom Thurmond, U.S. Senator from South Caro-
lina 2
Letter from Hon. Ernest F. Hollings, U.S. Senator from South Caro-
lina 2
Letter from Hon. John E. Moss, U.S. Representative from California_ 3
Telegram from Hon. Clement E. Zablocki, U.S. Representative from
Wisconsin 3
Free World Assistance to Vietnam, as of April 1, 1967 13
Article entitled, "Renaming of Foals to AID Expected," from the
Washington Post, February 4, 1967. 27
Editorial entitled "AID Appointee," from the Washington Post,
February 28, 1967 28
Response by Rutherford M. Poets to the statement of Senator Bayh 47
Ut
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NOMINATION OF RUTHERFORD M. POATS, TO BE
DEPUTY ADMINISTRATOR, AGENCY FOR INTER-
NATIONAL DEVELOPMENT
MONDAY, APRIL 10, 1967
UNITED
COMMITTEE ON
The committee met, pursuant to notice,
New Senate Office Building, Senator J.
presiding.
Present: Senators Fulbright, Sparkman, Lausche, Symington, Pell,
Carlson, and Williams.
The CIIAIRMAN. The committee will come to order.
The committee is meeting this morning to consider in open session
the nomination of Rutherford M. Poats of Virginia to be Deputy
Administrator, Agency for International Development.
Mr. Poats, will you come forward, please, sir.
(The biographic sketch of Mr. Poats follows:)
STATES SENATE,
FOREIGN RELATIONS,
ashington, D .0 .
at 10:05 a.m., in room 4221,
W. Fulbright (chairman)
RUTIIERFORD M. POATS
Present position.?Assistant Administrator for the Far East, Agency for In-
ternational Development.
Office address.?Agency for International Development, Washington, D.C.
Born.?August 8, 1922, South Carolina.
Legal residence.?Virginia.
Marital status.?Married.
Family.?Wife: Esther (Smith) ? Children: Penfield, born August 8, 1949;
Huntley, born July 26, 1952; Rutherford S., born January 23, 1954; Grayson
born June 9, 1957.
Home a4dresa.-6352 Crosswoods Drive, Falls Church, Virginia 22044.
Education.?A.B., 1943, Emory University.
Experienee.?Non-Government : 1940-41, reporter.
Military: 1943-46, U.S. Army, Captain, overseas, Chief, Armed Forces In-
formation Section, General Headquarters, Far East Command, U.S. Army.
Non-Government: 1947-51, Foreign Correspondent, United Press International,
Tokyo, Japan; 1951-57, Bureau Chief, United Press International, Tokyo, Japan;
1957-61, Reporter, Asian Affairs and Assistant Chief, Foreign Department,
United Press International, Washington, D.C.
Government: 1946-47, Chief, Information Section, TT & E, Far East Com-
mand, War Department; 1961, Special Assistant, Bureau of Far East, Agency
for International Development; 1963, Deputy Assitant Administrator for Pro-
gram, Bureau for Far East, Agency for International Development; November
1963, Acting Assistant Administrator for the Far East, Agency for International
Development; 1964 to present, Assistant Administrator for the Far East, Agency
for International Development.
.4v?"Decision in Korea," 1954.
Memberships and clubs.?Phi Beta Kappa.
1
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NOMINATION OF RUTHERFORD IVI. , POATS
1 ,
The CHAIRMAN. Before I ask Mr. Poats to testify, I woul like to
put in the record a letter from the senior Senate]. from Sou h Caro-
lina, the Honorable Strom Thu ond; a letter fTom the, juni r Sena-
tor, the Honorable Ernest F. Ho lings; and a letter from C ng:ress-
man John E. Moss, chairman o the Government Informa ion and
poieign Operations Subcommittee of the Committee on Gov rnment
Operations of the House; and a telegram from Gangressman lement
J. Zablocki, all supporting the nomination of Mr. Poats. 1
(The communications referred t follow:)
; 'LS. SENATE,
COMMITTEE LON THE JT,TDICIA Y,
April lj, 19117.
Senator J. W. PULBRIGHT,
Chairman, Senate Foreign Relations Committee,
New Senate ?flee Building, Washington, D.C.
Dais Ma. CHAIRMAN: Unfortunately a prior' comnaitroent prevents me from
being personally in attendance at the hearing on the nontination of Mr Ruther-
ford M. Poats to be Deputy Administrator of the Agmcy for Inte national
Development.
However, I want to take this oppor6nity to express ray support f r Senate
confirmation of Mr. Poats' nomination to fill this impOrtant assignme t.
Mr. Poats was born and spent his early life in South Carolina. Hel recElved
his grade school education in the public schools of SO ith Carolina, aithaugh
his college degree was earned at Emory University in Atlanta, deorgi
Mr. Poats' experience and proven capabilities make him particularly ell quali-
fied to perform the duties required of the Deputy Administrator of AIID. His
many achievements since having joined the staff 4 AID reflect cr it upon
both himself and the Agency. It is a pleasure for Me ,to recoMmend that the
Committee net favorably upon this nomination.
1=
With kind regards,
Sincerely,
STROM PHT4iMOND.
' U.S. , SENA E,
WashingtO , D.C., 21;pril 1, 1.967.
Hon. J. WILLIAM FULBRIGHT,
Chairman of the Foreign Relations Committee,
U.S. Senate, Washington, D.C.
DEAR Mn. CHAIRMAN It is my pleasure to take this opportunity, to re minuend
to the Committee Mr. Rutherford M. poats for confirmation as, Assi 'lit Ad-
ministrator, U.S. Department of State, Agency for International Dev lopment.
" Mr. Poats has proven through his seivice that he hits an unusual in ight into
the complexities of international affairs, government atlininistration, and eco-
nomic matters?both foreign and 'domestic. He has proven through hisperform-
ance that he is one of our most knowledgeable arid' capable anal sts And
administrators in the international field.,
His eleven years of broad and diverse foreign service ,oxperien2e ,qu lify him
uniquely for the position for which he has been recommended. This e perience
-Includes four years as an Asian affairs Specialist for United Press Interial ional,
and for the past few' years as senior executive charged vith ma ,iaginA.I.D.'s
_ ?
complex Far East Program.
While affiliated with A.I.D., Mr. Poats has compiled an outstandin reCord.
He was instrumental in implementing , many of the prpddent's econ nate and
social initiatives for southeast Asia, ingluding the recoil eStabllshme t or the
Asian Development flank.
' It is a pleasure to be able to recommend such an outstanding South C rolt4lan
Per this high pest.
Sincerely,
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NOMINATION OF RUTHERFORD M. POATS
FORDIGN OPERATIONS AND GOVERNMENT INFORMATION STJBCOMMITTEE,
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,
February 27, 1967.
Hon. J. WILLIAM, FULBRIGIIT,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
'4a, MR. CHAIRMAN: I understand that the confirmation of Rutherford Poats
as Deputy Administrator of A.I.D. is currently before the Senate and I would
like you to know that I personally consider him well qualified for the job.
During the past year, the Subcommittee on Foreign Operations and Govern-
ment Information conducted a detailed investigation of AID's Vietnam program.
In the course of this investigation, I came to know Mr. Poats well and to have
great respect for his abilities.
The Subcommittee's final report was critical of the AID Vietnam program in a
number of respects and some people have taken these criticisms as a reflection
on the competency of Mr. Poats. This is definitely not the case. In my judg-
ment he has done a fine job under exceptionally difficult circumstances. The
deficiencies we found in AID's Vietnam program are not directly ascribable to
Mr. Pouts and do not reflect unfavorably on him. In his appearances before the
Subcomnaitte and in numerous personal contacts he has alway's been vvell-in-
formed, candid, and responsive to our needs.
I believe Mr. Poats to be a man of great ability and integrity and it is my
earnest hope that he will be confirmed in the position for which he has been
nominated.
Sincerely,
JOHN E. Moss, Chairman.
WASHINGTON, D.C., April 7, 1967.
Hon. J. W. FULBRIGHT,
Chairman, Senate Foreign Relations Committee,
Senate Office Building,
Washington, D.C.
DEAR MR. CHAIRMAN: Throughout my tenure as chairman of the House Sub-
committee on Asian and Pacific Affairs I have given constant and close study to
the economic development of Asia. During that period I have had the oppor-
tunity to work with various Deputy Administrators in the Agency for Interna-
tional Development. On the basis of that experience I can say unequivocally
that none have surpassed in overall competence Mr. Rutherford Poats. His com-
prehensive knowledge of Asian development problems, his ability to devise mean-
ingful and effective solutions, and his articulation in testifying before Congress
on these complex issues has never been surpassed. Against this background may
I urge your committe's favorable consideration of Mr. Poats' appointment as
Deputy Administrator of the Agency for International Development.
CLEMENT J. ZAELOCKL,
Chairman, Subcommittee on Asian and Pacific Affairs.
The CIIAIR/VIAN Mr. Poats, we are very pleased to have you. Will
you give us for the record a short statement of your experience.
STATEMENT OF RUTHERFORD M. POATS, NOMINEE TO BE DEPUTY
ADMINISTRATOR, AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. POATS. Yes, Mr. Chairman.
I joined AID 51/2 years ago as Special Assistant on Far Eastern
Affairs to the then Assistant Administrator of AID.
Prior to that time, I was a United Press reporter, news manager,
bureau manager, most recently in Washington in the foreign depart-
ment of the TJnited Press, concentrating on Asia.
?'Prior to that time, I was in the Tokyo Bureau of the United Press as
bureau chief, and earlier as reporter in a number of countries in the
Far East.
Prior to that time, I served as the Chief of the Information Section
of the Troop Information and Education Office of the Far East Corn-
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NOMINATION OF RUTHERFORD M! !'OATS
mand, and in the military services in the Far East at the end of t
I had some service prior to the War with the Internationa
Service. I l
,
My connections with the Far East, therefore,, go back to 195, and
have been almost continuous from that time.
In the fall of 1963 I was made Acting Assistant Administr
AID for the Far East, and was nominated and conarmed, swo
this position, almost exactly three years ago.
The CHAIRMAN. Thank you, Mr. Poats.
e War,
News
SIGNIFICANCE OF FOREIGN t51.13
,
Mr. Poats, I wonder if you WOU d give us your feeling abo
eign aid in general and its significance to our interests in the
particularly in Asia.
Mr. Paws. Yes, Mr. Chairman. will try to resist soundin
on this subject, but I am here because I feel a Very keen sense
fortunate coincidence of purposes in the aid program.
It seems to me that in economic assistance a man as the wpm
to both serve the national interests of the United States and se
larger interests of the developing world. I cannot think of a ft
in which greater satisfaction and a sense of purposeful life
found.
On the more immediate interest of your question as to aid i
I would. like to suggest the diversity of the uses, purposes of cc
assistance by looking at a few of the countries that I have been w
with during the past five years.
' In the past three years, public attention has been largely foci
Vietnam. But during that period I have divided my attention b
that problem and the varied tasks of aid elsewhere in the Fa
Shortly after I came into office in my present position we accel
the timetable for termination of aid to Taiwan because it was p
We arranged to endow with local currency derived from count
funds of previously committed aid the continued developm
Taiwan, which included its pioneer family planning progra
its own overseas technical assistance work in agrinilture.
Now, the people of Taiwan are engaged with us in a number o
cultural development programs in Africa and other places.
During the past four years Korea has emerged from the desp
prospect of a permanent dole to a model development case. I
and 1966 its self-help performance, particularly in taxation, s
investment, and family planning, has been, again,- a model for
developing countries in other regions.
In both Korea and Taiwan we have seen the obligation an
cised the opportunity to provide through our policy advice no
means for achieving economic development, but also to 13r.
about greater opportunities systems for social justice. I concei
to be an important element O
f the aid task.
In southeast Asia, the last two years particularly, we have bee
ifig beyond the Vietnam and Laos wars to try to encourage throu
use a offers of aid and advice the already existing but limited,
outset, Asian interests in establishing a system of regional coope
for development which would bring together in several for
regional integration the commitment of the countries of :the
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without respect to political systems, and other developed countries in
a joint effort to produce a better era, abetter prospect for southeast
Asia.
The end of the Vietnam war, of course_, and conditions for reduc-
tion of military expenditures would be the essential prerequisites to
achieving that new era in any full sense. But the foundations are
being laid today for this system which would provide an answer not
just to some development problems but also to some degree to the
security problems of that area.
So here, again, I see a means of using economic aid to achieve these
broad purposes, all consistent with our prime purpose.
SRIRIT OF REGIONALISM
This spirit of regionalism, as you know, Mr. Chairman, has ignited
lately in response to offers of help not only by us but by Japan, the
Netherlands, and other countries. Regional organizations of all sorts
are springing up?the Asian Development Bank, the Southeast Asian
Ministers of Education Council, groups in transportation, agriculture,
and the II.N. organizations already existing, which have been stimu-
lated to new activity.
I think this work with Eugene Black may prove to be the most im-
portant of my career in AID, and I hope it will have relevance in
other parts of AID activity.
Another country which illustrates the diversity of the definition and
problems of aid, and the opportunity, is Indonesia. The Indonesians,
of course, have returned to a sane approach to their internal problems.
They face probably the most crucial as well as difficult, task of eco-
nomic recovery that I know about in the world today.
I have been engaged very closely with the international agencies, the
Asian Development Bank, and with the French-led group on debt
rescheduling, and the Dutch-led group on new aid, to help to bring
about a joint participation?which has come about?in the solution
te the problems the Indonesian Government has inherited.
Another example of the variety of our interests and programs are
the efforts we have made, working with local leaders in northeast
Thailand, Laos, the Philippines, particularly in Luzon, lately in de-
vising new methods for comprehensive rural development which have
both an economic output and a local political institutional development
and purpose.
These are efforts at the grassroots, political development, if you
will, which may be applicable to other countries and other regions be-
cause it is certainly clear that economic development requires local
organization, local social mobilization, institutions to carry out this
thing called self-help.
Mr. Chairman, if you will, I can proceed to other areas, but this
gives some of the variety of the tasks that I have been concerned with,
apart from Vietnam. And even there, it seems to the that the essential
methods and purposes of aid have been applied, are being applied, with
the focus on nation-building under the most difficult circumstandes,
but nation-building from the village and 'hamlet up, local institutional
developments from the hamlet up. But there We have also, to Add an
enormous effort to reduce the human suffering and economic and social
dislocation of the war and to attemp t-t6 apply our resources to induce
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and help the Government to reduce the legitimate bases for gri Varee
which have been the breeding- ground and the basis for the C mmu-
nist-led insurgency.
' OPERATION I* VIETNAM [
. F
Now, this operation in Vietnam, of course, is a very special thirg,
and it is certainly true that in part our judgments and our d isions
have been affected by the sense of , urgency that war require
If we can shorten the war or increase the prospects of a more ecure
peace by the use of economic assistance, we have done so. e are
continuing to do so, even at costs and risks greater than we vould
accept in other more normal situations.
We simply have not been able to wait for the optimum conditi ns of
aid administration before undertaking these programs.
We have attempted, of course?I think we have a substantial eCord
of success recently?to reduce by further management improvdments
the waste that is to some degree ineVitable in this kind of a sit at ion.
We do not like it. We are trying to reduce it But when thel chips
are down we have often chosen to take a risky course when it seemed
possible that by doing so we could shorten the war and improve the
prospects for a good settlement.
, In all these diverse programs, we have faced dificult mana meat
problems. Recently we have recognized the necessity to concentrate
more management strength on the Vietnam operation in Washi4igon,
so we are splitting the Bureau which I head into two: One sol ly on
Vietnam, one on the rest of east Asia? including the regional programs,
each to be headed by an assistant administrator who will be nom-
inated to the Senate and heard by this committee.
The CHAIRMAN. That is. very interesting, Mr. Pmts.
BILATERAL AGREEMENTS 'VMS S MULTILATE CIES
, . .
Do you feel that it is wiser for the United State; to extend id di-
rectly through bilateral agreements, or through international ulti-
lateral agencies?
Mr. Pom-s. I think every time we , have an opportunity, a me ns of
,
working through the multilateral agencies, and clepmding up-o them
to do a development job, we should.
There are certain types of Situations, such as Indonesia today, in
which, there is no multilateral institution prepared to do the jo ',and
there you must take the next best step of organizinix an interna ional
consultative arrangement participated in by the multilateral ag neies,
advised by them, but depending for the larger part of its res urces
on bilateral programs that are coordinated through this mech nisin.
1- '
AMOUNT OF U.S. AID TO TA WAN, KOREA, I MONES A
' I
The CHAIRMAN. Mr. Poats, you mentioned Taiwan.. Could yoja give
us an estimate of how much aid we lave given Taiwan since th war?
Mr. PoNrs. My recollection, Mr. Chairman, was that it wa $r1/2
billion over a 15-year period.
- The CHAIRMAN. IS that all? ,
? Mr. POATS. That was all the economic assistance. ,
The CHAIRMAN. The total aid?
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NOMINATION OF RUTHERFORD M. POATS 7
Mr. POATS. Military assistance, I think, was about the same mag-
nitude. I am not sure.
The CHAIRMAN. Your estimate then of the total economic and mil-
itary assistance to Taiwan would be in the neighborhood of $3 billion?
Mr. POATS. I believe that is right.
The CHAIRMAN. What do you say about Korea? What is our total
economic and military aid to Korea?
Mr. POATS. I think the figure is about, close to, $3 billion in economic
aid, and about $2 in military, as I recall, Mr. Chairman. I would have
to check that. It has been larger program. Of course, the country
is about twice the size of Taiwan. It has had very large military
forces along the truce line, as you know.
? The CHAIRMAN. We have given aid to Indonesia in the past, too.
Mr. POATS. That is right.
The CHAIRMAN How much would you guess?
Mr. POATS. Going back to the period of the Dutch rule before in-
dependence, the total was in excess of $800 million. Counting the
period of Indonesian independence, I believe $650 million or there-
abouts.
Then, of that, by far the largest proportion was Public Law 480
sales of rice, cotton, and so on; and, secondly, Export-Import Bank
loans, relatively small AID-type aid.
The CHAIRMAN. The aid totals mentioned a moment ago concerning
economic and military included Public Law 480, did they not?
Mr. POATS. Yes.
U.S. EXPENDITURES IN ASIA
The CHAIRMAN. How about Vietnam? What is your estimate now
of how much we are spending in Vietnam?
Mr. POATS. I am sorry, these cumulative figures are not in my mind.
It has been around a total of $1.8 billion from 1954 through 1963, and
then accelerated to the present level of about a half a billion dollars a
year.
The CHAIRMAN. What I was trying to get at?I wo/A hold you to the
precise figures, although this is your area?is that we have made a very
substantial, effort in this area.
Mr. POATS. Yes, indeed; certainly..
The CHAIRMAN. What is your idea of the justification for this?
What do you seek to achieve for the United States, the people of this
country, by such a major expenditure of our funds?
Mr. POATS. In Vietnam?
The CHAIRMAN. Taiwan and Vietnam or Korea. What is the ob-
jective? Can you tell us rather briefly?
If you were talking to my constituent, how would you justify the
diversion of these funds for these purposes? What is the overriding
purpOse that justifies the program?
Mr. POATS. Well, there are several purposes, Mr. Chairman, as you
well know. As I would phrase it, they are these: first, we have been
engaged in supporting the defense of northeast Asia through in effect,
supplementing the resources of a poor country, Korea, and a poor
country, Taiwan' to enable them to maintain military defenses which
are in our joint interests.
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8 NOMINATION OF RUT IERFORD M. FICATS
I
Certainly all the costs of a new war and all the osts of' the I orcan
war itself demonstrate the wisdom of this.
Second, we have been engaged in helping nes?. two count les :to
acquire the means for their own self-support thrtugh invest ent -in
their productive facilities, infrastructure, and human resource, such
as educational institutions, and imports to maim-Ain an exp nding
pace of domestic production to reach the so-called takeoff p in
. .
their own development. These are the two principal purposes.
There is, of course, a more philosophical purpose of lending hand
to people in need and attempting to bring them to, the point th t they
are no longer in need.
I submit that these two programs we are talking about now Korea
and Taiwan, are examples of achievement of all those three obj ctives.
DETERMINATIO OF PRIORITI7S
The kjITAIRMAN. Just for the record, I have -)e en given a 11 111 of
$4.464 billion in total from 1949 td 1065. That is quite a sub tantial
I am trying to develop a sense of priority. Hew do we de ermine
whether Taiwan, for example, is more important to us than th .egen-
eration of our own cities, the dealing -witli pollittion, and the ? ealing
with the conditions that cause riots like Watts and Harlem hat we
have had in 'recent y-ears. How' do you justify that? This s what
bothers me.
Mr. POATS. I would say, Mr. Chairman, that I cannot m ke that
iudgment because I am obviously a person who is hot broadly ngaged
in both. But I would certainly think that
Senator LAUSCIIE. You are not broadly engaged, in what?
Mr. POATS. In detailed concern with both the domestic s evelop-
ment and the overseas program. I would think if we had to acrifice
the development of our own underdeveloped areas in order o carry
out the foreign aid program that we would be m ing a mist ce
However, it seems to me that this country has the economic 'Jacky
to do both just as we have the capacity to make a number f other
expenditures in many other fields, in addition to domestic J evelop-
ment programs.
I think it is clearly in our national interests and betide al to us
in economic as well as political and security terms to reduce t e kinds
of sitnations in the less-developed world which, over a time, wwld
create a sharp antagonism between the have-not and. the have nai:ons.
I certainly think it is impossible to ignore the appeal to ur own
conscience of this disparity.
CHARACTERIZATION or AIWAN SOCTI"./
1' '1, l!lf.2'il
The CHAIRMAN. DO you consid r Taiwan to De a MOCIAL YOI a'floeratT
and, progressive democratic society ?
Pioirrs. No, sir I do not. T think?
The CHAIRMAN. You do not ?
Mr. POATS. isZO.
The CiaAianfA. Then, Why 'do you cite it as a brilliant ex
the sucCesS of our policy ?'. How would you char Acterize it?
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ME. POATS. Taiwan has a central government, which is not a. model
of representative systems, which is still imposed on a province of
China, as the government, the Republic of China sees Taiwan, and
therefore the national government is not subject to the electoral
process in Taiwan. However, beneath that, in the province of Tai-
wan itself, through the development, elaboration of local institutions
like farmers' associations, three co-ops, local district organizations,
there is a remarkable development of local autonomy, local elections,
a local responsibility for public affairs which has grown in Taiwan,
and this is what I meant by my remark.
The CHAIRMAN. Is there freedom of speech in Taiwan? Do they
tolerate dissent?
Mr. POATS. They tolerate dissent in a wide array of areas, but not
in all. I am speaking now of the press.
The CHAIRMAN. Is it safe to criticize General Chiang Kai-shek in
Taiwan?
Mr. POATS. Well, there is certainly no thought police, and that i
sort of apparatus, if that is what you mean. There s a limitation on
the freedom of press in attacking the leadership of the central gov-
ernment; that is correct.
The CriAntmAN. Is there an opposition party in Taiwan?
Mr. POATS. There are several opposition groups that are in a loose
sense contesting for seats in the provincial assembly and provincial
local governments.
The CHAIRMAN. But national?
MT. POATS. Not in the national government because it is not sub-
ject to election.
U.S. AIMS IN SOUTHEAST ASIA
The CHAIRMAN. You cite this as a great example of our accomplish-
ments; one of the success stories. I wonder somethimes what it is
we are fighting for. We say in southeast Asia, in Vietnam we
are fighting for self-determination for the people in South Viet-
nam. You cite Taiwan as an outstanding example of success, a coun-
try where we have spent over $1 billion, and yet there is no self-
determination of the people of Taiwan at all, is there, not in their
national government? It is a dictatorship, is it not?
Mr. POATS. At the center and on national affairs, but not on the
affairs that affect the lives of the people in most respects. I was say-
ing there is a great deal of freedom developing there. Take the
emergence
The CHAIRMAN. Is not this the same kind of freedom that exists
in Russia? As long as you do not question the basic philosophy of the
central government, you are quite free to express your opinion on the
best way to grow wheat, or how to cultivate a field, or such things as
that. There is no restriction on that kind of talk in any of these coun-
tries, is there?
Mr. POATS. Well, it is a little freer than that in Taiwan, Mr.
Chairman. But I accept your point, we are obviously not
The CHAIRMAN. What I am trying to get is that we -profess that
our reason for carrying on the war in Vietnam is the self-determina-
tion of South Vietnam, and yet you cite two outstanding and success-
ful countries, Taiwan and Korea, neither of which has self-deter-
mination.
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10
NOMINATION OF RUTHERFORD M. , PATS 1
Mr. POATS. Mr. Chairman, I -would think that JKorea is cer ainly
demonstrating remarkable freedom, freedom of the press cer ainly,
freedom of political organizations, certainly. They are about t4 have
an election this next few months for the National Assembly and
President.
The CHAIRMAN. Do you think there will be an open and fre eke-
tion for the opposition?
Mr. POATS. I think there was last time four years ago.
The CHAIRMAN. Please understand that I am not myself taki a the
position that the only way to run a society is our way. I hav often
said Mexico is an example of a one-party state that is suceessfi1kl, and
I would not for a moment suggest that they adopt our system of
government.
What I am trying to get at is what are we really after in soiitheast
Asia. I am not saying that Korea should follow our system r any
other system. I am trying to clarify what you think we can ach eve by
the foreign aid program.
Mr. POATS. Mr. Chairman, we are after, in this respect, a co tirroal
expanding opportunity for people and freedom for people w ich we
think require the complete set of free social institutions. Now we do
not impose that standard, of course, and we are not happy so dimes
when that standard is not fully met, but there is a trend, a very
encouraging trend, in Taiwan, just as there has been in Korea, in this
respect.
The great wealth that is developing in Taiwan now is amo g Tai-
wanese-businessmen, Taiwanese farmers.
The great development in Korea is very broadly shared. This is
the real payoff of a system, in the economic sense.
f
MORE ATTENTION TO DOMESTIC PROOIMAMS
The CHAIRMAN. I would not question for a moment that this has
been economically good for the individuals of each country. What
keeps bothering me is that now, as the cold war?except for s utheast
Asia?has begun to lessen, the time may come to reevaluate t is pro-
gram and to give attention to domestic needs here in the Unite States.
You say you see no reason for the curtailment of the progra s here.
I recognize this is not your responsibility ; you have foreig aid to
be responsible for. But from my point of view the fact is t at they
,are cutting down most severely on the most elemental p ?grams
here, such -as water and sewer programs in my State and. I a sure if
it is in my State, it is in every other State. I need not tell on that
nothing is being done for the conditions of life in our big c ties., the
pollution of the air, the nolluton of the water. There is vtry little
being done, nothing in this city yet except talk about relic ing the
terrible conditions of traffic congestion and transportation or ordi-
nary people. That does not concern Government, officials wit chauf-
feur-driven automobiles, but it does ordinary people who do ot have
chauffeurs. It is very hard to get to and from your job in thi city.
You say there is no reason to make a choice, Ti say, as a p
there is a, reason because we cannot stretch the money much further.
We have a budget now of $135 billion. z
Mr. POATS. My response, Mr. Chairman is that the total conomic
assistance budget, AID or Public Law 480;has not been Mere ed sub-
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stantially at all. In fact, it is a much lower percentage of the budget,
much lower percentage of the GNP and it has not increased
arithmetically.
The CHAIRMAN. The military has taken the greatest amount of it.
I hope anybody who wishes to intervene will.
Senator LAusouE. I have been prompted very much?
The CHAIRMAN. I yield to you.
Senator LAUSCHE. Because some of the information you are elicit-
ing is in complete conflict with positions you have taken with respect
to other nations, but I will let you go on as longas you want and I
will sit here suffering and listening to you. [Laughter.]
The CHAIRMAN. I do not want you to suffer in any respect. I think
this is not the purpose at all.
Senator LAUSCHE. I think we ought to have the ten-minute rule.
The CHAIRMAN. I just want to carry this on. I would be perfectly
willing to yield to you at this moment if you wish, or anyone else who
wishes to ask questions.
ECONOMIC CONDITIONS TODAY ARE DIFFERENT
Here is a man with long experience in this program. I am trying
to clarify my views as of the present conditions. I wish to point out
that I think the conditions today are entirely different from the time
of the Marshall Plan and during the era of Stalin, and when there
was a very uncertain stability in Europe. These countries were not
able to control even their domestic problems2 aside from any external
aggression, if it was threatened, as I think it was from time to time.
I would say to the Senator from Ohio that the difference in views,
in my point of view, is accounted for by the difference in conditions
that have developed over the years.
Senator LAITSCHE. Does the Senator from Arkansas feel that the
Government was right when we were aiding Chiang Kai-shek in the
initial stages of his fight with communism, and that aid went on until
now when it has completely terminated?
Mr. POATS. ECOnOIMC aid.
Senator LAIISCHE. Economic aid. Were we right when we origi-
nally said we were going to stop the Communists from moving south-
ward into Taiwan, Laos, Indonesia, Vietnam, Cambodia, Burma,
Thailand? That was the view of President Truman. It was the view
of every Secretary of State, every President, that we could not afford
to allow them to move on, and that is why we gave certain countries
the aid. Were we wrong then? The Senator from Arkansas voted
for it.
The CHAIRMAN. You ask a, very broad question.
Senator LAITSCEIE. It is broad.
The CHAIRMAN. I would be perfectly willing at the proper time to
debate that. I think it is very questionable when we look back at the
present situation in southeast Asia whether or not it was right?the
original intervention in support of Chiang Kai-shek. I think it, is a
very big question, just as I think our intervention to keep the French
in Vietnam is a very big question.
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12 NOMINATION OF RUT ERFORD M. POATS
'BASIS FOR OCR INTa NTION IN IEJ'NAM
131.1t I think that is too far afield or discussion now. I Ny' ant o 2.on-
elude my part of this particular matter with one further q stion.
The Secretary of State has stated before this committee pre iously
that one of the reasons that justifies our present military iaterv ention
in Vietnam, has been the aid program. You are' familiar wi h that
statement?
Mr. POATS. Yes, Sir.
The CHAIRMAN. Do you subscribe to that? .
Mr. POATS. Mr. Chairman, I have read the record of the, stat ments
made by different persons in this controversy, and it has always eemed
to me that what the Secretary of State was saying., in sum, w s that
the principal basis for intervention ay in our mutual security c mmit-
ments that were represented by the SEATO Alliance, and su ely it
is clear that we became increasingly interested in Vietnam an I pro-
vided military and economic assistance there wt.. ich clearly had a
security purpose in substantial part.
So that, from 1951 onward, with the beginning. of the indepe dence
., of the Republic of Vietnam, we were interested in helping tha Gov-
' eminent defend itself against the threatened resumption of th
mirth, insurgency.
The CHAIRMAN. Senator Sparkly' in.
Senator SPARK-MAN. I want to as you just two or threi'?. que tions.
NATURE OP POSITION OF EPUTY ADMINI TRATOR;
Your work has been primarily in Asia, has it not?
Mr. POATS. That is correct, Senator Sparkman.
Senator SPARKMAN. Will it continue to be in your new job?
Mr. POATS. No, sir. The Deputy's position
Senator SPARKMAN. When you are Deputy Administrator, y
concerned with the whole field, is it not?
Mr. POATS. That is correct; yes.
PACIFICATION MOO ..43I IN VIETNA
ti are
Senator SPARKMAN. How much in terms of dollars are rt,her Asian
nations contributing to South Vietnamese pacification efforts this
year?
Mr. POATS. I am afraid I cannot answer that in terms of ll ars,
Senator Sparkman, because some of the contributions are an th form
of military aid and some are in the form of militry pacificat on.)y
the Korean and Australian troops, and so on, Philippine ele ents.
We do not have a reliable total, on an annual basis, compar ble to
our accounting system.
We have, of course, a detailed brfakdown of precisely what he 31
countries, I believe it is, are doing in the way of assistance in South
Vietnam, which I would be glad to furnish you. ;
Senator SPARKMAN. How many different countri,?.s?
Mr. POATS. Thirty-one.
Senator SPARKMAN. There are 31 'countries coutrbuting one tray or
?
an other to the ffeneral effort in South Vietnam, is that right?
Mr. POATS. 1Tiat is correct, yes, sir.
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Senator SPARK1VIAN. You do not. have any line that clearly divides
the military and related operations from the pacification program?
Mr. POATS. It is very difficult to divide it in Vietnam as you know,
Senator Sparkman, because military forces are engaged in civil works,
and military forces provide the outer security for the revolutionary
development teams. Military forces contribute to medical assistance
to civilians. It is a very joint effort. But I will be glad to furnish
you the statement of the contributions of each country.
(The information referred to follows:)
FREE WORLD ASSISTANCE TO VIET-NAM (AS OF APRIL 1, 1907)
FREE WORLD ASSISTANCE PROGRAM
Thirty-one nations have assisted Viet-Nam under the Free World Assistance
Program. Several others have offered help. The contributions of six other
countries and of the UN are listed at the end of this paper. A detailed listing
by geographic area follows:
FAR EAST
Australia
Australia is providing a wide and substantial range of aid to Viet-Nam under
the Colombo Plan and by direct bilateral assistance.
Military aid consists of:
1. Approximately 6,300 combat troops including a brigade and support, a
guided missile destroyer, and a squadron of 8 Canberra bombers.
2. 100 combat advisors (primarily specialists in jungle warfare).
3. A 73-man air force unit at Vung Tau with six Australian caribou planes
which fly daily logistical transport missions in support of Vietnamese mili-
tary forces.
Economic and technical assistance has totalled nearly $10 million including:
1. Three surgical teams, totalling 37 personnel, in 3 provincial hospitals.
These teams, in addition to performing major operations, have established a
blood bank and are giving lessons in nursing.
2. A group of civil engineers working on water supply and road construc-
tion projects.
3. Three experts in dairy and crop practices and radio techniques.
4. Training of 130 Vietnamese in Australia.
5. In goods and materials: 1,250,000 textbooks in Vietnamese for rural
schools; 3,300 tons of corrugated roofing for Vietnamese military dependents'
housing; 6 large community windmills; 15,750 sets of hand tools; 400 radio
sets and 2,400 loud-speakers, 16,000 blankets and 14,000 cases of condensed
milk.
6. A 55 kilowatt broadcasting station at Ban Me Thout.
The Australian Government decided on February 1 to increase its nonmilitary
aid to Viet-Nam during FY 1967 to $2 million dollars. This will permit substan-
tial enlargement of current medical and civic action programs and the undertak-
ing of new projects such as providing equipment for refugee resettlement centers.
Republic of China
The Republic of China has provided:
1. An 80-man agricultural team.
2. An 18-man military psychological warfare team.
3. A 12-man electrical power mission under the leadership of Taipower.
4. A 10-man surgical team,.
China has also provided training for more than 200 Vietnamese in Taiwan.
In the way of goods and materials, they have provided 26 aluminum prefabri-
cated warehouses, agricultural tools, seeds and fertilizers, 500,000 copies of
mathematics textbooks and an electrical power substation.
Japan
Japan has provided over $55 million worth of economic assistance to Viet-Nam,
chiefly through reparations. Japan has sent two medical teams, considerable
amounts of medical goods (4,544 eases), 20,000 transistor radios and 25 ambu-
lances. It has provided technical personnel and funds for the construction of a
large power dam across the Da Nhlin River and electrical transmission line and
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agreed to participate in the construction of a bridge over Mekong Rive near
Vinh Long.
Korea
Korea has sent approximately 45,000 troOps including:
1. 2 combat divisions.
2. A 130-man Mobile Army Surgical Hospital (MASH).
3. 10 military instructors in Korean karate for training Vietnames mili-
tary in hand-to-hand combat.
4. A 2,200-man Task Force Unit coMposed of the following ,elemeits: 1
Army engineer battalion; 2 Headquarters group; I Army Transpo ation
company; 1 Marine Corps Engineer cOmpany ; 1 Infant: 7y battalion; LSP
and 2 LSMs ; 1 Composite Support unit (communications., medical su splies,
etc. ) .
Korean military medical personnel are providing some medical care o the
local population in areas where ROK troop? are stationed., In addition, 7 c vilian
medical teams totalling 118 doctors, nurses and support pe:?sonner are w rkir,g
In provincial health programs.
Laos
One million kip ($4,167) for flood relief ii February 1965.
Malaysia
Since 1962, Malaysia has trained about; 2,000 Vietnamese military and police
officers. Groups of 30-60 are regularly Sent for about a month's trai 'ng in
counterinsurgency with Malaysian Police Special Constabulary. Malay a has
previously provided substantial amounts of counterinsurgency materials, pri-
marily military and police transport such as. armored vehicles.
New Zealand
New Zealand has sent a 6-howitzer artillery battery of approximately 1
and provided a 25-man army engineer detachment. On March 8 th
Zealand Government announced it will increase its forces to Viet-Nam
men by addition of an infantry company and supporting elements.
In non-military aid, New Zealand has sent an 8-man surgical team, an
fessor in English language for the UniverSity of Saigon. A second 16-ma
cal team will be sent shortly to Binh Dinh province. They S re presently t
62 Vietnamese in New Zealand and have provided 7,500L ($21,000) for
ment for a technical high school. They are also assisting by providing a
mately $600,000 for a science building at the University of Saigon.
Philippines
5 men
New
to 360
a pro-
medi-
aini ng
equip-
)proxi-
The Philippine Government has sent a 2000-man military engineering ui4it w
security support personnel, a station hospital, and rural health and civi action
teams.
In non-military aid, approximately 60 Philippine civic ac: ton personnel includ-
ing military and civilian medical team a have been working in Viet-Nun :or
several years.
Thailand
The Thai Government announced on January 3 that it would send a ground
force combat unit to Viet-Nam. It is expected that this will total 2,00-2,500
men. A 200-man Thai naval group manning an LST and PGM patrol c aft ar-
rived in Viet-Nam in December 1966. A 35-man air force contingent h s been
flying operational transport missions for the Vietnamese forces. Tae Th is have
also been providing jet training for Vietnamese pilots in Thailand.
In non-military aid, the Thais have prOvided rice for refugees and cement and
zinc roofing materials. At the Manila Conference, the Thais offered tjie Viet-
namese a $20 million rice credit. The Thais have also ann ounced they sil1 send
a medical unit to Viet-Nam.
MIDDLE EAST
Greece
Greece has contributed $15,000 worth of medical supplies.
I
Iran
Iran has contributed 1,000 tons of petroleum products to Viet-Nam
despatched a 20-man medical team to Viet-Nam.
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Turkey
Turkey has provided medicines and also offered to provide a substantial
amount of cement.
EUROPE
Austria
Austria has offered to supply medical supplies, blankets, tents, through the
Austrian Red Cross.
Belgium
Belgium has provided medicines and an ambulance and has given scholarships
for 9 Vietnamese to study in Belgium.
Denmark
Denmark has provided medical supplies and is training Vietnamese nurses in
Denmark.
Germany
Personnel in Viet-Nam:
Seven Germans, a director and six instructors, are teaching at the new
Vietnamese-German Technical High School at Thu Due near Saigon. At
Hue University there are five Germans: three physicians in the Medical
School, a professor of music, a professor of German language, and one expert
in forestry is working at the Department of Rural Affairs, Saigon.
A 3,000-ton hospital ship, the "Helgoland" with 8 doctors, 30 other medical
personnel and 145 beds is on duty in Viet-Nam.
Vietnamese in Germany: Forty Vietnamese are studying in Germany and the
Germans have agreed to accept 30 more primarily for training as future instruc-
ors in the technical high school. A considerable number have previously been
trained.
Goods and materials: The Germans have provided the following credits:
(1) DM 15 million ($3.75 million) for import of German products such as
machine tools, fertilizer, etc. The piastre funds generated go to the National
Office of the Agricultural Credit to aid farmers, particularly with loans;
(2) a credit of DM 50 million ($12.5 million) for development of the major
industrial complex at An Hoan-Nong Son;
(3) a credit for DM 20 million ($5 million) for construction of an abattoir
at Saigon-Cholon, and three coastal vessels;
(4) a credit of DM 500,000 ($125,000) for equipment at the Vietnamese-
German Technical High School at Thu Due.
In April 1966, the Germans announced a gift of DM 17.5 million ($4.4 million)
worth of pharmaceuticals, the first shipments of which have arrived. Also in
the medical field, they have provided two mobile dental clinics and 30 ambulances
for the Ministry of Health.
On June 29, the Cabinet voted DM 25 million (US$6.25 million) for new aid
to Viet-Nam including: (1) sending 25 experts to establish a refugee center; (2)
building a home for wayward youths; (3) expansion of 8 social centers and con-
struction of a ninth; (4) establishment of a training center for social workers;
and (5) the gift of 100 buses and a maintenance and repair facility in Saigon.
The Germans have also donated 260 tons of rice for refugee relief programs.
Italy
The Italians have provided a 10-man surgical team and have offered science
scholarships to 10 Vietnamese to study in Italy.
Luxembourg
Luxembourg has provided plasma and blood transfusion equipment.
The Netherlands
The Dutch have undertaken to build 5 tuberculosis centers in Saigon; sites for
3 have been selected. In August, the Netherlands announced a contribution of
$355,000 for a 4-year UN project in social welfare, part of the $1 million they have
earmarked for UN projects in Viet-Nam. In 1964, the Dutch gave antibiotics
and 4 scholarships for Vietnamese. They previously provided a dredge.
Spain
Spain has provided 800 pounds of medicines, medical equipment and blankets
and has sent a 12-man medical team to Viet-Nani.
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United Kingdom
The United Kingdom has provided six civilians for the British Advisor Mita-
sion and a Professor of English at Hue University. Twenty-one Vietname e ate
receiving training in the United Kingdom. A pediatric team of four ritish
doctors and six nurses went to Viet-Nam in August, 1006.
In 1963-64, the United Kingdom provided, the following goods and mat ials
Laboratory equipment for Saigon University ; a typesetting machine fir the
Government Printing Office, a cobalt deep-ray therapy unit for the Nationa Can-
cer Institute; various equipment for the faculties of Medicine, Scienc and
Pharmacy at Saigon University, the Meteorological Service tad the Agric turt1
School at Saigon, and Atomic Research Establishment at ,Dalat and the F culty
of Education at Hue. In 1965-66, British eednomic aid totalled ?81,000 ($22 ,800)
for roadbuilding equipment, diesel fishing boat engines, and portable ane hetic
machines.
LATIN AM,RICA
Argentina
Argentina has contributed 5,000 tons of wheat.
Brazil
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Brazil has sent a substantial quantity of medical suppIR4 which was c rriel
to Viet-Nam by a Brazilian Air Force plane and has also pi ovided coffee.
1 I
Costa Rica
Costa Rica has contributed an ambulance for use in Viet-Nam.
1 It
Dominican Republic
Cement has been offered by the Dominican Republic for nie in Viet-Nam
Ecuador
Ecuador has sent medical supplies to Viet-Nam.
Guatemala
Guatemala has sent 15,000 doses of typhoid-paratyphoid serum for use in Viet-
_
Honduras
Honduras has contributed drugs and dry goods for refugees in Vie -Nam
flown there on a Honduras Air Force plane.
Uruguay)
Uruguay has contributed $21,500 for relief supplies and medicines for Viet Nrnt.
t
Venezuela I
Venezuela has provided 500 tons of rice for refugee relief, and two doc-
tors are working in Viet-Nam.
AFRICA.
Liberia
A contribution of $50,000 has been made by Liberia for the purchase of hoS-
pital equipment and other medical supplies for Viet-Nam.
Tunisia
Recently Tunisia has made available a number of scholarships for Vietn mese.
NORTH AMMICA
Canada
Almost $6 million of development assistance to Viet-Nam bas been provided by
Canada.
1. Personnel in Viet-Nam: A Canadian Supervisor has been at Quangi Ngti
supervising construction of a small TB Clinic which the Car adians are fu ding.
The Canadians have sent two doctors and four nurses to st0fi7 the clinic. pro-
fessor of orthopedics is working at Cho Ray Hospital, Saigon, and ther is a
Canadian teacher at the University of Hue.
2. Vietnamese in Canada: 380 Colombo Plan trainees and a total of 163 tr inecs
under all programs, including those sponsored by other agencies and third coun-
tries (as well as Colombo Plan), have beep trained in Canada. There ar cur-
rently 231 Vietnamese students in Canada.
3. Since 1958, Canada has provided $850,000 worth of food aid for Viet Nam.
Funds generated by sales are used for capital construction projects in Viet Nallly
F
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NOMINATION OF RUTHERFORD M. POATS 17
4. A new science building for the medical faculty at the University of Hue is
being built costing about $333,000, drawn from counterpart funds generated by
sales of food supplied by 'Canada. Construction has passed the half-way mark.
5. The Canadians have also agreed to construct an auditorium for the Faculty
of Sciences at Hue University which will cost about $125,000;
6. Canada has increased its aid to South Viet-Nam allocating $1 million for
medical assistance this fiscal year including providing ten 200-bed emergency hos-
pital units. The first two units have arrived and have been installed at Phan
Tiet and at Phu Tho near Saigon. A Canadian doctor and technician visited
Viet-Nam in the fall to inspect potential sites. Canada has sent 650,000 doses of
polio vaccine for Vietnamese school children and offered additional vaccines
against polio, TB and smallpox. Consideration is being given to establishment
of a children's rehabilitation center in Viet-Nam.
7. Canada is printing half a million copies of a social sciences textbook for
Vietnamese grade school children.
OTHER ASSISTANCE
Six other nations whose help does not fall under the Free World Assistance
Program have provided valuable assistance to Vietnam in economic and
humanitarian fields.
Prance
Since 1956, France has contributed about $111 million in assistance to South
Viet-Nam.
France has nearly 500 persons serving in South Viet-Nam. Among them are
05 experts under France's program of economic and technical assistance, includ-
ing 32 physicians, professors and other medical personnel. Under its cultural
programs, 471 professors (350 French and 121 Vietnamese) are teaching at 9
French-teaching institutions, and 30 French professors are at Vietnamese insti-
tutions. France provided in 1965 for Vietnamese to study in France, 55 fellow-
ships for technical training, and 85 academic fellowships.
France has provided low-interest credits of 100 million francs (20 million
dollars) for financing imports of French equipment for Vietnamese industry,
a grant of 500,000 francs ($100,000) for equipment for L'Ecole Nationale
d'Ingenieurs des Arts Industriels.
In 1960 France extended a low-interest credit of 70 million francs ($14 million)
to aid construction of the major coal and chemical complex at An Hoa-Nong Son
south of Da Nang which is well underway. It also provides a low-interest, five-
year credit of 60 million francs ($12 million) for construction of Viet-l\Tam's
largest cement-producing complex with plans at Hatien and Thu Duc. In 1964,
France provided a 930,000 francs ($186,000) grant for the installation of a
training center for electrical technicians and in 1905 a gift of "25 million francs
($250,000) for teaching equipment, primarily in the medical field.
Ireland
The Irish people have contributed ? 1,000 ($2,800) for Vietnamese flood victims
through their Red Cross.
Israel
Israel made a gift of pharmaceutical supplies for flood victims and will train
this year five Vietnamese in irrigation and animal husbandry.
Norway
Norway sent a contribution through the International Red Cross for flood
victims in February 1965.
Pakistan
Pakistan made a financial contribution for assistance to flood victims and
donated clothing for them.
Switzerland
The Swiss have provided microscopes for the University of Saigon. The
Swiss Red Cross has sent an 11-man medical team through the International
Committee of the Red Cross to work in a provincial hospital in the Central
Highlands of South Viet-Nam.
UN System, Aid to Viet-Nant
The United Nations and its specialized agencies are also making a significant
contribution to the social and economic development of Vietnam. Under the
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18 NOMINATION OF RUTHERFORD M. POATS
Expanded Prograin bf Technical AssistanJe of the UN Developmenit Pro ram;
15 technical assistauce projects are scheduled for 1061 Sine 1068 at a c st ol
$724,475. These projects range across such varied fields as maternal and child
health, labor administration, educational planning, telecoMmunications, m :tem-
ology and civil aviation. Among the participating agencies are ILO. FAO,
UNESCO, W110. ICAO, ITU, W1110, and the Department of Economic and 'ociol
Affairs of the UN. In aclidtion, UNICEF is lending financial ,iapport to an mber
of programs in the health and child care fields.
Several major projects financed by the Special Fund of the U.N. Develo met t
Program are about to get underway. A National Technical Center total
national contribution approximately $1.5 million), with UNESCO is bec ming
operational. The Special. Fund in January approved a Fisheries Develo ment
Project including exploratory and experimental fishing in the waters if the
South China Sea, to be executed by FAO at a cost of $1.3, million. Also beirg
negotiated is a Social Welfare Training Center to be executx1 by the Bur au of
Social Affairs of the UN. ECAFE is pressing ahead with regional proj ets Of
benefit to the nations of the Mekong Basin and has unclertalten surveys of rriga-
tion, hydro-electric facilities and bridge construction projects in Viet-Na i.
'
AMOUNT ALLOTTED FOR PACIFICATION :PROGRAM
1.
Senator SPARKMAN. In the current fiscal year as the United tales
is providing Vietnam $525 million in economic ,aid, and also ublic
Law 480 assistance, how much of thA will be used for the pacifi al ion
program?
Mr. POATS. We break down our program into four categorie : eco-
nomic stabilization, war support and relief, revo'utionary d clop-
ment and pacification, and long-term development.
The total that we have in the fiscal year 1967 current progr m for
the revolutionary development, which is our general term co ering
the civil aspects of this pacification, village level nation buil ing, is
$88 million. That does not include some indirect overhead c sts of
staff, central staff, in Washington, and in the Saigon mission, an so ,311.
I would say roughly $100 million plus about, oh, say, $5 mi
Public Law 480 commodities.
I have excluded from that such things as medical assistanc We
count that in what we call war support and relief.
Refugee relief is also excluded from those figures.
Senator SPARKMAN. All of this is to civilians?
Mr. POATS. That is correct.
Senator SPARKMAN. The pacification task there is enormo s, i; it
not?
Mr. POATS. It certainly is. It is enormous because of its L ensity,
We are going down to the hamlet level supporting the Vie namese
local government, village councils, revolutionary developmei t cadre
and other work assisting the 4,060 or so hamlets in which this Too-ram
is operating.
Senator SPARKMAN. Well, because of its size and importa cc and
intensity, the amount of money that is directed to the pacificat on pro-
gram seems small to me; $88 million out of $525 million is nit going
to achieve a great success in pacification.
Mr. POATS. Senator Sparkman' 'I think
Senator SPARKMAN. Will this tend to step Up as you mov along ?
Mr. POATS. Yes. It has stepped up from about $50 mil ion hist
year, and it is about $101 million;, precisely $101, million in ur fiscal
budget for 1968.
Let me add, Senator Sparkman, I have excluded, of co rse, the
Vietnamese budget expenditures Which are additional to th t. This
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budget is made possible by our stabilization program, our commercial
import program. Without that they would be unable to maintain the
pace of budget expansion to support their own people in this work.
So the total expenditure is considerably larger than the direct U.S.
aid expenditure for revolutionary development of the dollar sum.
That is true of our logistic program which provides general support,
and a number of our military programs which I have excluded, which
are not included in the aid program but which bear on it.
CURRENT AID MISSION DIRECTOR
Senator SPARKMAN. Last October before this committee you were
asked about the turnover of mission chiefs in Vietnam. In this pres-
ent turnover in Vietnam, is the AID mission director affected?
Mr. POATS. No, he is not. He is staying on This is Don McDonald.
He has been out there since last fall and I hope he will be there a long
time. We have, I think, some stability at the top of the mission. We
have a number of senior people in it, from a number of our missions
around the world, a number of our best people. We have more sta-
bility now than we had in the past.
Senator SPARKMAN. Thank you, Mr. Chairman.
The CHAIRMAN. Senator Carlson.
AID PERSONNEL IN VIETNAM
Senator CARLSON. Mr. Portts, you have been discussing the pacifica-
tion program in our work in Vietnam. How many employees does
AID have in Vietnam?
Mr. POATS. Senator Carlson., we have at the present moment about
1,400 regular AID direct-hire personnel and approximately another
400 on contract or borrowed from other government agencies, making
a total of about 1,800 Americans; then several hundred third country
people such as Thais, Filipinos, Taiwanese, so it is a very large staff.
Senator CARLSON. Of these 1,800, how many are working in the
pacification program?
Mr. POATS. About 500 out of these 1,800?no' 500 Americans of the
1,400 are in the pacification or revolutionary development sector of
the program and in addition about, nearly 400 are in provincial medi-
cal assistance programs which, of course, are supportive, to the revolu-
tionary development, psychological human effort in the field.
Senator CARLSON. In other words
Mr. POATS. Roughly half.
Senator CARLSON (continuing). About half of the people are en-
gaged in this pacification program, half in other fields of endeavor to
improve the economic and social conditions of the people of Vietnam?
Mr. POATS. That is correct. A very large number engaged, for ex-
ample, in the advisory, training and equipment of the civil police
forces; a large number engaged in logistics, internal transportation,
port operations, airlift, and so on, which are abnormal to an AID
program, but essential in a war theater operation; a large number,
increasing number, engaged in audit and inspection and control work
because of the tremendous diffusion of commodities throughout this
Country in such a program and a limited Vietnamese management
staff to control it within the Vietnamese Government.
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?
E4PECTED SUCCESS OF PAC FICATION PROGRAM
I
Senator CARLSON-. Now, of course, t ie pacification program, I ti ink
most of us would.gree, is an important program in timt area aft r 1V6
get the military situation cleared up extensive do you e peel;
this program to be next year? You say you have i.round 1,800 ein.?
ploYees now, probably 500 in the pacification program. What is our
estimate for next year?
Mr. POATS. We have a request now which we are wicrking On to add:
several hundred additional employee by the end Of this year. be
lieve the target is approximately 400 additional, of which well ver
half, perhaps two-thirds2 would be in what we now a1l the Offi e of
Civil Operations, which is the management system, for controllin the
AID, USIA, Embassy, :crA..and military personnel working o the
civil side of the programs of revolutionary development country l,
So there is a further expansion required this year. There
expansion of the area of operation and intensity Of it. The R. D.
program plans in each province add up to a targetHaf 1,100 addif
villages to be secured up to the minimum criteria; for exam*, ha iiig
elected or some form of local government established; elections will_
be held, as you know, in most of these hamlets and villages this year.
They are now beginning to hold. S,econdly, to reestablish go erh?
ment services to the hamlets, to have provided loca. security fir it,
to be assured of a screen of outerse curity, andH sc on.
i
There is a land reform element n the more elaborate; 11- oint:
criteria of these programs. There ar 1,100 such hamlets progr, 'ed.
this year, in addition to the 4,400 listedby the Vietnamese Govern cut
on January 1, 1967, as secure.
NO LIMIT TO NUMBER OF AID 1ERSONNEL IN VJTNAM
Senator CARLSON. There is no limit on the authoription -we passcd
last year as to the number of people you can employ so far as f4inds
for paying the costs of Federal employees were concerned. We er-
milted the AID agency, without limitation, as I remember it, f4inds
to employ people. In other words, we did not try to the nu bet
of people you could use.
Mr. Poxrs. No, sir, but a limit was imposed on the administr tiye
type personnel, a $5 million ceiling on the use of supporting assist$inc.
funds to fund administrative operatio s.
MILITARY PERSONNEL IN THE ACIFICATION PIIOGRAM
Senator CARLSON. The people that you have mentioned
working in the pacification program are civilians. What percen
of the military is used in this pacification program?
Mr. POATS. I think the principal use of the military in the paci
ca-
tion program in the narrow sense of revolutionary development, s I
have used it, would be those at the district level. There are a out,
close to, 200 teams composed of four, five, six military perso nel,
usually a company grade officer and several enlisted men in ach
district town, so that is roughly 1,0002 slightly over 1,000, I bel eve,
military personnel working at the district and to a large extent se ing
the civil side of the operation.
ow
age,
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Senator CARLSON. That would be U.S. military people.
Mr. POATS. U.S. military.
Senator CARLSON. There have been press reports and statements to
the effect that the South Korean Army itself Was going to be used
principally for pacification. What about that?
Mr. POATS. Oh, I see, in that sense the South Vietnamese Army
Senator CARLSON. I was thinking of United States also.
Mr. POATS. The great problem in achieving a more rapid. pace of
pacification, revolutionary development, has am the absence of con-
tinuous local security for the villages in which this was undertaken.
The relaxation of that security, bringing the Vietcong raiders back
into the hamlet, or Vietcong cells back into it, has led to disillusion-
ment on the part of those who have sided with the Government and
attempted to carry out this program. So there have been repeated
cases of a loss of absolute security and of the maintenance of these
criteria.
It was decided last fall by the Vietnamese and United States Gov-
ernments that a much greater effort should be devoted to providing
local security for this village-by-village process.
The Vietnamese Government agreed to ass* a much larger pro-
portion of its regular military forces as well as its regional an popu-
lar forces to this task. They have committed 50 maneuver battalions,
which is more than a third of the total Vietnamese Army, to provincial
level assignment carrying out explicit screening operations to pro-
vide an outer shield of security for the revolutionary development
cadre teams, police and so on, that would provide the inner security in
each of these hamlets.
Now, with respect to the U.S. forces and the Korean forces, their
principal mission is against the main forces of the North Vietnamese
Army and the so-called Vietcong regular units.
However, they do, for example in. the Marine area, work a number
of special arrangements to team up with local Vietnamese popular
forces and regional forces to carry out a program of joint action pro-
viding local security. But it is not the best and most efficient use of the
foreign troops. It is far more effective that Vietnamese troops, Viet-
namese security forces of all sorts, do the job.
KOREANS WORKING IN VIETNAM
Senator CARLSON. You mentioned Koreans. We also use large
? es
numbers of civilians that are Koreans, not just the military.
There was an article in the paper earlier this year that said Korea
was sending 40,000, I believe, civilians to Vietnam to work in connec-
tion with the pacification program. I assume we pay those people?
Mr. POATS. Senator, that article was not correct. We have been dis-
cussing with the Vietnamese Government and with the Koreans ways
in which the Korean civilian talent could be used.
For example, we have now four Korean hospital medical-surgical
teams in the country. We would like to get more of that kind of talent.
Korean nurses, Korean agricultural people, Korean supply and logis-
tics people.
So there have been some recent discussions between the Korean and
the Vietnamese Governments in Seoul, looking to further use of Korean
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specialists where no Vietnamese Were available for the partic lar. job.
But it will be nothing in the order of 40,000 or anything of t at sort.
Senator CARLsoN. The only thing I was basing it on was tha article. _
Mr. Po4Ts. Yes,. I saw that.
Senator CARLSON. In view of the fact that 40,000 is incorr ct, ]:iow
many Koreans would you say we are using in the civilian iapaeity
in South Vietnam?
Mr. POATS. So far as AID is concerned, we have oantractual rrange-
merits to share the costs of these, four medical i.eams, and re ave
prospects of several hundred additional, perhaps as many as a ti ousand
additional, over the course of this year, Korean civilians in van i us jobs
in Vietnam.
In addition to that, the U.S. military prime contractor, the RMX-
BRJ Consortium, employs Koreans, and I do not know the i umber,
but it is in the thousands; and, further, Korean seamen are e played
on shipping and maintenance contracts in Vietnam but not ii eluded
in the personnel figures that I gave you.
Senator CARLSON. In other words, even if the 4,1,000 is not affect,
there are thousands.
Mr. POATS. Yes, yes; particularly, with the const uction
contractors.
Senator CARLSON. That is all, Mr. Chairman.
The CHAIRMAN. The Senator from Ohio.
Senator LAIISCHE. Yes.
=
U.S. AID TO rUOOSLAVTA
Mr. Poats, I do not know whether you are the person who o ght to
be questioned on this subject, but do you know when we started giving
aid to Yugoslavia?
Mr. POATS. No, sir. I am afraid I am completely ignorant on aid
to Yugoslavia, except as a newspaper reader.
Senator LAuscHE. Do you know how much we have gi en to
Yugoslavia?
Mr. POATS. Very substantial in Public Law 4800 I am sure, nd of
course, we had an aid mission there, in the period of the AI rshall
Plan, I believe.
Senator LAUSCIIE. I think it began in 1948 when Tito was sup-posed
to have severed himself from the Comintern, and it Is my undert-aiid-
ing we have given approximately $2.5 billion in the aggregate.
What is your understanding about the existence of freedom t vote
for candidates of two political parties and the right to attend hur2,h
in accordance with your own conspience, and other liberties about
which we speak? Do they or do they not exist, in Yugoslavi? ?
Mr. POATS. Well, Yugoslavia is certainly a Conalunist societ . It
has considerably more personal freedom than some other Com unist
societies.
Senator LATTSCHE. Did we give aid to Yugoslavia to perpett e the
Communist government or because we believed that it was a p rt of
our defense system to have Yugoslavia torn away frim Russia?
Mr. POATS. I believe the rationale; has been that 'Yugoslavia epre-
sented a hopeful tendency toward diversity in the Communist rorli.
Yugoslavia's role with respect to the Greek civil war had beei con-
, 1
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structive from our point of view at a certain moment, and that Yugo-
slavia had tendencies internally w,hich represented some relaxation
of the harsh system.
Senator LAUSCIIE. Was it because it had a relationship to the secu-
rity of the United States that we decided to give such liberal aid to
that country?
Mr. POATS. I believe, Senator Lausche?and I am sure you appreci-
ate my lack of qualification on this answer?I believe that that was
a consideration of the Presidents who successively made that decision.
U.S. ACTION IN KOREA
Senator LAUSCIIE. Why did we go into Korea?
Mr. POATS. We went into Korea to resist Communist aggression in
a very blatant form and to demonstrate the validity of the United
Nations proposition that such small countries would not be the victims
of external aggression.
Senator LAuscHE. Why should we have worried if the Communists
took over South Korea back in 1950?
Mr. POATS. I think our principal reason for concern was a desire
to maintain the whole system for the preservation of peace; that if
it were allowed to be .broken in that flagrant way in Korea then the
next country and the next opportunity would be easier, and there
would be no resistance, and it needed to be- demonstrated that the
international organization for peace had meaning and teeth.
Senator LAuscm. While we were still in Korea, President Eisen-
hower made the statement:
Aggression in Korea and in southeast Asia are threats to the whole free
community to be met by united action.
Is it your understanding that that has been the thinking not only
of Eisenhower but also of Kennedy and Johnson?
Mr. POATS. I think that is right, Senator Lausche.
Senator LAUSCIIE. In 1954 the Geneva accords were signed, frag-
mentizing Indochina. Following the signing of the Geneva accords,
the SEATO Treaty was executed, which you mentioned a moment
ago.
COLLECTIVE SECURITY
Did the SEATO Treaty contain a provision that an attack upon any
one of the members of the SEAT() organization would be deemed
to be a challenge to the security of the other signatory nations?
Mr. POATS. That is approximately correct, as I understand it, sir.
Of course, the countries of Vietnam, which were Indochina, were cov-
ered in a protocol and were not members of SEATO, but were offered
the protective umbrella of SEATO if required.
Senator LAUSCHE. Well now, I will read article 2 of SEATO.
[Reading:]
In order more effectively to achieve the objectives of this Treaty, the parties
separately and jointly, by means of continuous and effective self-help and mutual
aid will maintain and develop their individual and collective capacity to re-
sist armed attack and to prevent and counter subversive activities directed
from without against their territorial integrity and political stability.
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. -
Do you know whether or not the following treaties Contained pr vi- :
sions declaring that a challenge to the Security of a, particular nat on
that is a signatory to the treaty would be deemed a challenge to he
security of all the signatories, first, the treaty with J'apan ? Are . ou
familiar with it?
MT. POATS. Yes; I think that is correct.
Senator LAUSCHE. The treaty with Australia and New Zeal nd
know as ANZUS ?
Mr. POATS. The same pattern there. :
Senator LAUSCHE. The Korean settlement?
Mr. Poxrs. Yes; I believe so. Of Course, there is a wider un
standing in the case of Korea with the ITnited Nations.:
Senator LAUSCHE. SEATO, of course, we understand it does.
,
ME. POATS. Yes. ,
Senator LAUSCHE. There are others.
t
CHANGES IN COMMUNISM SING THE DEA* STALHNT
i
Now then, do you recall when Stalin lied?
Mr. POATS. March 1953.
Senator LAUSCHE. 1953.
In your opinion has there been a change since Stalin's death
would have justified a change in the ,general attitude of the IT
States with respect to threats from southeast Asia.?
Mr. POATS. Senator Lausche, you appreciate this is entirely a
er-
sonal opinion beyond the competence of my present position.
It seems to me that there have been; from whatever source, afre ing
the local Communist movements, continued pressure for expAnsi of
Communist domain throughout the southeast Asian,: area. ,
Now, this pressure_ has been said to ,be more risk taking on the art
of the Chinese leadership, Communist leadership, than on the pa t of
the Soviets.
I think there is a great deal of evidence to support the view tha the
Soviet leadership is more conscious Of the wider lissues and da gers
of international war than has been evident on the tart of the Chi ese,
but both obviously seek to further these local war S Of liberation. ,
The Soviets are. capable of greater flexibility and adjuStme lit to
particular interests, and particular circumstances as in Laos fo:c
example where they, by their action, ,made possible the establish ent
of a neutral government there, and on several occasions have se n fit
to dampen down what might otherwise have been a greater expl sior..
Senator LAUSCHE. Are you familiar with the fact. that When cm-17
nedy became President we had 600 advisers in South Vietnam, a, d on
the day of his death there were 19,000 or 20,000 troops? ,
Mr. POATS. Yes; that is right. :
Senator LAUSCHE. Can that reasonably be interpreted to :meal that
he felt an apprehension about South Vietnam being' taken Over b the
Communists?
Mr. POATS. Well, I think he was quite frequently on the: reco d on
this subject, Senator Lausche. He certainly was cencerned a. s it i.
I cannot draw any conclusions from that as to What he would have
done in particular circumstances.
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NOMINATION OF RUTHERFORD M. POATS 25
CHARGE OF MISMANAGEMENT OF AID PROGRAM IN VIETNAM
Senator LAUSCHE. Now then, there have been stories about mis-
management of the aid program in South Korea. What is your posi-
tion now?
Mr. POATS. Assistant Administrator of Aid for the Far East, which
includes the area from Burma around Indonesia, Vietnam, Thailand,
Laos, the Philippines, Korea.
HW
Senator LAUSC
E. here is your office, here in Washington?
Mr. POATS. In Washington.
Senator LAIISCHE. It has been charged that there has been gross
mismanagement of the aid program in Vietnam. What answer do you
give to that charge?
Mr. POATS. I find it difficult to answer a charge that broad, Senator
Lausche. There certainly have been instances of wasteful expendi-
tures. There have been false starts, there have been projects which
were undertaken only to be overwhelmed by political changes in Viet-
nam, or by the tide of war.
There have been activities undertaken in haste when, as I said
initially, we did not or felt we could not, wait for the establishment
of an adequate aid administrative structure in Vietnam.
There have been problems in recruiting the control and specialized
staff for such things as monitoring particular commodities in our
commercial import program and guarding against abuses or irregu-
larities or frivolous procurement, bearing in mind, if you will, that
over 150,000 different commodities are financed by aid for the Vietnam
programs.
It has been difficult, to get experts in enough fields to properly police
the procurement specifications, the shipping schedules, and so on. But
we have made an enormous effort to reduce these problems. We are
not satisfied with waste. We do not want to hide behind the alibi
that there is a war on so that waste is acceptable.
We do not take that position.
But we have had to make some tough choices from time to time
in the need to get the job done.
DIVERSION OF GOODS
Senator LA:CISME. Mr. Fred S. Hoffman and. Mr. Hugh Mulligan
have written columns in which they have stated that indications are
that much food, lumber, medicine, and fertilizer never reach the
poor, but go to enrich provincial, and district officials.
If that has happened, will you describe why, and what is being
done to stop it?
Mr. POATS. Yes it has happened in several instances that I know
of. We have tried to stop it by increasing the strength of our own,
and of the Vietnamese Government's commodity management staffs
in the provinces by establishing a uniform system of accountability,
of documentation for the shipment of goods from, for example, the
Saigon warehouse to the regional warehouse, to the provincial .ware-
house, to the village.
We have worked out arrangements for a sample audit of these
transactions so as to minimize diversion. We have put our own people
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on the movement of goods right down to riding shotgun, as t were,
on some medical supplies, for example.
But there have been occasions when a local official would divert
cement or other building materials, for example', to a friend, a .ousin,
or to a person he sympathized with because his house had ben de-
stroyed by the fighting, or whatever. These are, in some cases, under-
standable, but not condonable types of corruption. In som cases,
they are outrageous.
We think that, on the whole the losses from this sort of th ft and
diversion were in the order of 5 to 6 percent of the commod ties in
the program in the latter part of last year, and that is terribl high.
But given the circumstances, it is, When you see the number of hands.
the number of movements, the limited control,. the degree to which
this is handled by people who are not regular employees if any
government, it is at least understandable to those DII the groi nd.
We think we are reducing this by a number of measures, th great
increase in the security controls in the Saigon port, our poll a acid
their police; a great increase in the customs management.
Senator LAuscnE. I assume this: subject has been generall ths-
cussed with your superiors in the Department of Stat e?
Mr. POATS. Yes, indeed, and the Administrator of AID.
Senator LAUSCHE. Has it been taken up with the President ? f the
United States, as far as you know?
Mr. POATS. It has, indeed. The Administrator of AID, Mr. 4aud,
submitted a full report on this to the. President in Ja:nuary.
Senator LAUSCHE. Were you called into the White House f4r the
purpose of discussing it with any of the aides?
Mr. POATS. Oh, yes, many times. In fact, the White I1ouse staff
has been very interested in the subject and has participated in vorlc-
ing out some measures to reduce it.
Senator LAUSCHE. You are familiar with these articles that I have
just mentioned to you?
Mr. POATS. Yes. Those articles had an element of truth i the
sense that the particulars they described were in many cases ace rate.
I think the sum total, the summary lead sentences a:i cf headline. and
so on, from them were a very serious distortion.
CRITICISM OF AUDIT PROCEDURES
Senator LAUSCHE. The General Accounting Office criticized th ad-
ministration in some respects. Has that been discussed wit the
White House?
Mr. POATS. The General Accounting Office made a brief repo ton
the audit procedures, audit staffing, accounting ol our Missio i in
Vietnam, and is in the process of preparing a second report o the
commercial import program. I do not know whether they have leen
discussed with the White House or not
Senator LAUSCHE. In the face of criticism that has been dir
at the general administration of the program and impliedly or m yhe
directly, at you, the President has nominated you for a superior ost
Mr. POATS. That is correct.
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NEWS ARTICLES REGARDING PENDING NOMINATION
Senator LAUSCHE. I have here, an editorial in the Washington Post
:ommending the nomination. It states, among other things:
"Confronted with the possibility of a noisy floor fight, the President
could have taken the easy way out by quietly scuttling Poats."
Did you read that?
Mr. POATS. Yes, sir; I did. I was glad to read on. [Laughter.]
Senator LAITSCHE. "To his credit, however, he"?that is, the Presi-
dent?"has indicated this week that he will stand by the nomination."
I also have here an article written by Mr. John Maffre under the
title, "Renaming of Poats to AID Is Expected."
' Mr: Chairman, I ask unanimous consent that both these articles
I e printed in the record.
The CHAIRMAN. Without objection.
(The articles referred to follow:)
[From the Washington Post, February 4, 196!T]
RENAMING OF POATS To AID Is EXPECTED
(By John Maffre)
The Administration is testing the Senate ice before it skates forward with a
second try at nominating Rutherford M. Poats to be the Deputy Director of the
Agency for International Development.
Since Congress reconvened, there have been probing phone calls and visits to
Sen. Birch Bayh (D-Ind.), whose criticism of how the AID program in Vietnam
has been run led him to block Senate confirmation of Poats in the dying hours
of the 89th Congress.
So far, Bayh has remained adamant in his quarrel with Poats's ability to ad-
minister the program, although an aide said he is "not taking lightly" the expres-
sions of high regard for Poats that have been beamed to his Senate office.
The State Department, AID itself and the White House make it clear that they
regard Poats as the man for the job.
AID officials have spent the last week scurrying about Senate offices lining up
supports for Pants. They are prepared to send a memorandum to the White
House recommending the President resubmit Poats' nomination.
Poats's nomination was approved by the Foreign Relations Committee last fall,
but Bayh insisted on the Senate floor that the nomination be reconsidered in
January.
Bayh, whose political antennas are sensitive to the steel community in his
State, won his campaign last year to reinstate a rule that 90 per cent of AID
steel products used in Vietnam come from U.S. sources or from a handful of de-
veloping nations designated by Washington. But his staff maintains that he is
not carrying on a personal vendetta against Poats.
The Senator felt that Poats was lacking in candor last year when Congress
wanted details on AID's auditing and inspection of the Vietnam program. He
feels that this complaint was supported later by critical reports from the Gen-
eral Accounting Office from a House subcommittee headed by Rep. John E. Moss
(D-Alaska).
Although the hassle over Poats's future has stalled a major reorganization that
would set up a separate AVD Vietnam Bureau, the Agency has managed to fill
one high level post?that of Information Director?that had been empty since
August.
Charles E. Bosley, 40, a one-time newsman in California who served as admin-
istrative assistant to the late Sen. Clair Engle (D-Calif.), has been named to
the $25,890 post. He succeeds Michael Moynihan, who left to become director
of public affairs for the Port of New York Authority.
For weeks, AID planners have been refining plans to lift the huge Vietnam
program from the Bureau for Far East and set it up as a separate operation, the
first time the Agency has built a bureau around a program in a single country.
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The expectation is that the older division would be renaMed Bureau of East
Asian and Pacific Affairs to conform with State Department style.
The names of most members of the new bureau?upwards' of 75 staff me ibers
?have been selected, but a chief has not been picked, penting a r?lutilon of
Director William S. Gaud 's problem in confirming a denutY. Persems el se to
Bayh said that he could hardly be agreedbib to PoatS's heading the new Vi tnaro
bureau any more than his being the No. 2 man at AID.
AID APPOINTEE
[From the Washington Ps t, Feb. 28, 196]
During the preadjournment rush last November Congress Ilecided 6 del y the
confirmation of Rutherford Poats as the new deputy director of the Agen y for
International Development. Sen. Birch Bayh (D-Ind.) blocked unanimou con-
sent to the nomination and issued a broadside charging that Poats hadl been
responsible for the "mismanagement of the aid progTain. in Vietnam" ring
his tenure as Far East regional director of AID. Confronted with the poss ility
of a noisy floor fight, the President could have taken the eitsY way out by q ietly
scuttling Pmts. To his credit, however, he has indicated this week that h will
[
stand by the nomination.
Although Congress has reason to cast a searching eye at the administrat on of
the vast economic aid effort in Vietnam, aS the Moss Colpatnittee deMonst ated.,
the weaknesses in the program cannot in fairness be attrilioted to a sin e
hi-
dividual. They reflect problems endemie to a war eraergencY. What is pe haps
most relevant in this case is that Poats has responded: construCtivel and
promptly to congressional criticisms. He has tightened up the complex com-
modity import program by instituting an automated accciunting system fir im-
port arrivals, stationing U.S. logistics advisers in provinclal warehouse and
doubling the number of AID auditors in Saigon.
Senator Bayh has made no secret of the fact that his opposition to Poa is in
large part a legacy of their conflict over the recently enactel Bayh amen meat
to the aid bill. As a restrictive, "Buy American" provision designed princ pally
to counter U.S. procurement in Japan and korea, the amenditent waS vigo ously
opposed by AID. But it should be remembered that opposition to the amens meat
was hardly the isolated invention of the aid agency. The White House a tho
State Department had political, Vietnam-related reasons Of their own for ant-
ing to channel aid spending to Korea and Japan.
Poats should not be victimized for his role in implementing what was a b adly
based Administration pollIcy. His administrative record daring fii,o ye rs at
AID is a solid one, and his appointment shotild go forward.
'
Mr. POATS. Senator Lausche, may I add along this line of inq dry,
the letter which the Chairman submitted for the record, one of hes,3
letters, was from Congressman Moss, chairman of the Foreign 0 ora-
tions and Information Subcommittee 6f the House.
His committee and staff have been continually aamining th ad-
ministration and management of the aid program n Vietnam ince
February, 1966, with a series of field (rips by staff and with testi 0:n:7
in Washington.
That letter, as the Chairman said, eelcs to make clear thalT., his riti-
cism of the aid program is not intended to be a reflection again my
particular competence or any suggestion that I should not be given
this position.
Senator LAUSCHE. We have had trOuble along this line in Viet am,
I think, as far back as 1959 when a newspaperman made a vi it to
South Vietnam and came back and wrote a series of stories that weithen
investigated.
Thank you very much, Mr. Chairman, for allowing me to ask these
questions.
The CHAIRMAN. You are welcome.
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ROLE OF CIA IN THE PACIFICATION PROGRAM
Mr. Poats, you mentioned one thing in your comments that aroused
my interest a bit. You mentioned, I believe, in answer to a question of
Senator Carlson, that the CIA performs a function in the. pacification
program.
Mr. POATS. Yes.
The CHAIRMAN. What role do they play?
Mr. POATS. The CIA initially helped some province chiefs develop
a group called the Political Action Teams, which were the forerunner
of the present revolutionary development cadre teams.
The CIA continued to provide some staff to assist in the instruction
and advice to these revolutionary development cadre teams. They
are in that function a part of the Office of Civil Operations of the U.S.
Mission in Vietnam reporting to Deputy Ambassador Porter.
The CHAIRMAN. How many people do they have in the training of
these cadres at present?
Mr. POATS. I think all together around 80, counting field advisers.
The CHAIRMAN. Do you know how much they are spending on this
program in Vietnam?
Mr. POATS. It is quite large, Mr. Chairman, because they are pro-
viding direct assistance to the RD Cadre.
The CHAIIHVIAN. That is in addition to the other items you men-
tioned?
Mr. POATS. That is correct.
The CHAIRMAN. You do not wish to venture an amount?
Mr. POATS. I think the figure last year was, perhaps, $20 million,
but I am really not sure, Mr. Chairman.
SOURCE OF AID MISMANAGEMENT ACCORDING TO MOSS REPORT
The CHAIRMAN. With regard to the Moss report, if it does not reflect
upon you, whom does it reflect upon?
Mr. POATS. Well, I think, of course, any criticism of the manage-
ment of the aid program in Vietnam has to be a reflection on me. I
simply was citing the statement made by Chairman Moss.
The prime responsibility for the management of the aid program in
Vietnam flows from the Administrator of AID through me to the AID
mission director, and I have been actively concerned with it for three
years, and, of course, have considerable responsibility for what
happens.
The CHAIRMAN. Since it did not reflect upon you, would it be Mr.
Gaud who is responsible?
Mr. POATS. Well, I think it is a reflection on the work of the agency
as a whole. But I have never thought to shirk prime responsibility and
have testified before the Moss committee and other investigative groups
regularly on this matter, and take it as my function to deal with these
problems of poor management, and there have been a number of them.
This is regrettable. I think it is understandable to those who have
been close to the operation.
The CHAIRMAN. I would not, of course, be able to speak about that,
but Mr. Moss was very critical. Since the matter was brought up I
wondered whom he was criticizing.
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NOMINATION OF RD M. POA1S
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f
Mr. POATS. Well, the Moss committee dealt primarily with the
o-
for the goods imported by AID, in the absence. of sufficient audi lim
,, iiimercial import program in Vietnam, and the degree Of accotintab :y
its judgment, and took issue with the system of market determi apt
in commercial import financing.
These questions, they felt, affected the work, the performance o all
of us who were responsible, including those who were recrtitin L the
personnel, those who were manning the AID missiot ? and those un.,
fling the audit branch, the comptroller branch of the Mission.
The CHAIRMAN. Thank you very much.
Mr. POATS. , Thank you.
The CHAIRMAN. Senator Birch Bah, of Indiana,- has requeste 1 to
,
have an opportunity to testify.
Senator Bayh, would you come forward, please
STATEMENT OF HON. BIRCH BAY }I, A U.S. SENATOR }tom
HE
STATE OF INDIANA
Senator BATH. Thank you, Mr. Chairman.
Could _I ask that I be joined by a couple of my staff members,
James Muldoon and Mr. Robert Keefe?
The CHAIRMAN. Yes.
Senator BAYII. Mr. Chairman, it is certainly kind if the committee
and you, as Chairman, to ask us to preSent our testimony this mon fitt-1,eg;:
I must say that I testify with considerable reluctance, and only ,
a great deal of soul-searching. The Chairman knows much better har
I that quite often before any legislative body reachei; decisions, t mere
is a great deal of vigorous dissent over programi. and facts and.
philosophy and issues. All of this is dOne without resorting to persma
attack or invective. ;
But today the nature of this hearing is not to determine the ad Tau.:
tages or disadvantages of a particular issue. Unavoidably, w are
forced to consider the qualifications of an individual?the merits the
qualifications of a nominee.
This is my first experience, in my five years in the Senate, and ight
years in the Indiana Legislature, that I have ever been cOnfro ANT
with making a determination of this nature, where I.:felt compel] d tc,
speak out. Frankly, this troubling experience. has been compou .ded
by the fact that some individuals Nirhose judgment. I respect ave
spoken highly of the nominee.
I am well aware of the criticism that has been directed at me by ome
members of the press because of My opposition to the nominee. en7--
ator Lausche referred to the Washington Post's editorial. I rec ntly
read an article by Carl Rowan., whom, I respect, wlio pointed out that
whenever we have real troubles, in an agency or de artment, then is a
tendency on the part of Congress to get the scalp o 6:ae. of the bu eau-
crats to hang as a trophy, so to speak.
OPPOSITION TO N MINATION
I do not feel this way, Mr. Chairman. I regret very much avi0. to
be here. But after giving this matter much reflection, I have de. eC-r.
to appear here to oppose the confirmation of Mr. !POats, and to irge
the committee to use its influence in this matter.
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I want to make it very clear, I am not opposed to Mr. Poats for
what he is or who he is. I am willing to concede that he has done his
best. I do not question his intentions or his motives. I question only
his ability to do the job for which he is recommended today. Some-
times, Mr. Chairman, all the good intentions in the world are not
enough to accomplish a very difficult task. As I see it, there is only
one reason for my being here, and that is my very strong feeling that
we can find a better qualified man to do a very difficult job.
I have here voluminous materials from which my statement was pre-
pared. There is a report that has been prepared on the Saigon port
and other facilities; the Moss committee report, which is perhaps the
most extensive congressional analysis of the Vietnam aid problem;
a report prepared by AID itself; a GAO report; and a number of
newspaper articles. I have tried, Mr. Chairman, to take excerpts from
those reports to conserve the committee's time.
I could spend all day going through these and similar reports, and
I would like to ask the committee's indulgence to hearing prepared
testimony in full because I do not want to be taken out of context. I
have tried to compile the significant facts to simplify the work of the
committee.
One document is still classified, and it took us some doing to even
get access to it, so I would like to maintain control over these reports
until the committee asks for them so that I won't violate any ethics
with AID. I just want to point out that they are available. The AID
report, which is primarily on shipping and the port tieup there, the
Moss committee report, and the GAO report all are available for the
committee's perusal.
There are others. The Herter report is another one that we looked
at. I am sure that the Chairman, Senator Lausche, and the committee
are familiar with these.
OBJECTION BASED ON NOMINEE'S PAST EXPERIENCE
The committee is being asked to send to the Senate for its concur-
rence, the name of Mr. Poats to become second in command of the 83-
billion-a-year aid program.
It is being asked to approve this appointment on the basis of the
nominee's past experience.
Mr. Chairman, it is precisely on this point, namely, the nominee's
past performance, that my objection and opposition to this appoint-
ment are based.
For the past three years, the nominee has held the position of Assist-
ant Administrator for the Far East of the Agency for International
Development. Chief among his responsibilities during this time has
been the conduct of our extensive and crucially vital foreign aid pro-
gram to Vietnam?a program costing the people of this nation about
$720 million this year, if you include Public Law 480 funds; or, to
put it another way, about $2 million each and every day of the year.
This committee does not have to be told about the importance of
our aid program to the total effort of the United States in Vietnam.
Although some of my colleagues on this committee may hold dif-
ferent views from my own on the military presence of the United
States in that unhappy land, certainly most of us are in general ac-
cord on the goals of our aid program there.
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NOMINATION OF RUTHERFORD M. POTS
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F ,
,
,
Call it aid, rehabilitation, development, pacifieation or *hat yot.
will, the fact remains that we are pouring, American dollars into iet.
hain for the purpose of developing a lasting, meanin(;ful' and effe tive
! '1 ,
peace.
All of us, I think, are acutely aware that a military victory in ' iet:
nam, or successful negotiations to terminate hostilities there, wi 1 bE,,
meaningless unless we can secure a Meaningful peace. This i my
opinion, can best be achieved by doing our part to strengthen tileiet
I/
nainese economy, by helping to provide better educatiOnal opportu I ity_
by encouraging equitable land distribtition, and by !providing the iech_ ,
nical assistance wherever necessary to bring abut greater go eral
abundance.
This, then, is our common goal?the goal for whith we are sp mil
ing $2 million a day, or one-fourth of our entire foreign aid e ort
throughout the world. The nominee has been direetty responsibl for. .
obtaining these goals. .
Senator LAUSCHE. Mr. Chairman, 4t this point, May I put a ties
tion?
The CHAIRMAN. Yes.
Senator LAUSCHE. Are you subscribing to the geneial principle htiliet,,
we should provide aid, but your complaint is directid mainly a
maladministration of the program?
MALADMINISTRATION OF AID 'ROGRAM IN .1,'16?NA1?1
i , 1
Senator Bikyill.. Yes, sir; that is correct, Senator IL'ausche. ,
We can debate and argue both sides of what. AJVs respensib lity
was in getting in there, and whether, we should have gotten in, and
what our military impact is. But I think we are: after more th n a
military victory. We are trying to get an economy, :a political st mc-
ture that will hold up; one we can look to with some pride, we h pe
in the not too distant future. ,
Hard as it may sound, Mr. Chairman, I submit to this cOmm ttee
that whatever progress we have made, toward thee goals has no . re-
sulted from ,the nominee's performance, but in spite of it.
His efforts, although I admit they are well intentioned, have "een
below the standards for the job, and certainly for the job for w ich
he has been nominated. !
I submit to this committee that the f'kmerican aid program in I iet-
nam, under the jurisdiction of the nominee, has been the most gr ssly_
mismanaged program in the history of American foteign aid.
And thisi s not Birch_Bayh, the Senator from Indiana, speaA ng.
i
These are from reports, from documentation, provid01 by seven, re-
porters who have gone out there and who have dug--7--,all of this tib-
stantiates what I am saying. You can go through these., and ,time and
time again you (rot to the place where I think evenjhe most ca nal
observer, even the nominee, even AIR, will recogny,e the ;fact hat
they have got real problems on their hands. . .
The question is whether they want to blame these!problems.on s
one else.
, , ,
I submit to the committee that the administratiOn of this ,proo., ?am,
has not only failed to complement and temper the fact. of our, mit.; ary,
presence in Vietnam, but may well have aggravated the struggle t ere
and made realization of a final and lasting peace *Ore difficult. In
my judgment, had the building job of AID laeen ,done properly the
[ !
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destruction of war might well have been avoided or greatly lessened
if we had attended to some of these problems before becoming the con-
flagration we now see.
EXAMPLES OF CHAOTIC CONDITIONS IN AID PROGRAM
I would like at this time, Mr. Chairman, to cite some specific exam-
ples of the chaotic conditions which have existed in our Vietnam aid
program in the past three years and, in too many instances, which still
exist today. I will confine these examples to conditions over which
the nominee had jurisdiction and for which he is directly responsible.
To conserve the committee's time, I will submit data here. You may
have it, any way you see fit, Mr. Chairman. I certainly do not say,
I certainly do not intend to say, that I know more about this than
the committee, because you have been working at it long and hard.
I just want to try to focus some attention on the problems that may
have gone unnoticed.
These have not been concocted by me. They are in these reports.
One is by a congressional committee; another one is an AID report it-
self; a third one had been contracted by AID, which is very critical, and
in which AID contends the man was unqualified after he submitted it
because of the critique that he leveled on them; and the fourth one is
a Government Accounting Office report.
To begin with, the House Subcommittee on Foreign Operations and
Government Information, which I shall refer to as the Moss commit-
tee, reported last October that:
The U.S. economic assistance program (in Vietnam) has mushroomed enor-
mously in the last year and vast resources have been utilized without the kind
of planning that should have been dictated by simple considerations of efficiency
and economy. Certain programs, such as commodity imports, have been ex-
panded without being carefully thought out in advance and without the setting
of clear priorities * * * Unfortunately, AID did not learn from its worldwide
experience of the past 20 years in conceiving and executing much of its program
for Vietnam.
To further support this general finding, I quote from a series of
articles by Associated Press staff writers Fred S. Hoffman and Hugh
A. Mulligan?a series published widely last November.
After an on-the-scene analysis of the Vietnam aid program they
write that?
The United States probably will never know how much of its goods has
been stolen, how much of its supplies, materials, foodstuffs and direct financial
aid has been misused in Vietnam. Until recently, record-keeping was haphazard
or nonexistent. Audits now getting underway are concerned with the present?
As I think they should be?
and the future, not the past * * * There are no real American controls, for
example, on rice imports paid for in American dollars. There are only occasional
spot checks once the bags clear the customs house. Indications are that much
food, lumber, medicines and fertilizers never reach the poor, but go to enrich
provincial and district officials. Some items reach the Viet Cong * * * At Ba
Hao, 50 miles from Saigon, the U.S. 196th Light Infantry Brigade recently cap-
tured a Viet Cong camp and uncovered a big hoard of goods mostly stolen or
diverted from U.S. economic aid supplies. There were more than a million and
a quarter pounds of AID rice, 440 gallons of gasoline, 600 gallons of cooking
oil, 88 shovels, 750 pounds of salt. The bags of rice, enough to feed a Viet Gong
division for two months, still bore the names of the American exporters?
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Mr. Chairman, the article continues?
' .
Ships go astray. Barges disappear. Trucks never reac4 their destina
A school house roof winds up on some minor official's chicken coop * * Th?
AID agency has been under the searching eye of the U.S. Government's ougli
General Accounting Office. GAO examined U.S. operations and, reporti ig t)
Congress in August, quoted officials of the AID mission ,(in Saigon ) as s yin;
the South Vietnamese Government lacked "sufficient qualified pe 7sonn 1" t)
manage the important commercial import ,program, that t11.9 mission sta was
inadequate?and that "controls must be saerificed in order to keep the pr grata
running." GAO would not accept this.
MOSS COIVIMITTEE RE'ORT CRITICISM1
1
According to the Moss committee, these eons-tuner goods pro hied
by the United States under the commercial import program, and oni-
prising about 70 percent of our nonmilitary aid to Vietnam, vera
bei;:ig pumped into the country, and the Moss committee outline five
specific areas of fault, and I enumerate them briefly :
"(a) Goods were coming in without any determination as to wh ther
the quantities imported were excessive and could he properly a el-
ficiently absorbed into the Vietnamese economy," and this AID r )ort,
done by the ,agency itself, its official did itself, alb:ides to the prs lem
of port facilities, saying that the port facilities should be able to ham
die six million tons per year. Yet in the study it points out that liar
to the expenditure of all the funds by AID to build up the port f cili-
ties and make them efficient, prior to this time, that the capaci y of
the port was 2,000 tons per day per ship, but now with the ma age-
ment that is presently going on the capacity is 500 tons a da per
ship.
The second area of criticism of the Moss committee was th the
goods are coming in "without any determination as to whethe cer-
tain types and grades of commodities were luxurious under cu rent
conditions in Vietnam."
My staff was looking through some material and .1 ran aeross some
Small Business Administration procurement mems, in Which they
were asking for bids for this country, and I was t, bit sarpris d as
they were, to learn that one of the items one day was for 8 m Ilion
pink bathtub stoppers; and the following day another Small U.Si-
ness Administration memo asked for 1,000 metric tons of tcicum
powder.
Perhaps the bathtub stoppers and talcum powder are 'imp tart
in Vietnam, but I wonder?the Chairman asked aboi)t, priorities c4n the
overall aid program to Vietnam priorities?I think` i
it s import nt to
look at the goods that come under our aid authorization.
The third criticism of the Moss committee was that the ooCis
come in, "without, any determination as to whether the commo titles
programed were likely to be hoarded, diverted, or used for pu oses
incompatible with U.S. objectives."
One product coming in was Unicel 100, which was a product being
used for the production of rubber. Du Pont, whiCP was sellin this
to AID, became increasingly worried because of the quantif es of
Unicel 100 that were being ordered, were entirely too great f r tLe
amount of rubber production that was going on,
Well, incidentally, after three months it finally ot turned 4ff Ey
AID because in an investigation that was made they found that T4Inicel
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NOMINATION OF RUTHERFORD M. POATS 35
100 had explosive power equal to or greater than TNT, and we do not
know where all the Unicel 100 went.
Silver nitrate was another commodity that came into the country
in 1965. There was $1.3 million worth of silver nitrate: used for the
backs of mirrors and for medication, putting it into baby's eyes, and
this sort of thing. It was terminated finally when AID was convinced
that the silver nitrate was being put through a, process where the
silver was being used as coinage in the black market and the nitrate
was being used for explosive power. I could go on and on, with
these kinds of examples.
But the fourth area of criticism by the Moss committee was that
the goods were being brought in "without any determination as to
the quantity of stocks on hand and in the supply pipelines, and," the
Moss committee points out there has been no auditing since 1961,
I think, despite all the pilferage involved.
The fifth and last area definitely outlined by the Moss committee
said the goods were coming in "without verification and adequate
surveillance of the use made of commodities previously delivered
under the. (commercial import program)."
One commodity we are importing into the country is thin tin,
tin stock, the primary purpose for which is to help the canning
industry of Vietnam. It is important to keep the foodstuffs from
perishing:. Yet a surprisingly large part of this has gotten into the
commercial market where fancy tin footlockers are being made by the
merchants for sale to GI's.
It is incorrect to suggest, Mr. Chairman, that these deplorable
conditions were new revelations promptly acted upon once they were
discovered. This is the inference that has been made. Mr. Poats
may have suggested this in his statement of July 191 1966, which is
contained in the Moss committee report when he said, and I quote
from the report:
No question about it, this program needed a great deal more management?we
feel very uncomfortable with the absence a knowledge in trying to run this
program.
This is a very worthwhile feeling. But, Mr. Chairman, I feel very
uncomfortable that corrective steps were begun only after public ex-
posure by the Moss committee during their trip to Vietnam in May
1966. For it was in July 1961, almost two years earlier, that the Gen-
eral Accounting Office reported on inadequate policies and practices in
financing commercial imports and in the administration of other
financial elements of our aid program to Vietnam.
COMMERCIAL IMPORT PROGRAM
The GAO reported on profiteering, overprising, and the import of
nonessential commodities under the commercial import program.
GAO further reported on the imprudent use of foreign exchange for
luxury goods by the Government of Vietnam; and on other problems
which had prevailed as far back as 1955. The Moss committee re-
ported, and I quote from the Moss report again, "since the GAO study
was completed,"?and this was back in 1964, July of 1964, two years
before the Poats' statement before the Moss subcommittee?"since the
GAO study was completed, other studies have been made by officials
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36 NOMINATION OF RUM RFORD f.13,10?.4S
of AID and the Treasury Department and the same----Mr. Chair air
t
underlining? ,
the same deficiencies have been identified repeatedly. As a result, swe ping
changes have been recommended on numerous occasions.: It was not ant 1 the
subcommittee initiated its investigation, however, that AID took aggr ssivia
action to implement Such changes.
Reactin 0- to the Moss committee report AID Administrator MI-
.
Ham S. Gaud was quoted on October 15, 1966, in the Christian Scienc
Monitor as saying:
This program * * * has had to face many difficult administrative pro leins.
But it has accomplished its purpose: to check runawaylinilation which vould
have ruined South Vietnam's economy and jeopardized the successful prsu.t
of our civilian and military efforts.
Certainly, inflation was important, inflation is 5;i11 impoitaiit, in
?
the battle of Vietnam. But, Mr. Chairman, pray bill, how couljd the
almost total absence of planning control leading to the loss and ver-
sion of hundreds of millions of dollars worth of American ai4 con-
tribute to the control of inflation?
Says the Moss committee in the same area, and I quite:
* the underlying philosophy (of 'AID) was to flood the Viet, amese
markets with enough AID commodities to "sop up" the excess local cu rency_
In spite of AID's philosophy, inflation soared. Prices almost doubled ' 1985
and increased another 50 percent in 1966. Moreover, the AID mi .ion in
Vietnam had neither the management -tools nor the personnel to ad i mister
an effective commodity import program * * *. The Sula2ommittee co eluded
* that the manner in which the import program was being administ red by
the AID mission was contrary to sound management practices in Gove nment
operations, and was contributing to, rather than preventing, widespread buses.
Again, and again, the AID response to such findings ha been
defensive rather than constructive. The Christian Science Ionit or
reported in October 1966, that "AID officials"--despite wh t the
i
nominee said, perhaps he s not aware of this, but certainly others
have found it?that "AID officials always maintained one xcuse :-
There's a war on, therefore controls are not practical.'"
ASSOCIATED PIESS REP0RTS1
The Associated Press reporting team of Hoffinan and $lligan
wrote last November:
Public administration advisers (in Vietnam) were told in an offiei 1 htnd-
out, "Re side losses: graft, payroll padding, wasteful local purehasi g from
preferred contractors, favoritism; you must tolerate a etyrtain amount of this.
Do not let your morals get in the way of project operations. Reme ber you
never can prove It exists so you might as well tolerate it in reasonable a ourds."
This self-defeating and, in my judgment, unconscionable ttitude
inevitably results in precisely the 'opposite effect on Vietna ese vil-
lagers than the effect, the attitude we are spending millions t create,
the attitude we have been trying to create in those people. olfinan
and Mulligan reported, for example, that half of 400 longs ?f
supplied cement?earmarked to build a school in a province orth of
Saigon?vanished. The reporters wrote:
U.S. officials couldn't pry a plausible' explanation from the Chan T aril dis-
trict chief, to whom the 200 missing bags were consigned. So it wa marked'
clown as a case of probable illegal sale of U.S. aid goois. The Unit d States
was the loser on two counts: (1) The American taxpayer is out the e st of the
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ICU RD M. POATS 37
lost, strayed or stolen cement. (2) The battle to gain the confidence and support
of peasants and villagers has suffered a setback.
They reported a similar episode in which fertilizer was delivered
to the custody of a district official for distribution to farmers of a
small Vietnamese village. The fertilizer never reached the farmers
and the district official was left untouched by authorities after he
presented 200 signatures?incidentally, all in the same handwriting?
of farmers who supposedly received their portions of the fertilizer.
Now, a moment ago, I quoted AID officials as saying there could be
no practical controls. In fact, they have encouraged public adminis-
tration advisers to turn their backs on graft and theft.
I think, in good conscience, I should say that I believe the nominee
and those around him, above and below, have tried recently to change
this philosophy, and although I suggest the earlier philosophy was
unrealistic, I would like to keep my remarks in the context of fairness.
But when confronted, in the past, with specific examples in which
graft and theft can be proved, they have sung a different tune. Here,
again, quoting from Hoffman and one ranking AID execu-
tive" was quoted as saying:
We do not, pretend to have a thoroughly efficient inventory regulation at the
district or village levels. We accept integrity of the documents presented to us
by the district and village officials. So there could be theft at the village level
we don't know about.
Thus, AID has constructed excuses for lack of control and efficiency,
in the past, again let me say,. to meet almost any eventuality. If you
are talking to someone primarily concerned about our military effort,
you say: "There's a war on and thus controls are impractical." If
you are talking to someone suspicious of Vietnamese villagers, you say:
"Graft and corruption are a way of life here and you must expect this
kind of thing." If you are talking to someone who is sympathetic to
the plight of Vietnamese villagers, you say: "We must assume and
accept their integrity."
Mr. Chairman, I could go on for hours talking about inadequate
auditing?the,last one, as I said a moment ago, was completed in the
summer of 1961; about illicit practices affecting our aid program;
about the port situation; and many, many other aspects of this almost
unbelievable situation.
I could fill a book in itself about AID procurement of steel, in which
we have demonstrated that sound practices, once forced upon AID,
result in huge savings.
NOMINEE SHOULD BEAR RESPONSIBILITY FOR MALADMINISTRATION
But I think I have said enough, perhaps more than enough, to dem-
onstrate that during Mr. Poats' tenure as AID's Assistant Administra-
tor for the Far East since April 1964, and for 28 months before that
as Special Assistant to the Assistant Administrator for the Far East,
he has had ample opportunity to learn of the deficiencies in his pro-
gram and to take steps to correct them. Yet, according to the Moss
committee and to reports made by a variety of public and private
sources?ranging from the General Accounting Office to the Associated
Press?action has replaced excuses only in the past few months. In
short, corrective action was not taken until investigation by Members
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38 NOMINATION OF RUTH RFORD M. r6ATs
t
of Congress and the white heat of publicity generated by ener etic
newsmen forced the whole sordid mess into public view.
This Mr. Chairman, is the record, at least excerpts therefrom, of
what has been going on in AID in southeast Asia.
If our aid program to Vietnam has been badly. rtn?and. I b licve
the evidence bears this out beyond reasonable doubt---then the m n i:a
charge of administering that program must assume the burd n of
responsibility.
But, there are those who seek to absolve from any blame fo this
debacle the man who had directed our Vietnam aid program fof the
last three years. They point out the great difficulty in dealingl with
any problem in Vietnam. Even Congressman John Moss, for w am I
have the greatest respect, has suggested in the letter which was Pu into
the record, that the Chairman of this committee and the co &-
tee should not conclude that despite his findings of massive aste
brought about by poor organizational and 'management me-
tices, Mr. Poats should not be held accountable. In fact, he give very
fine testimony, and T want to point that out, on behalf of the no ince.
I readily agree that it is frustrating and it must be difficult, o say
the least, to administer a program of this size hal f way arou d the
world. And, certainly, there are many factors to be considered other
than the administrative ability of Mr. Poats in assessing the fail re or
success of the program.
But can we rightly say that the nominee has no respons bility
whatsoever for the Vietnam aid fiasco as Congressman Moss s id in
his letter? If not Mr. Posts, then who is responsible? The ao min-
istrator ? The Secretary of State? ;The President?
Indeed, I think these top officials Cannot escape the ultimate r pon-
sibility. But who is actually to blame? Take the example of baak
president whose loan officer uses poor judgment in making an unre-
coverable loan. The bank president might have to assume ul imate
responsibility for the error; but I doubt seriously, Air. Chairma , that
the bank president would react by recommending that the erring xecu-
tive be promoted to bank vice president in charge of loans.
Harsh as it may sound, I believe we must hold the nomi ee ac-
countable for America's program Of aid in Vietnam. He as the
chief administrator over the Vietnarn aid program. At the ve least,
the condition of the Vietnam aid program should be the do imtat
factor in considering the nominee's administrative ability.
Despite its inherent difficulties, the Vietnam aid program hould
not have been permitted to drift aimlessly into a rudderless el aos of
collusion, corruption and kickbacks which were spread on the record
by all of these reports. It should not, Mr. Chairman, have ben per-
mitted to become a maelstrom of misdirected goods, widesprea theft
and graft, and inadequately staffed and poorly guided AID issions
across Vietnam.
INEFFICIENCY SIIOUI;) NOT BE REiVAIIDED
L
Mr. Chairman, another factor concerns me ' ?ter the pro
nomination of Mr. Feats. It goes much deeper than his quali
for this particular job or what has happened in Vietnam. F
very strongly that to reward such performance with elevatio
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second highest position in our aid program?a position from which
the nominee could well succeed to the highest office in AID?that
such promotion is to invite disaster not only for our aid program in
Vietnam, but for our total foreign aid effort as well.
I need not tell you, Mr. Chairman, that in the past few years the
American people have become increasingly critical of our foreign
aid program. With some exceptions in the field of military assist-
ance, I want to point out that I have consistently supported foreign
aid since I have come to the Senate. I have not been a witch hunter.
I do not say anyone who is critical of foreign aid is. I certainly have
supported this, with the exception of some of this foreign aid in the
military area and I might add that this support has not always repre-
sented the popular position among a large number of my constituents.
Yet, I firmly believe that foreign aid?well planned and carefully
administered?has been and can continue to be one of the Nation's
most effective tools in our never-ending search for a world at peace.
But I cannot?and my constituents will not?condone bungling,
waste, and mismanagement costing us?well, some people estimate as
high as a half million dollars a day.
None of us can condone and permit such bungling to go unchal-
lenged and unchecked. Certainly, we must not reward inefficiency
and lack of management capability with even greater authority and
increased responsibility.
I ask you, Ali.. 'Chairman, how can I justify such a promotion to the
people I represent? How can any of us ask them for their continued
support of a program in which administrative malfeasance begets not
condemnation, but commendation; not rebuke, but reward; not pun-
ishment, but promotion?
The truth is we cannot expect the continued support of the people
of this country if we take such action. They will demand an end to
such a program, and, in my opinion, not without justification.
EXERCISING THE PREROGATIVE OF THE SENATE
Mr. Chairman, I think, in closing, I should confess to you?they say
it is always goo ol for the soul?that at one point I had grave reserva-
tions about my position, and, frankly, had decided not to oppose this
nomination.
Quite frankly, the idea of getting involved in a confrontation where
you try to shoot out of the water the nomination of an individual
to do battle with a person instead of a program or a legislative meas-
ure?this kind of thing goes against my grain.
I asked myself, "What does the junior Senator from Indiana, pretty
low down on the totem pole of seniority in this great body?what right
does he have to place himself in opposition to a key appointment rec-
ommended by the President, and strongly supported by the Director
of the AID Program, Mr. Gaud, who feels Mr. Poats' services are in-
dispensable?"
Why should I inject myself into that?
Very frankly, and I hope without sounding melodramatic because
I do not feel that way about it, but just from a very practical stand-
point, I finally asked myself. "Did the Founding Fathers really mean
anything by giving the Senate the power to advise and consent to ad-
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I
ministration appointees?" If there was wisdom in these actions and
history, T think, indicates great wisdom?then any member of this
body has not only the right but the solemn obligation to actively o pose
nominations believed not to be in the best interests of the count
Members of this committee have eloquently exprsed the nee for
Congress to assert itself as a separate and distinct branch of Go ern-
'merit. Somewhere, sometime, somehow we must e/tercise that pre oga-
five to register our explicit and categorical dissatisfaction with
and inefficiency.
aste
Mr. Chairman, I say that this is the place?and row is the time--
and this is the way to exercise that prerogative.
For this issue does not concern Mr. 'Oats alone.. It concern, our
'broader responsibility as Senators to exercise our function of le isla-
five oversight?our function to review the administration of programs
that Congress has authorized and funded.
It seems to me, Mr. Chairman, that those who believe our pro ram
of aid for 'Vietnam has been wanting for firm leadership and s illed
management; those who believe that inordinately Wasteful pra tices
have been permitted to grow and flourish despite repeated wariings
to correet and Control these abuses; these who believe that the Sem te of
the United States has an obligation to the people to avert furthe and
-even broader mismanagement, then I think those of my colle oues
who believe this, Mr. Chairman, should join me in opposing Mr. oats'
nomination.
'I thank the Chair and the members of the donimittee for heir
tolerance. 'I do not like to read statements, as I said. I wanted o try
to 'summarize from the various reports and doe-L-1.111'6-as and I v ould
not want to have anything I said taken inadvertently out of co ttet
'because Of the very, very difficult position to which I find mys lf in
opposing the promotion of an individual.
DUTY AND OBLIGATION UNDER CONSTITUTIONAL SYSTM
The CHAIRMAN. .Senator Bayh, I completely agree with the re sons
that you have given in the last part of your statement. I thin you
have rendered a public service in going to the trouble to pr pate
a statement and to bring it to the attention of the public as w 11 as
to the members of this committee.
I realize it is very distasteful to Oppose anything, whether i is a
interpret our system of constitutional government correctly, it is yor
nomination,' or legislation, or policy- of our government. Bu if I
r
duty when you feel as you do to come here and to make a stat ment
as you did.
So I think it is a solemn obliigaton, and if you did not do it, f ling
?
as you do, you would be neglecting your duty as a Senator o
United States.
So I think you have nothing to apologize for. , Certainly I would
congratulate you on your courage and determination. The verY. fact
that you are a junior Senator, relatively speaking, only evi ences
greater courage than would be required of a senior lv[ember whc feels
more secure in his position through experience an lmowledge
I think you have rendered a very important service, regardl ss of
the particular substantive points. I think the points you make, vhich
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have been publicized in the press, we are all more or less familiar with
through the Moss report. I personally do not understand either, in
view of the severe criticism by the Moss subcommittee, just who the
Conaressman does think is responsible for it.
Irit is a vague, impersonal organization, that is one point to take,
I suppose. It is difficult dealing with, or even discussing, the vague
abstraction known as the system. We have to deal with individuals
who are responsible for it.
RESPONSIBILITY IS COLLECTIVE
Senator BAYII. Mr. Chairman, may I make one observation about
this business, about who is responsible?
The CHAIRMAN. Yes, indeed.
Senator BAYII. I must say I find myself partially in sympathy with
the nominee on this because none of us really can avoid responsibility
for the, situation. , All of us in the Senate have to accept some'respon-
sibility for a mistake like this that has been going ?on this long.
But I think we can be more specific in this particular case. We have
bad some significant dealings in this area with AID and have tried
to point out, and this started back in February, was it not, of 1966, this
started back before the Moss commitee went out there in May, to point
out some of the imperfections.
I tried to do it in a letter. I tried to do it by phone without making
it public because I would a lot rather clean up this type of very
troublesome thing very privately and not get it out into the press,
frankly. 'We got very little results in this way, and we had no alterna-
tive but to take our case to the public on the floor of the Senate.
But, be that as it may, that is over, that is past history, and I only
point out that in all of this discussion we invariably'were referred to
the man who had to make the final determination on the question of
policy?and that was Mr. Poats. So far as AID Washington was
concerned it was Mr. Poats. I do not recall anyone in my office ever
being referred to a man?indeed if there is one sitting on the Vietna-
mese desk down at the State Department or at AID for any decision.
Mr. Poats seemed to have the responsibility.
LETTER FROM DEPUTY DIRECTOR OF AID MISSION IN SAIGON
There are those, you could normally say, well, I think a man in
Washington is at the mercy of the administrators in the field. This is
really true. But I would like to refer the committee specifically,
because the Moss testimony is rather thorough, to page 101, to a letter
written to Mr. Rutherford Poats from Mr. J. II. Edwards, who was
the Deputy Director for U.S. AID mission Saloon, in which. he ap-
parently knows Mr. Poats well enough so that he can call him by his
nickname, "Dear Rud," and he says:
At least, once a week I have written you a diatribe on the problems created
by the misty and emotional approach to assistance to Vietnam, Vortunately,
I have recvered enough selicontroI to destroy these private mailings.
This was 1on:c1:0,1) No ember of 194.
t
Suffice it to say I don't like nor approve what we are doing here. It is at the
same time both unconscious and unconscionable. Let me only make these com-
ments without the lyrics?
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And then he goes on to list 12 specific problem areas,, and then ake
ten recommendations. He got no action on this. Filially, in di ust,
he resigned. I AO not know whether the quote in the paper was
correct, but Mr. Poats WM quoted in one of the newspapers wh he
was challenged by Mr. Edwards who was trying to get this info 'ma.
tion back from those in Washiniton, to get, those 'results, said, ' ell
,
he is just a businessman and he is not, very experienced in Go ern-
ment service," when in essence, I think he served as long as Mr.
Poats, I think four months shorter than Mr. PoatS, in the Fa eign
Service area.
So I think that when you find out that here is la person who, vith
all due respect, was charged with adininistering a very difficult pro-
gram, and who had a whole file of critique on how the program could
be improved, and yet no improvement's were made until Congress veni,
out there, and the press started, lambasting AID here, it seems you
begin to lose confidence. It seems to me some place along the1 line
we, in the Congress, have the responsibility of zeroing-in, not ge ting
somebody scalped, but insisting that an administrator has to lucw
what is going on.
' This is how I get into this area, not that I do not sympathize kvith
Mr. Poats! difficulty in dealing with a. very difficult problem.
The CHAIRMAN. I think you make, a. very persuasive case on that:
point. We all know it is a difficult problem.
Of course _ we realize that many of the involvements in r min:
years are not the responsibility of the AID Agency.
But haying undertaken this responsibility, I would think thei . re-
action to the criticisms from their o-wn people in, the field short d be
ITery much more efTective and much more timely.'th
e Seuatpr from Missouri, do you have any questions?
, Senator. SYMINGTON. Yes Mr. Chairman. I woUld like to k a
couple of questions of my friend from Indiana for -whom I hav the
greatest respect, as you well know,
:ANOTHER MAN FOR. THE JOB? 1
,
You say that you believe a better qualified man can be ioun ?
for
the job in question. Senator, have you anybody in mi id?
Senator BAYII. No, sir. I wish I did. Let me say there are . orne
people who have asked me this question, and maybe this was the rea,-
son I was standing in the way of Mr. Poats. I wash I did. I would,
think that pertOnly we could And such ,a person.
Senator SigtwirroN. Loisi. not mean, it in any such sense.
Senator 134-n,r. ]( am certain you did not.
Senator SymiNaTorr. I can assure you.
In the past, I have been involved with administrative departments
that could be considered relatively permanent, also with ones con-
sidered temporary. I found it is almost as difficult to get peopi e to
work in a temporary agency as it is easy to get them to work in say,
Justice, or Treasury, or State, or Defense.
Mr. Gaud wants this man to help him. If he is, not a good inan,
and some of your testimony here certainly is damaging then I was
wondering if you had anybody else you thought would be willing- to
take the job.
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Senator BAYLI. Senator Symington, I have not?in May of 1966
I wrote a detailed letter, a "Dear Dave" letter, to Dave Bell, whom I
respect, suggesting some improvements, one of them was that we
should try to make a search to get some people.
Senator SYMINGTON. I know you will be sympathetic with one ap-
prehension I have about this sort of localizing the whole problem
on one human being who has a life to lead, as do the rest of us.
GAO AUDIT PROBLEMS
I was in Vietnam last January, and talked with members of the
General Accounting Office. They said that of $300 million of con-
tracts to a private contractor group $120 million had been lost. It
seemed to me that to. lose 40 percent would be par for the course, a
40-percent loss in an organization operating for a profit.
I voted .against the foreign aid program last year. Did you vote
for or against it?
Senator BAYIL I voted for it, sir. I might point out, Senator, that
the Senator's great reputation as a businessman is such that I would
be quick to point out that we have not had an audit out there since
1961. That is a good place to start.
I do not want to zero in on any individual. I am not trying to get
at his job or anything. But here is a man who is before us to be
promoted.
Senator SYMINGTON. Fowler Hamilton was in there, and he left, and
David Bell was and he left; also the gentleman before Mr. Hamilton,
whose name, to be honest, I do not remember, left. This audit problem
has been around for a long time.
Until December, 1965, the French controlled most of the Saigon
harbor. There also was stealing going on around on the harbor. I
imagine there still is.
On these items on your page two from the Vietcong, I noticed that
last October we finally overcame an impregnable stronghold of the
Vietcong "6 miles" from Saigon. I saw air strikes 15 miles from
Saigon myself in January. I noticed in the paper this morning we
had a pretty good fire fight, many were killed, 20 miles from Saigon.
Under those circumstances, don't you think that some of these items
captured might in turn have been captured by the Vietcong from the
South Vietnamese, after we gave it to the South Vietnamese?
Senator BAYIL I think it would be possible?of course, the Senator
is a man with a great military record, and I am not. But he is more
familiar with battlefield conditions. But it would seem to me that in
a military situation where even after there is a victorious battle you
do not want to expose yourself to the enemy, you would not take time
to haul several hundred bags of rice and several hundred gallons of
gasoline, and this type of thing, that has been found still with the
labels of U.S. firms from which it came.
I am sure some of this is true' and I have not been to Vietnam let
me say: I tried, I approached the Leader, with the feeling that I
would like to go when this whole situation came to my attention. I
have had to rely on people who have been employees of the U.S. Gov-
ernment, who have been hired, some of them, to make an analysis of
what is going on, and I talked to as many as I could who have been
out there, who studied this situation.
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Senator SYMINGTON. Let me Say to my able iriena:i. am not Cri iciz-
ing his statement in any way.- I commend it, and join the ()hal an..
This is a, fine job of detailed analysis.
FAULT LIES IN A LARGER FIELD'
,
The only oint' is, if we decide Mr.' Poats should aof be confirmec.,
do we stop' t aere? It seems to me the fault lies in a larger field. '
If I were back there in WashinotOn I would like an audit of whEt
was going on out there. The average fellow who runs a busines say,
in Detroit, with distributors around the country, likes to know what
the distributors are doing, and the distributors should like to now.
.Let me put it to you this way. We are spending somewhe e be-
tween $2 and $2.5 billion a month in Vietnam, fighting out here.
'There does not seem to be any reason why waste in the military s iould
be more sacred than waste in the aid program., You would e the
first to agree, would you not, there is also waste in the military 1?
Senator BAYH. I would imagine there probably is. I de not know
of it to the extent that the AID program has been brought o my
attention.
Senator SYMINGTON, Specifically, f, I understand the Vietcon iie
at times off the South Vietnamese materials they have captured. With-
out criticizing the courage of the South Vietnamese troops, the
cong have shown tremendous courage.
When I was out there some 30 of them got. through the wire. They
knew they would be either dead or captured.
They killed, I believe, 18 of them and captured 12. In effe t, you
might say, they were committing suicide for a cause.
With that type and character of courage, wouldn't you thiifik. es-
pecially as they need the rice and the oil 'and the shovels and the salt,
if they win a victory, that they are ging to take it?
? Senator BAyx. I said earlier that I think this has probabl., hap-
pened. But I think it would be much more likely that they woUcl
pick up weapons and things they could carry with them, then try to
carry around hundreds of bags of rice and driur s of gasolinic, and
every evidence is they do not have to get these, things on the battle-
field. They can get them in any other number of ways.
-Senator SYMINGT0.1.c. They could get them on the battlefi ld for
nothing. They have to compete with the South Vietnamese to et the
rice that comes up from the delta. Sometimes it is a question f who
steals the most.
Senator BAYII. I personally do not condone either one of t em.
Senator SYMINGTON. The CambOdians are in there also, so it gets
pretty tricky. ,
AMOUNT OF WASTE IN THE WAR
. --
The 'AID' people are not, you inight say, . the mail, influential Amer-
icans,, especially with the South Vietnamese Government.
I looked at the black markets myself. You can buy Most a ything
if you,*int fi) pay the piice. It is all out in the streets, no si alley
or deals' in the backroom.
o1vt impresses rrie 'about your report is the tremendous /now,
of,Waste. it is going into this war.
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I happen to be one who believes it is unfortunate, we are now in a
large ground war in Asia. But inasmuch as we are there, I would hope
to see us use more of our technological ability to bring whatever suc-
cess is possible. I notice you say that despite its inherent difficulties,
the Vietnam aid program should not have been permitted to drift
aimlessly into a rudderless chaos of collusion, corruption, and
kickbacks.
There has been a major who was convicted of putting narcotics into
Vietnam, and an officer who was bead of the port at Saigon convicted of
improper action, bringing things into the country illegally. It seems
to me a lot of what is going on out there is pretty much of a mess.
Wouldn't you agree with that?
Senator BAYPI. Yes, sir. But I think my colleague and good friend
from Missouri would realize just by calling it a mess would not make
it any better, and I would hope maybe Mr. Pouts has learned in these
past few months how to be a better administrator. I give him credit
for reasonable intelligence. But I would like to see him put it to work
in his present capacity before we promote him to the No. 2 job after
seeing this whole debacle. I quote here from page 51 of the Moss
report which says that the chief auditor complained that he was not
able to carry out his program for audit as originally scheduled for fiscal
year 1966 because of frequent requests by the mission director in AID
Washington for routine and limited work of an investigative nature,
and limited financial audit.
I pointed out earlier that the Deputy Director of AID, the AID
mission in Vietnam, Mr. Edwards, wrote a rather detailed and per-
sonal letter to Mr. Poats outlining certain things going wrong and
making specific suggestions.
FOREIGN STEEL PRODUCTS USED IN VIETNAM
I personally had experience in my office with a program that because
of the way AID was administering it, resulted in steel being sold?
Senator .SYMINGTON. I think I joined the Senator.
Senator BAyx. Yes, you did.
Senator SYMINGTON. And spoke in favor of his position.
Senator BAYEI. Here they were getting $100 a ton more, $96 a ton
more, than the market would bear. There was collusion and graft and
kickbacks. The quality of the steel was such that it would last 8, 9,
10, 11 months, whereas, the U.S.-made steel products, which had the
proper thickness and right kinds of coating, would last 11 or 12 years.
Now, we brought this to the attention of the people down there.
They denied that it was going on. In fact, we finally had to get GAO
to go in and s-ubpena the files, and we found out that in the files was
a report made by a French firm that said what was going on down
there was worse than we had even imagined. Now, this kind of thing
I just cannot ignore.
Senator SYMINGTON. As I understand the Senator's position, he
would not object to Mr. Poats' staying in Vietnam but he does not want
him to come to Washington and be promoted; is that right?
Senator BAYll. I would like to see if he has learned in the past?he
is in Washington now over all of southeast Asia, and I would like to
see if, perhaps, the man has learned; and if he has, let us see the
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operation of the program the next year or so. flut certainly the
past three years while he has been there as the top man over that hole
aid area over there, you just cannot recommend som mme on that jlind
of record, so far as I am concerned, for a promotion.
Senator ST4n,ioToac. MT. Chairrnap, I am impressed with the osi-
tion of our colleague. I would hope we would give Mr. Poats a cl anc B
to reply to this long statement, perhaps, Mr. Gaud also. Iles are
serious- statements. I know the Senator is completely sincere bout
1 P
them. ,
I ,
He was absolutely right about the steel. The record later so pr vetodi
The American taxpayer is deeply involved in tht se problems r
only on the nonmilitary but also on the military side, as to wh t -vn
are getting for what we are spending.
-
ORDER trr V) WEST VIRGINIA 101
. Senator BAH. I might write one final chapter. I dunk the Se at or
.
S already aware of this, but I would ,like to show :0.S far as 'judg ent
is concerned., and the steel business, that is closed.
The regrettable thing about this is, because I personally
w
volved in the steel issue. I found out about it, that there, area hoins;
down at AID who have been telling, some of our colleagues he eoeii.
the Hill that my opposition to Mr. Poats is a result of a personal p qu
I have even heard an implication or two, and I certainly do not a cuse
Mr. Poats of this because I do not think that gentleman would do this,
but some have indicated that, "Well, you know, this is just a pr vat?.
little thing that Bayh has got going with the steel companies.',
them on it, andd. I just poi outfo
Congress to do it, but we finally licke
Well, this is not so. The steel thing is over. It took three time
as far as judgment is concerned, that in the argument that was going
on, one reason we got so much opposition from Mr. Poats a.nd others
down at AID was they said, "Well, no United States steel com a,ny
would sell steel products down there of that particular quality, aid if
they did they could not compete."
Well, the first order that was let, the first contract that was let, rid er
the amendment that the Senator from Missouri assised us qln wa for
20,000 tons of corrugated, galvanizea steel products, and in tha one
batch, just a small batch, the first time we saved $300,000, and i you
want to prorate that a contract which went to Wheeling Steel, W. Va,;
not Gary, Ind., or East Chicago, or Hammond, or any place like hat;
it went to West Virginia, and if you prorate that? it would m an a
savings of $15 or $20 million a year in the purchase of this ty e of
product.
I. Senator SYMINGTON. As against the purchase in Korea.
.. Senator BAV,II. Yes.
,Senator SYMINGTON. I have no fu her questions or comments.
POSSIBIX FUTtR HEARINGS
r, : , .( n ,1 ? I . T 1 , .1 L ' '
The arApilvIiVq. X NO Sa,y to the enator from 4issoArt I ould
Jaave no okection to having Mr. Gaud and Mr. Poats back. 17 for:
tunately, today is a very difficult day_to prolong thip any longer, and
we do not have a quorum to vote. .
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? So we will adjourn now and the staff will inquire of Mr. Poets and
Mr. Gaud if they wish to come back. I think perhaps they should cer-
tainly be given an opportunity to comment upon the Senator from In-
diana's statement.
? Again, I wish to commend the Senator from Indiana for taking the
responsibility of doing an enormous amount of work, and for taking
the criticism, which I know anyone who raises a question of this kind
i
is exposed to, n coming here. I think you deserve a great deal of credit
for cloing that.
Senator BA-Yu. Thank you,
Mr. Chairman.
Senator SYMINGTON. Mr. Chairman, I would associate with that
latter remark.
Senator BAYH. I want to make one final comment. I am not out to
get Mr. Poats. I am not trying to get his job, and if they create this
new Vietnam agency he will still have a chance in his present capacity
to supervise Vietnam aid and we will see whether, perhaps, he has
learned a bit more about the administration, and can go ahead to get
someone else to be the No. 2 man.
I do not know who that person will be.
The CHAIRMAN.i
That s for the future. I thank you very much.
We will be adjourned until tomorrow morning.
(Whereupon, at 12:25 o'clock p.m., the committee adjourned.)
(The following statement was subsequently received:)
RESPONSE RY RUTHERFORD M. POATS TO THE STATEMENT OF SENATOR BAyEt
Mr. Chairman: I appreciate the opportunity you have afforded me to respond to
Senator Bayh's criticism.
I an not, of course, a proper witness to my own competence. I can, however,
offer some factual comments on the evidence on which his case is based.
The criticism is confirmed to management of the AID operations in Vietnam.
As the committee knows, my responsibilities also have included policy guidance
to and Washington support of AID programs with Korea, Taiwan, the Philip-
pines, Thailand, Laos, Indonesia, Burma and regional institutions.
Many of the comments on Vietnam operations were, I believe, drawn from
allegations made in the past which have subsequently been shown to be incorrect
or exaggerated.
EXAMPLES
?
1. The allegation that "loss and diversion of hundreds of millions of dollars
worth of American aid" have occurred, or that waste of American economic
aid amounts to "a half million dollars a day."
There was no factual basis for these estimates when they were originally
made in a series of press dispatches quoting rumors and off-hand guesses. There
ls ;TO basis for them today. A series of studies and estimates made by the AID
Mission and reported to the President and the Congress by the AID Administra-
tor in January indicated losses at that time through theft and diversion were
abont 5 to 6 percent, or an annual rate of $20 to $30 million if projected against
total commodity aid disbursements in 1966.
This is an unacceptable loss rate, although probably not abnormal in a war
theater, and we have continued to strengthen measures to reduce it as rapidly
as we could obtain qualified staff for these assignments. We already have
evidence that Josses in the port of Saigon have been sharply reduced on AID
project commodities and Food for Peace supplies.
2. TIT story of the alleged diversion of 400 bags of cement destined for a school
constrwt.ion project.
In fact, this cement was found to have been misdirected to a U.S. military
upit.Yt was located there and sent to the project, where it was properly used.
(The Vietnspinese district chief was interviewed by the press reporter at a
time when the misdirected cement had not been located)
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8. The quotation from a press report on disappearance of trucks rind ha ro.es
I t
carrying aid supplies and discovery of AID or Food for Peace supplies in Vet
Gong caches.
Such incidents have occurred. However, the report that U.S. rice was f und
in the particular cache mentioned was proved to be incorreet; expert exariina.
tion showed it to be domestic Vietnamese rice repacked it bags originally tnsed
for American rice.
This is not to say that the Viet Gang have not acquired some AID-fin need
or Food for Peace supplies, most of which was shipped to Vietnam for se e on
the open market last year. Long before any congressional or press cri cisni
was heard, we helped the Vietnamese police establish "resources control" heck
points and patrols to intercept goods being smuggled to Viet Cong military nits,
The nature of the war makes it impossible to fully deny locally available oocIE:
to the Viet Cong.
We could not carry out policy directives to support 'the widely disp
village-level "Revolutionary Development" 'program if we insisted on ab lute.
assurance that every shipment would reach its proper destination or tha1:
Americans would manage and install all the equipment and supplies we fu nish
to the Vietnamese local leaders for village projects. We have, howeve , en-
larged our logistics staff to provide greater accountability and security of stipply
movements. We have stationed auditors in regional headquarters to Uheck
reports of diversion. The Vietnamese Government has strengthened its anti-
corruption surveillance and removed some major officials accused of c rum;
tion. We have obtained military assistance in ground an] air movement of
supplies. But we cannot devise absolute guarantees in this situation a hist
some theft, highway holdups and corrupt diversion.
As I said in my opening remarks to the Committee, "The war does, of c ursE,
affect our judgment and decisions. If we can shorten the war or tnerea.e the
prospects of a secure peaCe by provision of economic aid, medical assista ce or
relief, we do it, often with costs or risks we would not accept in a norm I aid
program. We have simply not been able to wait until the optimum eon tions
of aid administration existed."
4. The allegation that AID had allowed procurement, with AID fund, of 8
million "pink bathtub stoppers."
These stoppers, as the invitation to bid which he di,sPlayed indicated, were
for a Vietnamese laboratory supply firm. They were to fit bottles with a touth
of approxiinately one-half inch in diameter, and they were one-third of a inch
high?clearly not bathtub size.
. The Statement that AID stopped financing imports of silver nitrate altEr
belatedly discovering that it was being converted in Vietnam into shy r mid
explosives. a
Considerable investigation has failed to produce evidence that expiosive were
being manufactured in this very costly way. Silver, apparently for jewehfy and
hoarding, was being obtained.
rOLICY cal ICISM
I
The statement criticizes the rapid expa sion of the A,Ill Commercial mport
Program without adequate management Staff in Vietnam to plan and po ice t.
We have acknowledged this. It was the considered judgment of all sem
officials of the HS. Government concerted at the time that jve had no ace pt tide
alternative Refusal to do so, when the U.S. military buildup and ex and led
Vietnamese Military spending were creating the threat of i runaway in aticn,
could have undermined the entire US-Vietnamese effort, at incomparably renter
cost. I r
From the moment of that decision, we initiated recruitment of an ex arid,ed
commercial import staff and audit staff of the Saigon mission and began irr1rg-
ing for assignment Of U.S. Customs Bureau examiners to work in the tort of
Saigon. It has been difficult to obtain such specialized staff for duty in Vijetriam.
but it has been done.
We also obtained agreement of the Government of Vietnam to expand ?ts own
financing of commercial imports and increases in Vietnamese taxes. Tijie U.S.
military command undertook measures to reduce the inflationary im aet of
military construction and to curb private spending of piasters by U.S. forees
in Vietnam. Urgent port expansion work was undertaken by both t e U.S.
military command and AID.
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NOMINATION OF RUTHERFORD M. POATS 49
As soon as the market was assured of increased supplies to meet the greatly
increased demand, the Vietnamese Government and the International Monetary
Fund agreed on the devaluation of the piaster, which was carried out in June.
At about the same time, several significant changes in the procedures of import
licensing and financing were put into effect.
The statement conveys the impression that this expanded program and related
policy measures failed in their purpose of preventing a runaway inflation.
The sharp upward trend in prices began in mid-1965 and continued through
the first half of 1966, parallel with the intensified Viet Cong interdiction of
domestic transportation and the U.S. troop buildup, accompanied by very large-
scale military construction. A combination of several measures was required:
restraint on piaster spending, increased domestic production and movement
of goods, increased tax collections and increased imports. These measures
were agreed upon among the U.S. agencies concerned and with the Government
a Vietnam in January-February, 1966, but progress in opening internal trans-
portation and increasing domestic revenues was disappointing. It was recognized
that military piaster spending for local goods and services could not be fully
neutralized by imports.
The increased volume of AID-financed commercial imports did not have their
full anti-inflationary effect until mid-1966, due largely to procurement lead times.
The threat of runaway inflation subsided quickly after the devaluation of the
piaster in late June and the arrival of increased import flows.
Prices remained relatively stable from July 1966 through December 1966. The
Saigon cost of living index for working class families, which had risen 73%
between June 1965 and June 1966, leveled off after an initial 21% reaction to
devaluation and rose only 4% between July and December. Prices of food and
certain other goods recently pushed upward again, partly under pressure of
the Lunar New Year buying season and partly due to a sharp increase in rice
prices stimulated by false fears of shortages. This rice price push now has been
checked and appears to be reversed by increased imports.
Our aid and joint Vietnamese-American economic policies have spared Vietnam
the disastrous inflation which Korea suffered during its war. In the first year
of the Korean conflict retail prices in Pusan rose by more than 71/2 times, and
before the war was over prices were more than 24 times higher than in early
1950.
In disputing these criticisms, I do not wish to imply satisfaction with our
performance in all respects or to deny our need for criticism. Mistakes have
been made, goods have been stolen, problems inherent in this war theater
operation and in the Vietnamese society itself have frustrated many hopes. We
have not been able to staff specialized positions in a rapidly expanding mission
as promptly as the demands for action sometimes required. There have been
times when AID did not or could not adequately assure protection of its man-
agement interests because of our role as adviser, rather than manager, or
because our interests had to be reconciled with others in the overall U.S. effort.
I submit, however, that despite these problems and shortcomings AID had
carried out in Vietnam an unprecedented, uniquely difficult assignment in a way
that has earned the praise of many observers who have examined the program
objectively.
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