NOTE TO(Sanitized) FROM BETH ZAGOWITZ

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00415R000600090027-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 45
• Document Creation Date: December 12, 2016
• Document Release Date: March 1, 2002
• Sequence Number: 27
• Publication Date: June 16, 1972
• Content Type: HW

DEPARTMENT OF STATE
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State Dept. review completed
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CONTENTS
A. S.3390 - The Foreign Assistance Act of 1972
Report No. 92-823 Foreign Assistance Act of 1972
B. The President's letter to the Senate Majority and
Minority Leaders dated June 9, 1972
SECURITY ASSISTANCE
C. Tables of Comparative Funding Action
AMENDMENTS and POSITION PAPERS
(in order of precedence in the Act)
D. Military Assistance - Sec. 504 (a)
E. MASF to MAP.- Laos and S. Viet-Nam - Sec. 513
F. Local Currency Deposit - 10% to 25% - Sec. 514(a
G. Third'Country Operations (Thai Irregulars) - Sec. 515
H. Supporting Assistance - Sec. 532
I. Prohibition on Certain South Asian Countries
Sec. 720 (x)
J. Cambodian Limitation - Sec. 655
K. Foreign Military Credit Sales Authority to Increase
Terms to Twenty Years - Sec. 23 Foreign Military
Sales (FMS) Act
L. Foreign Military Sales Levels - Sec. 31(a) (FNIS Act)
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M. Foreign Military Sales Regional Ceilings -
Exempt Cash Sales - Sec. 33 (FMS Act)
N. Excess Equipment Limitation - Sec. 8(b) (FMS Act)
0. Mansfield - Sec. 12 of 1972 Act
P. Azores and Bahrein - Sec. 13 of 1972 Act
Executive Agreements Related Bases and Nuclear
Storage - Sec. 14 of 1972 Act
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DEPARTMENT
June 12, 1972
MEMORANDUM
TO: Senator Scott, Republican Majority Leader
Senator Griffin, Assistant Republican
Majority Leader
FROM: David M. Abshire, Assistant Secretary for
Congressional Relations
SUBJECT: Foreign Assistance Act - Senate Floor Debate
During the course of Senate floor consideration of the 1972
Foreign Assistance Act, which begins today, the adz inistra-
tion proposes to respond to the numerous restrictive
.amendments and authorization cuts. in the bill as reported.
out of the Senate Foreign Relations Committee as set forth
below:
The President has sent letters to both leaders requesting
support for his proposals and describing the impact of the
bill in its present form (copy attached).
1.
Mansfield Amendment (Sect. 12) - Senator Stennis will
introduce an amendment to strike.
t
2.
Azores/Bahrein (Case-Sect. 13) - Senator Sparkman will
4
introduce an amendment to strike. We will try for
Senator Tower to support on floor.
Executive Agreements-Advice and Consent (Case-Sect. 14)
Senator Scott will move to strike. His office will try
to enlist support of Senator's Pastore (Joint Atomic
Energy Committee) and Aiken.
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4. Transfer of Laos and Viet-Nam from MASF to MAP (Sect.
513) - Senator Stennis will move to strike.
Third Country Forces in Laos, N. Viet-Nam or Thailand
ect. 515) - We will try Senator McGee.
Excess Property Limitation - Senator Saxbe will offer
an amendment to delete South Viet-Nam from this provi-
sion.
Cambodian Limitation (Sect. 655) - We will try Senator
Fannin to move to raise ceiling to $320 million from
$275 million set in Committee.
25% Local Currency Deposit (Sect. 514) - Senator Allott
will move to revert to,10% level in present act.
South Asian Prohibition (Sect. 620) - Senator Allen will
move to strike; fall. back would provide a-Presidential'
waiver,
10. Grant Military Assistance Level (Sect. 504) - Adminis-
tration_request cut from $780 million. to- $600 million.
Senator Stennis will move to restore.
11. Supporting Assistance (S'.A.) (Sect. 532) - Administration
request cut from $844 million to $650 million. Senator
Stennis will move to restore,
120 Foreign Military Credit Sales (Sect. 31 of FMS Act)
Administration request cut from $527 million to 400
million. We will try to get Senator Tower to move to'
restore the funds and the ceiling.
13. FMS 10 to 20 yr. Credit Terms - (Sect. 23 of FMS Act)
Senator Bennett will introduce an amendment to permit
20 year credit terms in foreign military credit sales.
(In order to move countries to credit sales from grants.)
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14. FMS Regional Ceilings (Sect. 33 of FNS Act) - Exempt
cash sales. We will try Senator Bennett.,
Order of Proceeding
At this juncture it is the view of the administration that
the order of precedence might be:
MASF to MAP (Stennis) - Tuesday
Azores/Bahrein ('arm) Wednesday
Executive Agreements (Scott) Thursday
We would survey the situation Thursday. regarding the subse-
.quent. order of precedence.
Attachment:
President's letter dated June 9
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THE WHITE HOUSE
WASHINGTON
June. 9, 1972
In my special report to the joint session of the Congress
on June 1, the evening of my return from the summit dis-
cussions in Moscow, I said that the door to the agreements
that we reached there had been opened because the United
States had maintained the strength it needed to protect
its interests. A vital and indispensable element of
that strength has been our continuing security assistance
program.
The Foreign Assistance Authorization bill for fiscal year.
1973, a significant portion of which is devoted to security
assistance, is of direct and fundamental importance to the
continued maintenance of our strength and the protection
of our interests. As you know, the Senate will soon begin
consideration of this bill, S. 3390.
At Guam in 1969, I made clear that the United States would
look increasingly to its friends and allies to play a
greater role in providing for their own defense. Since
that time we have moved forward steadily toward that objec-
tive with full recognition that our own security depends
importantly upon the independence, the progress and the
stability of our friends. But if we are to reach that
goal, we must help others to develop the ability to defend
themselves. My Foreign Assistance program requests for
fiscal year 1973 are based on these imperatives.
The severe cuts in my fiscal year 1972 requests, and the
restrictive amendments which were imposed, significantly
limited our ability to move toward the basic objectives
of the program -- the maintenance of the strength necessary
to secure a lasting peace.
When I forwarded yfiscal year 1973 requests on March 10,
1972, I reported that the foreign assistance appropriations
for fiscal year 1.972 were below the minimum level required
to attain our foreign policy and national security goals.
Such reductions and restrictions, if imposed by the Congress
again in 1973, will call into serious question the firmness
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of our commitments abroad. Such Congressional action
could have a destabilizing effect at a time when con-
fidence in our-support and perseverance will be critically
needed.
In recent months we have taken bold and decisive steps in
our continuing search for peace. I believe that through
these efforts we have done much to enhance America's
security and that of the entire world, primarily by dimin-
ishing the likelihood of direct'confrontation with the
Soviet Union and the Peoples Republic of China. Though
we are making every effort to expand on these initial and
significant steps, the process of building the structure
of lasting peace will be long and arduous.
I share with you the desire to withdraw our remaining
forces from Indochina in a timely and honorable manner.
But Congressional amendments which can be misconstrued by
our adversaries to be hostile to my peace proposals of
May 8 do not serve this objective. As I have reported to
you and to the people of-the United States, we are continu-
ing to pursue every possible avenue toward peace in Southeast
Asia. I have made clear to the North Vietnamese that we are
fully prepared to participate in meaningful negotiations to
achieve a settlement and I am hopeful that they will be
convinced that such negotiations are in the best interests
of all parties. -
I am firmly convinced that the a:hievement of our purposes --
in Vietnam and elsewhere -- will be far more likely if this
bill is passed in substantially the form in which I submitted
it. As brought to the floor, ho?:vever, the bill is incompat-
ible with these objectives.
I have always appreciated, the assistance you have given me in
formulating programs to ensure this nation's welfare and
security. We seek the same ends ,- the maintenance of our
strength and will, a lessening of tensions and an amelioration
of the plight of the less privileged. I am confident that I
can count on your firm support in the further pursuit of
the goals.
Sincerely,
Honorable Mike Mansfield
Majority Leader
United States Senate
Washington, D.C.
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SECURITY ASSISI' NCE PRCGRR,MMS
NEW OET,::GATIO'A., AUTHORITY
,$ millions)
FY71 FY72 FY72 FY73 ~'!73
Appropriation Request Appropriation Request
Grant Military Assistance 690.0 705.0 500.0 780.0 6600
Foreign Military Credit Sales 699.3 510.0 400.0 527.0 2/ 400
Security Supporting Assistance 596.6 778.0 550.0 844.0 650 3/
l/ Senate Foreign Relations Co.urdttee
2/ Co :o rable TOA program 3:-,q esp. was for $629 million. 14iark-u is $550 million
of which $300 million is earmarked fay: Israel.
3/ $50 million earmarked for Israel.
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S.3390
sec. S`V V (J
TWENTY-THREE PERCENT SLASH IN FUNDS FOR GRANT MILITARY ASSISTANCE
Senate Foreign Relations Committee's Action
The Senate Foreign Relations Committee slashed the
Administration's request for grant military assistance
programs by over twenty-three percent -- from $780 million
to $600 million.
Administration' s Position
The Administration opposes this cut and urges the
Senate to reEtore the full amount -- $780 million.
Discussion
1. The Grant Military Assistance Program is the
linchpin of the Nixon Doctrine. It enables us to provide
allied and friendly governments with a portion of the
equipment anct training necessary to enable them to bear
primary responsibility-for their own defense.
2. A twenty-three percent cut in grant military
assistance in FY 73, coming on top of a twenty-eight percent
cut in FY 72, would increase doubts friendly governments
have about AI.lerican willingness to play a responsible role
in world affairs. Such a cut would greatly encourage
elements in the Middle East, Southeast Asia., and elsewhere
which are still anxious to change the existing world
balance of power by force.
3. Such a cut would threaten the stability of
Cambodia and Thailand, weaken the cortribution Turkey can
make to stability in the Middle East and the strength of
the Mediterranean flank of NATO, set. back our program to
modernize Korea's armed forces, and weaken our relationships
with a number of nations who permit us to station United
States force3 on their territory. Meaningful programs
for such countries as China, Indonesia, the Philippines,
Greece and Ethiopia could not be completed and important
U.S. policy objectives in these countries would be imperiled.
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4. Finally, this program cannot be viewed in
isolation from other expenditures for national security.
It costs at least $10,000 to station an American soldier
overseas but roughly only $500 to train and equip an allied
.soldier to take his place. As a direct result of this
program and the MASF funded Vietnamization program,
we have been able to withdraw over half a million American
personnel from East Asia and the Pacific. The millions
appropriated for this program saves billions in other
national security programs.
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(Section 504(a) - MAP authorization)
On page 6, in line 20, strike out the figure
"$600,000,000" and insert in lieu thereof the figure
"$780,000,000".
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MILITARY ASSISTANCE AUTHORIZATION, FOR LAOS AND SOUTH VIETPIAM
S-3390
Section 4(3) (A)&(B)
The proposed legislation would require that any military assistance
furnished by the U.S. to Laos or South Vietnam directly or through any
other foreign country be authorized by the Foreign Assistance Act or the
Foreign Military Sales Act after 30 June 1973.-
Executive. Branch Position
The Executive Branch opposes the transfer of authority for funding
for Laos and South Vietnam from the regular Defense Budget to the Foreign
Assistance Act or the Foreign Military Sales Act in FY 74.
South' V ietna.n was transferred.'from the Military Assistance Program
to Military Assistance Service-Funding in the DOD budget in 1966 end
Laos was similarly transferred in 1967 because the Military Assistance
Program is riot designed to be responsive to a war-time situation. This
condition still exists in both countries. Thus, the Executive Branch
position is that at this time there does not exist a basis to revert
these country programs to a Military Assistance of Foreign Military
Sales Program. The proposed transfer would reduce the flexibility of
U C r---pons- requirements nn a timely basis since neiti-ter
-Military Assistance or Foreign Military Sales-can _respond quickly to
the dynamics inherent in a combat situation as it now exists in these
countries. -
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(Section 513 - MAP vs. MASF funding)
On page 6, strike out line 24 and all that follows
through and including line 9 on page 7.
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DEPARTMENT OF STATE
S.3390
Sec. f ~ 3 t (c ).
TWENTY-FIVE PERCENT DEPOSIT REQUIREMENT
The proposed legislation would amend Section 514
to require recipient governments to make local currency
deposits of twenty-five percent of the value of MAP
and excess defense articles received from the USG. The
present law, passed last year, requires a ten percent
deposit.
Executive Branch Position
The Executive Branch strongly opposes a twenty-
five percent deposit requirement as it opposed the ten
percent deposit requirement in last year's legislation.
The Executive Branch urges repeal of the entire section.
Discussion
Section 514, as now constituted, requires MAP
recipients to deposit the local currency equivalent of
ten percent of the value of MAP and excess defense
articles received, the funds to be available for all USG
official us-:::s. This requirement is- contrary to the
military assistance program's basic purpose of helping
friendly countries which cannot afford to maintain adequate
defense establishments. It is thus contrary to one of
the basic thrusts of the Nixon Doctrine: to encourage
other countries to assume more responsibility for their
own defense. The money required fo:c these deposits is
money diver t,ed from programs to achieve self-sufficiency.
Implementation of the ten percent deposit requirement
since that law became effective on February 7, 1.972, has
created substantial difficulties with a number of countries
with whom we have long-standing and mutually beneficial
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security arrangements. It will, if not repealed, impact
severely ($20 million out of a defense budget of
$360 million) on Korea's efforts to modernize its'armed
forces and achieve substantial self-sufficiency -- a
program that is clearly in the U.S. interest. it
imposes a burden on Jordan which it can-ill'afford.
It has created real problems with a number of countries
that receive only MAP training which is an exceedingly
important means of establishing good long-term relations
with the future military leaders of the recipient countries.
(Under this program, some 4,000 trainees come to the U.S.
every year.) Moreover, as a practical matter, the
value of our present arrangements with host countries,
i.e., currency contributions, office space, military
-housing and installations, in the aggregate, exceed the.
value we could expect to receive under the deposit. We
estimate that our present arrangement permits us to meet
those objectives at a minimum cost.
If the deposit requirement were raised to twenty-
five percent, the problems would be cOupounded by many
multiples. The entire security assistance program and
an important pert of the Nixon Doctrine would be jeopardized.
A number of training-only countries could be ex pected
to terminate those programs --- and the loss would be ours.
Only a dozen countries receive grant materiel programs in
excess of $1 rlillion per year, and the security of these
countries has a direct bearing on the :security of the US.
They could be expected to re-examine closely the validity
of the premises of our security cooperation arrangements --
USG assurance:; of assistance in time o7 need would be
doubted, as would the USG's will to act'`. to preserve its
vital international interests. Such reactions could
have an immediate and dangerous impact on our nation's
security.
For these reasons the Administration opposes
Section 514 and urges its repeal.
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 ? (Sectpapon -qd- R special2/ o/zeigC ffS~i~i 4ALc~990027-4
On page 7, strike out line 10 and all that follows
through and including line 16 and insert in lieu
thereof the following:
(3) Section 514 is hereby repealed."
Fallback:
On page 7, strike out line 10 and all that
follows through and including line 16.
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DEPARTMENT OF STATE
S.3390
Sec. 5/.5-
LIMITATIONS OF AVAILABILITY OF FUNDS FOR MILITARY OPERATIONS
The proposed legislation of Section 515 would prohibit
funds for the purpose of financing any military operations
by "foreign forces" in Laos, North Vietnam or Thailand with-
out specific authorization of Congress. _
be designed to inhibit U.S. support for South Vietnamese
actions against the Ho Chi Minh Trail area in'Laos.
The uuLLeI1L pLuyi'ctla of Thai volunteers in Laos is an
essential part of the efforts to defend the independence and
neutrality of that country. The small Lao population in com-
parison with that of North Vietnam has always made for an
unequal struggls by the Lao. The continued attrition of the
Lao forces by dscades of war has made the struggle increas-
ingly difficult.. The Lao self-defense efforts assist in the
current'.program of Vietnamization and the withdrawal of U.S.
forces by some direct actions against the Ho Chi Minh Trail
area, by forcing the North Vietnamese tc deploy to Laos-
Executive Branch Position: The Executive Branch strongly
opposes the proposed legislation.
The Nixon doctrine presents a coherent program for the
encouragement of local self-defense efforts, with U.S. sup-
port, to replace direct involvement by U.S. forces. One of
the essential elements of'this doctrine is regional coopera-
tion and U.S.-support for it. It is clearly the effect of
.this legislation to rule out one of the current programs of
this nature in Southeast Asia, that is U.S. assistance to
Thai volunteers serving in irregular forces in Laos under the
command of the Royal Lao Government. The legislation may also
forces which might otherwise be directed. against South Viet-
nam, and by maintaining in power a friendly government which
does not impede U.S. and South Vietnamese efforts against
the Trail area. In addition, an independent and neutral Laos
serves as a buffer for Thailand thereby reducing the likeli-
hood that the SEATO commitment would ever have to be invoked
by the Royal Thai Government. Hence, particularly in the
crucial year ahead during which we hope to arrive at a settle-
ment in all Indochina, it would be highly undesirable to
indicate so clearly to North Vietnam -- and,to the friendly
Lao and Thai governments -- that the U.S. would not be provid-
ing assistance for the military component needed to complement
,the political efforts to arrive at an honorable and stable
settlement in the area.
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The legislation could also be construed to inhibit U.S.
support for South'Vietnamese forces operating against base
areas in Laos. The result would be extremely helpful and
important to the North Vietnamese. It would restore and
guarantee--inviolate sanctuaries in Laos, assure them unopposed
access to lines of communication for movement of soldiers and
supplies, and allow them to mount attacks into South Vietnam
from secure base areas adjacent to the South Vietnamese border
and within miles of key_targets in South Vietnam. The use of
Laos as a secure supply area and base of-operations will
strengthen the North Vietnamese forces in both South Vietnam
and Cambodia. It is clear that this provision of the legis-
lation would weaken the U.S. position in Southeast Asia and
detract significantly from the U.S. and South Vietnamese
capability to negotiate a satisfactory political settlement.
It would also be undesirable as a matter of precedent to
enact this leg_i.flation: If applied, to other countries,. such
legislation could in effect make it more difficult to support
regional defense efforts, thereby discouraging friendly
countries threatened by aggressors and perhaps in some cases
increasing the :Likelihood of direct U.S. involvement.
In addition, this proposed provision of the law is im-
practical to administer for the following reasons:
a. It applies to future funds and therefore coulcl not
be made applicable to materiel already a';Dpl.ied to RVN. To
apply this proposed revision of the law would require segre-
gation of the materiel provided before a:,-id after the effective
date. This could not reasonably be done and as a practical
matter would be impossible to administer and monitor.
b. The nature of war does not lend itself to a procedure
which, if the funds were approved, would nonetheless require
the pre-clEarance by Congress of the details of specific, and
frequently small scale, military operations.
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(Section 515. Funding of foreign forces in Laos,
North Viet Nam or Thailand)
On page 7, strike out line 15 and all that follows
through and including line 10 on page 8.
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 DEPARTMENT OF STATE
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BACKGROUNI) PAPER
The Administration's Fiscal Year 1973 request for Supporting
Assistance was $844 million.
The Senate Foreign Relations Cogmittee, in contrast, has
proposed authorization of only $650 million of Supporting Assist-
ance funds for Fiscal Year 1973. This proposed cut of $194
million would constitute a reduction of 23% from the president's
request.
An adequate level of Supporting Assista.n.ce is an essential
requirement of the Administration's policy which aims to transfer
the burden of defense from U.S. forces to friendly and allied
countries without jeopardizing their economic stability. The
new course on which the Nixon. Doctrine has set us encourages
other countries to take on greater responsibilities themselves,
but they can achieve the desired degree of military self-reliance
only if we are willing to provide adequate direct economic
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support to offset the increased defense costs which they must
assume. To short-change our responsibilities would risk mag-
nifying the world's instability in the near term and impairing
peaceful development in the long run.
The hulk of Supporting Assistance funds goes for economic
support of the Southeast Asian countries to allow them to carry
the burden of their own. defense as the U.S. military-involvement
in Vietnam continues to wind down. If the pattern of reduced
U.S. military involvement is to proceed without jeopardizing
the continued existence of these countries, it is essential that
adequate Supporting Assistance funds be provided. The amount
requested is small in relation to the savings now being realized
on the military side as U.S. troops are withdrawn from Vietnam.
As we continue to reduce our own physical presence, the adequacy
and effectiveness of our security assistance program becomes of
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increasingly critical importance.
 _3m
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The proposed cut would result in a substantial disruption
of Supporting Assistance programs, particularly in Vietnam.
The Vietnam program would have to take the brunt of such a large
reduction since Vietnam represents roughly two-thirds of the
total Security Assistance request. Such a major reduction in
Supporting Assistance would imperil the considerable progress
which has l--been made in turning the war over to the South Viet-
namese,. It would undermine the sweeping economic reform pro-
gram which. the South Vietnamese government is now pursuing and
would make it difficult to provide adequate assistance to
refugees, war victims, and longer term economic development
initiatives.
The primary purpose of this assistance is the preservation
of peace through the deterrence of war. It is another instru-
ment of that same quest for peace which guided the President on
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his'recen.t trips to Peking and Moscow. This assistance will
strengthen the defense capabilities of our friends and allies
so that they can shoulder their own responsibilities for
security and we can reduce our direct involvement abroad. In
this way, we can continue to work together toward deterring
aggression and creating a workable structure for world peace.
This assistance permits us to honor our international commitments
and promote our own security interests while still reducing
both the monetary and the manpower burdens which the United
States now carries.
6/5/72
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(Section 532 - Security supporting assistance)
On page 8, in lines 15 and 16, strike out the
figure "$650,000,000" and insert in lieu thereof
"$844,000,000".
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 lll,]'I~.I.~'J'~MEN'1' OF STATE
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5.3390
sc. CYop
1. CHURCH AMENDMENT ON MILITARY ASSISTANCE 'YD SOUTH ASIAN
COUN1'RI S
The- Church Amendment would prohibit ail forms of grant
assistance, nclud_i_nq trai_n:i..ng, and al:L I'ore.i_gn. Military
Sales to the countries of South Asia, i.e., India, Pak:i stan,
Ceylon, Nepal, Bhutan, Bangladesh and the Maldive Islands. .
There is no provision for exception or Presidential waiver.
2. 1EXEcUT:rvI I3BANCIT POSITION
The Executive Branch opposes enactment of the Church
Amendment and seeks its elimination. from the Foreign Assist-
ance Act.
DISCUSSION
The Church Amendment is too sweel.)in.q and too inflexible.
Its provisions would eliminate training of South Asian military
personnel in this country. We have had modest programs for
training in 3-0 cen.t yea.r::s , and we would like to continue them
to maintain a. relationship with the military forces in the
region. The. amendment would also prevent the Executive IBranch
...... ..... .... ..-.~J._ .. _.... ... _~ vv ~....._. .'~_a. T2T .._.a. VuC.1. 1. S. L1i. , .-. li .)in Ceylon. Last year wh-fen we provided a modest amount of assist--
ance to the democratically el_ectted government there. It would
also preclude provision of spare parts for U.S. equipment
already supplied to Ceylon last year. In Nepal, the amendment
could also prevent fulfillment of our commitment to support
t.lme East--West Highway and make it impossible for us to supply
spare parts for the vehicular, medi_cal and communications
equipment already provided under an earlier MAP program.
We are, of course, hopeful. that upcoming peace talks in
South Asia will produce an honorable and just settlement. In
our diplomatic contacts with Pakistan, India and Bangladesh,
we have consistently urged. such a settlement. We have no
intention of taking any action that would fuel an. arms race
in South As:i..a or would prejudice the achievement of a peaceful
settlement there. however, we believe it important that we
maintain the f 1_exi_lai_lity to respond to changing circumstances
in South Asia which might justify or require a military s~lpp1.y
relationship with one or more of the countries of the reg:i on .
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
(Section 620 - Prohibition on military assistance to
South Asia)
On page 9, strike out line 3 and all that follows
through and including line 15.
Fallback I:
On page 9, in line 14, insert "unless the President
finds and reports to the Congress that such assistance,
sale, credit sale or quarantee is important to the
national interest of the United States."
Fallback II:
On page 9, in line 8, strike out the word "assistance"
and insert in lieu thereof "defense articles"; in line 10,
strike out "sale,"; in line 9, strike out "sale,"; in
lines 10 and 11, strike out the word,; "or defense services'",
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
LIMITATION ON CAMBODIAN ASSISTANCE
S-3390 w Sec 9
(Sec 655, FAA)
The proposed legislation would reduce thr- ceiling for assistance to
Cambodia from $341,000,000 to $275,000,000.
Executive. Branch Position
The Executive Branch opposes the reduction of the Cambodian ceiling since.
support of Cambodia is critical to the entir. South East Asia situation and
particularly to the orderly and safe withdrawal of US Forces.
The current budget requests for FY 1973 total $345.5 million (AID -$75
million; PI. 480 ' $30 million; Military Assistance Program .. $225 million,
including costs for packing, crating, handling and transportation). In
defense articles
addition, it is assumed that about $15.5 million in excess
will be provided. A limit of $275 million cn all US assistance would alr;aost
certainly result in a reduction of ail l three programs. The adequacy of mili-
tary assistance depends on the adequacy of the AID and PL 4SO programs.
Specifically, as regards military assistance, any reduction below the $225
arillion level would seriously limit Cambodian military capability to defe-d
its territory ag inst enemy forces. Limitations in US.-sc.ppor'ted field forces
would limit the Armed Forces' capability to defend primary population centers
and lines of communication. Such limitation in Cambodian military capability,
would give to the enemy freedom of rrrovement, operation, and sanctuary In
Cambodia which would impact not only on the Cambodian situation but also cn
Vietnamese operational capability and on US withdrawals.
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
(Section 655 - Cambodian ceiling)
On page 9, in line 25, strike out the figure
"$275,000,000" and insert in lieu thereof "$320,000,000".
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
DEPARTMENT OF STATE
EXTENSION OF CREDIT REPAYMENT PERIOD
(Section 23 of Foreign Military Sales Act)
The Committee has eliminated the Executive's request
to extend the period of repayment on FMS credit from
ten to twenty years.
Administration Position
The present Foreign Military Sales Act limits the
repayment, period on loans to ten years. The Administration
urges reconsideration of its amendment.
Discussion
- One of the objectives of U.S. security assistance
is to encourage nations receiving grant assistance from
the United States to assume progressively greater porti0rV3
of their own defense costs as their economic capabilities
increase. To ease this transition, we have attempted to
substitute credit sales for grant, military aid, followed
eventually by a shift to straight commercial sales.
Longer repayment terms will mean a quicker reduction of
grant military assistance as friendly nations will be able
to assume a greater share of the?_r defense burden earlier.
- A longer repayment period will also be used to
help friendly countries such as :Israel meet an emergency.
Under the present Act, for example, we are unable to give
Israel a repayment period of more than ten years, although
we can provide concessionary interest rates. Credit
under these terms imposes a heavy debt repayment burden
on IsraE.l.
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
(FMSA, section 23 - credit terms)
On page 10, in line 6, strike out "(1)" and insert
in lieu thereof "(1) In section 23, relating to credit
sales, strike out 'ten' and insert in lieu thereof 'twenty'.
(2)"; and in line 8, strike out-"(2)" and insert in lieu
thereof "(3)".
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 Approved For ReleaeE?~0Rffp C4-F00415R000600090027-4
5.3390
sec.
FMS CREDIT LEVELS
Senate Fore gn Relations Committee Action
The Committee has reduced the Administration's request
for FMS credit from a program of $629 million to one of
$550 million and reduced the new obligational authority
request from $527 million to $400 million.
Administration Position
The Administration requests restoration of the FMS
program to the originally proposed levels of $629 million
and $527 million.
Discussion
The Administration's Foreign M::.litary Credit Sales
Program is an integral part of the Security Assistance
Program. The amounts requested have been carefully developed
and represent an accurate forecast c,f requests for credit
assistance from friends and allies. The program is a
mixture of direct credit and guaranteed private credit.
Most, loans are provided at the cost of money to the United
States Government and thus do not represent a cost to the
American taxpayer. About one half cif the program amount is
required for Israel, leaving only a little over $300 million
for worldwide requirements.
The aims of the Foreign Milita:y Credit Sales
Program are:
- to assist friends and allies in assuming a greater
role in their on defense using the-.7_r own resources to
the greatest extent possible;
- to help friendly nations mecl: essential security needs;
- to terminate grant military assistance as quickly
as feasible without raising security risks to our allies
or placing undue burdens on. their e(coxnomi.es;
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 Approved For Release 2002/05/17 : CIA-RDP74B00415R000600090027-4
? 2
- although we do not and will not approve the sale
of arms primarily for commercial reasons, nevertheless
the credit program does make a positive contribution to
our balance of payments.
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(FMSA, section 31 -- authorization)
On page 10, in line 7, strike out "1972" and
insert in lieu thereof "$400,000,000 for the fiscal year
1972"; also in line 7, strike out "1973" and insert in
lieu thereof "$527,000,000 for the fiscal year 1973";
in line 9, strike out "1972" and insert in lieu thereof
"$550,000,000 for the fiscal. year 1972"; and in line 10,
strike out "1973" and insert in lieu thereof "$629,000,000
for the fiscal year 1973".
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 Approved For Release 2002/05/17: CIA-RDP74B00415R000600090027-4,
CEILING ON FXCESS DEFENSE ARTICLES
S-3390 - Sec 11
(Sec 8(b), EMSA) -
The proposed legislation iron1d reduce thr 'no?chargc: to-htii Lary Assist-
once Program" ceiling on supply of excess defctnsc articles from the re.c.st:cd
$215 million to $150 million at one-third of acquisition (original) cost.
Executive Branch Position
The Executive Branch would accept the reduction of the ceiling to $190
million provided transfer to Vietnam were excluded. The proposed 1CC _..at:ion
would reduce the "no charge" cr_i l ing from $185 mi 11 ion authorized for FY 1972
to $150 million for FY 1973 despite the inclusion for the first time c-f
excesses which may be supplied to Vietnam beginning on 1 July 1n'/2. i :15 f I t'
of excess defense stocks to Vet team in FY 1973 are forecast at $32_2 -,- I 11 ion
(at one-third of the original cost). The AAdministiotion request for