STATEMENT OF THE HONORABLE JOHN A. HANNAH ADMINISTRATOR AGENCY FOR INTERNATIONAL DEVELOPMENT BEFORE THE SENATE FOREIGN RELATIONS COMMITTEE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00415R000600110018-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 21
• Document Creation Date: December 16, 2016
• Document Release Date: December 27, 2004
• Sequence Number: 18
• Publication Date: April 17, 1972
• Content Type: STATEMENT

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Not for publication until
released by the Senate
Foreign Relations Committee.
STATEMENT OF
THE HONORABLE JOHN A. HANNAH
ADMINISTRATOR
AGENCY FOR INTERNATIONAL DEVELOPMENT
BEFORE THE
SENATE FOREIGN RELATIONS COMMITTEE
April17, 1972
Mr. Chairman and Members of the Committee:
I am here today to support our request for FY 1973 authorizations
totalling $986. 5 for three activities administered by A. I. D. -- Security
Supporting Assistance, South Asia Relief and Rehabilitation Assistance,
and International Narcotics Control Assistance. The other ,programs carried
out by A. I. D. have already been authorized for FY 1973 in the foreign aid
authorization bill enacted this past February.
First,. I would like to mention some of the changes we have made
in the Agency for International Development.
All Supporting Assistance programs now are managed by a single
bureau. In set ting up this new bureau, we sought clearer management
responsiblities within A. I. D. and improved coordination with other
agencies.
A new bureau for population and humanitarian programs has been
established within A. I. D. to give strengthened direction to these priority
programs. This bureau includes an improved capability for administering
emergency relief programs and coordinating U.S. relief assistance with
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In addition to these major organizational changes, central
program administration is being strengthened and we are redirecting
programs to focus more directly on basic human needs, to expand
the role of private organizations engaged in overseas assistance
programs and to rely more on the developing countries themselves
to manage their development programs.
Now, let us consider the authorizations we are requesting
for FY 1973.
SECURITY SUPPORTING ASSISTANCE
( $844 million )
Security Supporting Assistance is an important part of U. S.
foreign policy to strengthen the economies and defense capabilities
of friendly countries. This economic assistance helps countries to
promote and preserve political stability and to achieve greater self-
reliance. When provided in conjunction with U. S. military aid, as
in Southeast Asia, Supporting Assistance strengthens the recipient
country's capacity to meet its own defense requirements, permitting
reduction or termination of dependence on U. S. military forces
a central aim of the Nixon doctrine.
The countries we are helping with Supporting Assistance are
demonstrating increasing capability to shoulder a larger share of
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the burden of their defense, but their material resources are often
inadequate. They no longer expect American military forces, but
they do look to us for the tools - - equipment, supplies, and financial
resources to help them do th(, job.
Supporting Assistance often contributes to the economic
development goals of the recipient country, but the fundamental U. S.
aim in providing these funds is to strengthen the economic base and
help to stabilize the country's economy in the context of a specific
security situation. In many cases it helps a country avoid a major
and damaging deterioration of the national economy as it seeks to
deal with a threat to its national survival.
The bulk of the proposed FY 1973 Supporting Assistance program
is for the countries of Southeast Asia which share an immediate common
threat to their national security. Eighty-five percent of the FY 1973
Supporting Assistance program -- $743. 8 million of the $874. 5 million
total -- is proposed for Vietnam, Cambodia, Laos, Thailand and East
Asia regional programs. This assistance will continue in FY 1973 to
help maintain national economies capable of carrying the burden of
their security requirements.
Another $90 million is proposed for security-related purposes
in the Middle East. Of this, $50 million will assist Israel with its
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heavy fiscal burden arising from the absence of a peace settlement
in the Middle East and the flow of immigrants to Israel. The other
$40 million will help Jordan meet the costs of maintaining its security.
The remaining $40. 7 million is requested for security-related
purposes in other parts of the world. For example, $9.5 million
represents the U. S. contribution toward the new NATO Alliance agreement
with Malta, $4.8 million is proposed for support of UN peacekeeping
forces in Cyprus, and $3 million is requested to fund the educational/
cultural component of the 1970 U. S. -Spanish defense agreement.
Vietnam
The objectives of the economic program in Vietnam remain
essentially the same as last year, except for a shift in emphasis to
longer term economic development efforts so that U. S. economic
assistance can eventually be phased out. In addition, our economic
support will continue to make it possible for the Government of Vietnam
to take over the military burden of the war; will be used to maintain
economic stability; will assist the Government of Vietnam in caring
for refugees and war victims; and will provide support for the
pacification program.
Progress to Date. Much economic progress was made last year in
spite of the assumption by the Vietnamese of an increasing share of
the military burden of the war.
Outstanding accomplishments included reform of the foreign
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domestic savings through a series of economic policy measures
which have now set the stage for both economic development and the
gradual phasing down of U. S. assistance. These economic measures
were achieved while holding price increases to 14 percent, far lower
than the 32 percent average of the previous several years. The
Government of Vietnam deserves great credit for its progress with
economic reforms.
Significant progress was also made in implementing the land
reform program. Over one million acres were transferred to
325, 000 new tenant owners during the past year.
In agriculture there was an increase in rice production plus
the successful introduction of twd new high-yield strains. Pork and
poultry production have risen to the point where imports for the civilian
economy are no longer necessary. Agricultural credit was more
widely available with establishment of 16 new rural banks.
In the field of health Vietnamese Government hospitals were
expanded sufficiently to accommodate 23, 000 additional patients, and
the number of Vietnamese doctors and nurses graduating from A. I. D. -
assisted medical institutions reached an all-time high of 226 and 717
respectively.
A. I. D. also helped approximately 127, 000 refugees who
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resettlement program was also undertaken to provide permanent homes
to families which have been living in refugee status for many years.
We are continuing to reduce the number of A. I. D. -financed
American employees stationed in Vietnam. Since FY 1971, the
personnel ceiling has been reduced from 1, 830 to a planned 1, 133
during FY 1972, and ? will drop further to 822 in FY 1973.
Significantly, assistance to South Vietnam from other countries
increased substantially during 1971. Total non-U. S. financial aid to
Vietnam was $78 million, compared to $35 million in 1970. This
increased assistance for both humanitarian and development projects
also bodes well for greater sharing of the aid burden in the future.
Program Request for FY 1973. The FY 1973 request for Vietnam
includes funds to continue support for economic stabilization through
the Commercial Import Program ($375 million) and an Economic
Support Fund ($50 million). These funds provide a flow of commodities
required by Vietnam's economy, which indirectly replaces productive
resources diverted to the war effort. They also serve to keep inflation
in check, which could otherwise threaten both the political and economic
stability of the country. The request also includes $70 million for the
Project Program for a variety of projects in such fields as agriculture,
education, industrial development, public works, rural development,
customs control, public safety, public health and refugees. The amount
requested is below the FY 1972 level as war-related projects are turned
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The request also initiates a shift in emphasis to
development activities by including a $75 million request for an
"Economic Development Fund". The fund will provide financing for
private and public investment -- with $50 million of this amount to be
used to make loans available to Vietnamese private enterprises for
the expansion of plants and equipment so that Vietnam can produce a
larger share of the goods which it needs, and $25 million for projects
such as electric power, bridges, and water systems. In the past,
the A. I. D. program in Vietnam has provided technical assistance for
agriculture, industry, and roads, as well as the financing of capital
investment equipment within the Commercial Import Program.
However, the new Economic Development Fund will further direct
resources toward development, which in turn will hasten the process
of Vietnamese economic self-sufficiency.
Our request includes $15 million as our final contribution to
the Land Reform Program. At the time the program started in 1968,
we estimated that approximately $40 million would be required. We
contributed $10 million in FY 1969 and $15 million in FY 1971. The
final $15 million completes our support for this highly
successful program which will ultimately involve over 2. 5 million acres
and provide ownership to nearly three-quarters of a million former tenants.
In summary, in FY 1973 we are requesting $585 million for
Vietnam, an increase of $30 million over the FY 1972 request. This
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increase is caused by a continuing decline of our military presence
in Vietnam, and the consequent reduction in the Department of Defense
expenditures there.
We expect that future Supporting Assistance levels can be
gradually reduced after FY 1973. The economic policies which the
Government of Vietnam has set in motion during the past year have
laid a sound basis for future progress. The future reduction in U. S.
assistance will be hastened if assistance from other donors countinues
to increase, as it did last year.
Cambodia
Major economic dislocations have accompanied Cambodia' s
decision to resist North Vietnamese and Viet Cong aggression. Budget
expenditures have been greatly increased in order to expand the army.
At the same time, revenues have declined sharply because of decreased
domestic and export production and lower domestic tax collections.
The increase in money supply resulting from these budget deficits has
caused a major price inflation over the past two years.
The $75 million we are proposing for FY 1973 will provide
further foreign exchange financing for imports to help offset declines
in Cambodia's domestic production and export earnings. In addition,
we will join Japan, Australia, United Kingdom, Thailand, New Zealand
and Malaysia in contributing to a multilaterally-financed Exchange
Support Fund designed to finance other essential foreign exchange
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The Cambodia program is being implemented with a minimum
of direct U. S. involvement, relying heavily on existing Cambodian
institutions and encouraging Cambodia to seek advice and assistance
from others to the maximum extent possible.
U. S. economic assistance to Laos has been concentrated
primarily on controlling inflatio.ary pressures, which threaten the
country's economic and political stability, and helping the Lao
Government to provide essential services and facilities in rural areas.
The proposed FY 1973 Supporting Assistance program for Laos
totals $49.8 million -- $18.8 million in support of the multilateral
economic stabilization program and $31 million for project activities.
The United States has joined with Australia, France, Japan
and the United Kingdom to support the Lao Foreign Exchange Operations
Fund, which buys Lao currency on the open market to reduce the money
supply. The Lao Government, in turn, has made strong efforts to
increase taxes, improve tax collection and exercise stringent budget
controls. As a result, relative price stability has been maintained
despite mounting military and war-related costs.
The project program will continue in FY 1973 to help the Lao
Government provide basic services and facilities for which its own
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The principal thrust of project assistance is to provide relief to an
average of almost 300, 000 refugees at any given time. The United
States furnishes refugees with food, clothing, medical care and supplies;
provides air services for emergency relocation of refugees and for
delivering supplies to them; and helps refugees resettle and become
self-sufficient. The United States also helps train junior Lao Government
officials to perform refugee work at both the national and provincial
levels. The provision of refugee assistance is carried out not only
through a special refugee relief and resettlement project, but also as
an important part of other projects such as air support, public health
and rural development.
The remainder of our aid to Laos is designed to strengthen the
Lao Government's ability to provide essential services and facilities
in rural areas. These include schools and teachers, medical care,
public safety, roads, and a variety of development activities, particularly
in agriculture.
Thailand
Our past economic assistance programs have helped to relieve
the potentially adverse effect of large military programs on Thailand's
economic development. The economic growth rate Thailand enjoyed in
the mid-60's has decelerated in recent years. The uncertainty of the
military situations in both Laos and Cambodia has led the Thai to
reduce the rate of increase in budgetary outlays for development while,
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at the same time, maintaining defense expenditures: at a relatively
high level. The FY 1973 Supporting Assistance request of $25.6 million
is important to Thailand so that the Thai need not divert additional funds
needed for economic development to security purposes.
The United States will continue the basic security-oriented
program of previous years, but will also direct increased attention to
the building of institutions which will permit the Thai Government to
deal on its own with its economic development problems over the long
term. Assistance will be provided to help the Thai Government continue
to carry out a broad program of rural security and development. The
FY 1973 program will increase efforts to support or improve basic
Thai institutions which have leading roles in development, including
local government finance, national economic policy and agricultural
planning.
East Asia Regional Programs
U. S. assisted regional programs in East Asia help to improve
the prospects for long-range peace and stability in the area. The
main project focus is on the exploitation of the Mekong River's hydro-
power and irrigation potential. Other projects deal with flood control,
transportation and communications, fisheries, resettlement, and
schistosomiasis control. For FY 1973 we are requesting $8.4 million
of Supporting Assistance funds for East Asia regional programs.
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Israel
There is an urgent need to find a way to achieve a lasting Arab-
Israeli settlement. In the meantime, the ceasefire between Israel and
her neighbors, which began in August 1970 and which has endured for the
past eighteen months, must be maintained, so that a climate conducive
to continued negotiations may be preserved. However, until a peace
settlement is achieved, it is essential that we preserve the arms balance
in the area.
Despite the very considerable efforts which Israeli authorities have
made in managing the Israeli economy, Israel has experienced increasing
difficulties in meeting the mounting military and economic claims from
available resources.
To assist Israel in financing its heavy fiscal burden, we plan to
provide $50 million of Supporting Assistance in FY 1972 and propose
another $50 million in FY 1973.
Jordan.
As a moderate Arab state, Jordan is a stabilizing influence in an
area where important U.S. interests are threatened by radical forces.
Despite internal difficulties and pressures from Arab neighbors,
Jordan remains interested in a peaceful settlement of the Arab-Israeli
dispute.
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Jordan still finds itself in serious economic difficulties.
These difficulties stem essentially from Jordan's loss of the West
Bank, with its relatively good farmland and its world-renowned tourist
attractions. The cost of rehabilitating the areas damaged in the
September 1970 crisis added another burden to the Jordanian budget.
The United States is providing Supporting Assistance to Jordan to enable
it to carry out essential government activities, as well as to continue
modest development activities. In the course of FY 1972, we have
provided Jordan with $30 million in Supporting Assistance and $15
million from the Contingency Fund. A $40 million Supporting Assistance
program is proposed for FY 1973.
Other Programs
The remaining $40. 7 millionis proposed for a number of other
security-related programs.
In fiscal year 1973, we propose to contribute $9. 5 of Supporting
Assistance funds as the U. S. share toward the recently concluded NATO
Alliance defense agreement with Malta. The U. S. contribution toward
this agreement for FY 1972--also $9. 5 million -- is being provided
from the Contingency Fund.
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Security assistance to Spain is covered by a five-year treaty
of friendship and cooperation signed in 1970, which provides grant
military aid in exchange for extension of U. S. military base rights.
We propose $3 million of Supporting Assistance in FY 1973 to fund the.?
educational/ cultural component of this U. S. -Spanish defense agreement. The
Spanish Government attaches importance to the non-military portion
of the defense agreement and views it as a significant item in U. S.
relations with Spain. Accordingly, Spain looks forward to its
continuation. as part of our agreement on the use of Spanish bases.
Other Supporting Assistance funds being requested for FY 1973
are $4. 8 million for the UN Force in Cyprus and a- portionof the costs of
A. I. D. 's centrally-administered activities.
SOUTH ASIA RELIEF AND REHABILITATION
($100 million)
The people and government of Bangladesh face extraordinary
difficulties. Large-scale relief is needed to avert human suffering
arising from chronic, and now increased, food shortage and from wide-
spread destruction of shelter. Related to this is the requirement for
help to rehabilitate the economy -- rebuilding basic facilities such as
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roads and bridges, port facilities and schools, and providing com-
modities such as fertilizer and raw materials to help meet basic
production needs.
Bangladesh authorities estimate it will cost $3 billion --
including at least $1 billion of food and non-food imports -- to get
the country to where it was prior to 1971.
The United Nations is to be applauded for assuming a lead
role, working with Bangladesh, in assessing needs and priorities, and
in calling for and coordinating the world response.
The United Nations has already assessed the immediate human
relief needs and is now engaged, with the World Bank, in examining
urgent reconstruction priorities.
Initially, the UN has focussed on the more immediate relief
requirements -- particularly food, but also road, and river transport
and interim logistic support, shelter, fuel, fertilizer and other essential
agricultural inputs. The UN preliminary assessments total over $600
million needed during the balance of this year.
As our initial response to the UN Secretary General's appeal for
contributions on February 15, 1972, the U.,3. Government donated 450, 000
metric tons of wheat and rice valued at approximately $51 million, including
shipping costs, under Title II of PL 480. Fifty thousand metric tons of
edible oil valued at approximately $21 million including shipping was
authorized as a further grant to the UN.
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In response to a subsequent UN appeal for funds to help meet
the priority relief and rehabilitation needs in Bangladesh, we have made
an additional grant to the UN of $35 million. These funds will be used
to meet urgent needs for additional vessel and aircraft charters, repair
and reconstruction of port facilities, and purchase of relief import
requirements such as vehicles, power tillers, irrigation pumps, fuel.,
fertilizer, roofing and other construction materials. A small portion
will also be used to pay administrative costs of the UN operation.
We have also provided $6. 7 million in grants to support voluntary
agency relief programs. Our initial grant of $650, 000 is to enable CARE
to carry out a 62-village housing project and continue its research on
cyclone-resistant shelters. A $3 million grant has been made to the
Catholic Relief Service for housing materials for 200, 000 returned
refugee and displaced families. To help college students made destitute
by the war continue their education, the United States has provided
$1. 2 million to the International Rescue Committee education program.
These funds will enable 9, 000 college students to continue their education
for at least one year. In the field of health we have made a grant of
$450, 000 to the International Rescue Committee for emergency funding
of the Cholera Research Laboratory, which operates two hospitals.
Also in the field of health, a grant of $1. 5 million was made to the
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American National Red Cross, for use by the International Committee
of the Red Cross in carrying out a program of nutritional and medical
assistance for an estimated two million persons, including minorities,
who have special needs. A $1. 5 million grant has also been made to
the Foundation for Airborne Relief to airlift food and supplies within
Bangladesh.
As a result of these obligations of $43. 57 million in non-food
post-war assistance provided to the UN and voluntary agencies for
Bangladesh, plus a total of $27. 7 million incurred before December of
last year for refugees in India as well as needs in Bangladesh, less
than $130 million of the $200 million FY 1972 appropriation for South
Asia relief and rehabilitation remains available to meet additional
requirements over the next few months.
In making our contributions, we are guided by the Congressional
recommendation that the U. S. share should not exceed 40 percent of
the total from all sources, if reasonably possible. In view of the
significant contributions already made by many nations, including India
and Great Britain, we expect that U. S. participation in the amount
already provided by the Congress will be within this concept of "fair
share". The $100 million requested for FY 1973 will enable us to
continue to provide our fair share of this vital effort of expanding
dimensions, which we expect to continue through the middle of next year.
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By late this month, when we expect to receive the report of
a UN/World Bank survey of needs in Bangladesh, the type
and magnitude of rehabilitation requirements will be clearer. After
we have examined that report Mr. Chairman, we would be pleased to
provide the Committee with a fuller, more detailed account of the
requirements these funds will help cover than we, or anyone, can
do today.
INTERNATIONAL NARCOTICS CONTROL ASSISTANCE
( $42, 5 million )
We are requesting a line-item authorization and appropriation
of $42. 5 million for FY 1973 to carry out the international narcotics
control program for which special authority is now provided in the
Foreign Assistance Act.
The President has made the control of drug abuse a high
priority. In support of this policy the U. S. Government has launched
a major international drive for improved narcotics control. Initial
efforts are being directed toward opium and its derivatives, since
these drugs are recognized to be the most destructive, both to the
individual and to society as a whole.
Largely through U. S. efforts, a conference was held last month
in Geneva which approved amendments to the 1961 Single Convention
on Narcotic Drugs. This Convention will require tighter controls on
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the production of such drugs and will, for this purpose, give greater
powers to the International Narcotics Control Board. These amend-
ments will come into force following ratification by 40 nations. Our
efforts have also led to the creation a year ago of the UN Fund for Drug
Abuse Control, to which the United States plans to contribute $2 million
this fiscal year and $5 million in FY 1973.
We have identified more than 50 countries with which cooperative
efforts could result in the diminution of the worldwide problem of drug
abuse. Discussions are already under way with many of these countries,
particularly those in which the more serious problems of opium
production and trafficking exist. As the President has indicated, we
stand prepared to assist any nation seeking to fight drug abuse.
The most important development to date has been Turkish Prime
Minister Nihat Erim's announcement that all opium production in Turkey
will be banned after the 1972 crop. France and Mexico are also making
significant contributions to the effort. We hope the Turkish decision
and other efforts which have been undertaken will serve as an example
for other countries to move forcefully also.
The funds we are requesting will underwrite our contribution
to the effort for the next fiscal year. The program is new and expanding
rapidly. Hence, it is not possible at this time to provide detailed
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proposals for the entire amount of the request. However, discussions
are under way with a number of governments which we expect will
result in an increasing number of concrete programs in the coming
months. It is essential for the United States to be in a position to move
quickly into the implementation stage as each proposal is made and
evaluated.
Particular emphasis will be placed in the first instance on
improving enforcement capabilities and increasing cooperation between
national and international enforcement agencies in the exchange of
intelligence on drug trafficking. We believe this will make the most
immediate impact on the problem, in terms of preventing both the
illicit production and processing of narcotic drugs and their movement
throughout the world.
Programs addressing the agricultural and health aspects of
drug abuse will also play important roles in the U. S. effort. However,
crop substitution programs, by their very nature, must be considered
long-term solutions.
Drug abuse is a relatively new problem in many countries
around the world. Those which are not now experiencing serious drug
abuse are becoming increasingly alarmed that this could become a
problem for them in the future. The control of narcotics will require
the cooperation of the entire community of nations. We are gratified
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with the growing awareness of this fact and the increasingly helpful
responses we are receiving. We must be prepared with the financial resources
needed to take full advantage of the interest. of other countries and
international bodies in cooperating with the United States in attacking
the narcotics problem.
Mr. Chairman, each of the three authorization requests A. I. D.
is making this year is for an assistance program of great importance.
I urge the Committee to provide the full amount we are requesting.
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