U.S. NATIONAL SECURITY STRATEGY PART III MILITARY COMPONENT SECTION F SECURITY ASSISTANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000300490013-7
• Release Decision: RIFPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: December 20, 2016
• Document Release Date: March 31, 2008
• Sequence Number: 13
• Content Type: REPORT

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NSC review completed
U.S. National Security Strategy
PART III
Military Component
Section F
Security Assistance
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EXECUTIVE SUMMARY
Security assistance is a critical instrument for achieving
national security objectives such as power projection, deter-
rence and political influence. While the Administration has
taken several initiatives to make the program more effective,
further work needs to be done. The paper discusses the following
problems:
-- The FY 82 supplemental and FY 83 program will need high
level Executive Branch support if they are to survive on the Hill.
-- Resources in real terms and as a percent of the defense
budget have been declining for two decades. Although the Adminis-
tration has begun to turn the situation around, the outlook for
sustaining real future increases is uncertain. Further, we lack
adequate grant and concessional aid to meet the security require-
ments of the poorer countries.
-- We need to be able to use more extensively multi-year
commitments to permit long range planning and to enhance pre-
dictability. The Administration has this right and should defend
it vigorously before Congress.
-- Long lead times, rising prices and the lack of export
versions of high technology items are undercutting the effective-
ness of our programs. We need to take foreign country requirements
into account in US defense procurement and production planning.
-- In order to accomplish the above, we need to move care-
fully toward more extensive combined planning with host governments;
recognizing there are political sensitivities involved.
-- Finally, the legislation governing security assistance is
flawed: it is too inflexible and provides for too much congres-
sional micro-management. While extensive changes may not be
attainable in this election year, we can begin interagency work
promptly and explore with Congress possibilities for change in FY 84.
Five issues are identified and tentative recommendations
proposed as follows:
1) FY 82 Supplemental and FY 83 Program - Should we initiate
a top priority administration drive to in con.gressionai approval
for our FY 83 program and other related congressional initiatives
as part of our overall budget strategy with Congress. Tentative
Recommendation: We should do so and promptly agree on an appropriate
legislative strategy involving Presidential commitment.
2) Resources - Should we plan for steady real growth in the
security assistance program over the next five years? Tentative
Recommendation: We need sustained real growth over the next five
years to meet our strategic objectives and more grant and con-
cessional aid for the poorer countries.
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3) Multi-Year Commitments - Should we make more extensive use
of various forms of multi-year commitments?. Tentative Recom-
mendation: Multi-year commitments should be more widely used to
permit longer range planning and greater predictability in pro-
gramming.
4) Procurement - Can we extend our anticipation of and
planning for Foreign Military Sales? Tentative Recommendation..
we should. press for prompt operability for SDAF; take foreign
sales more explicitly into account in planning procurement; and
develop export versions of weapons that incorporate high technology
aspects.
5) Legislation - Should we undertake an effort to rewrite or
substantially revise the Arms Export Control Act and the Foreign
Assistance Act? Tentative Recommendation: Security assistance
legislation should be revised or rewritten to remove outdated or
inflexible provisions. We could begin an interagency review-
promptly, with a view to exploring possible changes with Congress
after the election.
End of Summary
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SECURITY ASSISTANCE
This paper discusses the role of security assistance*
in US foreign and defense policy and identifies issues for
further consideration.
Security assistance is a critical element in supporting
this Administration's national security objectives. It is
designed to extend US influence abroad, to help deter conflict,
and if deterrence fails, to enable friends and allies to defend
themselves. Security assistance provides US forces with access
to bases and overflight and other rights enabling coordinated
operations of US and friendly forces. Security assistance also
strengthens the US economy and the defense production base.
It should be clear from the above that security assistance
is one of the hardest currencies circulating in the international
security community and it must be emphasized that the Soviet
Union fully appreciates this fact. The USSR has demonstrated
a capacity and flexibility in the arms transfer business that
in many important respects exceeds our own. This is particularly
marked in their ability to offer quick delivery and concessional
financing.
By contrast the US security assistance program is not
able to meet satisfactorily the ambitious set of objectives
set forth above. There are several reasons:
-- resources are inadequate and often of the wrong kind;
-- the annual budget cycle constrains both long-range
defense planning with aid recipients and coherent FMS procurement
planning by the Defense Department;
-- procurement lead times, high cost and potential technology
compromise have seriously reduced the responsiveness of the
security assistance program; and
-- legislative restrictions in the various acts covering
security assistance reduce Executive Branch ability to react
appropriately to emergencies or unforeseen events. Congressional
earmarking, advance notification, and other oversight and control
provisions make it very difficult to get the best possible return
out of the security assistance resources Congress makes available.
Fulfillment of the global and regional objectives set
forth in earlier sections- of this study -- including support of
*Security assistance consists of Foreign Military Sales credits
(FMS) , grant military assistance (MAP), International Military
Education and Training (IMET), Economic Support Funds (ESF) and
Peacekeeping Operations (PKO).
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key Southwest Asian states, maintenance of existing alliance
relationships, strengthening our friends in the Caribbean and
Southeast Asia -- depend in part on the availability of security
assistance resources. Security assistance is an essential
complement to our own force structure. in meeting our security
objectives abroad.
Resources
Security assistance is and will remain a critical element
of our foreign and defense policy and, as such, will require
significant budget resources for the indefinite future. While
eight countries*account for over 85 percent of the 1982 Foreign
Military Sales (FMS) credit program new and important
recipients continue to appear -- the states of Central America
and the Caribbean being a recent case in point. The marginal
return for the dollars spent on small programs can be extremely
high. This is particularly true of the International Military
Education and Training (IMET) program, but applies equally to
the modest FMS programs that. now exist in Latin America and
Africa. In the large programs such as Korea and Turkey,
security assistance becomes a potent force multiplier -- an
important characteristic where the US has explicit security
commitments. In the small programs, the resources usually
buy basic transportation, communications, and other military
capabilities for dealing with low-level external threats and
internal security problems.
During the 1950s, the security assistance budget ranged
from 5-10 percent the size of the defense budget, and was pro-
vided primarily as outright grants. In recent years, our as-
sistance has increased from $4.3 billion in FY 1980, when it
equalled 1 percent of the US defense budget Can all-time low)
to $7.5 billion in FY 1982, but it is still only about 1.5
percent the size the defense budget. One direct effect of this
decline in purchasing power is that, except for Egypt and
Israel, no country program is large enough to cover the purchase
of modern fighter aircraft, something that a number of countries,
like Turkey, desperately need.
We have begun to turn the situation around by raising
resource levels to meet urgent requirements. The FY 1983
budget calls for an increase of $1.2 billion or 16 percent over
FY 1982 appropriations, which itself represents a significant
increase over its predecessor. Ifowever, the political climate
for sustaining needed increases this year and in the future
is uncertain. The FY 1983 request will be a major test for the
Administration; positive results will help to establish a
firm foundation for the program for the next several years.
Beyond the issue of levels, there is a need for a better
mix of assistance:
* Israel 37%; Egypt 23%; Turkey 9%; Greece 7%; Korea 4%;
Spain 3%; Tunisia 2.%; Sudan 2%.
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a higher proportion of grant aid to FMS credits;
-- of the FMS credits, authorization for a certain portion
at 3 percent interest instead of market rates now running about
14 percent (currently we have no authority to offer concessional
interest);
-- revised costing rules for FMS-financed training and
increased use of the IMET program because of their high returns
for each dollar.spent.
-- maintenance of significant levels of Economic Support
Funds (ESF), which provide balance of payments support for
countries devoting significant resources to defense. (Seventy
percent of.the current funds are absorbed by Egypt, Israel,
and Turkey, leaving very little for other worthy recipients.)
Our assistance programs are not meeting the needs of the
1980s. In FY 1982, grants fell to 50 percent of the total
program, and most of.this was for ESF, little grant money was
available for FMS programs. Needs for increased security assis-
tance rarely arise in prosperous countries; however, the require-
ment for increased concessionality, grant aid, economic assistance,
and IMET grows as our support is required in a large number of
economically weak countries.
Multi-year Commitments
We also need the ability to make more extensive use of
multi-year commitments to permit longer-range planning and
predictability in our programs for the benefit both of the US
and recipient countries. Multi-year commitments assist the US
in planning procurement, thus helping to keep production lines
going and unit costs down. Foreign security assistance recipients
are also better able to manage the acquisition of expensive and
complex weapons systems, rationalize force planning, and develop
a sense of confidence in US support.
Currently we have three types of multi-year commitments in
security assistance programs:
formal Executive Branch commitments over a specified
period as part of formal base agreements (e.g. Spain, Philippines,
Portugal);
an Executive Branch "best effort" commitment (e.g.
Zimbabwe and Pakistan); and
-- "cash flow" arrangements with Israel and Egypt, which
presume outyear funding at levels no less than those of the
current year.
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All of these multi-year commitments nonetheless depend
on annual appropriations by Congress. It is unlikely in the
future any more than in the past that Congress will compromise
its budgetary flexibility by guaranteeing funding levels in
outyears. Thus, we do not see multi-year commitments as a
legislative issue but rather a determination by the-Adminis-
tration to exercise its right to make such "commitments" in
the interest of conducting a more rational foreign policy
and to defend that right vigorously on the Hill.
Procurement and Security Assistance
Because of budgetary uncertainties and legal restrictions,
neither the military services nor the Defense Department
systematically take foreign requirements into account in terms
of sizing the production base or planning production runs. Thus,
to meet urgent security assistance commitments, our own forces
must often absorb unplanned diversions. We do not take full-
advantage of the fact that security assistance procurement could
provide smoother production runs, an expanded industrial base,
shorter leadtimes, and reduced costs for us. Security assis-
tance procurement also enables us to maintain.a production base
for current systems that are being replaced, while the new
production capability is coming on line. We must develop an
approach to US defense procurement and production planning that
prudently takes into account likely requests by foreign govern
ments._.For example:
-- we can demonstrate that a certain percentage of our
production capacity for specific systems historically serves
security assistance requirements; thus we should plan on it
from the beginning.
-- where sensitive technologies are involved that we do not
want to release worldwide, we should plan from the outset to
provide export versions of new equipment.
-- where a current model is being replaced we should
examine the opportunities offered by co-production/co-assembly
arrangements abroad. These arrangements offer an alternative to
selling front-line equipment and provide a fall back for our-
selves. To make this work, we would have to be willing to per-
mit the use of FMS credits to buy equipment produced abroad and
be prepared to defend this decision-on the Hill.
The Special Defense Acquisition Fund
The purpose of the newly-established Special Defense
Acquisition Fund (SDAF) is to allow the Defense Department to
buy defense articles in anticipation of_eventual foreign sales.
The SDAF, operating as a revolving fund, will enhance the
President's ability to fulfill urgent requirements quickly.
It will reduce procurement leadtimes both for delivery of
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equipment to foreign customers and paybacks to US forces when
equipment is diverted from production or withdrawn from stocks.
The SDAF can be used to smooth production rates or extend
the production line of older equipment still in demand (e.g.
the M-60 tank).
The SDAF account has been established,. but we are limited
to a capitalization level of $600 million by the end of FY 1983.
Moreover, we do not yet have authority to spend. We are seeking
such authority and an increase in the size of the fund to $900
million. Both deserve and will need strong'support from White
House and Cabinet officials..
Although ccaisideration has been given to a'higher capitaliza=,i.on target,
a $900"million level gained through three consecutive years
would allow a test of SDAF effectiveness. Since most production
cycles run in the two- to three-year time frame, money from the
sale of SDAF procured items would begin returning to the fund
in the third year of operation. This could permit planning for
procurement in the fourth year without new capitalization.
However, the potential need to procure an intermediate fighter
aircraft in addition to high-cost air munitions and Army equip-
ment demand a minimum capitalization level of $900 million if
we are not to continue the pattern of diverting equipment intended
for our own forces.
The major example of an emergency diversion was when US
war reserve stocks in Europe were decimated in order to rush
tanks and other items to Israel during the 1973 war. This
pattern has continued: Since 1978, almost seven battalions of
tanks have been diverted or withdrawn from the Army. Similarly,
the tactical aircraft equivalent of 1.5 fighter wings has been
diverted or withdrawn from the Air Force. Diverted equipment
is, of course, paid back, although this may take as long as three
years.
Combined Planning
Our ability to improve production planning and to use the
SDAF efficiently will depend heavily on our ability to forecast
both demand and resources over a three- to five-year period. This
in turn suggests a requirement for far more extensive combined
planning with major recipients of security assistance and also
with those countries rich enough to finance purchases by themselves.
We have successfully conducted such combined planning for
several years with Korea and Jordan, and we are beginning it with
Saudi Arabia, Tunisia, and Morocco. There are others we will need
to engage in this effort. Such planning may require expansion of
security assistance organizations overseas and broader authorities
for them.
Success will be gradual, since few third-world countries
have strong planning capabilites, and estimating future resource
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availabilities will be difficult. Moreover, there are certain
liabilities involved. Combined planning carries with it
implications of commitments that may be impossible to fulfill.
In addition, such planning must invariably touch on sensitive
systems and technologies (e.g. advanced aircraft, precision
guided munitions) that could raise serious Congressional reactions,
whether or not the systems were ever sold. The US will have
to accept security risks in providing available threat analyses
to foreign countries. In addition, we will have to make available
comparative performance, cost and other data on specific systems,
even though we might not ultimately be willing to sell all such
systems to the country in question. A genuine joint planning
activity will require comparative data if countries are to make
rational decisions. We are developing procedures to accomplish
this end.
Finally, it should be noted that countries may for political
or other reasons be reluctant to engage in complete planning.
In any event, combined planning will serve little purpose if
we cannot respond decisively when country decisions are made'
and formal requests put forward. This brings us back to the
weaknesses of the current production base, delivery lead times,
and resource limitations. All of these must be improved in
tandem if we are to fulfill the ultimate goal of putting needed
equipment in the hands of friends and allies in a timely way.
Legislation
There are a number of flaws in the legislation governing
security assistance. For example, by its nature, a portion of
security assistance should be available to respond to emergencies.
Heretofore, Congress has balked at appropriating any significant
sum of unallocated money for this purpose, although it has pro-
vided limited emergency drawdown authority under strict.
Congressional control. We should be prepared to make an
energetic effort to persuade Congress to provide such con-
tingency funds.
The analysis and input that goes into the formulation of
the budget is well over two years old before any money is
actually disbursed and at least twice that before materiel is
actually delivered. Moreover, the budget is formulated and
presented to Congress on a country basis, that is, each country
is allocated a certain level of assistance -and that level is
defended in the hearing process. Once that budget.is passed, it
is extremely cumbersome to reprogram resources from one country
to another as priorities change. And it is virtually impossible
when Congress earmarks funds, as it does in the case of Israel
and Egypt.
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While Congress is unlikely to give up earmarking, we should
try to get relief from rigid reprogramming procedures, easing
of conditions for emergency drawdowns, and a reduction of
congressional micro-management of the arms transfer process.
We should also try to get rid of burdensome and largely meaning-
less reporting requirements, country specific conditions (e.g.
Angola), restrictions on police training, differing methods
of computing costs for cash and grant training, and similar out-
dated or inappropriate provisions of law. It should be noted that
the Congressional veto authority over arms sales, which is one
of the most intrusive aspects of Congressional oversight, may
be settled by the Supreme Court in a related legislative veto
case later this year. It is not something, however, that we
are likely to be able on our own.to negotiate out of the
legislation.
Very few of these changes are attainable this year because
of the 1982 election. However, late this fall, prior to the
reconvening of Congress in January 1983, it should be feasible
to begin to explore with the appropriate Congressional staffs
a proposal to revise extensively, rationalize, or conceivably.
even rewrite both the Arms Export Control Act and the Foreign
Assistance.Act of 1961.
1. FY 1982 Supplemental and FY 1983 Program -- Should we
initiate a top priority Administration drive to win Congressional
approval for our FY 1983 program and other security assistance
related legislation as an integral part of the overall budget
strategy. Success would enable us to meet top priority strategic
objectives and establish a firm foundation for the program for
the next several years. Failure, on the other hand, would set
back the Administration's efforts to strengthen American security
interests and could have disastrous international ramifications.
2. Resources -- Should we plan for steady real growth in the
security assistance program over the next five years? The
importance of security assistance to our foreign and defense
policies suggests not only that real growth will be essential if
we are to meet our national security objectives, but that the
rate of.growth perhaps should be indexed to that of the defense
budget.
3. Multi-year Commitments -- Should we make more extensive
use of various forms of multi-year commitments (formal Executive
Branch commitment, best-effort, cash flow)? Even with the
vulnerabilities associated with commitments that depend on
annual Congressional appropriations, such commitments do have
the virtue of establishing the reliability of the US and of al-
lowing more rational force planning, procurement, and program
management for both the US and the aid recipient.
4. Procurement -- Should we improve our security assistance
planning activities and extend combined planning activities to
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more countries? Such planning could improve estimates of
future resources and equipment demands, and consequently our
own procurement planning, including the integration of foreign
military sales into US service procurements. Such planning
would also serve to nudge countries toward greater compatibility
and cooperation with US forces.
5. Legislation -- Should we undertake a major effort-to
rewrite and rationalize the Arms Export Control Act and the
Foreign Assistance Act? The present legislation is technically
complex and confusing and contains restrictions, prohibitions,
and procedures that work not only against the objectives of
security assistance but also seriously complicate the management
of the program. Early 1983 would be an appropriate time to
submit any major revision or rewrite to the Congress.
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