Second, insofar as the financing is concerned, our system is to pay the exporter. Our dollars don't go through anybody's hands in Vietnam. The things are ordered and then we pay. A check goes to an American exporter or occasionally an exporter from another country. They don't go through any financial process in Vietnam itself. For these reasons we think the American economic aid-financed commodities are probably more tightly controlled than anything else that is going on in Vietnam at the present time. Even they are certainly subject to various kinds of leakages and losses, and we must continue and are increasing our systems of policing and so on, as the Department of Defense is, on all the matters under their control. Mr. ZABLOCKI. Mr. Fraser. Mr. FRASER. Thank you, Mr. Chairman. Mr. Bell, the amount of money that is asked for this year is, excluding military assistance, around $2.5 billion? Mr. BELL. Not including? Mr. FRASER. Excluding military aid. Under the set of definitions used in the international community to measure our input to development funding we would add on the food for peace and our contributions to international institutions, the World Bank and so on. Mr. BELL. That is right. Mr. FRASER. Even so, one gets rather clear impressions that the problem that was described in a recent report by the president of the World Bank about the great gap developing between the rich nations and the poor nations, and the great need for sharply stepped-up increase in assistance to these nations, that what we are doing doesn't begin to-I shouldn't say doesn't begin-isn't adequate or responsive to this growing need. We don't, for example, meet the 1 percent of GNP that I think was set down by some United Nations resolution. What would your comment be about that? Mr. BELL. Mr. George Woods, the president of the World Bank, has said that the judgment of the Bank's staff-a very experienced and an able staff is that if the developing countries undertake the appropriate self-help measures it is their judgment that on the average over the next 5 years $3 to $4 billion more than is now being provided by the countries and the international agencies could effectively be applied to the development problem. It is very important to note his qualification: If the countries do what they can for themselves. Some countries obviously are not. He means by that that they follow sensible fiscal and monetary policies, fight inflation, and so on. He also means they organize their own governmental and private organizations and institutions so that they can carry out instruction in education and other projects. There are two other qualifications or comments that I would make on his statement. The first and most important one is that he is talking about a need for capital of all types, public and private. There are developing countries which can in our judgment afford to obtain their capital on commercial terms. Those countries are not included in our AID program because they don't need to be included in our AID program. In Mr. Woods' $3 or $4 billion a year, for example, there will certainly be some amount of money-I don't know how much-which the World Bank staff calculates as the requirements for capital for Taiwan. We agree Taiwan does need more capital and probably rising amounts of capital as the standard of living of their people is increasingly enlarged. We also feel, and I am sure Mr. Woods would agree with us, that Taiwan is now sufficiently strong economically so they don't have to obtain that capital on concessional terms. So within his $3 or $4 billion additional amount of money, there is some portion of it which can be met through hard loans from the World Bank and other sources. What he is saying is therefore not the same thing as saying the world needs to provide $3 or $4 billion of aid as we understand aid in relation to the bill that is before this committee. Finally, and this is the least important of these comments, I think there must be some technical difference of judgment as between his staff and ours. I would not expect it to be very large. This does rest on a guess as to how many projects can be developed in each country over a given period of time. And we might be a little more skeptical or doubtful than his staff. But the main elements are the ones I have indicated. First of all, he has stated and would agree that capital in this amount might be forthcoming only if all the countries that need help will do everything they can for themselves. That is a desirable performance objective, but it is not necessarily a statement of the present situation. There are some that aren't doing all they could. Therefore, you would reduce his figure somewhat for that reason. Secondly, his figure includes capital both on commercial and on concessional terms. Therefore, it is not to be directly compared with the amount of aid that we have. You mentioned this 1 percent target. The 1 percent target is a difficult figure to work with because it wasn't developed in relation to a careful estimate of the needs of the developing countries. It is a statement which the United States has subscribed to: that is, if the needs are there, 1 percent of the incomes, or the GNP of the advanced countries is not a burden for them to bear. We agree. Mr. FRASER. Let me ask two questions and I think the answers can be prepared and put in the record. I would like to see if it is possible to envision what would be required in terms of external assistance to double agricultural production in Chile within a 10-year period. I have some idea of what kind of country it is. I think it is producing about one-fourth of what it can produce. I am thinking of all the kinds of inputs. Then I would like—————— Mr. BELL. Including policy changes? Mr. FRASER. Yes, and whatever is involved in that. Then I would like to see laid against it what we propose to do. (The information follows:) REQUIREMENTS FOR INCREASED CHILEAN AGRICULTURAL OUTPUT The Frei government is publicly committed to increasing agricultural output and improving the standard of living of the rural population. A new sweeping agrarian reform bill was submitted to Congress on November 22, 1965. The agriculture terms of trade are being improved. In order to improve the invest ment climate in agriculture, the Government of Chile has permitted agricultural prices to increase more rapidly than industrial prices. Agricultural cooperatives are being strengthened, and detailed sector planning is in process. President Frei has announced plans to resettle some 100,000 farmers on their own land under the agrarian reform plan during his administration. In recent experience it has cost an estimated $4,000 each for resettling a limited number of farm families, but this amount may well be reduced in any broad-scale resettlement program. [Security deletion.] Additional investment is needed, but in all phases of agricultural development. Our efforts in agriculture are directed primarily to improving the general investment climate for agriculture. The AID program loan is designed to reduce inflation and help the Government of Chile to carry out basic monetary and fiscal policies necessary for economic development which will provide the incentive for increased investment in agricultural production. Commitments from the Government of Chile are obtained on the implementation of land reform, development of a multiyear agricultural plan, development of plans for modernizing pricing policy and marketing systems, and to continue to improve the agricultural terms of trade. We provide technical assistance to the Government of Chile under the Chile-California program to assist them in establishing the necessary institutional bases and planning systems to carry out these structural changes. We have also provided capital assistance directed toward increased agricultural production-an IDB-SPTF supervised agriculture loan of $6.5 million in 1962, a $3.3 million AID loan to rural electric cooperatives, and a $3.6 million AID loan for fertilizer imports; the latter two were provided in 1965. AID does not have a detailed estimate of the monetary requirements needed to achieve a 5-percent growth rate in agricultural production. However, a major job of the Chile-California program group is to work with the Chileans in the development of an agricultural investment plan. AID believes that such a growth rate is an attainable goal and would meet Chile's food requirements. The general activities necessary, by Chile assisted by AID when necessary, to achieve this goal are considered to be: I. AGRICULTURAL POLICIES AID will continue to assist the Government of Chile in establishing and implementing agricultural policies regarding realistic prices, stabilization, and especially investment incentives. These general program policies are now beginning to be implemented. II. MARKETING The AID program will accelerate its activities aimed at an improved marketing system with efforts to reduce the spread between farm prices and the final consumer price. For example, a carefully worked out Government program of price supports, offering farmers a reasonable minimum price for major crops, could reduce speculation and force middlemen buyers to meet the minimum price. III. AGRARIAN REFORM The present uncertainty with regard to Chile's agrarian reform remains a strong disincentive to investment in the agricultural sector. Implementation of a known program will be given the highest priority as soon as the new legislation is enacted. IV. AGRICULTURAL CREDIT Farm credit is not being made available in sufficient amounts nor probably being used efficiently. As the IDB loan of $6.5 million is effectively utilized, another loan of this type should be provided. V. AGRICULTURE INPUTS The present cost of inputs into the agricultural sector are too high in relation to farm prices. Fertilizer, seeds, pesticides, and simple farm equipment should be made available to farmers at the lowest possible prices in order to spur additional agricultural investment. Fertilizer use should be increased as rapidly as possible. As Chilean plans for increasing agricultural production become more specific and therefore capable of being implemented effectively, the United States is prepared to provide appropriate technical, and if necessary, financial assistance. Mr. FRASER. Second, I would like to have some idea of what the plans of AID may be, either current or conjectural, with respect to what may happen to these thousand people who are being recruited for service in Vietnam in the rural areas after that crisis passes. I would be very much interested in a rather detailed exposition of the need for that kind of personnel, and the framework within which they might be retained. Mr. BELL. I may have misled you, Mr. Fraser. We don't expect to have 1,000 direct-hire people stationed in the rural field. However, it is a substantial number-several hundred. Mr. FRASER. I put the "rural" in. I assumed most of them were outside the cities. Perhaps they are not. In any event, the kind of people that you are including have a variety of skills. I would be very much interested in your long-term look at them, the fact that you had to hire them so quickly, and the question of what the long-term future might be in terms of U.S. programs. Thank you. (The information follows:) LONG-RANGE PLANS FOR UTILIZATION OF AID VIETNAM PERSONNEL AID had 668 direct-hire employees in Vietnam at the end of February 1966. Of these, 40 percent were assigned outside Saigon. Requirements for additional people will raise the total to about 1,050 in succeeding months. Many AID employees there now have signed up for an additional tour of duty. Almost half of those whose current tour is up this year have asked to go back again. AID intends that those who do not want to return to Vietnam be continued in other constructive and satisfying assignments with the AID if they so desire. However, a substantial number have indicated they will leave AID after their Vietnam assignments to resume previous careers. AID has assigned staff in the Office of Personnel to analyze the problems of utilizing and further developing the talents of employees who have served in Vietnam in the context of individually prepared career plans. We are in close and continuing communication with the mission in Saigon on this. For many returning Vietnam employees AID will develop individual career plans, providing a sequence of assignments and locations, and any advisable training or retraining. This will help provide continuing careers for many who are doing types of work common to many of our overseas programs, such as technical advisers in education, health, and agriculture. However, there are other kinds of work and assignments that have been developed for the Vietnam program situation which do not clearly or directly relate to other AID activities outside southeast Asia. This category is exemplified by those critically important and useful provincial representatives and their assistants who work directly with Vietnamese villagers, local government leaders and officials. Some 75 such men will be completing assignments over the next 2 years. AID is studying the personal and vocational attributes of this group, so that we may not only move them on to other suitable assignments or special training, but also consider the possible adaptation of such attributes and techniques to meet needs elsewhere. Mr. ZABLOCKI. Mr. Fulton. Mr. FULTON. To look at the bill here, it surprises me that you need 57 pages to extend this program. Mr. BELL. I think, sír, you are looking at the military bill. The Foreign Assistance Act is 12 pages only. Mr. FULTON. Then you add both to the total-that is H.R. 12450 and H.R. 12449 has the pages in addition. So we are getting more words every time on these programs every year we go. Mr. BELL. The H.R. 12450 is essentially a new redraft of the statute. Mr. FULTON. What we are doing is putting into words the policies. that we have in a major part already had. Mr. BELL. That is right. Mr. FULTON. Look at H.R. 12450 if you will, on page 13, and my comment would apply equally well to H.R. 12449. If you will look at title II, section 21, subsection (2), paragraph (c), it reads: No assistance shall be furnished under this chapter to any country which furnishes assistance to the present government of Cuba unless the President determines such assistance is in the national interest of the United States. I would like to add a sense of Congress amendment so that this kind of prohibition will apply in both acts. Mr. BELL. It already does, sir. Mr. ZABLOCKI. It is already in the law. Mr. FULTON. My amendment would apply to both acts. Mr. BELL. No amendment is needed to accomplish that objective. Mr. FULTON. I am going to add something else on. read: It will then No assistance shall be furnished under this chapter to any country which furnishes assistance to the present Government of Cuba or cooperates with the Government of Cuba, the Soviet Union, or the Peoples Republic of China by conference or joint action in advancing the plans of the Government of Cuba or either of these other countries for subversion of any countries or the peoples of the Western Hemisphere. I am expanding the coverage so if there is cooperation of any of these recipient countries for subversion of the countries of the Western Hemisphere or the people of the Western Hemisphere these countries are denied assistance unless the President determines. What do you think of the effects of such an amendment? Mr. BELL. I wouldn't want to comment on it now, Mr. Fulton. Mr. BELL. I will be glad to. (The information follows:) BAR TO ASSISTANCE FOR COUNTRIES WHICH COOPERATE TO SUBVERT LATIN AMERICA The amendment would be made to both H.R. 12449 and H.R. 12450. It would prohibit assistance to any country which "cooperates with the Government of Cuba, the Soviet Union, or the Peoples Republic of China by conference or joint action in advancing the plans of the Government of Cuba or either of these other countries for subversion of any countries or the peoples of the Western Hemisphere." The amendment would permit the President to determine to furnish assistance notwithstanding such cooperation. EXECUTIVE BRANCH POSITION Communist subversion in the Western Hemisphere continues to be a problem, but it is not one which exists exclusively in that area of the world. It is neither necessary nor desirable to single out one geographic area for special consideration. The United States opposes such subversion wherever it occurs. Through our bilateral military and police programs, we have made significant progress in helping Latin American States to develop their internal security capabilities to deal with Communist subversion. In addition, the Rio Treaty machinery is available to generate collective action to help a country check Communist subversion. The phrase "cooperates * * * by conference or joint action," as used in this amendment, is very broad and ambiguous, raising serious problems of legal interpretation. We assume that the phrase means some substantial and verifiable act by a government toward the end of subverting Latin American peoples or governments. Since concrete acts of that type by governments in association with Cuba, the U.S.S.R., or Communist China would be most exceptional for any free world country, the amendment would probably have little or no ef |