794A.5/3–2351
The Director of the Bureau of the Budget (Lawton) to the Under Secretary of State (Webb)
My Dear Mr. Webb: There is pending in the Bureau of the Budget a requested Presidential allocation of $21,200,000 for Formosa from funds made available for 1951 pursuant to section 303 of the Mutual Defense Assistance Act, as amended. Since this proposed allocation is part of a total program of approximately $450,000,000 running into 1953, a large part of which will require early action in connection with the foreign aid authorization for 1952, it is believed appropriate at this time to seek a review of our objectives in Formosa and the relationship of these objectives to the developing military and economic programs.
Heretofore, economic and military programs for Formosa have been approved on a tentative basis consistent with the most recent decision of the National Security Council on August 3, 1950.1 This action, as you know, called for a survey to determine the deficiencies of the armed forces on the Island and, at the same time, to make a realistic appraisal of their ability to repel a determined assault from the mainland of China. This military survey, generally known as the Fox Survey, has been completed.
In addition, the ECA STEM program for Formosa has been developed subsequent to the tentative NSC determination. Because of the magnitude and long range characteristics of these programs, it is believed desirable to clarify our objectives on Formosa and the relationship [Page 1606] of the proposed military and economic programs thereto. Specifically:
- 1.
- What are immediate U.S. objectives with respect to Formosa?
- 2.
- In light of recent and prospective political and military developments, can we continue to assume that accomplishment of these objectives is consistent with efforts to achieve a settlement in Korea?
- 3.
- To what extent would a settlement in Korea be likely to affect the amount, form, and timing of U.S. aid to the Chinese Nationalist Government?
- 4.
- In what respect is the future of Formosa involved in the proposed pending treaty of peace with Japan?
- 5.
- What is the long-term U.S. objective in Formosa:
- a.
- How are political and economic interests in the area balanced against military objectives in arriving at this policy?
- b.
- Is it anticipated that U.S. objectives can be achieved through United Nations action?
- 6.
- How are present and projected U.S. programs related to these
objectives given in 1 and 5 above?
- a.
- Is the mission of the armed forces purely defensive?
- b.
- How large a military establishment is required?
- c.
- What are its matériel deficiencies?
- d.
- What are its training and morale deficiencies?
- e.
- What degree of U.S. supervision of the Nationalist forces will be required to make military assistance effective?
- f.
- What priority in relation to other mutual assistance programs will be accorded to deliveries of military equipment to Formosa in fiscal year 1951 and fiscal year 1952?
- g.
- What provision will be required to absorb the additional impact of an expanded military end-item program on the economy of Formosa?
- h.
- What level of general economic aid is required to achieve our objectives?
- i.
- Are projects for long-term economic development essential to attainment of presently-known U.S. objectives?
It is understood that subsequent to the submission of this request the subject of our over-all policy in the Far East has been under discussion by the National Security Council senior staff. I would like to urge that every effort be made to expedite the consideration of this matter. In addition, it is requested that the Department of State, in cooperation with the Department of Defense and Economic Cooperation Administration, undertake to develop the specific answers to the above questions which we believe are required to satisfactorily review the pending allocation and the foreign aid authorization for 1952.
Sincerely yours,
- The reference is to NSC 37/10, August 3, 1950; for text, see Foreign Relations, 1950, vol. vi, p. 413.↩