12. Memorandum From the Assistant Secretary of Defense for International Security Affairs (McNaughton) to Secretary of Defense McNamara1
THROUGH
Assistant Secretary of Defense (Comptroller) (signed/C. J. Hitch)
SUBJECT
- FY 65 Military Assistance Program
Introduction
Set forth below is a proposed revision of the FY 65 Military Assistance Program necessitated by substantial increases in requirements for Laos and Vietnam and decreases in our estimates of recoupments and reappropriations. Table 36 of 17 July 1964, at Tab A, shows the program which you presented to Congress, with our proposed adjustments marked in red.2 The program as adjusted fulfills your commitments.
1. Theory of Reduction. As in prior years, the reductions proposed for the FY 65 program fall principally in the Forward Defense Countries.3 In making these reductions, the order of priorities established by the Unified Commands have generally been followed. (It is recommended that a long range study be made to determine, from a political-military point of view, how best to structure MAP in coming years if the present low level of appropriations continues, which study should include recommendations as to the force structure and tasks to be sustained in MAP recipient countries.)
The substantial cuts to the program of the Forward Defense Countries in recent years have resulted in serious deficiencies in the capability of the armed forces of these countries, without reduction in the tasks [Page 26] assigned to such forces. The deferral of the same low priority items over successive years (e.g., naval vessels for Turkey and China) has resulted in marked weaknesses in certain areas where the risk is least unacceptable.
2. Assumptions. In preparing our proposed adjustments we have assumed that the appropriation will be the $1055 million requested by the President.4 We have also assumed that Section 510 authority will not be used;5 that no supplemental appropriation will be sought; and that no funds will be transferred from AID. To the extent that funds are made available from any of these sources upward adjustments to the program can be made.
3. Shortfall. The presently estimated shortfall of $123 million from the FY 65 program presented to Congress is made up as follows (see Tab B6 for details):
| Item | $ Million |
| Congo—Increase | $4.3 |
| Laos—Increase | $33.9 |
| Vietnam—Increase | $19.4 |
| Guinea—new program | $1.0 |
| Minor miscellaneous increase | $5.4 |
| Reappropriations loss | $24.0 |
| Recoupment loss | $35.0 |
| Total Shortfall | $123.0 |
4. Additional Requirements. In addition to the increase listed in paragraph 3 above, there are potential additional increases of $61 million, two thirds of which is for Vietnam, plus an additional $100 million if we do not get the credit guarantee authority. (The chances at this moment are very good7 that we will have the credit authority.) These potential increases have not been provided for in the revised program. The amounts and details are at Tab C.8
[Page 27]5. Summary of Proposed Reductions. The reductions we propose in the FY 65 program, as shown in red on Table 36 at Tab A, are:
| Item | $ Million |
| Hawk Consortium Cost—deferred to FY 66 | $12.0 |
| NATO Infrastructure—decrease in estimate | $10.0 |
Program reduction in Forward Defense Countries (Analysis of the impact is at Tab B):
| $ Reduction | MAP Asset Adjust | Program Reduction | % of Program Reduction | ||
| Greece | $13.6 | $5.5 | $19.1 | (23.6) | |
| Turkey | 19.3 | 3.7 | 23.0 | (17.5) | |
| Iran | 5.3 | — | 5.3 | (10.4) | |
| Rep of China | 28.1 | -1.5 | 26.6 | 27.5) | |
| Korea | 18.7 | 1.4 | 20.1 | (13.8) | |
| Pakistan | 1.6 | — | 1.6 | (4.0) | |
| Thailand | 1.0 | -.2 | .8 | (2.5) | |
| Philippines | .1 | .8 | .9 | (4.0) | |
| India | .5 | — | .5 | (1.0) | |
| $88.2 | $9.7 | $97.9 | 88.2 | ||
| Miscellaneous minor reductions: | |||||
| $12.8 | $5.7 | $18.5 | 12.8 | ||
| Total Dollar Reductions | $123.0 | ||||
- Source: Washington National Records Center, RG 286, AID Administrator Files: FRC 68 A 2148, DEF 19 Military Assistance FY 1965, July–October. Secret. An attached October 13 transmittal memorandum from General Robert J. Wood, Director of Military Assistance, to AID Director Bell indicates that Secretary of Defense McNamara approved the FY 1965 Military Assistance Program and requests Bell to approve the program for implementation. In addition to Tabs A, B, and C cited below, Tab D, “Areas Considered for Reductions But Not Recommended,” and Tab E, “Amendment of Current Retention and Transfer Policies to Increase Excess Material Available to MAP,” are not printed.↩
- Tab A, “Summary of Proposed Reductions,” September 30, is not printed.↩
- On May 21, Secretary McNamara delivered a speech in New York before the National Industrial Conference Board in which he argued against further reductions in military assistance to the 11 “Forward Defense” nations. For text of the speech, see Department of State Bulletin, June 1, 1964, pp. 893–899, or for excerpts, see American Foreign Policy: Current Documents, 1964, pp. 1255–1258.↩
- For FY 1965, President Johnson originally requested the Congress to appropriate $1 billion in military assistance; see Document 4.↩
- 78 Stat. 1012 (P.L. 88–633), approved on October 7, 1964.↩
- Tab B, “Analysis of Adjusted FY 65 MAP,” September 29, is not printed.↩
- Almost certain. J. T. McN. [Footnote in the source text.]↩
- Tab C, “Potential Additions to FY 65 MAP,” is not printed.↩