one of the principal means of developing a technologically proficient work force. We also take into account a country's ability to pay for the weapons it buys; security supporting assistance and direct FMS credits at concessionary interest rates are both means of assisting countries with the burden of large, but justified, defense expenditure. In general, we try to avoid providing weapons which will be a burden to the recipient country, or will have a destabilizing effect on its society or economy. ROLE OF OUR AMBASSADORS Mr. ROYBAL. What role do our Ambassadors play in the sale of arms? Mr. ERICSON. Ambassadors, as the President's representative to countries receiving arms, play a central role at all stages of the decisionmaking process on government-to-government arms transfers. They are instrumental in formulation of the foreign policy objectives which determine our security and military supply relationship. On occasion, they receive the foreign government's request for particular sales personally, and in every major case, their views contribute to the executive branch decisions. Under the Ambassador's direction, difficulties which may arise during the sales or delivery process are monitored and reported for remedial action. Elements of the Embassy staff also monitor the use and disposition of weapons we provide. BRIBERY Mr. ROYBAL. Has the U.S. Government bribed any foreign citizens to insure that American weapons were bought instead of competing foreign versions? Mr. ERICSON. No. SALES TO UGANDA Mr. YOUNG. What controls do you have over commercial military sales to Third World Countries? Why were sales to Uganda approved? Mr. ERICSON. All exports of items on the U.S. munitions list, regardless of their destination, require U.S. Government export licenses before they may be shipped. In addition, all transfers of U.S.-origin defense articles and services furnished to one country cannot be transferred to another country without the prior approval of the U.S. Government. Each license of third country transfer case is judged on its merits. In June 1975 the U.S. Government approved an export license for two gas turbine engines valued at $110,000 to be shipped to Uganda for use on two Augusta-Bell 205 helicopters. The helicopters were already in Uganda, but two new engines were required so the helicopters could be used to transport heads of state at the Organization of African United meeting held July 1975 in Kampala. The fiscal year 1977 and fiscal year 1978 estimates of $100,000 in commercial export deliveries of defense articles to Uganda as contained on page 22 of the fiscal year 1978 congressional presentation document on security assistance are simple projections of the similar fiscal year 1976 statistic rather than the result of any precise sales expectations. ATOMIC WEAPONS Mr. CONTE. Do any of the Arab countries presently have atomic weapons, or are any of them in the process of manufacturing, constructing, or otherwise procuring such weapons? Mr. ERICSON. No; not to our knowledge. NICARAGUA Mr. CONTE. Since our military assistance is prohibited for use in internal control and police operations, can you tell us what evidence you have that the Nicaraguan National Guard's police units are not being funded by the United States? Mr. ERICSON. Proving a negative is always difficult, but our MILGRP in Nicaragua takes all possible precautions to prevent the use of our security assistance by those elements of the national guard which exercise domestic police functions. The functions of the national guard units are clearly defined. Only specific units are engaged in ongoing police functions, and these are barred from receiving assistance and grant training. These units, charged with civilian law enforcement duties which are performed by no other guard units, are distinct from those performing military duties. The Nicaraguans provide written assurances that security assistance received by nonpolice elements of the guard will not be transferred to elements functioning as police. FUNDING OF POLICE ACTIVITIES Mr. CONTE. In many of these Latin American countries, where there is often a close connection between the army and the police, it is difficult to distinguish between them. What distinctions have you made as a policy matter to insure compliance with the prohibitions against funding police? Mr. ERICSON. Under section 660 of the Foreign Assistance Act of 1961 as amended, no defense articles, defense services, or training of any kind may be supplied to any unit which has ongoing civilian law enforcement responsibilities. We consider that units which have a contingency function of supporting police are eligible for defense articles, defense services, and training not related to civilian law enforcement. Where training is furnished on an individual rather than a unit basis, no training of any kind in a foreign country will be provided to any individual unless we are satisfied that he will not be assigned to a unit performing on-going civilian law enforcement functions for a reasonable period subsequent to the completion of his training. Neither the name given the unit by the foreign government nor the ministerial authority under which it operates is sufficient, in and by itself, to determine whether a particular force is a "police unit." The determining factor is the nature of the function performed. Where we cannot make the distinction between a police-type unit and a strictly military-type unit, we do not provide assistance. ARMS TO URUGUAY AND BRAZIL Mr. CONTE. According to a list you provided the subcommittee last year, both Uruguay and Brazil are totally dependent on the United States for military resources. In light of their recent announcements concerning the refusal of American aid, will those countries seek arms elsewhere? If so, do you have any knowledge of likely suppliers? Mr. ERICSON. I believe you have been misinformed. Last year's congressional presentation document noted that Brazil acquires its military equipment through cash and credit purchases, both from the United States and third countries. Nor did the presentation state that we are the sole supplier for Uruguay. According to figures compiled by ACDA, from 1965 to 1974 the United States provided $243 million of $531 million worth of arms received by Brazil. Other suppliers were the United Kingdom, France, Canada, and Belgium. The United States, over the same period, has supplied a greater proportion of Uruguay's arms imports, but not all of them: Of $47 million worth, the U.S. total was $36 million. Brazil has an indigenous arms industry which has a capacity for export. We do not know from which foreign suppliers Brazil and Uruguay plan to purchase as an alternative to U.S. suppliers. AID FROM THE WARSAW PACT NATIONS Mr. CONTE. Are any of the countries proposed for military assistance or military sales also receiving assistance from the Warsaw Pact nations? General FISH. Yes. The following countries purchase military equipment from both the United States and the Warsaw Pact based on 1976 data for the Warsaw Pact which is the latest year for which we have data: Afghanistan, Bangladesh, India, Iran, Lebanon, Yemen, Finland, Yugoslavia, Ethiopia, Gabon, Ghana, Nigeria, Sudan, Honduras, and Peru. MODERNIZATION OF THE ZAIRIAN ARMY Mr. CONTE. Considering recent events in Zaire, how will our modernization of the Zairian army be affected? In the 1976 figure of $115 million over an 8-year period for that modernization still valid? Mr. ERICSON. The modernization plan has two basic phases. The initial phase envisages a modest upgrading of Zaire's self-defense capabilities-armored cars, light artillery, a small number of tanks, et cetera. This program was to be financed out of FMS credits, totaling $38 million, authorized in the transitional quarter and fiscal year 1977. Further programs would be initiated only after an intensive study of Zaire's manpower, logistical, and related capabilities. Needless to say, the invasion of the Shaba region will require us to reevaluate the initial phase program, in light of ongoing developments. PIPELINE FOR ISRAEL Mr. CONTE. What is the amount of combined grants and credits remaining from previous years that Israel has not yet received through the assistance pipeline? General FISH. As of March 31, 1977, Israel had not yet used $22.0 million from their fiscal year 1976 and prior years' FMS grants and credits. In addition, Israel has $637.6 million remaining in the fiscal year 1977 grant and credit program. MILITARY AID TO EGYPT Mr. CONTE. Will this year's program in Egypt extend beyond the C-130 aircraft purchased last year? Are there prospects for any additional arms for Egypt? Mr. ERICSON. The question of future sales of U.S. defense articles and services to Egypt was discussed during President Sadat's recent visit to the United States. The administration currently has the matter under review. No decisions or commitments have been made. MILITARY TROOP ROLE IN ASIA Mr. CONTE. How has our military troop role changed in Asia since Thailand asked us to remove our troops? Mr. ERICSON. The specific mission of the U.S. combat units stationed in Thailand was the prosecution of the war in Indochina. These units contributed only tangentially to the much broader mission of U.S. forces in the Pacific. Therefore, the end of the war in Indochina made U.S. combat forces in Thailand nonessential and their withdrawal did not result in any fundamental change in our military troop role in the Pacific. FMS TERMS Mr. CONTE. What rates of interest are charged by the Defense Department under the FMS program? To what extent are the rates variably adjusted according to ability to pay? What countries are receiving concessionary rates? General FISH. The rates of interest charged by the Defense Department under the FMS financing program have averaged about 7.8 percent over the past 3 years. The rate of interest for direct loans is the cost of money as determined by the U.S. Treasury at the time the loan agreement is consummated; the rate for DOD guaranty loans made by the Federal Finance Bank is the cost of money at the time each drawdown is made. Direct loans may be made with a lesserconcessionary rates of interest when the President certifies to Congress that to do so is in the national interest and states in the certification the lesser rate so required and the justification therefor. There have been no loans with concessionary rates of interest since November 1974. EGYPT'S DEFENSE EXPENDITURES Mr. CONTE. What portion of Egypt's gross national product is devoted to defense activities, and how does this compare to Israeli defense spending? Are these two countries spending more or less of their total resources on defense than in previous years? Mr. ERICSON. Egypt's U.S. $1.3 billion estimated 1975 defense expenditures would approximate 12 percent of the country's estimated $11.2 billion GNP. For the same year Israel's estimated military expenditures were $4.0 billionthe equivalent of approximately 37 percent of the country's GNP. The substantial portion of its resources which each country devotes to its national defense has remained roughly constant in recent years and there appears to be little prospect of this changing as long as the Arab-Israeli conflict continues. TURKEY/GREECE Mr. CONTE. Could you outline what effect the provision of $48 million for Turkey and $33 million for Greece will have on efforts to achieve a peaceful settlement of the situation on Cyprus? Would there be any justification for a more balanced approach to the two countries in the distribution of funds? Mr. ERICSON. The administration is currently conducting a policy review of U.S. interests in the eastern Mediterranean including the question of security assistance for Greece and Turkey. Until the policy review is completed, we would prefer to defer further comment on the future U.S. approach to security assistance to Greece and Turkey. At present, security assistance to Turkey remains under statutory restrictions which preclude all grant assistance and limit the amount of foreign military sales transactions, whether for cash or credit, to $125 million for the current fiscal year. Therefore, the $48 million in grant materiel assistance proposed in the budget request for fiscal year 1978 cannot be furnished until the existing law is changed. There are no such statutory restrictions currently in force for Greece, but the administration has notified the Congress that the MAP request for Greece as well as Turkey is contingent on final approval, including congressional action, of the Defense Cooperation Agreements. INTERNATIONAL MILITARY EDUCATION AND TRAINING PROGRAM Mr. CONTE. What figures can you provide regarding the relative cost effectiveness of the international military education and training program as opposed to training foreign military personnel in their own countries? General FISH. We can more efficiently meet a foreign country's training needs, in a cost effective manner, through formal training at established service schools in the United States, where foreign students have an opportunity to develop a better understanding of the United States. The overall quality of instruction a foreign student receives at U.S. schools training side by side with U.S. students is superior to that which could be made available through training teams in a foreign country. Moreover, in most cases it is cost effective to train foreign personnel in existing schools that have an experienced, trained faculty, reference materials, training aids, and related academic support readily available. To temporarily duplicate overseas the more than 2,000 technical and professional courses available to foreign trainees would be difficult. However, where it is more expeditious, practical and economical to bring the training to the country, we do so with mobile training teams. This training is normally of a specialized nature and for a short duration. Most teams are in country only a few weeks as opposed to training of longer duration in the United States. An example of training which a mobile training team might conduct would be sending one U.S. instrucfor overseas to train a large group how to assemble and disassemble small weapons. We believe that formal instruction in the United States and onsite overseas training complement each other. In managing the IMETP we use which ever method of instruction is most responsive and cost effective. TREATY OF FRIENDSHIP AND COOPERATION WITH SPAIN Mr. CONTE. What is the present status of our Treaty of Friendship and Cooperation with Spain? Mr. ERICKSON. The treaty is in force as of September 21, 1976. MAAG'S Mr. CONTE. With regard to your elimination of the so-called "MAAG" groups in favor of Defense Field Offices, is that simply a paper change, or is there some substantive functional difference between the two? General FISH. The DEFO's will be tailored to our unique requirements in a particular country and will focus on program management. The term Military Assistance Advisory Group, or MAAG, which dates back to the early days of the program when the emphasis was on training and advisory assistance to the entire force structure, is no longer descriptive. It is more than a paper change; we propose to redefine, restructure, and streamline the in-country organizations to carry out a management rather than training and advisory role. PEACE CORPS WITNESSES TUESDAY, March 29, 1977. SAM BROWN, DIRECTOR OF ACTION MARY KING, DEPUTY DIRECTOR OF ACTION JOHN DELLENBACK, ASSOCIATE DIRECTOR OF ACTION FOR INTER 1 These tables reflect the original President's budget submission and have not been updated to reflect recent budget amendments. Note.-Excludes $3,938,000 in 1977 and 1978 for activities transferred to: Salaries and expenses, State. Comparable amount for 1976, $3,360,000; and transition quarter, $939,000 are included above. |