Mr. ZABLOCKI. Was there any good reason ICA had for not bringing this matter to the attention of the Foreign Affairs Subcommittee during the review of the mutual security program hearings held last winter? Why didn't you advise the subcommittee of this matter?

Mr. SACCIO. These were charges and accusations. Presumably we could have told you about our investigation in this case and any number of cases.

Mr. ZABLOCKI. Don't you believe that would strengthen our confidence in the ICA, if you had confided to us rather than to have some other subcommittee of the Congress ferret this out by investigation? It makes our hearings and review look as if we were just pussy footing. Mr. SACCIO. Well, I think the relationship of our agency with your committee is close, but should be closer on all of these things that we have to face in the administration of the program and perhaps we made a mistake in not advising you that this was a case that we were investigating.

Mr. ZABLOCKI. Is it the policy of ICA not to tell anything that you can avoid telling to a committee of the House of Representatives? Mr. SACCIO. As a matter of fact, there haven't been any final findings in any of these cases.

I mean in this case, before that subcommittee, a former ICA person admitted that he had accepted gifts. We did not have that information. We had been investigating and had not succeeded in getting evidence that this man had accepted gifts. The subcommittee had. But we hadn't come to any conclusion that there had been malfeasance or wrongdoing at any point in the past.

Mr. ZABLOCKI. That shouldn't prevent your advising the committee in order to better inform the committee. Has a finding been made? Mr. SACCIO. No finding has been made. This man just testifiedhe finally admitted that he had received these gifts and we are taking further action with the Department of Justice on the matter.

Mr. ZABLOCKI. How about the charge that a firm had been blacklisted by ICA for its efforts to clean up the Laotian program. How much truth is there in that statement?

Mr. SACCIO. Well, I am sure the person hasn't been blacklisted. I know that the officer of this corporation has told us of things that he suspected and that we had an investigation made, but his job was actually in the area where we had our greatest difficulty, in the government itself. He was supposed to try to get some form of improved public administration operating in the Government of Laos and obviously he came up against a lot of things which were the sort of things we were trying to correct.

But I don't think he was blacklisted because he came back and told us about this.

Mr. ZABLOCKI. Mr. Saccio, you will agree that this article is really quite damaging?

Mr. SACCIO. It is.

Mr. ZABLOCKI. You will agree further that those who are sympathetic to this program ought to be told the facts?

Mr. SACCIO. I do.

Mr. ZABLOCKI. I hope that will be the case in the future.
Chairman MORGAN. Mr. Fulton.

Mr. FULTON. I would like to ask you several questions on Israel. It has concerned me that the amounts going to Israel are receiving cuts under these mutual security programs, and they are being moved over from grant assistance to purely loan programs. We realize there is already in the U.S. surplus agricultural products programs abroad, under Public Law 480, $62,208,000 worth of U.S.-owned Israelí pounds in local currency to our credit that is now being used for economic development loans.

Likewise, I realize that under the U.S. Development Loan Fund there is a $15 million item and a $5 million item for Israel, totaling $20 million.

However, I would like to point out to you that Israel, on the current fiscal year 1960 proposed programs for defense support and special assistance, is left out completely. That is, Israel is not going to receive any defense support, or any special assistance. As a matter of fact, in the defense support proposed for fiscal year 1960, there is $835 million for 12 countries, of which countries in that area are Spain, Greece, Turkey, Iran, Pakistan, as well as East Pakistan.

Israel is in a situation where it is being pressed militarily and economically and with the upsets there have been in that area recently it is a little bit hard for me to understand why they are, as a people who have been so loyal to us, being left out of both of these programs. Likewise, could I point out to you that there is a proposal for special assistance for the coming year 1960. This is $272 million going to 14 countries plus Somalia and West Berlin. This also includes programs in Bolivia and Haiti. Programs are proposed for Yugoslavia, Afghanistan, Libya, Tunisia, Sudan, Ethiopia, Somalia, Morocco, and I am particularly interested to note that Jordan is included.

I strongly favor Jordan being included because she is right next door to Israel and it would seem to me if it is necessary that Jordan be included, likewise, Israel itself should be included.

I wish that a further study would be made of these two matters because I would like to submit an amendment to include Israel in each of the defense support and special assistance proposed programs for fiscal year 1960.

Then likewise I am interested in the Palestine refugee program and also in the Israel refugee program. I would like to have put in the record at this point what is the proposal to help each of these two refugee programs during fiscal year 1960, either by counterpart or by our own U.S. funds, and our Public Law 480 funds.

I believe we should have that to see what we are contributing possibly indirectly through the U.N. toward this type of program. (The following information has been supplied for the record:)

United States is providing substantial aid to Israel directed to programs which will support Israel's efforts to develop economically. In this context over the years U.S. grant aid has decreased while aid in the form of surplus agricultural commodities and development loans increased. Proposals under the mutual security program for fiscal year 1960 or for utilization of Public Law 480 local currencies are not directed to the immigrant problem. Israel has utilized other external resources for more specific purposes, including direct aid to new immigrants. The gradually increasing tempo and resultant level of economic development does indirectly contribute to Israel's ability to integrate immigrants into the total economy.

With respect to the Palestine refugees, while seeking resolution of the basic problem, we have recognized a moral obligation to continue to provide for relief,

and, insofar as feasible, for rehabilitation, recognizing the fact that these refugees are not, under present circumstances, being integrated into any economy. U.S. contributions in the past and for fiscal year 1960 are therefore made through UNRWA. The executive branch is requesting $25 million in new funds for contribution to the relief and rehabilitation for Palestine refugees for fiscal year 1960. This assistance will be pledged to UNRWA subject to the understanding that actual contributions will constitute no more than 70 percent of total contributions from all international governmental sources. In this context it has not been possible to provide directly for such relief from Public Law 480, although it is anticipated that as much as 4 million pounds of powdered milk will be donated to UNRWA through UNICEF. Additionally, UNRWA continues to make some of its flour purchases in the United States. There are no counterpart funds which might be utilized to assist in the relief of Palestine refugees. Mr. FULTON. May I finish on this subject by saying that I am one of the persons who served, on the subcommittee for displaced persons and refugees originally, prior to the displaced persons act of May 2. I know what a good job Israel is doing in taking refugees from many of the areas of Europe and saving people who otherwise would be executed or at best be put into ghettos.

I notice likewise there is no special assistance, defense support, arms or military aid of any kind for a little country that has stood up for a long time now, many months, against Communist China, and that is the country of Tibet.

First, are we doing anything for them or are we just sitting on our hands and letting these poor people take the brunt of it?

I can't see why the United States, when it gets so interested in West Berlin and is willing to stand pat on principle, does not at least supply the patriots of Tibet with food, small arms, or show some concern, other than a pious statement or two that it is too bad these poor people got caught because they are putting up such a wonderful fight. There are people in the areas surrounding Tibet who know what hardy people these are.

I feel any place in the periphery where there is trouble, and people who have stood up for us, they should get some attention, even if it is small.

As a matter of fact, I am one of those who would have made airplane drops to Hungary regardless of whether it was going to be successful or not.

You are on the economic side and I would ask you if anything is being done by way of furnishing food to the beleaguered people of Tibet and why could we not do something in the way of an airlift, even if it is not arms?

You see, unless the U.S. does something in the East that is just as strong on principle, as we were willing to do in the West, possibly it makes it look as if we do it when they are our type people and then we don't do it if they are too far away even though they just as firmly stand up as do our closer allies.

That is all. Thank you, Mr. Chairman.

(The following memorandum has been supplied for insertion in the record :)

The United States, of course, sympathizes deeply with the plight of the Tibetan people in their struggle to preserve their freedom in the face of Chinese Communist attempts to suppress it. On March 26 Acting Secretary Herter issued a public statement expressing our sense of shock at the happenings in Tibet. On March 28 the Department of State released another statement denouncing Peiping's action in overthrowing the established government of Tibet and taking

up arms against the Tibetan people. However, it is, of course, extremely difficult for the United States to offer the Tibetans anything but moral support. Tibet is one of the most remote and inaccessible regions in the world. The only practicable route of access is through India, and any attempt to supply the Tibetans would fail without Indian cooperation. However, India is understandably anxious not to become embroiled with its powerful Communist neighbor to the north.

So far as assistance in the form of food is concerned, there is no reason to believe that the Tibetans need food at the present time. Should it later become apparent that they do, or if other forms of aid are needed for refugees who may emerge from Tibet, the United States will, of course, offer to do all it appropriately can in cooperation with the Indian Government to render effective assistance.

Chairman MORGAN. Dr. Judd, any questions?

Mr. FULTON. Would you comment on that for me?

Mr. SACCIO. On the last? On Tibet?

Mr. FULTON. Yes, and a restudy of Israel and I have given you notice of amendments.

Mr. SACCIO. We will have testimony here on the subject of Israel. I think I should say here at least, however, as you pointed out, the program in Israel is not in this area, but under Public Law 480 and the Development Loan Fund. The objective of the entire MSP is that when a country gets going on its own feet, we terminate the grant part of the program and assist them with the Development Loan Fund and surplus agricultural products.

Mr. FULTON. It is pretty hard to tell countries that are in a better financial situation and longer and more established and under less pressures than Israel that they can get defense support and special assistance, when a country right next to Israel is getting it.

Mr. SACCIO. You have to make hard decisions in this business because you just haven't got the resources.

Of course, we would be happy to help them, but they are doing a good job themselves with the help we are giving them.

Mr. FULTON. Would you then object to the country, Israel, being put under these two provisions so that in the future during 1960 fiscal year, if they need it, they can get it, and you will have the opportunity to give it to them?

Would you object to such an amendment?

Mr. SACCIO. No amendment is necessary. If there is a country that needs aid, we have authority under our contingency fund or transfer authority, to help a country that is in distress at a particular time.

Mr. FULTON. You would not object to their being put specifically under the provisions providing for defense support and special assistance?

Mr. SACCIO. I would object to making any specific statement about a specific country. I think this is unwise to put this in the legislation. Mr. FULTON. But simply cover them in as a country that will get aid under these two provisions for fiscal 1960?

Mr. SACCIO. As far as general eligibility is concerned, they are covered either in special assistance or in defense support if the situation arises where they need the kind of assistance that we should give them. But at least at the present time we have no program for Israel out of these funds. We have the Development Loan Fund and the Public Law 480 surplus agricultural fund which we think are quite helpful and in many ways, as we have said time and time again, it

has to be taken into account before getting into the grant aid program when we are setting up your programs.

Mr. FULTON. In order not to take further time, would you attempt to put in the record the justification for each of these countries getting defense support and special assistance and show the distinction as to why Israel in regard to that particular country should not get it? Give us the reasons.

That is all.

(The information requested is as follows:)

ISRAEL

As is shown in detail in the worldwide summary statements presented to the Congress in support of the mutual security program requests for fiscal year 1960, defense support is that ecenomic assistance which is required, in addition to military assistance, in order to secure a specific contribution to the common defense by another country in which U.S. military aid is helping to support significant military forces. Special assistance is economic aid designed to maintain or promote political or economic stability in countries in which U.S. support is essential to continued independence or identification with the free world and to support economic growth where, for political and economic reasons, the use of the Development Loan Fund would be inappropriate. The United States supplies such assistance in cases where it is not possible to attain U.S. objectives through alternative means.

The U.S. program objective in Israel is to assist Israel in achieving the maximum degree of economic independence possible by 1963, when German reparations will end, German restitutions will be reduced to a fraction of the present level and when net income from international borrowing will be considerably reduced because of the necessity for servicing present international debts. Israel receives annually, on current account, some $145 to $165 million in institutional and personal remittances and German restitution payments, in addition to capital account transfers of more than $70 million of German reparations, which finances capital goods imports, and net capital inflow of $38 to $45 million from bond sales. Thus, a major portion of Israel's current and capital imports are and will continue to be met from these external sources. Moreover, Israel has access to the Development Loan Fund for the financing of projects which will further the economic development of the country. DLF loans amounted to $15 million in fiscal year 1958 and a loan commitment of $5 million additional has already been authorized in fiscal year 1959.

An important consideration in Israel's drive toward economic independence is its inability to provide its own food requirements from domestic production—a problem which, it appears, Israel will not be able to solve in the predictable future. In recent years, the gradually reduced assistance to Israel under the mutual security program has been in the form of agricultural commodities under section 402. In addition, very much larger amounts of agricultural commodities are being supplied under Public Law 480.

In arriving at the estimated Public Law 480 program for fiscal year 1960, Israel's reported annual requirements of agricultural commodities were examined carefully and adjusted to allow for the maintenance of adequate stocks. Average commercial imports of these commodities in earlier years from the United States and other friendly countries were taken into account. Discussions between the United States and other suppliers, principally Canada, as to reasonable market requirements resulted in our conclusion that normal marketing expectations have been moderated to the point where they could now be met by Israel without special help. The remainder is the current estimated need for sales to Israel of agricultural surpluses for local currency under Public Law 480; adequate access to Public Law 480 is assumed to continue.

In view of the present possibility for meeting Israel's requirements for these commodities adequately under Public Law 480 without recourse to special assistance, no special assistance is proposed. In the light of other external assistance currently available and the estimate that adequate resources of food will be made available under Public Law 480, it is believed that the proposed provision and assistance will be adequate to meet Israel's requirements.