Of course, the destruction is not on anything like the scale it was in Germany, but I do believe that when we talk about reconstruction, there has been this perfectly appalling standard on which rentals are based, and that has been followed consistently for political reasons. Senator HICKENLOOPER. It is just a simple rule that if people with private capital can't get any return on its investment and loses money they are not going to invest. You can still rent an apartment if you know the ways and means of inducing the persons who go there by round-the-corner deals and so on, and you still pay through the nose for a place.

Mr. BRUCE. There is real tragedy in that, Senator.

(Discussion was continued off the record.)

Senator GEORGE. Mr. Ambassador, we have appreciated your appearance here. Your statement has been most helpful to this committee. I am sure all of the members of the committee will agree to that.

Senator GREEN. We certainly do.

Mr. BRUCE. I am sorry to have been so long, sir.

Senator GEORGE. That is quite all right. This is an important job that we have, of course, as you realize. We want to spend as much time as we can on it.

General, could you give us briefly, now, the country program for France, from the Defense Department?

Is it agreeable to the committee to hear the general at this time? Senator SMITH of New Jersey. What is your plan, Mr. Chairman? Are you going to recess at 1 o'clock?

Senator GEORGE. We have to recess just before 1 o'clock.

Senator SMITH of New Jersey. Is this the only chance to hear the general?

Senator GEORGE. Oh, no. The general will be back tomorrow. This will be only on France, however, and we will have him here for the other countries later.

We thought we might get the total picture on France today, if you will just tell us the Defense Establishment's program under this bill. STATEMENT OF GEN. GEORGE OLMSTED, DIRECTOR, OFFICE OF

MILITARY ASSISTANCE, DEPARTMENT OF DEFENSE

General OLMSTED. Mr. Chairman and gentlemen, I will try to make this just as rapidly as I can, and if I go too fast and you wish to interrupt, please feel free to do so.

I am the Staff Officer on the Staff of the Secretary of Defense charged with the responsibility of monitoring this military assistance program. I would like very briefly to give to you the mechanism or procedure that we use in establishing these requirements, in controlling the delivery and in supervising the end use after the items have been delivered, in order to make it plain to the committee that great care is used from the beginning to the end of this process to avoid waste or dissipation of American resources.

First I would like to offer for the record, if it is satisfactory with you, a statement from General Handy. General Handy is our Commander in Chief for Europe, for the Army Forces, and in addition to that job he is the representative of the Secretary of Defense in Europe for the administration of this program. In this statement he does cover, from

the strictly United States point of view as opposed to the international point of view which we heard so well from General Gruenther yesterday, both the procedures and the safeguards, and his evaluation of what we are getting over there as a result of the program. I will not review it, due to the pressure of time.

(The document referred to is as follows:)

REPORT BY GEN. THOMAS T. HANDY, UNITED STATES ARMY, UNITED STATES MILITARY REPRESENTATIVE FOR MILITARY ASSISTANCE IN EUROPE ON UNITED STATES MILITARY ORGANIZATION AND PROCEDURES FOR MILITARY ASSISTANCE IN WESTERN EUROPE AND ON THE MILITARY DEFENSIVE POSTURE IN WESTERN EUROPE AND THE EFFECT OF UNITED STATES MILITARY ASSISTANCE THEREON

1. Introduction

As United States military representative for military assistance in Europe, I am responsible to the Secretary of Defense and the Joint Chiefs of Staff for the military aspects of United States military assistance programs in the European North Atlantic Treaty (NAT) area. This report outlines briefly the United States military organization and procedures for discharge of this responsibility, and presents my evaluation of the progress which has been made toward an adequate military defensive posture in Western Europe and of the part which the Mutual Security Program (MSP)—and its predecessor, the Mutual Defense Assistance Program (MDAP)—has played in this effort. My evaluation is based upon information obtained by personal contact with numerous European officials; through my activities as a member of the Joint Chiefs of Staff Joint Representatives, Europe; in connection with my duties as the Defense Department member of the European Coordinating Committee; and from periodic reports made to me by the Joint American Military Advisory Group, Europe (JAMAG). 2. United States Military Organization for Military Assistance

a. Responsible to me, and maintaining day-to-day contact with the planning and implementation of the military aspects of United States military assistance, is the Director of JAMAG, who with his staff, is located in London. His principal military assistance functions are those of equipment (end items or matériel) and training programing and implementation, and of providing military policy and operational direction for the Military Assistance Advisory Groups (MAÄG's), which are under my military command and which are stationed in the European NAT countries. The JAMAG joint (Army, Navy, Air Force) staff works very closely with the other United States regional agencies and coordinates the military portion of the program with the Office of the United States Deputy Representative, North Atlantic Council, for political aspects; the Office of the Special Representative for the Mutual Security Agency, for economic aspects; and the Office of the United States Representative, North Atlantic Defense Production Board, for matters relating to European production.

b. The MAAG is the military element of the United States Country Team which also includes the Embassy and the Mutual Security Agency (MSA) Mission. Each MAAG is likewise a joint organization. It carries out the military portion of the program, and is responsible for equipment and training programing and implementation, for requisitioning, and for receiving and turning over equipment. It also renders guidance and assistance to country authorities in appropriate military fields and keeps under constant surveillance the ability of the country to receive, store, maintain, and operate matériel. The MAAG works in close coordination with its State Department and Mutual Security Agency counterparts, especially in matters related to indigenous military production.

3. Relationship of United States military organization with SHAPE

Entirely separate and distinct from this United States military organization is the international military command agency, Supreme Headquarters, Allied Powers-Europe (SHAPE), with its subordinate commands. We recognize that close coordination must exist between the United States agencies responsible for the military assistance program and the SHAPE organization. The need for such coordination has gradually increased as SHAPE's plans and operations have developed. Because of the international nature of his position, however, the Supreme Allied Commander, Europe (SACEUR), has naturally not desired to assume responsibility for what is strictly a United States program. On the other hand, he has properly made known to us, through his United States element and

on the basis of his force requirements and his plans for the build-up and employment of those forces, his views as to priorities for allocation and delivery of equipment. This information is taken into full consideration by JAMAG and the MAAG's in both planning and implementing equipment and training programs. To this end, close informal working liaison has been developed between JAMAG and the United States element in SHAPE, and between the MAAG's and the United States elements in appropriate subordinate NATO commands. Actual programing and implementation are, however, entirely United States matters, and final responsibilities and decisions rest with the United States. 4. Military situation existing prior to initiation of program

a. Before I explain how this United States military organization for military assistance in Western Europe operates and outline what it has done so far, I think that it would be useful to sketch briefly the military situation in that area before the program was initiated. First, it must be remembered that most of our European allies suffered seriously during World War II in losses of manpower, resources, and productive means. Moreover, with the exception of the United Kingdom and Portugal, their military services were wrecked and their military equipment largely destroyed. Our allies, therefore, had a very poor foundation upon which to reconstruct their military forces. On the matériel side, they were forced to begin their rebuilding with odds and ends of equipment which were salvaged after the German surrender, or were acquired subsequently from the United States, the United Kingdom and various other sources. On the personnel side, they were faced with a shortage of officers and of NCO's since relatively few had been trained since quite early in the war.

Given

b. The pressing military needs, then, were for equipment and training. sufficient time and the will, I believe that our allies could have filled these needs largely through their own efforts. However, with increased evidences of Soviet aggressiveness, time became the essential consideration. It was concluded that our NAT partners could not achieve the goals called for by the North Atlantic Treaty Organization (NATO) defense plans unless they were given substantial United States assistance. Such assistance included United States equipment and training, production knowledge, raw materials, and economic aid to support the basic economy upon which the military effort would rest.

5. Principles and procedures governing equipment programing

a. (1) With regard to equipment assistance, let me first mention some of the basic military principles governing the giving of such aid, which have actually served to stimulate countries to make greater defense efforts themselves. These principles are consistent with the thought which underlies the whole program, that primary responsibility rests with each NAT country for raising, maintaining, and equipping its own forces, and for obtaining all necessary goods and services for those purposes. However, we must keep in mind that urgent objective of creating effective defense forces rapidly. The principles themselves are contained in the broad programing criteria which the Joint Chiefs of Staff furnish to responsible agencies preparatory to the development of a program for a given fiscal year. These criteria are:

(a) Equipment (as well as training) needs for forces must conform to the force requirements approved by the North Atlantic Council and be based on the need for, and the ability of, the country to absorb and utilize the equipment requested. (b) Combat forces should be equipped so as to approach a performance capability comparable to that of similar United States units. However, the scale of equipment should be related to the missions which the forces are expected to execute and to the conditions under which they are expected to operate. Also, most foreign forces are accustomed to operating on a more austere basis, as regards mechanical equipment and matériel to provide for the health and comfort of the men, than are United States forces.

(c) Generally speaking, items supplied should be those primarily for military application, especially essential combat weapons. Other items, such as food, clothing, medical supplies and POL should be furnished only under special circumstances.

(d) In general, common (commercial) spare parts, otherwise procurable by the requesting countries, such as spark plugs and tires should not be provided.

(e) Finally, but importantly, equipment should not be furnished to any country which can, within the time phasing called for by the Medium Term Defense Plan (MTDP), produce or otherwise obtain the same or comparable items within that country or in any other country.

b. (1) I feel that it would be helpful if I now reviewed briefly how we apply these principles in programing equipment assistance. Each country has commitments to furnish definite Army, Navy, and Air Force units in accordance with NATO plans, and to provide certain vital forces needed to support these units. On the basis of these commitments the MAAG, in collaboration with the local military authorities, determines the deficiencies of the particular country in the equipment required to place those units in combat readiness. In this determination, the MAAG is guided by the foregoing programing principles. The United States Country Team then makes a critical review of the deficiency list, and articles which it is felt the country is able to manufacture or to procure locally or elsewhere are deleted. A tentative program is then prepared by the MAAG, within anticipated monetary ceilings if available.

(2) The deficiency list and tentative program are next reviewed at the regional level, where JAMAG again applies the programing principles which I have mentioned. The lists are also studied by SUSREP with view to determining what items might be screened out on the basis of over-all European production capacity. In addition JAMAG, in coordination with the United States element of SHAPE, formulates priority recommendations for the division of such funds as may become available, between countries and between services in those countries.

(3) The deficiency lists, screened tentative programs and priority recommendations are then taken to Washington where they are further reviewed by the services in the light of over-all requirements, United States production capabilities, and other considerations. When monetary ceilings become reasonably firm, the programs are again screened and are refined at all levels, before being finalized.

c. It can therefore be seen that a given program does not represent a "European shopping list, or a superficially considered blanket requisition for United States equipment. Rather, it represents a carefully screened, integrated, and coordinated effort to determine those essential military requirements of European NATO forces which the countries cannot themselves provide within the time limits set by the medium term defense plan.

6. Objectives, scope, and status of equipment programs

United States equipment assistance has so far been programed under three programs those for fiscal years 1950, 1951, and 1952. A proposed program for fiscal year 1953 is currently under development.

a. The fiscal year 1950 equipment program ($890M) had as its objectives: (1) Army. To meet, to the fullest extent possible, the deficiencies in major items of equipment for the divisions which existed in the NATO area at the time. The items furnished consisted in most cases of World War II types of ordnance, signal, and engineer equipment which were available from existing Army stocks. (2) Navy. To modernize those naval forces which existed in the title I countries in 1949, by providing up-to-date combat and training equipment. Emphasis was placed upon antisubmarine warfare and minesweeping through the supply of antisubmarine warfare vessels and equipment, and minesweepers. (3) Air Force. To equip fighter, bomber, and transport squadrons-and training units of existing NATO forces by providing aircraft, spare parts and aeronautical equipment—such as field and organizational equipment, electronics, ordnance, and other logistical support equipment. The majority of this equipment was supplied from existing Air Force excess stocks.

b. The consolidated fiscal year 1951 equipment program ($3.8B) had as its objectives:

(1) Army. To meet, to the fullest extent possible, deficiencies in major items of equipment for the divisions in being and mobilizable by D plus 15 days. Much of the equipment involved required new procurement and included many of the most modern-type items adopted as standard by the United States Army, such as improved antitank rocket launchers and the latest medium tanks.

(2) Navy. Further to modernize and equip forces in being during 1951 and to provide ships and aircraft for the forces which the countries planned to have on hand by January 1, 1953. Emphasis was placed upon furnishing additional escorts, mine sweepers, and antisubmarine warfare aircraft and upon harbor defense and antisubmarine warfare equipment.

(3) Air Force.-To equip additional fighter, bomber, transport, and tactical reconnaissance squadrons and training units by providing aircraft and spare parts and other aeronautical equipment. The program called for procurement and provision of jet-type fighter-bomber and tactical reconnaissance and trainer aircraft in addition to the types supplied under the 1950 program.

c. The fiscal year 1952 equipment program ($4.7B) had as its objectives: (1) Army. To supply certain maintenance equipment, supplementing the fiscal year 1950 and 1951 programs, and to furnish certain major items of equipment for forces mobilizable by D plus 90 days. Special emphasis was placed on the equipping of certain high priority units designated by SHAPE, and to the programing of certain selected major items such as tanks, which require long production lead time.

(2) Navy. To supply certain maintenance equipment, supplementing the fiscal year 1950 and 1951 programs, and to furnish certain major items of equipment required to round out and bring the navies into balance in accordance with over-all NATO plans.

(3) Air Force. To supply certain maintenance equipment, supplementing the fiscal year 1950 and 1951 programs, and to furnish certain additional aircraft, spare parts, and other aeronautical equipment required to meet NATO commitments. Provision was made in this program to permit the production in Canada of 395 interceptor-type aircraft for the United Kingdom, the United States furnishing aircraft engines and related accessories.

d. The objectives of the proposed fiscal year 1953 equipment program, as submitted to Washington, were:

(1) Army.—(a) To complete the equipping of the forces which the countries have committed themselves to raise by 1953.

(b) To furnish a portion of the long production lead-time items required for additional forces to be raised in 1954.

(c) To furnish a small war reserve of ammunition and spare parts.

(2) Navy. To provide essential combat equipment required by countries in support of the major naval units committed to the NATO defense plan.

(3) Air Force.-(a) To provide initial unit and peacetime attrition aircraft and equipment for current Air Force commitments of NATO countries, and (b) To provide like equipment for an increase of country forces over current country commitments based upon the force requirements of the so-called Paris air plan, which integrates revised country Air Force plans for contributing to the median term defense plan.

7. Objectives, scope, and status of training programs

a. So far as I have emphasized matériel aid; and equipment does, of course, consume the great bulk of available funds. However, I consider that the training program, while relatively inexpensive, is of at least equal importance.

b. It is obvious that an item of equipment, no matter how modern, depends for its effectiveness upon the ability of those who operate it to use and take care of it properly. Thus the primary objective of military assistance training is to insure proper operation and maintenance of equipment provided under the program. We also furnish the NATO countries certain additional training and technical assistance which they themselves, using their own resources and combined training facilities, cannot provide; and we assist in the establishment and standardization of certain training and operational procedures which can be supported by Allied governments when United States participation is withdrawn. Finally, this training gives the United States an opportunity to teach sound military doctrines and procedures, the value of which should considerably outlast that of many items of equipment furnished.

c. (1) Training under the military assistance program is carried on in training installations in the United States, in training establishments and units in the United States occupation zone of Germany, and within the countries themselves by means of United States training teams. The countries must ask for military assistance training, but the MAAG's evaluate the countries' training needs and assist materially in the formulation of their requests. In performing this function, the MAAG's principally undertake to tailor military assistance training to the specific requirements generated by the expected deliveries of equipment. This is not an easy matter, in view of the general difficulty which the United States services encounter in making firm delivery predictions. However, every effort is made by United States military agencies at all levels to provide, as a minimum, essential quantities of training equipment required for use in country training establishments.

(2) Students to take military assistance training are generally chosen because of their expected ability, upon completion of training, to transmit their acquired knowledge to other members of the armed forces at training establishments or in units in their own countries. The MAAG's screen the selection of students, and they also check the use to which military assistance trained personnel are put after the instruction has been completed.