793.5 MSP/6–153
No. 106
Memorandum of Conversation, by the
Acting Officer in Charge of Economic Affairs, Office of Chinese
Affairs (Hope)1
Subject:
- Future of Formosan Aid Programs
Participants:
- FE—Assistant Secretary Robertson
- FE—Ambassador Rankin
- FE—Mr. Gay
- FE—Mr. Parelman
- Defense—Mr. Sullivan
- Defense—Col. Anding
- MSA—Mr. Paul
- MSA—Dr. Hayes
- CA—Mr. Martin
- CA—Mr. Hope
On the recommendation of CA, Mr. Robertson called a meeting of a small group of officers from FE, Defense, and MSA most directly concerned with the Formosan aid program in order to discuss this program frankly and informally with Ambassador Rankin.
At Mr. Robertson’s request, Mr. Martin opened the meeting by noting that we had received from the Chinese Government an estimate of requirements for fiscal 1954 very substantially higher than the aid program presently contemplated. He invited participants to comment on the extent and direction of the Formosa aid program.
Upon request, Mr. Hope outlined a previous discussion which had been held between State and MSA officials which had resulted in interim guidance being sent to the American representatives at [Page 199] Taipei indicating that economic planning and discussion with the Chinese should be guided by the principles of termination of economic aid within a few years, greater emphasis on economic relations with Japan and more private investment; fiscal controls under close mission supervision should be carried on to curb excessive military demands; planning for Chinese military programs should be limited to current levels; and the Chinese should be informed that the U.S. was sincere and determined in its economy effort and that all aid-receiving countries should try to achieve the maximum within close budgetary limitations (see Deptel 951 to Taipei—secret).2
There was a general discussion of the possible availability of funds over and beyond the present program assuming future needs dictated by new policy determinations which might be made as a result of the situation in Korea or new military advice from the Joint Chiefs of Staff. Col. Anding indicated that there was some flexibility in Defense appropriations from Title to Title. Dr. Hayes indicated that the MSA legislation allowed something of the same sort. Mr. Parelman indicated that there was less flexibility in transferring funds under MSA legislation since the figures are published and therefore tend to harden in the minds of foreign Governments and the public.
Mr. Martin reviewed the agreed objectives prepared by the NSC Staff Assistants, pointing out that in its present form the NSC paper on Formosa3 does not envisage any radical departure from the present magnitude of military build-up and economic support.
Mr. Rankin felt that the crux of the problem was that there had been no definite determination of our ultimate objectives involving the use of the Chinese forces on Formosa. He assumed that our real long-range objective is the liberation of China. He felt the U.S. Government must come to a decision which it had not faced squarely heretofore as to the mission of the forces on Formosa: is it attack? is it simply defense of the Island? is it somewhere in between? It appeared to him that we had taken for planning purposes only the forces which happened by accident of history to be on Formosa and had not given adequate thought, particularly from the standpoint of military planning, to the balancing of these forces for most efficient employment in particular missions.
Mr. Robertson stated that, speaking without the special study of the question which some of the other conferees had pursued, he had no difficulty in conceiving the policy of the U.S. Government toward the forces on Formosa. He felt that Formosa is a strategically [Page 200] important island on which resides the second largest anticommunist military force in the Far East which we have been supplying and supporting in order to assure its capability of defending the Island from attack. We were creating an important strategic reserve which could be employed when and where the interests of the free world indicated. He did not think anyone seriously believed that the National Chinese army could retake the China mainland without very substantial assistance, including troops, from the U.S. He did not believe the Administration or the American people were disposed to employ U.S. troops in the present circumstances in such a venture. He felt this policy was reasonably clear, although we must all be aware that developments in Korea could make the occasion for employment of the Chinese troops more imminent. The whole question was being reviewed by the National Security Council and in due course decisions would be reached and promulgated which might affect this current policy determination.
Mr. Parelman stated that there was no lack of policy consideration from a military standpoint, since the Joint Chiefs of Staff have stated military program objectives for Formosa each year.
Mr. Sullivan stated that he regarded the strategic reserve concept as a very important and workable one; that the Chinese National forces were being usefully employed as a threat against the mainland and might be assigned as the occasion dictated in various places, for example, in scattered raids against the mainland, in Korea, or even in Southeast Asia, though the latter did not seem desirable at the present time.
Col. Anding stated that Defense had testified on this specific point before Congress4 and had justified the program on Formosa as the maintenance of a strategic reserve.
Mr. Robertson summed up the point by noting the potential usefulness of such forces for resisting Communist aggression wherever it might occur, whenever it was feasible to employ the forces, whenever and wherever it was desirable to employ them.
Mr. Rankin felt that there had been insufficient attention to developing a balanced force and selecting a particular mission (for example, the question of the size of an armored force had not been treated adequately). He pointed out that there is a difference between the handsome sums which had been voted for military hardware and the comparatively small amounts of deliveries. It was agreed generally that this is an important point in our objectives of [Page 201] building up the Chinese armed forces and in maintaining best relations with the Chinese.
Mr. Robertson commented that it was well known that Admiral Radford had some ideas on this subject and we would doubtless be hearing from him in the near future in his new capacity as Chairman of the Joint Chiefs. Mr. Rankin stated that unless the working size of forces was decided upon, it would be very difficult not only to attempt to plan a military assistance program but also to judge the impact on the economy and consequently the optimum size of the MSA program.
Mr. Hope noted that he had made a quick tally of extra-budgetary projects for which the Chinese had requested funds over the past several years. They included currency stabilization; land reform; pay raises; retirement for military personnel; reserve training; improved protein rations; air fields; payment of UN obligations; and there were doubtless others. He estimated, and Ambassador Rankin agreed, that not less than a hundred million dollars would be required to assist these objectives, and he did not believe the Congress or the Administration was disposed to devote this much money above the substantial sums already granted for the military program and civilian economy.
In conclusion, it was noted that the consensus of opinion of the various representatives was that there did not appear much prospect for substantially larger sums in the next fiscal year, although perhaps as much as fifty million dollars might be made available if there were new recommendations involving major changes in program. These would have to be justified on a very high priority basis.
Mr. Rankin noted that there was a need for further exploration of the major policy issues.
-
Robertson’s signature, indicating his approval, appears on the source text.
Previously unidentified participants listed below are:
From the Department of State, Bureau of Far Eastern Affairs: Merrill C. Gay, Economic Adviser, and Samuel T. Parelman, Special Assistant for Regional Programs.
From the Department of Defense: Charles Sullivan, Chief, Northeast Asian Section, Office of Foreign Military Affairs, and Col. James G. Anding, Deputy Director of the Office of Military Assistance.
From the Mutual Security Agency: Norman S. Paul, Officer in Charge of Asia, Africa, and Latin American Program Affairs, Office of the Deputy to the Director for Program and Coordination, and Samuel P. Hayes, Jr., Assistant Director for Far East.
↩ - Dated May 19, not printed.↩
- NSC 146; see footnote 6, Document 86.↩
- Reference is presumably to the hearings held on the Mutual Security Program by the Senate Foreign Relations Committee, May 5–29, 1953; see U.S. Senate, Committee on Foreign Relations, 83d Cong., 1st Sess., Mutual Security Act of 1953: Hearings (Washington, Government Printing Office, 1953).↩