Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

411. Memorandum of Discussion at the 368th Meeting of the National Security Council, Washington, June 3, 1958¹

Washington, June 3, 1958

[Here follows a paragraph listing the participants at the meeting.]

1. Significant World Developments Affecting U.S. Security (SNIE 66–58)²

[Here follows discussion of unrelated subjects.]

Noting that the next item on the agenda was a revision of our policy toward the Philippines, the Director of Central Intelligence read the conclusions of the recent Special National Intelligence Estimate on “The Outlook for the Philippine Republic” (SNIE 66-58, a copy of which is filed in the minutes of the meeting).³ Mr. Dulles also cited U.S. aid figures to the Philippine Republic since the end of the Second World War. Taken in their broadest terms, this assistance totalled about $3.5 billion. Basically, said Mr. Dulles, the Philippine management was rotten.

[Here follows discussion of unrelated subjects.]

2. U.S. Policy Toward the Philippines (NSC 5413/1; OCB Report on NSC 5413/1, dated April 2, 1958; NSC Action No. 1907;⁴NSC 5813;⁵SNIE 66–58; Memo for NSC from Executive Secretary, same subject, dated June 2, 1958⁶)

General Cutler briefed the Council in considerable detail on the contents of the revised policy statement on the Philippines. (A copy of General Cutler’s briefing note is filed in the minutes of the meeting, and another is attached to this memorandum.) At the conclusion of his briefing, General Cutler asked Secretary Herter whether he wished to comment on the proposed new policy. Secretary Herter answered in the affirmative, and said he had three points to suggest.

The first occurred in the last sentence of paragraph 12, on page 10,⁷ where Secretary Herter suggested that the first and qualifying clause of the sentence be deleted, since the exception stated therein was no longer valid.

His next point, said Secretary Herter, occurred in paragraph 32, on page 18, reading as follows:

“32. Without committing U.S. officials to any single solution, encourage spiritual and secular leaders to work toward a solution of problems arising out of Church–State relations; meanwhile pointing out the advantages which derived from strict separation of Church and State during the decades of U.S. tutelage in the Philippines.”

Secretary Herter suggested the deletion of paragraph 32, on the grounds that the problem of the influence of the Roman Catholic Church in the Philippines was a very touchy subject. Moreover, in the last election the Church had on the whole exercised a beneficent influence in fighting against corruption.

The President, agreeing with Secretary Herter’s point, said that we would be expecting our officials in the Philippines to be veritable Machiavellis if they were to carry out such a very difficult course of action successfully.

General Cutler explained the reason which had induced the Planning Board to include paragraph 32, and suggested that while the second part of the paragraph might well be omitted, he thought that the first part was sound and deserved to remain. Secretary Herter replied that he would still be happier if the entire paragraph were deleted. Secretary Herter’s proposal was adopted.

Secretary Herter’s next point concerned subparagraph 36–c, reading as follows:

“c. Consideration of any substantial expansion in economic assistance to the Philippines should be dependent among other things on absorptive capacity in the Philippines and Philippine performance in utilizing available internal and external resources for well-conceived development purposes based on sound financial policies and administration.”

Secretary Herter stated that of course this subparagraph was of very great importance in view of the forthcoming visit of President Garcia. He and Under Secretary Dillon feared that as presently written this subparagraph was too restricted. He therefore recommended the inclusion, after the word “Philippines” in the second line, of the words “except for the Development Loan Fund”. Otherwise all loans, even from the Development Land Fund, would be shut off.

General Cutler asked Secretary Anderson if he cared to comment on subparagraph 36–c. Secretary Anderson replied that basic to the Philippine financial and economic problem was the fact that, regardless of what the United States did, only the Filipinos themselves could provide the ultimate solution to their own problems. Garcia and his people were coming here in the hope of solving their economic and financial problems through measures of external assistance rather than by undertaking the requisite internal reforms. Such a course of action cannot and will not work. We can, of course, sit down with Garcia and tell the Filipinos what they ought to do to set their house in order.

However, if we do this we ourselves become at least partially responsible for the results. The only other choice open to us is to counsel the Filipinos to follow a program formulated for them by the International Monetary Fund. The trouble here was that the Fund must be invited to formulate such a program. Accordingly, the over-all result would probably be that Garcia and his associates would return to Manila greatly disappointed at the size of our proposed assistance. It will be very hard to tell them what they themselves must do to solve their difficulties. Nevertheless, they would have to solve their own difficulties, because the Export-Import Bank was adamant against granting any further loans to the Philippines.

General Cutler then pressed Secretary Anderson for his reaction to Secretary Herter’s suggestion for amending subparagraph 36–c. Secretary Anderson replied that making an exception for loans from the Development Loan Fund would not in itself be sufficient to provide a solution to the basic problems in Philippine finances. He was therefore inclined to be opposed to Secretary Herter’s proposed new language. The Acting Director of the Budget, Mr. Merriam, after further discussion, suggested that the views of the interested Council members would be served by the insertion of the word “total” at the end of the first line of subparagraph c.

At the conclusion of the discussion, the President said he wished to refer to a little history. If one went back to the year 1935 and read the views and objections of thoughtful members of Congress and of the Cabinet of those days with respect to giving independence to the Philippines, one would quickly perceive that these people had foreseen all the difficulties which we now observed to be confronting the Philippine Republic.

The National Security Council:⁸

a. Discussed the draft statement of policy on the subject contained in NSC 5813; in the light of the views of the Joint Chiefs of Staff thereon, transmitted by the reference memorandum of June 2, 1958.

b. Adopted the statement of policy in NSC 5813, subject to the following amendments:

(1) Page 10, paragraph 12, last sentence: Delete the qualifying clause “Except for one small loan request currently being considered,”.

(2) Page 18, paragraph 32: Delete, and renumber subsequent paragraphs accordingly.

(3) Page 19, subparagraph 36–c: Add, at the end of the first line, the words “the total amount of”. Place an asterisk in front of subparagraph 36–c and the following footnote at the bottom of the page:

• “* This paragraph is not to be construed as prohibiting the use of the Development Loan Fund as part of the total amount of economic assistance.”

Note:NSC 5813, as amended by the action in b above, subsequently approved by the President; circulated as NSC 5813/1 for implementation by all appropriate Executive departments and agencies of the U.S. Government; and referred to the Operations Coordinating Board as the coordinating agency designated by the President.

[Here follow the remaining agenda items.]

S. Everett Gleason

Attachment

Briefing Note Prepared by the President’s Special Assistant for National Security Affairs (Cutler)

PHILIPPINES

1. The next item is a revised policy statement on the Philippines. This revision was prepared, following OCB’s recommendation, because the 1954 statement was out-of-date and because President Garcia was soon to visit the U.S.

2. Since the 1954 policy statement was approved, President Magsaysay died in a 1957 airplane crash, Vice-President Garcia succeeded to the Presidency, and last fall Garcia won a four-year term as President. While this sharp change in political leadership has been the outstanding event affecting the Philippines, a number of other important things have happened in the period:

(1) SEATO was formed (Par. 14).

(2) In 1956 the Philippines signed a peace treaty and reparations agreement with Japan.⁹ Under the latter, the Philippines will receive $550 million in goods and services over a 20-year period, at the annual rate of $25 million during the first 10 years (Par 14).

(3) There has been a trend away from teaching and using English, a necessary means of communication between Filipinos themselves as well as with the outside world; a trend away from technical and vocational training in the Philippine school system; and greater efforts by the Catholic Church to reassert its influence in education and politics. (Pars. 8, 13)

(4) Philippine trade, while still over 50% with the U.S., continues to shift away from America. (Par. 9)

(5) After Magsaysay’s death, foreign exchange reserves drastically declined; and inflation set in. (Par. 10)

(6) On the military side, reorganization of the Army from battalion combat teams to divisions has begun, and jets are being introduced into the Air Force. (Par. 18; Par. 14, Annex B.)

3. These events have been reflected, and made the basis of policy guidance, in the revised paper. But the principal issue before us stems from the change in Philippine political leadership. At the time the last paper was approved, Magsaysay had just taken office, and we had high hopes for his administration. Now we are faced with an entirely different picture. Garcia has been President for 15 months and has 3½ years more to serve.

4. Garcia has already given us many evidences that the next few years will be difficult. Because of our immediate interest in Garcia’s capability to administer his office, I want to read briefly from the early paragraphs of the statement, beginning on p. 2:

(READ)

5. The paper before you deals with the Garcia problem in two ways.

a. On the political side, paragraphs 25 and 26 (p. 17) call for encouraging the Garcia Administration to reform its character and improve its effectives, and for encouraging the development of an effective opposition.

b. On the economic side, paragraph 36 (on p. 19) deals with aid to the Philippines under the Garcia Administration. Subparagraph a calls for continuing economic and technical aid (at about the present levels). Subparagraph b calls for attempting to persuade the Philippine Government to take measures for economic and financial stability. Subparagraph c deals with any substantial expansion of economic aid, as follows:

(READ paragraph 36–c)

6. The Financial Appendix on p. 23 estimates U.S. aid programs under this policy through FY 61, based on the assumption that no additional aid will be promised to President Garcia during his visit.

7. A matter that may come up during President Garcia’s visit is the long-pending U.S.-Philippine base negotiations. Annex B, the Military Annex, following the Financial Appendix, spells out the U.S. military interest in the Philippines and says of the base negotiations:

(READ, p. 7, Annex B)

8. The Joint Chiefs in their written comments find the statement’s provisions militarily acceptable There were no differences of view recorded in the Planning Board (such unanimity, being unusual, may give some concern).

Call on:

• Secretary Dulles
• Secretary Anderson
• Mr. James Smith
• Secretary McElroy–General Twining

1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret; Eyes Only. Drafted by S. Everett Gleason.
2. Document 409.
3. The minutes of all National Security Council meetings held during the Eisenhower administration are in the National Archives and Records Administration, RG 273, Records of the National Security Council, Official Meeting Minutes File.
4. NSC Action No. 1907, taken at the NSC meeting on May 8, authorized a review of U.S. policy toward the Philippines, which had been recommended by the Operations Coordinating Board. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95)
5. NSC 5813 was the same as NSC 5813/1, infra, except for the changes made during this NSC meeting.
6. The memorandum transmitted a memorandum from General Twining to the Secretary of Defense, dated May 31. Twining wrote that “from a military point of view, NSC 5813 is an acceptable statement of U.S. Policy toward the Philippines.” Both memoranda are in Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5813 Series.
7. The last sentence of paragraph 12 read: “Except for one small loan request currently being considered, all Philippine loan applications thus far submitted to the Development Loan Fund have either been referred to the Export-Import Bank or rejected.”
8. Paragraphs a–b and the Note constitute NSC Action No. 1922. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95)
9. For text of the Japanese-Philippine Peace Treaty, see 260 UNTS 1832; for text of the Japanese-Philippine Reparations Treaty, see 285 UNTS 4148.