NATIONAL SECURITY POLICY


trialization. It is in the U.S. interest that Yugoslavia remain outside
the Soviet Bloc and maintain a viable economy.
  To assist Yugoslavia to overcome the effects of the recent severe
drought, grant aid of $64 million will be needed for expenditure in
fiscal 1951. However, because certain government agencies are pro-
viding immediate .food relief for Yugoslavia out of their existing
appropriations, Congress will be asked to appropriate only $38 million.
It is possible that, in consequence of the drought, further grant funds
will be needed in 1952,
  The IBIRD rather than the Eximbank is expected to provide further
loan funds for Yugoslavias economic development.
  Latin America: The program of economic assistance which is pro-
jected for Latin America is primarily one of production 'for defense
purposes. The objectives are to increase the availability of critical
materials which the ,U.S. will need for industrial and defense output,
to maintain production of food and other ,items at a level adequate
to meet the essential requirements of western Europe from this tradi-
tional source of supply, and to develop production which will mini-
mize the dependence of Latin American States on imported food and
other essential supplies in case of emergency. In addition, it will be
necessary to speed up the construction of the Inter-American High-
way ....
  Increased U.S. procurement and higher raw material prices will
increase Latin America's dollar receipts and her capacity to service
further dollar debt. Consequently the major part of U.S. assistance to
Latin America is scheduled in the form olf loan aid (largely for trans-
portation, fuel and power facilities). It is estimated that Latin
America will require foreign capital for investment at a rate of about
$350 million a year, of which the International Bank may be able to
finance about $125 million a year, leaving about $225 million a year for
U.S. Government loans.
  Grant aid for Latin America includes $64 million over four years
for completion of the Inter-American Highway, and about $28 million
a year for an expanded technical assistance program, with particular
stress on aid to increase indigenous food production.
  Japan and the Ryukyus: The estimates of budgetary requirements
for Japan and the Ryukyu Islands represent, for fiscal year 1951,
funds actually made available for obligation; for fiscal year 1952,
figures recently submitted by the Department of the Army to the
Bureau of the Budget; and for other years, tentative projections by
the Department of the Army.
  The assumptions underlying them, particularly those relating to
Japan's foreign trade prospects, are on the whole conservative. Should
her foreign exchange earnings exceed the estimates, however, the


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