438


FOREIGN RELATIONS, 1950, VOLUME I


  13. The fOregoing estimates for Title II are based upon the follow-
ing assumptions:
   (a) That the international situation will not appreciably improve
during the course of the five-year period, but that actual hostilities,
either localized or general, will not commence, or the likelihood of hos-
tilities will not substantially increase. In case of a more imminent
danger of conflict, or of hostilities in any form in the general area, the
aid requirements would require adjustment in light of circumstances
prevailing at the time.
   (b) That common-use items for the Greek armed forces will be
provided in to-to from the Greek economy, or, in regard to foreign
exchange costs, by funds appropriated for the general economic
support of Greece.
   (e) That the size of the Greek, Turkish and Iranian forces will not
be increased appreciably during the period.
   (d) That the achievement of United States objectives in the Near
East and South Asia will not require the furnishing of military
assistance on a grant basis to countries other than those presently
eligible for grant assistance under the Mutual Defense Assistance
Act.
  14. The Far East. The estimated requirements for military assist-
ance on a grant basis to countries in the general area of China, includ-
ing the Philippines and Formosa but excluding Korea, are given
below:
                                    YEstimated Requirements
               Fiscal Year              (in million dollars)
                 1951                      $375. 0
                 1952                        560.0
                 1953                        467.4
                 1954                        383. 6
                 1955                       358. 7
  15. Indo-China. This country is the key to the control of the main-
land of Southeast Asia. Its loss would represent a major strategic
reversal for the United States and its allies and concurrently a great
increase in the political, economic and military power of the enemy.
The preservation of Indo-China from      Communist encroachment
depends upon the success with which the military, economic and
political programs are concomitantly prosecuted. The military pro-
gram will fail unless the political and economic programs are a success
and vice versa. The immediate purpose of the political program is to
secure for Bao Dai the support of Indo-Chinese nationalists sentiment.
Even if this is achieved, Communist-inspired guerrilla operations will
continue until a successful military program has been completed.
  The success of the military operation depends upon the French who
must prosecute it successfully. We are confronted by the dilemma
between this fact and the fact that the more political concessions the