NATIONAL S'ECURITY POLICY


pleted, and it will be many months before reliable figures can be
obtained.
  Estimates thus far compiled by ECA indicate that the total cost of
foreign aid for reconstructing and restoring the Korean economy
would be somewhat less than $1 billion. The capacity of the Korean
economy to absorb imports requiring foreign financing is probably
limited to $150 million per year. The absorptive capacity would be
greater in the initial years, however, since a substantial portion of
total requirements is for relief-type goods. The annual costs set forth
are projected only through fiscal year 1955, but assistance beyond
that date may be required if the country is to become self-sustaining.
  It is assumed that the U.S. will bear 65 to 70 percent of the costs
of a United Nations program.
  Philippines: The payments and expenditures of the United States
in the Philippines have supported the economy of that country since
liberation from the Japanese forces. Without such assistance the large
trade deficit and budgetary deficit would have resulted in a serious
economic crisis and inevitable large-scale support of the Communists.
However, a substantial prt of U.S. aid funds was made available to
meet war damage claims and consequently was not used in such a
way as to encourage increased production. The program projected
above is designed to assist in the development of resources of the
Philippines required to achieve viability and stability which are essen-
tial if the Philippines are to resist Communist pressure.
  A minimum program designed to achieve viability will have to? be
based primarily ,on agricultural development but some increase in
industrialization is justified. Among the principal goals of such a pro-
gram woould be (a) self-sufficiency in rice, corn, fish, vegetables and
fruit; (b) increased sugar production for export to at least the U.S.
quota total level and ,abaica production to. the 1940 level; (c) mod-
ernization of selected mines and determination of location and extent
of mineral resources; (d) expanded facilities for processing ores,
wood and agricultural products,; (e) expanded hydro-electric power
for the production of nitrogen fertilizer and for other purposes; (f)
expansion of small-scale industry, land (g) improvement of general
and vocational education and further improvement of public health
to the extent required to provide the basis for economic development.
In addition, if any economic development program is to .proceed with
reasonable prospects ,of success in the Philippines, it will be necessalry
that (h) the Government's budget be balanced by raising revenues
substantially, and (i) that popular support among the agrarian popu-
lation be enlisted by improving agricultural credit facilities, provid-
ing for land resettlement and redistribution, ete.


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