NATIONAL SECURITY POLICY


pean NAT Countries (and Western Germany)to Meet t"heir Require-
ments under the Medium Term Defense Plan."]
     PART B. ANTICIPATED U.S. FOREIGN GRANT AND LOAN ASSISTANCEt
 (Prepared by the Department of State and the Economic Cooperation
                          Administration)
   1. The estimates given in table 3-8 below of foreign grant and loan
 assistance were made on the assumption that we shall not be engaged
 in a major war, but that the Soviet Union will intensify its efforts to
 extend the orbit of its influence and control. Our objective in provid-
 ing economic aid is to create situations of political and economic
 strength in the free world especially in critical areas whose present
 weakness may invite Soviet thrusts. However, as a consequence of
 increased demands on U.S. resources resulting from a military defense
 program that may require expenditures at a rate of $50 billion a year,
 claims on U.S. resources for foreign aid have been limited to programs
 that will meet most urgent and immediate needs. These programs have
 therefore been restricted to those fulfilling three broad purposes:
 (1) investment to increase the production and facilitate the distribu-
 tion of critical materials directly needed for defense, (2) aid to
 strengthen the defense effort of our allies, and (3) aid to enable
 governments which are or can be expected to become friendly members
 of the free world to win the confidence and support of their own
 peoples as a solid foundation for political stability and national in-
 dependence. To reduce the drain on U.S. resources, aid programs have
 been held to the minimum believed necessary to effect these purposes.
   2. The basic task in Europe now is to build up the combined defenses
of the European nations without seriously endangering thereby their
economic strength. All U.S. military end-item and economic aid to
assist in achieving this objective is included in Annex I. However,
certain countries are not directly associated with the defense program
for the NAT community but nevertheless will require continued eco-
nomic aid to sustain their economies. These include, at least in fiscal
1952 the following countries: Austria, Greece, Iceland, Ireland,
Sweden, Trieste and Turkey. Aid for this latter group is included in
Annex II. U.S. aid will also be needed in support of European inter-
national economic institutions such as the European Payments Union,
the Schuman Plan, and the program of trade liberalization. The total
aid figures in Annex I and in Annex II for O.E.E.C. countries include
such funds as may be required for these institutions although the
specific amount needed for this purpose has not yet been determined.
  3. The primary task in other areas is to assist them to make progress

  iEconlomic aid requirements for European NAT countries and Western Ger-
many are given in Part A of this annex. [Footnote in the source text.]
  8 Not reproduced herein.


44.1