1976 is estimated at $250,000 compared to original

estimates.

The Administrator has pledged to continue to exert maximum efforts toward further reductions in administrative costs.

QUESTIONS SUBMITTED BY SENATOR SCHWEIKER

REASON FOR INCREASED UNDP CONTRIBUTION

SENATOR SCHWEIKER. What has occurred at the UNDP that would justify a $30 million increase over the FY 77 level of $100 million?

DR. MOREY. The increase in the U.S. contribution to UNDP requested in 1978 is intended to indicate: (a) a recognition of the growing importance of our relations with the developing world, (b) a realization of the seriousness of LDC needs for increased assistance, and (c) to serve as a signal and example to other donors (particularly the OPEC countries) to be more generous to a program we value. Only through substantially increased funding will UNDP be able to meet its program target of $3.46 billion for the next five years, setting the organization on a sound financial footing.

We continue to believe strong U.S. support is justified for these reasons:

(a) U.S. National Economic Interest is served by UNDP's contribution to a growing and dynamic world economy with high levels of trade and investment opportunity and the increasing availability of vital natural resources.

(b) Improved Relations with the LDCs result from cooperative international problem solving in a global context which serves to shift our relations away from ideological confrontation with these countries.

(c) Reducing Long-Term Costs

The U.S. will certainly be faced with crisis situations and demands for massive relief operations if better solutions to world problems of food, population, water and natural resources are not found.

PROLIFERATION OF UN AGENCIES

SENATOR SCHWEIKER. I am sure that you are aware of the widespread and growing concern in the Congress over the proliferation of agencies of the United Nations. It seems to me and to many others that far too much redundancy is occurring. What we appear to be funding is sinecures for international bureaucrats. I am especially concerned that this is the case regarding technical assistance provided to developing countries through the United Nations. As I understand it, the UNDP is supposed to be the centralized focus of UN technical assistance activities. Yet the FAO and other Specialized Agencies appear intent on carving out a similar function for themselves in the technical assistance area. Is there any reason to believe that these other UN agencies will refrain from encroaching upon the UNDP's area of responsibility if we provide an increased contribution to it?

DR. MOREY. It should be stressed at the outset that UNDP, although the major technical assistance funcing agency in the UN system, has never been the only organization to fund such programs. WHO from its early history, and as provided in its charter, has had a significant TA program. In 1977 this WHO program will amount to about $75 million. A number of other agencies also have had TA programs for some time. Since 1971 UNDP has been given a central role in the coordination of the technical assistance of the UN system at the country level through the Resident Representatives and in our view performs this role rather well. However, with respect to the projects they fund themselves it is up to each agency to determine how closely they will work with the UNDP Resident Representative. It is in the context of wishing to preserve this central role of UNDP, that the USG has considered with some concern the movement toward additional proliferation of funding by other agencies.

The FAO's Technical Cooperation Program (TCP) was established in July 1976 with limited purposes and at a time when UNDP resources were in doubt. We supported it on an experimental basis for 1976/77. Using funds reallocated from savings through cuts in staff, meetings and publications, TCP aims to be supportive of UNDP rather than competitive with it. Its projects are short term and high impact. In most cases, they appear to have been closely coordinated in-country with the UNDP Resident Representative. We are keeping a careful watch on the TCP to assure its limited scope and non-duplicative nature. In our view the best way to limit the pressure by LDC's and the Specialized Agencies for increased separate TA funding is adequate financing to enable UNDP to meet its long-term spending targets and meet the needs of the developing world for this type of assistance.

SENATOR SCHWEIKER: Dr. Morey, in your statement you intimate that "substantial U.S. contributions" have a multiplier effect in stimulating higher donations from others. I take this to mean that if we put in more, they put in more and if we put in less, they put in less. If that is the case, would it be reasonable for the Congress to stipulate in the relevant appropriations bills that fund provided for the various U.N. programs can only be obligated if the U.S. obligated contribution is a certain percentage of total actual contributions? For instance, what would be your reaction if the Congress stipulated that, while appropriating $130 million for UNDP, these funds could be obligated only so long as the actual U.S. contribution did not exceed 20% of total actual contributions by all donors.

DR. MOREY. We do not believe that U.S. contributions to the UNDP should be contingent upon and thus determined by other Government contributions. Contributions by individual nations to UNDP are voluntary and should be based on each government's assessment of its national interest. This would retain the true spirit of the completely voluntary nature of the contribution. If the United States or any other nation were to stipulate a relationship between the level of our contributions and that of others it would in effect mean we were placing a pre-condition on our future contributions against the voluntary contributions of others. For this reason, based on the principles used in establishing the UNDP and other voluntarily funded UN programs, we do not believe such a stipulation would be in the best interest of the United States or of the UN Development Program.

Should the statistics for any one year show that the U.S. is bearing a disproportionate share of the total, we could then take this factor into account in our support for the immediately subsequent year.

QUESTIONS SUBMITTED BY SENATOR BROOKE

SENATOR BROOKE. As you know, I have been intensely interested in the activities of the United Nations Environment Program. One of the most pleasant events of last year's deliberations on the Foreign Assistance Bill was the decision by the Congress to double the amount requested for this effort. This Committee led the way in that regard. Were we justified in doing so?

DR. MOREY. The FY 1977 Administration request of $5 million reflected the relative priorities among many programs within available resources as governed by the realities of an austerity budget. I have to acknowledge frankly that our request was viewed with some concern, not only by the Executive Director of UNEP and other member governments of the UNEP Governing Council, but by .environmental groups in this country who foresaw a negative impact on the development and funding of environmental projects. As it happened, the increased amount granted by the Congress related well to the level of programs planned by UNEP. The increase granted by Congress, therefore, is being put to good use and was welcomed by the Executive Director of UNEP. The amount allowed in 1977, together with the $10 million in the present request, will permit us to complete our original $40 million multi-year pledge to this program.

SENATOR BROOKE: Please outline for the record the various projects currently underway in UNEP.

DR. MOREY: UNEP is a coordinating and catalyzing, rather than an operating, institution. It works cooperatively with other organizations and with individuals, providing support in identifying and filling gaps in existing environmental activities. The following Summary provides an over view of projects which UNEP currently supports. Over 400 projects have been initiated with many completed -- since 1973.

Priority Areas

Human Settlements,
Human Health

-

SENATOR BROOKE. Is the expenditure of funds by UNEP proceeding on a prudent but timely basis?

DR. MOREY. The management of the UNEP Fund, making
some allowances for the inevitable problems encountered
in the early years of any new program, has been reasonably
prudent and timely. In response to a decision by the UNEP
Governing Council, the Executive Director has made it clear
that he intends to avoid any temptation to indulge in over
committing the program's resources. While we do not have
the final 1976 accounts, the Executive Director has indi-
cated that cash balances at the end of 1976 totalled $26
million, of which $7.5 million was in non-convertible cur-
rencies. This is a larger cash carry over than we like to
see. Nevertheless, this amount should be considered in
relation to a total of $31.7 million, representing amounts
already committed in fund projects for 1977 and the carry
over of commitments from 1976 to 1977. The Executive
Director has estimated that he will have only on the order
of $16 to $17 million for new programming during the entire
calendar year 1977. We have not been entirely satisfied
that the program has yet reached the desired level of
balance as between authorized program level, commitments
and obligations, and expenditures. Nevertheless we believe
that progress is being made and that with a few more years
development, the program will show the results of careful
and prudent management on the part of the Executive Director
and his staff.

SENATOR BROOKE. What type of growth, in terms of funding that could be utilized effectively, is anticipated for UNEP in the next four years?

DR. MOREY. We are now in the fifth of the first five-
year period of UNEP. At its session in May, the Governing
Council will consider and approve the mid-term plan for
1978-1981 and within that mid-term plan the biennial budget
for 1978-1979. This will be the critical session of the
Council in projecting UNEP's growth over the next four
years. The Executive Director has initially suggested that
a reasonable goal for the next five years might be $190 mil-
lion, which represents a continuation of the original
$100 million, increased only to take account of inflation.
Our reaction has been that this projection may be too ambi-
tious. Furthermore, we have pointed out that we are not
favorably inclined toward the establishment of a further
five-year goal and that the future level of the environ-
ment program should be considered within the program's own
procedures for the development of a four-year mid-term plan
and biennial budgets. In the absence of detailed proposals
from the Executive Director, we have not yet developed a
firm position on the future level of the Environment Fund
or of our level of support. We anticipate, however, that
total contributions to the program from all countries will
range between $25 to $40 million per year over the next
four years.
We will be in a much better position when we
make our FY 1979 request, which will be made in the light
of decisions at the fifth session, to project the proposed
US contribution, but at this stage we do not anticipate
maintaining our support at 40% of total contributions as in
our initial pledge. On the other hand we have urged the
Executive Director to make every effort to broaden the base
of support for UNEP, bearing in mind that only 68 of the
140-odd members of the UN now contribute.

SUBCOMMITTEE RECESS

Senator INOUYE. Thank you very much, Dr. Morey and gentlemen. The subcommittee will now recess until 2 p.m. Wednesday. [Whereupon, at 12:10 p.m. Thursday, March 10, the subcommittee was recessed, to reconvene at 2 p.m., Wednesday, March 16.]

FOREIGN ASSISTANCE AND RELATED PROGRAMS APPROPRIATIONS FOR FISCAL YEAR 1978

WEDNESDAY, MARCH 16, 1977

U.S. SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The subcommittee met at 2:05 p.m., in room 1318, Everett McKinley Dirksen Office Building, Hon. Daniel K. Inouye (chairman) presiding.

Present: Senators Inouye, Johnston, Leahy, DeConcini, and Schweiker.

STATEMENTS BY:

DEPARTMENT OF STATE

SECURITY ASSISTANCE

HON. LUCY WILSON BENSON, UNDER SECRETARY OF STATE-
DESIGNATE FOR SECURITY ASSISTANCE

HON. CHARLES W. DUNCAN, JR., DEPUTY SECRETARY OF

DEFENSE

HON. ROBERT H. NOOTER, ACTING DEPUTY ADMINISTRATOR,
AGENCY FOR INTERNATIONAL DEVELOPMENT

ACCOMPANIED BY:

LT. GEN. H. M. FISH, U.S. AIR FORCE, DIRECTOR, DEFENSE SE-
CURITY ASSISTANCE AGENCY

BENJAMIN FORMAN, ASSISTANT GENERAL COUNSEL FOR IN-
TERNATIONAL AFFAIRS, OFFICE OF THE SECRETARY OF
DEFENSE

RICHARD ERICSON, DEPUTY DIRECTOR, BUREAU OF POLITICO-
MILITARY AFFAIRS

NICHOLAS A. VELIOTES, DEPUTY ASSISTANT SECRETARY OF
STATE FOR NEAR EASTERN AFFAIRS

Senator INOUYE. Before proceeding, I would like to apologize to all of you for having to cancel this morning's hearing. Unfortunately, the plane that I was scheduled to arrive on developed a mechanical problem and as a result the flight was canceled. Fortunately, I got another flight. So here I am 4 hours late. My apologies.

I would like to further announce that the markup that was scheduled for this afternoon will be rescheduled for tomorrow afternoon at 2 o'clock.

This afternoon, the subcommittee will begin by hearing justification for the following budget requests: Grant military assistance, $230 million; international military education and training, $35 million; foreign military credit sales, $707.8 million; security supporting assistance, $1,887,200; and the Middle East special requirements fund, $25 million.