I believe they recognize that this is desirable. There is one minister, as you probably are already aware, who is Taiwanese, this is the Interior Ministry. This is the smallest ministry, but there is one Minister of Taiwanese background.

There are a number of Taiwanese who have extremely influential positions in industry who are rather getting over into government. [Deleted.]

Mr. PAUL. What percentage of the national income is represented by the public sector, which includes these government monopolies? Mr. MCCONAUGHY. I do not have that figure offhand, I can get it for

you.

Mr. PAUL. Could you supply the approximate figure for the record? Mr. MCCONAUGHY. Yes.

(The information referred to follows.)

PERCENTAGE OF NATIONAL INCOME REPRESENTED BY PUBLIC SECTOR

In 1967, the latest year for which the data is available, public corporations and government enterprises on Taiwan accounted for 11.7% and the general government for 13.1% of national income, thus making the public sector account for 24.8% of total national income.

U.S. NATIONAL INTERESTS IN STANDING BY NATIONALIST CHINA

Mr. PAUL. Finally, Mr. Ambassador, on the last page of your statement, you say that the U.S. national interest requires us to stand by our treaty with Nationalist China. I think it would be helpful if could tell us in what particular area you are referring when you say that our national interest requires this.

Mr. MCCONAUGHY. Well, it is my view that the considerations which guided us in 1954 are just as relevant today as they were then. I think of Taiwan as being an anchor point in the offshore island chain. If it were in unfriendly hands, I think the security particularly of the nearest areas, the Philippines to the south, and Okinawa and Japan to the north, would be vitally compromised.

I also believe that we have an obligation to maintain the liberty of 14 million freedom-loving people there, and I think we need the virtues and the values of free China, the traditional Chinese virtues, that we all associate with the Chinese, all of which have been repudiated by the Chinese Communists.

So as important as the rights and the liberties of the 14 million on Taiwan are, I would go beyond that and say that the overseas Chinese, who will look to a free Chinese Government, many of them, for spiritual and moral leadership and the interests of these overseas Chinese all around the world would require us to do what we can to keep in existence a free China with all of the values and with all of the disposition to work with us that we see manifested in the Government of China on Taiwan. I think of the Republic of China as a big plus in a situation where we have a peculiar disequilibrium and we need a plus in this vital area of traditional Chinese values as well as from the strategic standpoint, rather than being a minus.

Senator SYMINGTON. Mr. Ambassador. It is clear how you feel about the Formosa position.

We had better move along a bit if we can.

TOTAL U.S. ECONOMIC AND MILITARY ASSISTANCE TO NATIONALIST CHINA

Mr. PAUL. Mr. Ambassador, with respect to the amount of economic and military aid we have given to the Republic of China, so the record is as complete as possible, we have been shown a document which states that our total economic assistance to Nationalist China through fiscal year 1968 was $2,291,100,000, of which $1,793,400,000 was grant aid and the rest was loan, and the total military assistance deliveries through fiscal year 1968 was $2,435,000,000. I would just ask you to have the Department of State or the Department of Defense supply the figure through the most recent fiscal year which you have available for those items, if you would.

Mr. MCCONAUGHY. All right, it will be a pleasure to update that, Mr. Counsel.

(The information referred to follows.)

Grants..
Loans.

U.S. economic aid to the Republic of China (total obligations fiscal year 1946-69):
Total.

Grants.

2,490.4.

55.4

32.2

13.5

U.S. military aid to the Republic of China (total deliveries fiscal year 1950-69):
Total.

FMS credit and cash sales.

U.S. military additional grants from excess stocks (not included in above total).

1 Includes an estimated, $726,600,000 in economic aid to mainland China in fiscal year 1946-49, of which $598,900,000 was in grants and $128,700,000 was in loans.

* Does not include local currency grant portion (50 percent) of fiscal year 1968-69 Vanguard Public Law 480 sale, which totaled $37,500,000 since the grant proceeds are entirely used for developing 3d countries, and not for the ROC.

Mr. PAUL. I would also, for the sake of historical perspective, like to place in the record at this point the statement of policy issued by President Truman on June 27, 1950, with respect to Taiwan. (The information referred to follows.)

MISSION OF THE UNITED STATES SEVENTH FLEET IN THE FORMOSA AREA: STATEMENT BY THE PRESIDENT, JUNE 27, 1950 (EXCERPT)

The attack upon Korea makes it plain beyond all doubt that communism has passed beyond the use of subversion to conquer independent nations and will now use armed invasion and war. It has defied the orders of the Security Council of the United Nations, issued to preserve international peace and security. In these circumstances, the occupation of Formosa by Communist forces would be a direct threat to the security of the Pacific area and to United States forces performing their lawful and necessary functions in that area.

Accordingly, I have ordered the Seventh Fleet to prevent any attack on Formosa. As a corollary of this action, I am calling upon the Chinese Government on Formosa to cease all air and sea operations against the mainland. The Seventh Fleet will see that this is done. The determination of the future status of Formosa must await the restoration of security in the Pacific, a peace settlement with Japan, or consideration by the United Nations.

EXTENT OF U.S. COMMITMENT UNDER MUTUAL DEFENSE TREATY

Mr. PAUL. Turning now to the more specific subject of this morning's discussion, the basic commitments, is it your judgent that our obligation under our treaty with the Republic of China requires this

country to defeat overt attack against it if its own forces are not capable of doing so?

Mr. MCCONAUGHY. Well, I would take our treaty commitment literally there, Mr. Counsel, and I would consider it would be incumbent upon us to endeavor to meet the common danger in concert with the Republic of China in accordance with our constitutional processes. [Deleted]. We would have to react, I would say.

Mr. PAUL. You say we would have to act, but the nature of our action is somewhat ambiguous under the language of the treaty. Is that a fair statement?

Mr. MCCONAUGHY. Yes, I think it has to remain undefined.

The preservation of the security of the Republic of China there on Taiwan and the Pescadores is the objective. But as to how we would go about it, I do not think anybody can cross that bridge right now.

NATIONALIST CHINA NOT MEMBER OF SEATO

Mr. PAUL. Now, Mr. Ambassador, the SEATO Treaty was signed in September 1954. You have mentioned in your statement that the negotiations for this treaty with Nationalist China commenced in October 1954. Why was not China included in as one of the signatories of the SEATO Treaty?

Mr. MCCONAUGHY. I would say technically because it was, well for a technical reason because it is not within Southeast Asia. It is a bit north of there. It is not in the SEATO Treaty area. It is more, I would say it is more in the central offshore position rather than the southern or the southeast position.

Mr. PAUL. One of the reasons was not because some of the signatories did not want it included under the SEATO Treaty?

Mr. MCCONAUGHY. I do not know that that issue ever arose, Mr. Counsel.

U.S. RIGHT TO REMOVE FORCES FROM TAIWAN

Mr. PAUL. Now the last sentence of the exchange of notes of December 10, 1954, that you referred to, states:

Military elements which are a product of joint effort and contribution by the two parties will not be removed from Taiwan and the Pescadores to a degree which would substantially diminish the defensibility of such territories without mutual agreement.

Since the Nationalists provide the land on which our forces are stationed, can this in any way restrict our right to remove these forces if we should desire?

Mr. MCCONAUGHY. It is not interpreted that way, Mr. Counsel, no. This is still Chinese territory. They have never raised any issue as to our right to dispose of the resources we have placed there at all.

Mr. PAUL. This provision essentially applies to their forces which we assist financially, is that correct?

Mr. MCCONAUGHY. Yes. It could be applied to movement of their forces from the treaty area to other areas which they control, but they have never endeavored to make any such movement of supplies in the substantial quantities envisaged here so we have never had to invoke or raise any question as to this issue, and neither have the Chinese.

FORMOSA RESOLUTION

Mr. PAUL. Now, with respect to the Formosa resolution, is it the position of the State Department that that resolution is still effective to allow the executive branch to send troops into combat in the area? Mr. MCCONAUGHY. That is my interpretation, but I cannot speak for the executive branch.

(The position of the Department of State appears on p. 1141.)

SIGNIFICANCE OF COMMITMENT IN GUAM STATEMENT

Mr. PAUL. Now, coming to this year, Mr. Ambassador, and the statement of the President on November 3 interpreting his earlier remarks in Guam, he said:

"We shall provide a shield if a nuclear power threatens the freedom of a nation allied with us."

Obviously Nationalist China would be one of the countries to which this statement would be highly relevant.

Do you consider statements such as this by the President as forming part of our commitment to a country like Nationalist China?

Mr. MCCONAUGHY. I would not construe that as modifying the commitment already existing, Mr. Counsel. It is a reiteration basically of a commitment already existing.

This is comprehended, I would say, before this statement of the President in the basic commitment.

Mr. PAUL, On November 3, the President went on to say that in other forms of aggression we would look to the host country to carry the primary responsibility for the manpower. In light of this, do you feel statements such as these at least clarify our commitment to such countries?

Mr. MCCONAUGHY. I just would not want to characterize, attempt to dissect, the President's statement, Mr. Counsel.

Mr. PAUL. I am asking about the significance of these statements in our total pattern of commitment as part of this subcommittee's quest to find out what our commitments are. Let me just add this point: When the Preparedness Investigating Subcommittee of the Armed Services Committee in August 1966 asked the State Department for a list of our defense commitments the Department not only provided the basic treaties and agreements, but also provided official declarations of the Congress, the President, the Vice President, and the Secretary of State.

So in light of this, would you say that these declarations such as the November 3 one form a part of our commitment?

Mr. MCCONAUGHY. I am just not prepared to make a statement on that, Mr. Counsel.

Mr. PAUL. Then let me ask you one question with respect to the substance of the statement of the President that I just read:

It clearly applies to a nuclear attack by Red China against Taiwan. But does it also apply to a conventional attack by Red China as well? Mr. MCCONAUGHY. I would construe this as not changing the existing understanding. An attack of any sort is envisaged under the treaty provisions, conventional or nuclear.

Mr. PAUL. Now, since it does apply to what is often called nuclear blackmail, what sort of response might be appropriate among

35-205-70-pt. 4- -3

the range of responses this country could make in the event of such nuclear blackmail directed against Taiwan by Communist China?

Mr. MCCONAUGHY. This is pretty much a hypothetical question, I would say, Mr. Counsel.

I do not feel that I am in a position to try to spell out exactly how we could or should react in the event of that frightful event. We can all use our imaginations, but I would not try to stipulate just the course which I personnally think we ought to follow.

Mr. PAUL. I realize that a range of possibilities could, perhaps, be thought of, but when you say it is hypothetical, I must say that hypotheticals are the thing that foreign policymakers deal with all the time, so I wondered if you meant something else when you said it was hypothetical.

I think the subcommittee could find it useful to have some idea of what the State Department thinks might be an appropriate course of action in the event of nuclear blackmail on the basis of these commitments.

Mr. MCCONAUGHY. Well, there just has not been any formulation that I know of, Mr. Counsel. I know of nothing that has been spelled out along this line.

CHINESE CONFIDENCE IN U.S. SECURITY COMMITMENT

Mr. PAUL. Have the Nationalist Chinese sought any reassurance from the new Administration of our continued commitment to them either before or after President Nixon's visit to the Far East? Mr. MCCONAUGHY. I do not know of any formal request for

reassurances.

They have full confidence in the fidelity of our position. I do not believe they consider it necessary. Of course they like to have exchanges with us all along on the security situation, and those exchanges reflect, of course, our continued determination to stand by our treaty commitments. But I have seen no sign of any anxiety on the part of the Chinese that we might be inclined to look to a termination of the treaty.

Mr. PAUL. Have they expressed in recent years any concern that they think our commitment should be more automatic along the lines perhaps of the NATO commitment?

Mr. MCCONAUGHY. Not to my knowledge.

Mr. PAUL. Do they look upon our forces on Taiwan or our ships in the Formosa Straits patrol as forming part of our commitment to them?

Mr. MCCONAUGHY. I would not put it precisely that way. Naturally they look upon our forces as an outward and visible sign of our capability to carry out our commitments. They welcome the presence of those forces, and they think it is logical to have them there in view of our security, our defense interests, not only as to Taiwan and the Pescadores but the entire area.

CHINESE ATTITUDE TOWARD WITHDRAWAL OF U.S. FORCES

Mr. PAUL. Would they feel considerably more concerned if we withdrew various types of our forces there?