IS It a Godsend or a Giveaway?

OFFSHORE PROCUREMENT

THE greatest program to provide J. dollar exchange for Europe since the Marshall Plan is the Offshore-Procurement Program. Through OSP, the U.S. buys war materials from European factories to equip NATO armies. In dollars, it amounts to far more than U.S. citizens spend through normal trade channels for Swiss watches, French wines or British sports cars. Yet, for all its size and importance, Offshore Procurement is one of the least talked about and least understood of all the many props the U.S. has built to bolster its allies.

To some, OSP sounds like a gigantic giveaway. Since 1952, $2.5 billion has been set aside to equip NATO soldiers with everything from Italian minesweepers to German radios. "We just buy from them what they need," quipped one brasshat, "and give it back." On the other hand, many careful planners think OSP is a godsend--the cheapest, most efficient way for the U.S. to defend itself. With OSP dollars, they argue, the U.S. gets such unique military bargains as the services of the Turkish army, which fights gallantly on 21-c- per man per day.

Good or bad, OSP is under attack from all sides. In the Administration's economy drive, all overseas aid will surfer, and OSP may be the first to go. Washington already talks of cutting OSP funds from $1 billion to $500 million next year. The program will also become increasingly hard to defend if unemployment rises in the U.S. Political pressure will build up for more defense contracts in jobless areas at home, though it can be argued that dollars spent on guns abroad eventually trickle back to the U.S. through increased European orders for civilian goods. Furthermore, Congress is worried about Communist infiltration of European factories working on OSP contracts; Senators Styles Bridges and W. Stuart Symington, on their way to Europe to investigate OSP progress, will check rumors of Reds in French jet-fighter plants.

But the greatest threat to the program comes from Europe itself. By act of Congress, at least 50% of all OSP funds must now go to a formal European Defense Community or nations that belong to it. Europe has dragged its feet on EDC, with the result that of the $1 billion available for OSP in 1054 hardly any has been obligated. If the EDC plan falls through, OSP may well die with it.

The program was born two years ago out of hard military and economic necessity. The Western allies needed arms, and their factories needed work. OSP was a lot easier for Congress to swallow than outright grants and arms shipments, and it was a way for U.S. dollars to get around U.S. tariff barriers, help Europe towards "trade, not aid."

OSP defense orders have performed no miracles, but they have brought some big improvements in Europe's military and economic position. By the end of 1954, OSP dollars combined with straight U.S. arms shipments will give NATO 47 fully equipped frontline and support divisions, with enough material in reserve for another 47 divisions. Some $878 million has gone for ammunition and explosives, $442 million for planes, another $475 million for ships and naval gear, electronics equipment, tanks and weapons carriers. In many cases, the money has bought more than it would at home. Example: a U.S. M-47 Patton II tank costs $157,000, but the comparable British Centurion costs only $120,000, and there are no heavy shipping charges to pay.

OSP has given European heavy industry a healthy boost, though some manufacturers complain that they are still restricted to relatively light items such as rifles and small patrol boats while the U.S. continues to produce the heavy artillery and heavy planes. Throughout Europe, idle plants are being tooled up for production, and some new factories built to handle U.S. orders. OSP contracts for 802 jet fighters mean that British and French planemakers can set up production lines, something that would have been economically impractical if they had to depend entirely on their own government's orders. OSP has also spurred hotter competition, more and better scientific research. A new French radio capacitor is so good that U.S. firms are now making it; Belgium has found a better way to make submarine nets.

OSP has also worked some big, if short-term, improvements in the balance of payments. Italy alone has enough orders on hand to keep 230,000 men busy into 1955.

If OSP dies because of the delay of European nations over EDC, the U.S. will still have to find some way of arming Europe. And it might not be easy to devise a plan that combined military and economic benefits. The end of the program would also intensify the problems of U.S.-European trade. In short, it looked as if OSP was a program that might not be truly appreciated until after it was dead.

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