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26 SUKVEY OF CURRENT BUSINESS February 1972 to the dollar resulted in a twofold increase in the sales of piastres to individuals through official outlets and thus some of the personnel spending which was previously lost to the black market is now included in the reporting system. Total outlays in Vietnam in the first half of 1971 were approximately $520 million at an annual rate, essentially unchanged from 1970. The withdrawal of American GI's from Vietnam has had as much impact on certain other countries as on Vietnam. Spending by servicemen on rest and recuperation leave in Australia, for example, channeled more than $80 million into that economy during the past 4 years. Other "R and R" leave centers were located in Hong Kong, Singapore, Bangkok, Taiwan, and Okinawa, and a total of more than $100 million was spent annually in these places when American forces in Vietnam were at their peak. Such spending is estimated to have decreased to about $50 million in 1971 and is expected to decline further in 1972. Military expenditures in Korea, after peaking at over $360 million in 1969, declined slightly in 1970 and in the first half of 1971. An infantry division was withdrawn in 1971 but some 40,000 U.S. military personnel remain. Also, there have been substantial U.S. expenditures in Korea associated with Korean support efforts in Vietnam, involving troops, civilian technicians, and construction materials, particularly cement. The other major recipients of U.S. defense spending, as shown in table 2, are the United Kingdom, Canada, the oil-producing countries in the American Republics and Caribbean area, the Ryukyu Islands (Okinawa), Philippines, and Thailand. There are a number of major U.S. air bases in the United Kingdom, and Canada is an Table 2—Defense Expenditures Abroad for Goods and Services, by Major Country r Total Western Europe.. Belgium/Luxembourg D enmark/ Greenland France Germany __ _ Greece.. _ Iceland _ Italy Netherlands-. Norway Spain.. Switzerland Turkey . United Kingdom Other and unallocated . Canada _ Latin American Republics Other Western Hemisphere- Bermuda _ Netherlands Antilles- Trinidad and Tobago _ Other and unallocated Australia, New Zealand, and South Africa. - Other Countries. Bahrein... Japan Korea _. ._ . Morocco Philippines _ Ryukyu Islands Saudi Arabia Taiwan Thailand Vietnam Other and unallocated Jan.- June 1960 3,087 1,652 28 51 274 649 19 14 116 37 17 64 9 57 287 30 387 59 89 13 60 124 75 825 36 412 94 26 47 78 42 255 27 53 1961 2,998 1,531 12 37 286 636 18 14 97 28 14 54 6 54 225 50 357 57 100 14 63 20 3 98 855 43 392 112 21 49 93 45 238 212 57 [Millions of dollars] 1962 3,105 1,633 16 34 268 749 20 12 114 34 15 52 5 55 197 62 326 76 87 14 53 173 103 880 39 382 103 18 51 96 44 22 30 237 58 1. For quarterly data by area see line 17, table 9, of the quarterly balance of payments presentations in the SURVEY OF CURRENT BUSINESS. 2. Includes Cambodia and Laos. NOTE.—See table 1 for other notes. Source: U.S. Department of Commerce, Bureau of Economic Analysis, from information made available by operating agencies. 1963 2,961 1,523 12 42 243 691 27 10 93 31 14 49 8 50 184 69 296 79 92 14 51 21 6 105 866 35 368 90 16 46 97 43 20 27 52 72 1964 2,880 1,492 11 36 218 694 28 11 102 40 24 49 10 58 173 38 258 86 94 10 54 24 6 103 847 31 321 917 58 115 37 21 34 64 68. 1965 2,952 1,468 12 40 208 714 31 13 102 41 24 45 11 42 154 31 177 89 80 8 33 32 7 57 1,081 36 346 974 81 123 36 21 70 188 79 1966 3,764 1,535 14 37 206 770 24 17 106 43 28 50 10 49 146 35 205 91 68 9 21 29 9 59 1,806 38 484 160 5 147 150 51 60 183 408 120 1967 4,378 1,616 35 36 97 837 26 24 102 49 38 48 12 48 210 54 232 102 81 11 43 198 29 2,318 56 538 237 6 167 188 53 70 286 564 153 1968 4,535 1,536 37 34 25 878 29 18 106 41 32 43 10 49 173 61 285 105 82 8 44 228 33 2,494 61 580 302 6 171 201 91 76 318 556 132 1969 4,856 1,628 39 33 18 948 23 17 122 44 18 47 12 43 208 56 296 112 64 8 33 167 42 2,714 50 651 364 6 189 229 92 80 264 576 213 1970 4,851 1,774 37 30 17 1,080 23 21 108 448 53 12 41 228 72 253 118 51 8 17 18 8 48 2,607 40 670 323 7 174 249 79 83 226 527 229 Jan.- June 1971 2,388 974 19 16 11 596 14 11 59 24 5 29 7 17 123 43 101 54 26 38 114 19 1,214 30 308 148 4 75 127 34 37 99 258 94 important supplier of spare parts for U.S. military equipment. Bases in the Ryukyu Islands, Thailand, and Philippines have provided important staging areas and other forms of support for U.S. operations in Vietnam. U.S. Military Shipments Transfers under U.S. military agency sales contracts were running at an annual rate of $2.2 billion in the first half of 1971 (table 3). Such shipments totaled more than $10 billion from 1960 through 1970, with 70 percent of that total delivered during the 1965-1970 period. This sales program has provided our allies with modern equipment for their defense requirements and has helped to standardize cooperative logistics and equipment; the expansion of the program reflects the emphasis on military sales as a means of offsetting the foreign exchange costs of American troop maintenance and other defenserelated expenditures in Europe and Southeast Asia. .Transfers under Foreign Military Sales (FMS) Contracts account for 95 percent of the total shown in table 3 and have been primarily to developed countries. FMS transfers represent deliveries of goods to and performance of services for foreign governments by U.S. military agencies. In this context, "delivery" of goods refers to the transfer of goods from the U.S. Government to foreign governments for use abroad or in the United States and to the transfer from stocks at U.S. military installations abroad. The equipment involved largely consists of advanced weapons systems, aircraft, and associated parts and spares. Also included are training in the use of this weaponry, and other less sophisticated equipment such as tanks, ammunition, and communications gear. Transfer is effected upon change of title or performance of service. The other 5 percent of military transfers consists mainly of sales of surplus or excess property, mostly at scrap or salvage value, petroleum products and other goods and services furnished to foreign naval vessels and aircraft, and deliveries of material and services under
February 1972 SURVEY OF CURRENT BUSINESS 27 logistical support programs furnished to foreign countries or international organizations. Also included is the receipt of foreign currencies, contributed by foreign governments under military assistance programs and used primarily for the support of our military missions abroad. Transfers under U.S. military agency sales contracts shown in table 3 differ from the military exports identified in Census documents in that the latter measures only those military goods which cross U.S. Customs borders. It should also be noted that the figures in table 3 include only that portion of military sales transactions which is channeled through the Department of Defense. Sales of military equipment negotiated by U.S. private firms are included in the private merchandise account in the balance of payments statistics. (For further discussion of the relationship of defense shipments to U.S. trade, see the statistical note at the end of the article.) Under a series of agreements beginning late in 1961, the balance of payments impact of disbursements for U.S. forces stationed in Germany was to be offset by large purchases of supplies and equipment by the Federal Republic of Germany from the U.S. Government and from private U.S. suppliers. As a result of these agreements, Germany has been the largest Tatol United Kingdom European Economic Community Other Western Europe Canada Latin American Republics and other Western Hemisphere Japan Australia, New Zealand, and South Africa. __ Other countries in Asia and Africa International organizations and unallocated Memorandum: Merchandise exports transferred under U.S. military agency sales contracts identified in Census documents 2 . . , ,. -„ „, 1. For quarterly data see line 3, table 2, and line 3, table 9, of the quarterly U.S. balance of payments presentations in the SURVEY OF CURRENT BUSINESS. 2. Exports of military equipment under U.S. military agency sales contracts with foreign governments to the extent such exports are identifiable from Census export documents. For quarterly data see line 7, table 4, of the quarterly balance of payments presentations in the SURVEY OF CURRENT BUSINESS. buyer of U.S. military goods and services under military agency sales programs, receiving 30 percent of all shipments from 1960 through 1970. The United Kingdom has also been a large buyer of U.S. arms, accounting for 13 percent of total deliveries from 1960 through 1970. Contracts for F-4 fighter aircraft and C130 cargo planes pushed deliveries to the United Kingdom to an average of $300 million a year in 1967-69, up from a previous high of $78 million ia 1966. As major deliveries under these contracts were completed, military exports to the United Kingdom declined to $175 million in 1970. Over the past 10 years, other Western European countries combined received about 20 percent of total U.S. military exports. In 1965, Australia increased her defense budget to allow for a larger armed force and additional defense procurement, subsequently ordering a number of C130 cargo planes and other aircraft from the United States. These aircraft sales, combined with later sales of several destroyers and other military items, resulted in deliveries averaging $125 million in 1967-69, up sharply from previous levels. Deliveries to Australia of over $135 million in 1970 were associated with the leasing of 24 F-4 fighter aircraft pending delivery of the technically troubled F-lll. Since 1965 New Zealand has also increased its Table 3.—Transfers Under U.S. Military Agency Sales Contracts 1960 335 10 196 16 35 19 20 5 27 6 232 1961 402 17 224 26 38 17 24 6 27 24 232 1962 656 18 463 58 26 17 24 19 19 14 327 [Millions of dollars] 1963 657 13 477 50 18 17 25 26 20 11 394 1964 747 43 477 83 34 18 16 40 35 1 420 1965 830 56 397 63 60 31 31 96 95 621 1966 829 78 407 64 40 22 24 67 128 379 purchases of U.S. arms. The two countries combined received 8 percent of total U.S. deliveries from 1960 through 1970. Military exports to other countries in Asia and Africa amounted to $1.9 billion in the period 1960-70 or 19 percent of total deliveries in the period. However, $1.7 billion represent shipments from 1965 through 1970. The sharp increase is largely attributable to two factors. First, several countries which had previously been recipients of military goods under U.S. grant aid programs have in recent years become purchasers of military goods under credit arrangements made available by the Export-Import Bank or through special credit accounts provided by the military assistance program. Second, sales to Israel have increased since the Middle East conflict in 1967. Special credit arrangements provided to Israel through the military assistance program enabled her/ to procure U.S. fighter aircraft and other military equipment. Transfers of military goods and services to Canada represented 4 percent of the total from 1960 to 1970, while the American Republics and Japan each accounted for 3 percent. However, substantial Japanese purchases of military equipment directly from U.S. private firms are included in the private merchandise trade account. 1967 1,240 328 428 115 52 27 38 132 120 640 1968 1,395 291 363 124 39 63 31 179 306 784 1969 1 515 293 395 175 45 29 18 103 457 1, 172 1970 1,480 177 270 152 35 41 25 168 612 1,010 Jan.- June 1971 1 097 57 355 74 34 18 12 47 501 653 Total 1960-70 10 086 1 324 4,097 926 422 301 276 841 1,846 56 6,211 NOTE.—Details may not add to total because of rounding. Source: U.S. Department of Commerce, Bureau of Economic Analysis, from information made available by operating agencies.
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