TOP SESRET Secretary Dulles undertook tc explain to the Presiden what the issues were. Mr. Cutler followed with a fuller e:plar. tion, in terms of the past history of our policies toward Taiwa He cited paragraph 3 of existing U. 5S. policy toward Formosa, w.1 set forth the missions of the GRC armed forces as fellows: "3. Continued develonment of the military poten of GRC armed forces (a) to assist in the defense of F mosa and the Pescadores and (b) to take action in def of the GRC-held off-shore islands, equipped and train: to contribute to collective non-Communist strenvtn in Far East and for such other aztion as may be mutuell. agreed upon under the terms cf the Mutusl Defense Tre. Mr. Cutler then explained thet the dc:fference in interpr Ye this paragraph derived from disasreement as to whether t eth bution of the GRC armed forces to collective non-Conmunist in the Far East and for such other action as might be muvually vereed upen under the terms of the Mutuel U-fense Treaty, constituted we DEe rate end distinct missions, or were merely by-procucts cf *he f wee two missions of assisting in the def-nse of Formosa aril im tne alae fense of the GRC-held off-shore SAGs . Ves a; The President replied that this was not vhat he wre about. Here in the Council we were writing a policy Tor ourse: end we do not have any obligation to tell all about it to Chian. Kai-shek. What the President said he was after was the acvual fect of our language, because he emphatically acreed with “he 3° Department on the danger of destroyince Nationalist hopes of ar mate return to the mainland. ‘This, of course, @ic not mean toa were obliged to tell the Chinese iat.onelists everything «else 7» we have in our mind about them At this point Secretary Ducles broke in to state was precisely the intention of the sentence proposed “y of the Budget in the proposed revision cf paragraph 17 of NSt where it is suggested that we ‘make clear to the GRO theat--exc the event of substantial change in the world situstior or uf to tions on the mainland of China--our future military and econon: sistance programs will not be premised on the assumpt or the return to power on the mainienc.” Mr. Cutler explained the basis for the Budget's -cint view as expressed above, and aiso called attention to the urrum of the State Department representetive on the Flarmin> Foard +h. Wwe ere already telling the Chinese Nationalists what the Bud-> proposes that we tell them in she Bucset revision of pera-rarr Speaking with emphas.s, t!.. agreed with the revision of perecrep! the Budget. Only the hope of - itunate REPRODUCED AT THE DWIGHT D. , | , Onnicct ae nea a hy 9 J I nm EISENHOWER LIBRARY te SE SECRET

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