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the sum of $385 million referred to above, or its equivalent in French francs, is considered by the United States Government to represent the full amount of 135 billion francs requested in the memorandum of September 3, which stated that the complete execution of the recommendations of General Navarre was subject to the grant of this additional aid. It is of course understood that in the review in detail of the cost of financing the various components of these plans, savings might be developed which would reduce the amount of additional aid required. Any savings developed would be applied first to reimburse the French Government for any expenditures it may have to make in order to meet any shortfall in the proposed contribution by the Associated States of the equivalent of 60 billion francs, and thereafter to reduce the ceiling figure of $385 million in additional aid described in this letter.

V. The United States Government concurs in the proposal made by the Trench representatives that the process of refining the estimate of costs, together with the development of procedures for determining the requirements for funds and for making the additional aid available, should be worked out in detail between representatives of the Governments concerned, and should be carried on continuously throughout the calendar year 1954. It is understood that the procedures to be worked out will be based upon the principle that the United States Government will provide the financing for agreed franc and/or piaster expenditures (outside the 60 billion francs referred to in paragraph IV above) relating to the National Armies of the Associated States, as such expenditures actually arise, up to the aforementioned maximum of $385 million computed at the rates of exchange current at the time when the expenditures are made. Any changes in costs which may result from any adjustments in the rates of exchange will of course be taken into account in determining the amount of United States financing to be made available, provided, however, that the total amount of the additional United States assistance described in this letter will in no case exceed $385 million.

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