811.05151U/5–1454
Memorandum of Conversation, by Jerome R. Lavallee of the Office of African Affairs
Subject:
- General Economic Discussion.
Participants:
- Mr. John E. Utter, AF, Chairman
- M. Jean Jurgensen, Chief of the African Section, French Foreign Office
- M. Francois de Quirielle, Assistant to M. Jurgensen
- M. Gabriel van Laethem, First Secretary, French Embassy
- Mr. Moran, Foreign Operations Administration
- Mr. Blankenheimer, Department of Commerce
- Mr. Gorlitz, ED
- Mr. Thompson, ED
- Mr. Longanecker, AF
- Mr. Feld, AF
- Mr. Lavallee, AF
Private American Investments
M. Jurgensen opened the discussion by stating that France is very desirous that foreign capital be invested in its Overseas Territories in [Page 248] Africa South of the Sahara. At the same time, he was conscious of certain difficulties which stood in the way. According to M. Jurgensen prospective investors are basically interested in political and economic stability. He believed that the French Territories presented a greater degree of political stability than say, the neighboring British Territories. In spite of their progressive decentralization the French Territories form a permanent part of the French Republic. Therefore, they come under French Law. In addition there is no danger of nationalization taking place.
With reference to economic guarantees he listed some of the difficulties as follows:
- 1.
- The problem of double taxation must be overcome;
- 2.
- The possibility of repatriation of capital or earnings must be established—and this may necessitate the adoption of many lengthy measures;
- 3.
- Participation with French capital must be clarified. The French will permit American capital to come into the Territory as a majority holder, except in the few cases where the undertaking would constitute the backbone of the economy of the country and, would, therefore be politically important. In such instances the French Government would insist on at least a 50–50 basis. M. Jurgensen added however that there is no overall fixed policy concerning this matter.
M. Jurgensen went on to list two specific cases which, according to him, are very “interesting”:
1. The manganese deposits at Franceville,1 French Equatorial Africa.
A company (COMILOG) has been formed to explore further and, perhaps later, to exploit the deposit. United States Steel has a 49% interest in this company. The French are very much interested in the future action which U.S. Steel will take in this matter.
2. Fort Gouraud2 iron ore deposits.
These deposits with a potential of 100 million tons of ore which is estimated to be 69% iron, the highest percentage in the world, should prove of interest to United States capital. Since the ore has to be evacuated via Spain’s Rio de Oro, a Company has been formed to build a railroad to the Spanish border. This Company includes French, British and Canadian interests and has a capitalization of 15 billion francs. A second company must now be formed in order to build a railroad inside Spanish Territory and in order to enlarge the port of Villa Cisneros. M. Jurgensen pointed out that this was a large undertaking and that only a big American company could do the job. Consequently, the French were ready to do everything possible in order to attract American investors.
Mr. Thompson stated that the idea has grown over the years that France is not interested in receiving American capital. Up to now [Page 249] there is a strong impression that American investments are permitted and not invited. There now seems to be a new point of departure and this fact should be publicized. He went on to state that the question of majority control is very important to American investors. Another complaint has been the centralization of power in Paris. Up to now information on investments in Overseas Territories has to be obtained in Paris and this round-about way constitutes a source of discouragement and difficulties for the interested investor.
Mr. Blankenheimer stated that it will be necesary not only to make known this new French policy throughout the country but that it will have to be followed with deeds and acts. He added that the Department of Commerce is equipped to publish and disseminate information regarding business opportunities. Mr. Blankenheimer suggested that it would be helpful if the French issued a Basic Policy Statement and maintained up-to-date information on business opportunities. The point of contact with the Department of Commerce could be either through our Consuls abroad or the French Embassy here in Washington.
M. Jurgensen replied that he did not believe that it would be politic for the French, internally speaking, to give out a policy statement. He added that, of course, they could improve their regulations governing investments and these could be disseminated through publications or other media. He also added, with reference to criticisms regarding centralization of information in Paris, that direct contact with appropriate services in Paris was much better than contact with local people who might be cool to the idea of foreign investments coming into their area. He added that French officials, in Paris, particularly in the Foreign Office could be of much assistance to specific American investors.
Mr. Utter pointed out, however, that those who might be interested in making investments in Africa would be travelling through Africa and would wish to obtain the necessary information on the spot and not be referred to Paris.
Mr. Thompson then made the following points:
- 1.
- The problem of double taxation could be overcome;
- 2.
- The repatriation and transfer problem could also be solved;
- 3.
- The problem of majority control is a very important one and should be further clarified;
- 4.
- The impression that the Metropolitan Powers regard their Overseas Territories as private reserves must be corrected. Investments must be welcomed and not merely tolerated.
M. Jurgensen pointed out that the French authorities in the highest circles have always favored foreign investments. Therefore, it is necessary for them to be informed concerning a prospective foreign investor [Page 250] so that, if necessary, they be in a position to prod some of the local people who might be cool or chauvinistic.
Returning to the question of making available as efficiently and quickly as possible the information which the prospective investor might desire, Mr. Moran stated that the small investor, with $200,000 or less to invest, could not afford to run to Paris or to hire agents but had to get action on the spot within a few days. If he has to be “red-taped” through Paris, Mr. Moran concluded, then 90% of the small investors will be lost.
Mr. Gorlitz agreed that time was very important to the small businessman. He added that some countries had established offices in this country for the specific purpose of assisting the prospective investor by giving or obtaining for him the necessary information.
Mr. van Laethem pointed out that M. Massin, an Assistant Commercial Attaché of the French Embassy was stationed in New York and he dealt with economic information concerning the Overseas Territories.
Mr. Thompson made the statement that if the French desired to attract foreign investments it would be necessary for them to do a selling job. He cited as an example the Mission which Puerto Rico sent to Milwaukee and the success it had in obtaining investments.
Mr. Gorlitz agreed with these remarks and emphasized the fact that to be successful this “selling job” would have to reflect a sincere desire on the part of the French to attract investments.
M. Jurgensen concluded his remarks on this subject by stating that they would like to receive our reaction regarding Fort Gouraud and Franceville.
The Commission for Technical Cooperation in Africa South of the Sahara.
M. Jurgensen in his opening remarks stated that he was specifically addressing his remarks to FOA. He then proceeded to give a short history of CCTA3 (CTCA); its first meeting held in London in September 1949; the composition of its membership, namely Belgium, France, Portugal, Southern Rhodesia, Union of South Africa, the United Kingdom; and its general functions, which are directed to the coordination of programs and information for the solution of specific common problems of a technical nature.
M. Jurgensen stated that he believed that the French could do one of two things:
- 1.
- They could strengthen their links and establish a permanent correspondence between CCTA and private American universities.
- 2.
- One of the functions of CCTA is to promote joint schemes to undertake certain common problems in a particular area. This had been discussed in Paris with Mr. Saxe,4FOA, who appeared interested in assisting a joint Franco-British-Liberia fight against trypanosomiasis. According to Mr. Saxe, this is one of the schemes to which FOA could lend assistance.
In conclusion, M. Jurgensen stated that the French desire was only for symbolic assistance to be given CCTA. It would then be possible to point to United States participation in these joint schemes.
Mr. Moran stated that, of course, FOA is interested in participating in those schemes which are efficient and in which it would be possible to save time and money by not duplicating action. He said that FOA is prepared to assist CCTA. However, he pointed out that it would be easier for FOA to participate in such schemes if Liberia could be included along with the French and British.
M. Jurgensen assured Mr. Moran that the door is open for Liberia to participate. As a matter of fact Liberia had been asked to join last year.5 He also pointed out that it is not necessary for Liberia to become a permanent member of CCTA in order to participate in specific schemes on a regional basis.
Mr. Moran added that FOA has 4 technical experts who are now abroad and he believes it would be beneficial for them to sit as observers at some of the CCTA meetings. M. Jurgensen agreed and suggested that the FOA technicians communicate with the appropriate persons.
Mr. Moran pointed out that it would be helpful for the CCTA to receive information on the research which is being done in this country, and indicated that FOA might assist CCTA members who wished to establish contacts with American universities. Mr. Moran suggested that a contract might be drawn up with an American university which could send and receive information, act as a clearing house and arrange for experts to visit CCTA in the field. However, it would be necessary for the British or the French Government to make a firm request to FOA for this type of assistance. He indicated that he would discuss this problem with his people in Washington and would write to Mr. Horace Reed, who is the Chief of the FOA mission in Paris.
M. Jurgensen said that the French were interested in sending to the United States, as it had been suggested, four or five persons to study techniques of public relations in the economic field. Mr. Moran told him that France should make an official request for this. [Here follows a discussion of surplus equipment.]