811.20 Defense (M) Portugal/145: Telegram
The Minister in Portugal (Fish) to the Secretary of State
[Received 11:43 p.m.]
1058. Legation’s 1046, August 14, 9 p.m. I have had a conference with my British colleague who read me a draft of a telegram which he proposed to send to London. In effect it recommends signing of the wolfram agreement since the alternative would be a break in relations involving loss of Portugal’s wolfram and acquisition of it by the enemy, establishment of a real blockade of Portugal and denial of refueling facilities for ships and planes at Lisbon and in Azores. It points out, however, that unless some action is taken to counteract the [Page 224] ultimatum character of Salazar’s communication he will have acquired such a primacy of position as to make profitable dealing with him well nigh impossible. On the other hand the British Ambassador is convinced, and I agree with him, that Salazar has in his own mind faced up to the implications of such a break and might well in certain circumstances prefer that course of action.
Due to reduction in price of wolfram the production of free wolfram has in recent months so declined as to make it entirely probable that under existing arrangements Germany will not obtain the promised 2,400 tons. In this connection Salazar has been under strong German pressure which always carries the threat of sinking Portuguese ships.
The acute shortage of petroleum products is having an increasingly adverse effect on Portuguese economy and the cost of living has risen decidedly due to repercussions of war. In these circumstances when petroleum supplies are flowing at such a low level and tanker difficulties cloud the future, the law of diminishing returns operates against the employment of petroleum control as an instrument of pressure.
The British Ambassador has embodied in his telegram a suggestion that if he is authorized to sign the wolfram agreement, that at the same time he present Salazar with a demand for example for the signature within a week of a new war trade agreement and/or a supply purchase program as drafted by the British and American missions. These suggestions seem to me to have the practical disadvantage of being susceptible to complete refusal which would result in an overt break at a time when it may embarrass our dispositions in war.
For my part I believe that one of the means of obtaining the wolfram agreement and at the same time of rapping Dr. Salazar’s knuckles, without these disadvantages, is to challenge him on an intangible such as the continuance of the venerable Anglo-Portuguese alliance. Naturally I refrained from suggesting to the British that they “whistle their ancient ally down the wind” hut perhaps they will worry this out for themselves over the week end.