811.20 (D) Regulations/5730: Telegram
The Ambassador in Spain (Weddell) to the Secretary of State
[Received January 23—2:06 p.m.]
99. My 65, January 15, 1 p.m. The fact that this Embassy has not been negotiating with the Spanish Government on economic matters since last November, taken together with the time which has elapsed and the further fact that our entry into the war has at least temporarily had the effect of almost stopping trade between Spain and the United States, has created a situation in which it is going to be difficult, even with the best will on both sides, to bring about that resumption of trade which we and the British desire.
The Department will recall that [following?] our economic conversations with the Spaniards prior to December of last year the Spanish Government placed as many as 30 ships in the trade with the United States which carried zinc pyrites, cork, olives and other commodities to the United States and which relieved American vessels from the necessity of being used in this trade. Furthermore, at the Department’s request the Spanish Government informed us of the quantities of materials which could be procured here and gave an indication of probable prices. The Spanish Government has facilitated the export of certain materials acquired by direct purchase some of which are of strategic value and as stated important shipments of these latter materials to the United States have been made in Spanish vessels. As an example of the continued willingness of the Spanish Government to cooperate the Spanish ship Motomar which is leaving Cadiz for New York today carries 400 tons of cork.
On the other hand our Government increased restrictions against the export to Spain of petroleum products and was unable to grant export permits for other materials urgently needed by Spain including fertilizers, nor has it thus far given any indication of the commodities or quantities which could be made available to Spain or at least for which export permits could be granted although the Spanish Government submitted a list of its urgent requirements. From the Spanish point of view these conversations were unproductive and did not prevent a progressive deterioration in Spanish-American trade.
The Department’s memorandum embodied in its telegram No. 18, January 8, 7 p.m., requests specific information on the petroleum situation. A part of that information was transmitted with my despatch No. 1342 of December 23, 1941,15 in which there was also transmitted a summary of the reasons given by CEPSA and CAMPSA [Page 261] as to why they want to be now in a position to give information in as great detail as required. In the same despatch I reported the willingness of these companies to give full cooperation to any representative of our Government who might be sent here for the purpose of developing further information. Will the Department please inform me whether the data transmitted is satisfactory; if not please inform me what more the Department requires, bearing in mind that neither the Spanish Government nor the petroleum industry are able to turn out quickly such detailed information as is currently available to our own Government and petroleum industry even if the most conscientious effort is made. I would also like to know whether Ambassador Cárdenas furnished the Department with any of the assurances requested in the memorandum. If not I shall press for such assurances.
With reference to the sixth paragraph of the Department’s No. 32, January 12, 8 p.m., appertaining to military stocks in the Spanish Protectorate, Ackerman has just returned from Tangier where this question was discussed with Childs16 and with representatives of the two American and the one British oil company. These representatives have been quietly attempting to obtain the real facts and their maximum estimates were, respectively, 8,000, 5,500 and 3,000 tons. The middle estimate was given by the representative of the Socony Vacuum who appears to be best informed, based on certain known deposits, personal observation and the drum situation although he has not made a personal survey of the entire territory. Ackerman could learn of nothing to support the Department’s belief that military stocks attain the figure of 15,000 tons and is inclined to believe they are probably between 5 and 6 thousand tons. Considering the extent of the territory, the size of the army there which is believed to be equipped with approximately 1,000 motorized vehicles and the lack of rail transport, military stocks appear to be modest. The army does not appear to be increasing stocks although it is satisfying current requirements from current imports. These current military requirements probably represent between 50 and 60% of current imports used mostly for transport services. The shortage of gasoline for civilian uses is not serious although restrictions prevent the use of civilian cars during Sundays and Mondays. However, there appears to be an acute shortage of lubricating oil or otherwise gas oil for civilian use. No lubricants have been received since May and stocks are entirely exhausted although the military still has developed reserves. Gas oil shortage threatens the continued operation of power plants and has restricted fishing activities.
I have given careful consideration to the Department’s desires to prevent an increase in military stocks in the Spanish Protectorate. [Page 262] As the military authorities are in supreme command in that area they can at any time take over any or all stocks hence it is difficult to find a solution to this problem. However, I believe that the best way to assure against diversion of stocks for military purposes is to force a reduction in imports to that area. So long as CEPSA is given crude it will give preference to distribution of its processed products to the territories in which it has a primary interest i. e. the Protectorate and the Canary Islands, unless we insist that a part of the processed products obtained from crude be made available to the mainland. In this connection I desire to call to the attention of the Department that the American and British oil companies which formerly compete[d] with Atlas, the CEPSA subsidiary in Tangier and the Spanish Protectorate, have been effectively prevented from distributing gasoline by the refusal of Spanish exchange authorities to grant dollar exchange for such imports, an action which in effect has given Atlas a monopolistic position. If we could insist upon participation of these companies in distribution in that area we would be in a much better position to control or at least to know definitely of deliveries to the Allies.
Reverting to broader questions of negotiations an [apparent omission] now seems have been reached, apparently the Department is awaiting move on the part of the Spanish Government through its Embassy at Washington and the Spanish Government is waiting to hear exactly what the United States wants. I believe this deadlock can be corrected by my direct intervention with the appropriate authorities here.
In order to get under way a definite proposal I suggest that the Department authorize me to make the following proposal to the Spanish Government:
- 1.
- That if the Spanish Government accepts in principle the joint method of control of petroleum products outlined in the Department’s memorandum set forth in its telegram No. 32, January 12, 8 p.m., and has given or will give the assurances required thereunder we will immediately send experts to Spain to study the entire petroleum question.
- 2.
- That the United States and the British Government in cooperation will permit the purchase and transport during the months of February and March of a total not to exceed 40,000 tons per month of petroleum products (approximately one-half the monthly quotas agreed to by the British last year). Deliveries to begin immediately. Of this total CEPSA may import 20,000 tons of crude oil. From this it must make available to CAMPSA for consumption in Spain a quantity of products representing one-half of this tonnage and the products of the remainder may be available for the Canary Islands, Tangier and the Spanish Protectorate; that CAMPSA may import in proportion to the quantities from CEPSA a quantity not to exceed 20,000 tons. In this tonnage there will be included for distribution by Socony Vacuum, Atlantic Refining, Standard of New Jersey and possibly [Page 263] the Shell at Tabriz not more than 2,000 tons monthly of lubricants of which at least 75 tons must be destined to Spanish possessions.
- 3.
- That we will grant future permits for importation into Spain of 5,000 tons of sulphate of ammonia, 2,000 tons of sulphate of copper and machinery now manufactured especially for Spain and held in ports to a value not exceeding $100,000 the Spanish Government to select the machinery according to its most essential economic needs.
In return the Spanish Government must make available shipping facilities and export permits during the 2 months mentioned to cover 1500 tons of cork up to 10,000 tons of zinc concentrates, 2000 tons olive oil and 5000 flasks of mercury; that prices are to be agreed upon between buyer and seller and the Spanish Government is to impose no obstacles to the consummation of such contracts. Both parties understand that this arrangement is merely temporary and will be revised as soon as both Governments can agree upon a more extensive program. During the interim the oil companies will submit monthly figures following the enclosures submitted with my despatch No. 1342 of December 23, 1941;17 the American oil experts will be given full facilities to check these figures and prepare recommendations on which future supplies may be based. The Spanish and American Governments will also make known to each other the exact quantities of materials and services which each desires from the other during the second quarter.