811.20 Defense (M) Spain/578: Telegram

The Secretary of State to the Consul General at Algiers (Wiley)

485. For Murphy and Williams. Reference 274 of February 24 from Algiers, 308 of March 1 from Algiers,23 403 March 6 to Algiers, 510 March 6 to Madrid,24 542 March 7 and 594 March 11 from Madrid.

A preliminary review of your 308 indicates that the proposed program is incomplete in that it ignores the underlying objectives of the program developed here, namely, (a) the desire to increase the pre-emptive effect of the United Nations activities in the Iberian Peninsula by utilizing French North African commodities to procure additional quantities of strategic materials over and above the quantities available to us under our supply-purchase programs; (b) the desire to secure certain commodities from the Iberian Peninsula for North Africa in order to relieve the strain on United Nations shipping and productive facilities. These objectives are more fully discussed in the Department’s instruction 323 of March 16.25
For these reasons, we requested in our 403 March 6 that Bataille not commence negotiations prior to a common US-Anglo-French understanding on the objectives and procedures which we have previously indicated as essential. Since it is apparent that the phosphate supplies of North Africa are the chief trading weapon of the French in dealing with the Iberian Peninsula, it is of the utmost importance that no commitments be made regarding phosphates without careful study of our program of reciprocal trade between the Peninsula and North Africa and that no commitments be made which would result in this most important bargaining weapon being sacrificed without an appropriate quid pro quo. In this connection, your attention is directed to the United States Army interest in purchasing a large quantity of lumber from Portugal and the fact that neither shipping nor supply facilities exist here to meet these needs. In cable no. 21 of March 8, from Lisbon to Algiers, the following sentence appeared: “We consider it important to be in a position to offer phosphates in return for lumber and other Portugal supplies that our armed forces in North Africa urgently require.”
As stated in our 403 March 6 we believe that a preliminary understanding with the French in Algiers including their assent to joint negotiations in Madrid and Lisbon and to supervision of the trade by NAEB is of the utmost importance. There is not and has never been any intention of submitting a formula which would by-pass the French. As a matter of the mechanism of operation rather than as a matter [Page 24] of substance, the most satisfactory means of handling the trade is through the USCC and the UKCC. The use of the companies would provide an effective mechanical control over the movement of goods. They would, of course, only act by direction, and not independently. If the French object to such an arrangement, it should be pointed out that this would not conflict with their desire to channel private export or import trade through the High Command. The use of USCC and UKCC merely means that we would be utilizing an already established mechanism for moving goods to and from the Iberian Peninsula. The utilization of such a mechanism in North Africa would serve to continue a tried and orderly procedure. When the goods arrive in North Africa, the USCC and UKCC would channel them through the High Command to the trade. In other words, by utilizing the USCC and the UKCC in the first instance as original consignees and consignors, we would be effecting the type of control we desire in the Iberian Peninsula and in North Africa. This would make possible our essential purpose of coordinating the proposed commercial exchanges at all times with the activities of the NAEB and the US and British missions in Madrid and Lisbon. Like the US and British operations in these areas, they would be considered as combined Allied operations rather than those of a single ally acting independently. The Department and BEW cannot agree to this one segment of what is in effect a joint supply and economic warfare program being handled independently by the French without reference to us.
In regard to paragraph 2 of Madrid’s 542, we are in agreement that all negotiations should be joint in character and that the French should participate as equals. Our suggestion was and is that meetings be had in Lisbon and Madrid among representatives of the British and our Embassy, those French authorities sanctioned by the French High Command and the Spanish Government. The same procedure should be followed in Lisbon, though we should not wish that anyone still attached to the Vichy Legation participate in the negotiations there. It is our belief that if the French participate in the negotiations on a basis of full equality with their U.S. and British Allies, the political aims which our Embassy in Madrid has in mind will be achieved. The exact form of the joint negotiations can of course be best decided oil the spot.
It is recognized that it might well be unwise to insist upon utilization of the USCC and the UKCC in the face of objections from the French. While we would be decidedly reluctant to abandon the mechanism of the USCC and the UKCC for the reasons stated in paragraph 3, any alternative arrangement must obviously operate under the same safeguards and detailed supervision by the NAEB as the USCC and the UKCC would provide in their capacity of original consignors and consignees. Further, it would be the NAEB who [Page 25] would then be responsible for the mechanical integration of the North African trade program with the Anglo-American supply-purchase program on the Peninsula. Finally there should be a clear and unequivocal understanding with the French that they will submit for our approval any proposed program prior to undertaking discussions with the Spanish and Portuguese Governments, and that the French unconditionally agree to the supervision and direction of the NAEB. In the event the French insist on the alternative presented in this paragraph, it is necessary that we know the mechanism and type of control you have in mind; thus, do the French contemplate a commercial company of their own similar to the USCC and the UKCC? If they do not contemplate such an organization, what mechanism will they use and how will they meet deficits or dispose of credits in their balance of trade? Satisfactory answers to these questions should be obtained from Bataille and from the Haut Commissariat.
A further message will be sent as soon as study of your 308 has been completed. In the meantime, in conjunction with the British please discuss the matter with the French and report fully but take no final decision without consulting the Department.

Repeated to Madrid, Lisbon and London.

  1. No. 308 not printed.
  2. Regarding telegram No. 510, see footnote 18, p. 14.
  3. To the Ambassador in Spain, supra.