811.20 Defense (M) Spain/695: Telegram

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

671. From Murphy. My 642, April 17, midnight. The program for trade between French North Africa and the Iberian Peninsula as [Page 30] outlined in Department’s instruction 323, March 16 to Madrid and Madrid’s reply No. 910 of April 14, 5 p.m., seems to be based on the following conditions:

“Our control over French North African commodities.”
Entire control of the trade by UKCC and USCC.
Need for fulfilment of our commitments to Spain and Portugal in respect of trade with North Africa.
The use of North African products in furthering our economic warfare plans in the Iberian Peninsula.
The export to North Africa of commodities needed here and also certain commodities which are not needed in this area and for which no warehouse facilities are available (any merchandise coming here must go immediately into military or trade channels: furthermore, port facilities are now being used at their maximum).
Any peseta and escudo balances in favor of North Africa would be exclusively controlled by the UKCC and USCC.
Some undefined French representation is envisaged.

It would be difficult to obtain wholehearted French acceptance of this program. The regime here is sensitive as to its position, is resentful of any approach which tends to treat this as an occupied area or denies it a position of respect. We feel we have gotten the French to come quite near what we want, their position being outlined in my 642, April 17, midnight. They feel strongly about their position in the actual negotiations with Spain and Portugal not only insofar as those two countries are concerned but also the French people in this area. If as outlined in my telegram the French have large escudo, franc and peseta balances in Spain and Portugal which have arisen from prior trade, the program does not seem to take this factor into consideration. In Portugal the French maintain that the lumber for which they have used their escudo credits [apparent omission]. If this be true and we guarantee return phosphate shipments for any lumber sent to this area we permit the Portuguese to get away with double bargaining.

We do not consider that any of the direct instructions to us have involved a specific detailed commodity program which we could discuss with the French. We wonder, therefore, whether we should consider the Department’s mail instruction 323, March 16 to Madrid as the final detailed list to be used in our negotiations with the French, or whether we may expect to receive a screening of Bataille’s list submitted in our 308, March 13 midnight.33

Repeated to Lisbon and Madrid. [Murphy.]

  1. Not printed.