811.20 Defense (M) Portugal/837: Telegram

The Secretary of State to the Minister in Portugal (Fish)

710. Your 701, March 30 and 755, April 4 [3] re trade with French North Africa.36

Department and Board of Economic Warfare are anxious to get Iberian-French North African trade on regular basis as soon as possible and consequently do not favor protracted period of ad hoc exchanges. However, it will take considerable time to negotiate a long-term program along the lines suggested in Department’s instruction of March 16, and there may also be delays in the negotiation of the interim program referred to in that instruction. Accordingly, we approve trade on a ship-for-ship basis pending further developments in the general negotiations.
These ship-for-ship exchanges should be permitted up to a maximum of 10,000 tons of phosphates. This would probably take from 2 to 4 ships. If the interim program has not been agreed upon by the time 10,000 tons of phosphates have been moved, consideration will be given to authorizing additional shipments of phosphates on a ship-for-ship basis. We agree that the top limit not be divulged to the Portuguese. However, it should be impressed upon Portuguese that this ad hoc trade is considered to be only a temporary expedient and that it is expected that a comprehensive program can be worked out in the future.
As for south-bound cargoes, we understand that you have made or are making arrangements to ship the coffee, beans and the sleepers requested by the Army. As to other south-bound cargo, you must, of course, clear with the NAEB to make sure that the materials to be lifted are wanted in North Africa. Please also clear with the Department by telegraph all proposed movements, including quantities, values and proposed means of financing.
We hope that these ship-for-ship exchanges can be arranged through the USCC and the UKCC, in line with the suggestions in your 755 of April 3. This should permit you to utilize the escudo exchange realized through the phosphate sales. Please endeavor to work this out through NAEB.
We understand from your no. 45 of April 12, 2 p.m., to Algiers,37 that NAEB proposes leaving in suspense the question of phosphate prices subject to later adjustment. This is satisfactory, but it is not clear to the Department exactly how this will be accomplished. We believe that arrangements should be made whereby the Portuguese agree to pay a price to be fixed in relation to the prices which will ultimately be agreed upon for purchases by the British. In any event, it is important that the Commercial companies obtain a sufficient guarantee from the Portuguese to save them harmless against any loss on the transactions.

Please advise Butterworth of foregoing, and please repeat to Madrid, Algiers and London for their information.

  1. Neither printed.
  2. Not printed; it was repeated to the Department as an unnumbered telegram, April 12.