The Minister in Portugal ( Fish ) to the Secretary of State
[Received January 12—2:28 a.m.]
51. Department’s 1482, December 24. Legation has given careful study to the question raised in this telegram and wishes to make the following observations:
(1) Since Portuguese trade with Algerian ports has recently been of slight importance compared to Portuguese trade with ports in Morocco and since Portuguese-Moroccan trade is already covered by a barter agreement still nominally valid which could conceivably provide a basis for resumption of exchanges we suggest for purposes of simplicity and clarity that direct peninsular trade with Algeria be considered only in connection with Spain and that our problem here be restricted to trade in and out of Moroccan ports. Following points are drafted on the assumption that this principle will be accepted.
(2) It would probably be possible without much difficulty or formality to reactivate and implement the original Moroccan-Portuguese agreement of August 23, 1941 (see Legation’s despatch no. 156, August 29, 1941, and no. 569, August 22, 19428) as a legal framework for the resumption of commercial exchanges. Noguès in his capacity as Commissioner Resident General of the Republic of France in Morocco has already directed to the Portuguese Consul [Page 6] at Rabat a written communication dated December 16 inquiring whether the Portuguese Government would be prepared to resume trade under the existing agreement and to permit the use in this connection of the funds now on deposit in the Bank of Portugal to the credit of the State Bank of Morocco (text submitted with despatch no. 9552 , December 23, from Tangier9 which has presumably not yet reached Department). I have not heard that the Portuguese have replied to this inquiry and do not intend to discuss the matter with them unless so instructed. I believe, however, that they might be more inclined to assent to the proposal of the Residency General (assuming that they have not already done so) if this Legation and the British Embassy here were able to assure the Portuguese Government that such resumption of trade within the framework of the existing agreement met with our wishes and would receive our practical support and that we stood prepared to extend our good offices in behalf of the Sultan in further discussions of all details pertaining to this matter. The Portuguese, as the Department is aware, are much in need of Moroccan phosphates and would have every reason to accept such a solution.
(3) Doubtless as a result of this need for phosphates Castro Caldas10 has already suggested informally that we might purchase some Moroccan phosphates and send a ship to bring them to Portugal for resale here which he intimated [apparent omission] for free escudos. Castro Caldas stated at that time that the Portuguese Government might be willing to conclude a new agreement to cover this phosphate trade if we considered this necessary.
(4) The British seem inclined to feel that since the Portuguese are apparently agreed to a reopening of the trade on an informal basis there would be little merit in attempting to implement the old agreement at this time. They point out that implementation of the old agreement is complicated by the fact that the funds on deposit in Portugal as referred to by Noguès include funds arising from the operation of certain French tankers which had nothing to do with North Africa and that the Bank of France may lay claim to these funds (believed to be some 5 or 6 million francs out of a rough total of 17,500,000 francs) as not arising from Moroccan trade. It is not [sic] possible, however, that the views of the British here on this question are somewhat colored by apprehension about the political situation in North Africa and by unwillingness to do anything which might involve the direct cooperation of the French authorities there.
(5) We feel that while it would be advisable as a starter to undertake [Page 7] a few provisional shipments probably pit props against phosphates through the USCC11 and the UKCC12 it would also do no harm to pursue the reactivation of the old singles as outlined above. This might make it possible in the first place for us to use for purchases in Portugal at least some 10 million escudos if not all of the sum deposited here to the account of the State Bank of Morocco. Secondly, by virtue of the fact that proceeds arising here from trade agreement are deposited to the Moroccan accounts it would avoid the creation of the impression in Lisbon that we were ourselves profiting commercially from the exploitation of French Morocco. Thirdly, if at some future date we should wish to turn these matters over to the representatives of a new French Government it would be much easier if the Portuguese-Moroccan agreement were regarded as in effect. Fourthly, the Portuguese-Moroccan agreement committed both parties to “examine with sympathy” requests for alterations or increases in the categories and amounts of goods to be exchanged and there is no apparent reason why we could not develop trade within the framework of the agreement in such a way as to serve the objectives outlined in paragraph no. 2 of the Department’s telegram under reference.
We feel therefore that it might be advisable if (a) the USCC were to be authorized to join with the UKCC as a provisional measure in undertaking a few shipments of Portuguese products to Morocco in return for phosphates and if (b) the Department were to explore the possibility of having this mission and the British Embassy in Lisbon instructed to encourage the [apparent omission] Noguès approach as suggested above and to proceed to work out an extension of the trade on the basis of the old agreement.
Regardless of the bases on which this trade is resumed the following are the products which we think might be moved from Portugal to North Africa with a view to serving the objectives listed in the Department’s telegram.
- Cotton textiles to the value of 80,000,000 escudos (the existing agreement calls for only 30,000,000; the increase would be subject to the availability of raw cotton supplies).
- Colonial products including coffee, cocoa, tea and haricot beans to a total value of 25,000,000 escudos.
- Sisal binder twine to the amount of 1500 tons provided that sisal would be made available by us from Portuguese colonial sources.
- Cement to the value of 7,000,000 escudos.
- Most important of all the 400 odd tons of tin metal which we shall be obliged to deliver to the Metals Commission under recently government control and which are above [over?] and above the export allocation under the supply purchase program.
- Any other products which we are now buying preclusively and which might be of military use or vital to the other objectives listed in the Department’s telegram.
With respect to (a), (b), (c) and (d) above. The Portuguese authorities have given the British to understand that these amounts would probably be available for export to Morocco if the exchanges were to be renewed.
As far as shipments from Morocco are concerned in addition to the phosphates which could apparently be absorbed in Portugal to the amount of 138,000 tons per annum the following schedule of annual amounts might be suggested:
- Broad beans (5,000 tons) as provided under the Supply Purchase Agreement valued at 5,000,000 escudos;
- gypsum valued at 500,000 escudos;
- tanning bark 2,500 valued at 1,000,000 escudos;
- grease wool 1,500 tons (to substitute the quantity which under the Supply Purchase Agreement was to be obtained from South Africa) valued at 22,000,000 escudos;
- 10,000 tons of oats, 20,000 tons of wheat and various other cereals with a combined value of 30,000,000 escudos which we understand might be available for this purpose.
(7) [sic] Before this Legation and the British Embassy could undertake any conversations directed to the resumption of trade on any large scale either under the existing agreement or independently of it we would need precise and authoritative information regarding the exact possibility of deliveries of products from Morocco and of absorption in Morocco of Portuguese commodities. We should in other words be in a position to speak for all parties in Morocco including private French commercial interests as well as our own military authorities whose cooperation would be necessary to effect the commercial transfers and movement of goods in question. In order that this might be achieved we feel that there ought first to be direct consultation between on the one hand British and American officials familiar with our supply purchase arrangements and preemptive program on the Peninsula and on the other similar officials in North Africa qualified to speak authoritatively with respect to Moroccan foreign trade possibilities.
(8) The British have called attention to the possibility of using our present control over Moroccan phosphates to impress the Portuguese with the seriousness of our views in the coming wolfram conversations. If discussions looking to the reopening of Moroccan trade were to be held simultaneously with the new wolfram negotiations we believe that this might be accomplished.
Repeated to London and Algiers telegraphically and Tangier and Madrid by mail.