651R.5331/3: Telegram

The Ambassador in Spain ( Hayes ) to the Secretary of State

542. Department’s 205 to Algiers and Algiers’ 274.

British Embassy has received from London lengthy instruction concerning French North African trade. We do not know its full content. Spaniards informed us British asked whether they would be agreeable to handling French North African trade through United Kingdom Commercial Corporation to which they answered affirmatively. We believe Spaniards’ favorable reaction determined by fact that it would remove the need for dealing through French North African representatives thus permitting them to acquiesce to Vichy’s expressed wishes. British did not inform us previously their intention to discuss this with Spaniards although they had mentioned that exchange of products between Spain and North Africa would be determined in London and not through NAEB.
We persist in our conviction that French North Africa should be permitted to conduct negotiations for exchange of products with Spain and that we should not offer to Spaniards a formula to bypass French.
Most effective control of these negotiations could be exercised through tripartite agreement in Algiers. Preliminary negotiations should be conducted in Madrid and French North African representatives should be supported by both British and United States Embassies, preferably by actual participation in discussions. This evidence of unity would be an effective counter to Vichy and Axis.
It is immaterial whether the instrument of agreement with Spaniards is signed in Algiers or Madrid.
The movement of goods should be closely controlled. The quantities of materials to be included in the French part of the program and the goods and services desired from Spain should be determined in Algiers. Control should be exercised so as to insure that Spanish supplies move in harmony with French North African supplies.
Although French can most effectively use the supply of goods to obtain needed supplies from Spain and other advantages we do not need to use French North African products as bargaining weapons for our program with Spain. By our participation in discussions the Spaniards will know that these goods are being made available [Page 18] by common consent; they also are aware of the fact that we exercise additional control through navicerts and port facilities.
We can perceive no advantages to us from having United States Commercial Corporation and United Kingdom Commercial Corporation act as purchasers or suppliers of goods falling within the French North African-Spanish agreement. After negotiations have been concluded if the services of the companies are requested by all interested parties to facilitate the movement of goods we would not object. However, activities of the companies should be limited to such services as we may desire to have them perform in connection with any arrangements which may be concluded by British and American Embassies with Spaniards for our acquisition of Spanish goods for North Africa.

Repeated to Algiers and London.