811.20 Defense (M) Portugal/982: Telegram

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

1008. My 955, April 30, 7 p.m.31 The Mixed Commission convened again yesterday May 7, Ives and Kennan attending for this Legation.

Fernandes opened the discussion by informing us in response to our inquiry of last week that the Portuguese Government had concluded a new wolfram agreement with the Germans. His explanation was simply that the Germans had made proposals to the Portuguese subsequent to the expiration of the old German agreement, that they had found these proposals acceptable and had therefore concluded a new agreement and that this was within their sovereign rights. He was unwilling to offer any information as to the nature or duration of the new German accord and it is evident that the Portuguese are not prepared to divulge such information to us. Both Kennan and [Page 518] the head of the British delegation expressed in vigorous terms the conviction that the impression caused in Washington and London by this action of the Portuguese Government would be most unfortunate and cited the obvious reasons therefor.

Fernandes then states that the Portuguese Government was prepared in principle to agree to a prolongation of our former agreement, until June 30, it being understood that there would be some sort of an adjustment in the allocations of neutral wolfram. He was not prepared to make a detailed proposal as to the nature of the adjustments pending our acceptance in principle of the proposal to prolong the agreement.

Kennan then pointed out that the assumption by the Portuguese of new obligations to the Germans, of the nature and duration of which we were unaware, left us without instructions as to our position and that we would have to consult our Government. The British delegate expressed a similar view.

Annoying as the development may be particularly in view of the fact that the delay by which the Portuguese profited was caused by your endeavoring to meet their wishes on the question of price raising, it is only another demonstration of Salazar’s determination to use Portugal’s strategic raw materials as a bargaining counter for wartime supplies. Viewed from this standpoint our position is still not a strong one. The fact is that while German deliveries of a wide range of commodities seem to be maintained with reasonable punctuality and involve no strain on Portuguese shipping transportation, difficulties have nullified to a considerable degree the effect of the supply concessions which we made to the Portuguese in the present agreement. This is bad enough in the British case where the British supply the shipping and certain losses have been caused by sinking of seed potatoes and ammonium sulphate; but our case is even less favorable for we do not supply the shipping and the Portuguese—except in the case of petroleum—do not have enough of their own to lift the commodities we promised to make available to them. In this regard Castro Caldas32 mentioned in a conversation with Ives recently that as a result of a shortage in shipping tonnage Portugal would only be able to lift 7500 tons of the 20,000 tons of ammonium sulphate allocated during the period of the present Supply Purchase Agreement.

In these circumstances, I am afraid that the Portuguese are inclined to discount even the potential benefits to themselves from a new supply purchase agreement with us and will not be inclined to go [Page 519] out of their way in the wolfram question even to assure the granting of supply allotments equivalent to those specified in the last agreement.

  1. Not printed; this telegram contained information concerning agreement reached between the Portuguese and British on question of prices for rubber and tires (811.20 Defense (M) Portugal/949).
  2. Francisco Teixeira Castro Caldas, Vice President of the Portuguese Technical Cooperative Council.