811.20 Defense (M) Portugal/997: Telegram

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

1063. Referring Legation’s 1008, May 8, 3 p.m. During the course of a 4–hour conversation with Salazar last evening, the British Ambassador expressed his displeasure at the manner in which the Portuguese Government had recently concluded a new wolfram agreement with the Germans. Salazar appeared neither contrite nor even apologetic. He simply defended his action by stating that the Germans had approached him as far back as last November for a new wolfram agreement on more favorable terms than the one then in effect. Salazar said that he informed the Germans at that time that it was too early to discuss the terms of a new agreement. He said that he had then warned the Germans that a new agreement with them would have to be by virtue of other commitments on less favorable terms. Salazar appears to have mentioned a figure as representative of the maximum tonnage of wolfram which the Germans could be given export licenses for under a new agreement. The Prime Minister then stated that the Germans renewed attempts to obtain an agreement on the terms of the then effective agreement in mid-February when they were again confronted with Salazar’s ceiling figure. When the Germans appeared again towards the end of April and accepted the figure of 2100 tons, Salazar stated that he had been obliged to conclude an agreement.

When the Ambassador inquired as to what we might expect in the way of an allocation of neutral wolfram under an interim agreement Salazar replied “I will see”.

In concluding his remarks on the German agreement Salazar intimated indirectly that our position with respect to mineral from the pool might be improved by commenting that he anticipated that the Germans through more intensive exploitation on their own properties and concessions would be able to increase production from these sources over the period of the new agreement. This tends to bear out the informal statement made recently by Castro Caldas that it is the plan of the Portuguese to divide neutral mineral equally between the belligerents. [Page 520] Whether this will be done without the Portuguese asking for suitable quid pro quo from our side remains to be seen but it seems doubtful.

Repeated to London.