811.20 Defense (M) Portugal/997: Telegram

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

879. Your 1008, May 8, 3 p.m. and your 1063, May 14, 8 p.m.

The conclusion by the Portuguese of a new wolfram agreement with the Germans came as a shock. In the light of this development, the prolongation of the surcharge controversy might easily be interpreted as deliberate and designed to permit the undisturbed conclusion of the new wolfram agreement with the Germans. Certainly it has been made abundantly clear to the Portuguese in the past year that we regard wolfram as of preeminent importance. Whether the delay was deliberate or not, the closing of a wolfram agreement with the Germans without prior consultation with us constitutes an action which it is difficult to construe as anything but a clear disregard of our interests. Following on the heels of the Portuguese signing a contract with the Germans for 45% of the 1943 summer pack of sardines in the midst of our own sardine negotiations, the impression is gained here that the Portuguese feel obliged to satisfy the demands of the enemy before giving fair consideration to the needs of the United Nations.
In the light of the information contained in your telegrams under reference, an intensive study is being made by the Department and Board of Economic Warfare as to the character and extent of any successor supply-purchase program, including the justification, if any, for maintaining oil supplies to Portugal at the rate provided for by the current supply-purchase agreement. Oil is our key card. Neither shipping nor supply limitations obscure our ability to control its flow.
It is our intention that, provided the British receive parallel instructions, you should jointly with your British colleague inform Salazar (a) that we are amazed at the conclusion by the Portuguese of a new wolfram agreement with the Germans without prior consultation with us; (b) that prior to June 30, it is our intention to discuss with him the matter of our willingness to make available after that date supplies, including oil, in terms of the Portuguese willingness and ability to make available to us certain commodities we desire, including wolfram; and (c) that we wish a prompt statement from him as to the disposition he intends to make of the free wolfram for the period March 1, 1943 to June 30, 1943. In this connection you should point [Page 521] out that the U.S. supply authorities have been extremely disappointed over the amounts of wolfram secured by the U.S. and the U.K. in Portugal during the past year. Unless our treatment with respect to wolfram is substantially improved, it will be difficult to secure their consent to the release in the future of past quantities of material in tight supply as well as oil.
Your views on the approach outlined above are urgently requested.
British Embassy here has been informed and is telegraphing London.
Repeated to London.