Foreign Relations of the United States: Diplomatic Papers, 1943, Europe, Volume II

811.20 Defense (M) Portugal/1031: Telegram

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

Lisbon, May 22, 1943—5 p.m.
[Received May 24—1:22 p.m.]

1132. With reference to the Department’s telegram 879, May 19, 2 p.m., I have the following comments:

1. Our utter purpose which was to achieve by formal means a material decrease in the amount of wolfram which Germany could get from Portugal during the coming year has already been made impossible of complete attainment. The Portuguese are presumably not going to tear up on our behalf an agreement they have already concluded with the Germans unless they are prepared to abandon their neutrality.

2. Our immediate purposes in further negotiations with the Portuguese can therefore be only the following:

(a) to assure the continued use of our presently recognized concessions for our own supply and for special traffic purposes;

(b) to make sure that we at least get the remainder of neutral wolfram and that further quotas thereof are not used for bartering with the Axis states and

(c) to prevent the Germans as far as possible, from acquiring the United States Government amounts of wolfram by illegal means.

3. The Portuguese will expect a quid pro quo even for the leavings. We should decide in advance what these are worth to us in terms of supply and simply make this known to the Portuguese. I am not in favor of any lengthy bargaining efforts with the Portuguese on this subject particularly since they have already definitely restricted their own bargaining limits.

4. Since the Portuguese are not in a position to retract the undertakings they have made vis-à-vis the Germans we would have nothing tangible to gain for ourselves at this stage by withholding oil from them by way of retaliation. At best such action could only have the effect of punishing the Portuguese people for something which their Government has done and cannot now undo. It would have the drawbacks that (a) oil is the one commodity on which we cannot plead supply to reserve of our own and (b) it would draw the odium of the action almost exclusively to ourselves rather than to the British.

5. We must bear in mind that we were clearly warned in January of this year that if we persisted in our price-raising plans, the repercussions on our entire commercial relations with the Portuguese would be serious. Please see particularly my 96, January 19, in this connection.

While it is true that we eventually reached a compromise agreement on price-raising,³³ we did not do so until after the Germans had already made acceptable proposals and reached an agreement with the Portuguese. I think therefore, that it will be difficult to cause Salazar to feel any particular remorse over this action and any retaliatory measures we now take with respect to oil will only be regarded by him as gratuitous. It must also be recognized that heretofore we have received a share of Portugal’s wolfram production substantially greater than one-half and there is no reason to suppose despite the new agreement with Germany that the Portuguese intend that we should get a smaller proportion in the future. This may be unsatisfactory to us from the preemptive standpoint but from the standpoint of equal treatment of both belligerents as a part of Salazar’s general policy of neutrality, it is difficult to find fault with.

British Ambassador has not yet received instructions parallel to mine. On the contrary numerous messages which he has had on this subject have all indicated that major strategic considerations do not make the moment propitious for an attempt to force Salazar to deviate from what he considers a policy of neutrality in the economic field.

7. In order to get the remainder of neutral wolfram as above mentioned we must indeed know what the remainder consists of. I therefore see no objection to asking for a prompt statement as to the disposition he intends to make of the wolfram for the period [March 1?] to June 30. I feel, however, that only after we have gotten such a statement and made up our own minds on what we now wish to get from Portugal in a new agreement should we begin to talk about the supplies which we can make available to them. Then if reductions in our supplies to Portugal are indicated I should suggest that they be so allotted that the burden be borne at least equally by the British.

Fish

33. At a meeting of the Mixed Commission on April 29, 1943, a settlement was reached on the price-raising issue with slight mutual adjustment to avoid prolonging discussions.