852.50/111: Telegram
The Ambassador in Spain (Hayes) to the Secretary of State
[Received October 27—4:21 p.m.]
3112. Since the existing economic program was conceived, several of its primary objectives have been accomplished and it would appear that the time has come to review the fundamentals to determine whether the program as now in effect is giving satisfactory results under the changed military and political conditions or whether we should seek new objectives. The two primary aims of the program when adopted were, first, to assure against Spain’s collaboration with the enemy, either political, military or economic, and the second was to assure to ourselves certain additional economic advantages.
Military developments, plus the influence we have on Spanish economy through control of the seas and of principal sources of supply of materials essential to the functioning of that economy, and the economic cooperation we have given to Spain, have effectively checked and reversed any tendency to close political, military or economic collaboration with Germany.
We are ourselves receiving an increasing amount of both political and economic collaboration from Spain and this economic and political collaboration has been of important military assistance to the United Nations. Spain stood as a firm barrier between German forces in France and the vulnerable Straits of Gibraltar during and after our North African landings.72 It is a barrier today between these same German forces and Portugal, which counted very heavily on Spain when it decided to grant air and naval facilities to the British in the Azores.
Nevertheless, the time has come to examine once more whether these important advantages represent the maximum we can hope to obtain under present conditions, or whether we should press for greater advantages, and just what we should seek.
There are three possible objectives we might endeavor to obtain:
- 1.
- A military, political and economic alliance.
- 2.
- Full economic collaboration.
- 3.
- Limited economic cooperation.
(1) As military consideration and possible political repercussions in the United States, Great Britain and possibly Russia would have a bearing on determining the advisability of entering into a full alliance with the present Spanish Government, the Embassy is not in a position to make definite recommendations. There are no present indications [Page 647] that the Spanish Government would agree to an arrangement of this sort although the long-term benefits to be derived might induce them to view such a proposal favorably; particularly when the Germans become so engaged on the Continent that the possibility of a successful invasion of the Spanish Peninsula may be discounted.
(2) A proposal looking towards complete economic collaboration would have to be very attractive to the Spaniards who could not discount the possibility of German attacks against Spanish shipping or some other form of German aggression against Spain. In addition to the economic considerations, we would doubtless be requested to supply arms and munitions and give assurances that in the event Spain is attacked it would receive our fullest support. Importantly we would have to be in a position to give prompt and full support. Spain would probably insist on consideration at the peace conference at least equal to that of nations which had broken relations with Germany, but were not geographically exposed to German retaliation as Spain has been.
Under an arrangement of this sort some of the principal advantages that we should seek would be:
- (a)
- The prohibition of the export by Spain to Germany of strategic materials including wolfram, mercury, zinc, fluorspar, strontium arms, woolen textiles, foodstuffs of high vitamin value, and any other commodities which might benefit the war effort of the enemy, in addition to the prohibitions now in effect as a consequence of existing understandings and Spanish domestic shortages;
- (b)
- The use of Spanish shipping to transport to the United States and the British Isles goods acquired in Spain by the United Nations, and the charter to the United Nations of an agreed upon quantity of Spanish shipping;
- (c)
- The supply of such exportable surpluses as may be requested by the United Nations and the supply of agreed upon quantities of certain materials produced in quantities less than normal domestic requirements. In the latter instance consideration would be given to the means by which present Spanish domestic production may be increased in order that the quantities exported would not create undue hardship in Spain. There would be included products to meet military needs and the needs of liberated areas such as textiles, coal, steel and its manufactures, cement, telephonic equipment, cables, etc., certain foodstuffs such as fish, vitamin oils, fresh and canned fruit and vegetables and possibly rice. The Spanish Government would give assurances that these goods would be made available at reasonable prices and that it would not impose new export taxes or other taxes designed to increase the revenue of the state or to subsidize industries.
In return the United Nations would offer the following:
- a.
- To suppress overpricing on petroleum products and on products originating in the United States or British Isles purchased through the Agency of the United States or British Governments;
- b.
- To increase supplies to Spain of goods now being supplied under the existing economic program especially petroleum products, fertilizers, agricultural equipment, et cetera;
- c.
- To make available materials needed to stimulate Spanish economy so as to enable it to supply additional commodities for the United Nations such materials to include equipment for hydro-electric power development, machine tools, textile machinery, mining equipment, transportation equipment, both rail and highway, scrap iron, possibly copper, nickel and other metals;
- d.
- To increase purchases of exportable surpluses of commodities in order to maintain regional or industrial economy;
- e.
- To the extent that the value of United Nations purchases in Spain or services rendered by Spain may exceed the value of goods and services supplied by [to] Spain to [by] the United Nations, settlement would be made in free gold.
3. The limited economic cooperation arrangement mentioned would be a modification of the existing arrangement to the extent set forth in my telegram No. 3066, October 21, 5 p.m.
As my views above set forth are at exploratory stage, I have considered it preferable to await your reaction before consulting with my British colleague except to plan number 3 as mentioned in my telegram referred to immediately preceding.
- For correspondence regarding the invasion and occupation of French North Africa, see Foreign Relations, 1942, vol. ii, pp. 429 ff.↩