811.20 Defense (M) Spain/1179: Telegram

The Ambassador in Spain (Hayes) to the Secretary of State

3302. I believe Spanish Government will place an embargo on exports of wolfram if we demonstrate to it that such an embargo will be in Spanish interest.

There are certain immediate and serious disadvantages which would accrue to Spain if it placed an embargo on wolfram exports:

(1)
There would be an immediate loss of Spain’s principal source of dollar and pound exchange.
(2)
There would be an immediate loss of government revenue now derived from the export tax on wolfram.
(3)
There would be opposition from wolfram producers, some of whom have been operating many years and have depended largely on their export trade.
(4)
There would of course be opposition from the Germans who would be quite aware that such a step by Spain signified a reorientation of foreign policy in its economic, political, and even military aspects.
(5)
There would be opposition from the Spanish armed forces who are obtaining arms from Germany which they badly require and which they cannot obtain from other sources. These arms are being obtained by holding out to the Germans the hope that Spain will make wolfram available to them.

In light of above we should be prepared to demonstrate that by placing an embargo on the export of wolfram Spain would obtain certain advantages which would outweigh the obvious disadvantages some of which are set forth above.

There are three possible ways in which we may demonstrate this: I, By offering Spain certain new advantages to compensate for the [Page 652] disadvantages resulting from wolfram embargo, or II, by demonstrating that Spain must accept the disadvantages involved in order to retain more important advantages Spain now derives from its economic relations with the United States or III, a combination of I and II.

I. The Embassy in its telegram No. 3066, October 21, 5 p.m., presented a reasoned plan inducing the Spanish Government to place an embargo on wolfram exports. This plan embodies certain advantages to Spain. It likewise embodies certain advantages to us additional to the advantages to be obtained from an embargo on wolfram exports. What we offer in this plan is little in comparison with the cost to us of continued wolfram purchases. The plan has a sound economic basis. It forms a reasonable basis of discussion with the Spanish authorities. It is recommended that I be authorized to present this plan to the Spanish authorities in the memorandum on wolfram which the Foreign Minister has asked me for (my 3294, November 10, 9 p.m.).

II. The principal advantage obtained by Spain from its economic relations with the United States derives from the petroleum supplies made available to Spain.81 Spain can be expected to make great sacrifices, if necessary, to continue to receive these petroleum supplies. They are vital to Spain’s national economy and hence are probably vital to the political life of the present regime in Spain, which does not enjoy popular support. They cannot be obtained from other sources.

If Spain were faced with the alternative of placing an embargo on wolfram exports or losing access to petroleum supplies it would probably decide to protect the latter.

We should, of course, not threaten Spain with cutting off or even reducing petroleum supplies. The whole basis of our economic relations with Spain to date have been successful. It should not be abandoned without a further trial in this case.

The Germans have made liberal use of threats toward Spain in the past. Spain has instinctively resisted such threats and has tended to come closer to us even while German military prospects seemed exceedingly bright to the Spaniards. It can be accepted that this aspect of German policy in Spain has not been successful.

The present German Ambassador to Spain82 is intelligent and able. He is using persuasive methods. We must be careful not to exchange roles with the Germans.

The alternative to threatening the Spaniards is to face them with a fait accompli which can be explained on reasonable grounds and [Page 653] can later be associated with the wolfram situation. Such a fait accompli would be the reduction or interruption without prior warning of petroleum shipments to Spain.

The Embassy has already prepared the ground for such a step. It has made clear that petroleum products are no longer a surplus commodity. It has made clear that the war effort of the United Nations is expanding on such an unprecedented and gigantic scale that from now on we can consume all petroleum products we are capable of producing. We have made clear also that the terrific consumption of petroleum products is rapidly depleting valuable reserves and that making available such products is a definite sacrifice from that point of view.

III. The tactics I would recommend to the Department are the following:

(a)
Present to the Spaniards a reasoned plan such as is contemplated in I above.
(b)
If that does not succeed within a reasonable time, interrupt petroleum shipments explaining the interruption courteously and in a reasonable manner as described in II above.
(c)
Gradually make clear to the Spaniards that petroleum products can be made available to them only if some advantage such as an embargo on wolfram exports can be obtained commensurate with the sacrifice involved in making petroleum available.

It is the Embassy’s judgment that the proposed tactics have an excellent chance of succeeding.

Because of the obviously secret nature of foregoing I have not discussed the plan with anyone outside this Embassy. However, if the Department approves I suggest it discuss the matter with the British Government and authorize me to discuss it in the strictest confidence with British Ambassador here.

The British Embassy is now proceeding independently of this Embassy and apparently under instructions from London to discuss traditional trade of the character referred to in my 3066, October 21, 5 p.m., without relating it to a possible embargo on wolfram exports. See my 3177, October 30, 11 a.m.83

Hayes
  1. For correspondence concerning this subject, see pp. 668 ff.
  2. Hans Heinrich Dieckhoff.
  3. Not printed.