852.6363/918: Telegram

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

1631. Your 1331, June 12, 8 p.m. Welcome the Department’s reasoned statement of policy and find myself in complete accord with it. The Embassy of course considers the economic program of which the petroleum program forms a principal part as a device for advancing our own interests in Spain and not as a device for improving the lot of the Spanish people except of course to the extent that we can advance our own interests and prejudice the enemy by so doing.

A year and a half has passed since we adopted the formula of supplying Spain with enough and only enough petroleum to maintain Spanish economy on a low level. In the interim enormous changes in the military and political situations in this area have taken place and I believe the time has come for us to reconsider our policy.

In carrying on mutually beneficial trade with Spain we have already gained important strategic and political objectives. Our policy in that respect was thoroughly tested at the time of our North African landing when contrary to the predictions of many critics Spain did not lift a finger to interfere with our military operations, but promptly informed the Germans that it would resist any aggression from the Axis. It is obvious that if Spain’s attitude had been different our North African operation might have failed and that in [Page 696] any case it would have been much more difficult than it was. More recently as I have reported the Foreign Minister has given me explicit assurances that Spain will not hamper in any manner our future military operations in or across the Mediterranean.

I believe that these political and strategic objectives which have proved to be of great positive help to our war effort have now largely been consolidated and that from now on we should continue to work principally along two lines.

(1)
Continue progressively to divorce the Spanish economic system from the German system and thus advance our own interests by further restricting the flow of Spanish products to Germany. In connection with this I am now giving thought to urging that in return for the voluntary cooperation we are giving the Spaniards which experience has shown to be so helpful to Spanish economy the Spaniards cease granting credits of any kind to Germany and decline to accept from Germany in payment for Spanish products gold which may have been looted from our Allies.
(2)
Continue to explore and develop the possibility of exploiting Spain’s economy in our own immediate interest, as for example, by placing orders for textiles for our armed forces and for civilian needs in Europe and Africa. As the war develops in our favor and as Spain is increasingly freed from German pressure and influence the possibilities of developing and utilizing Spain as an economic ally will be increasingly important.

If we could achieve these objectives best, or if we could achieve objective (1) without at the same time incurring military or political risks more than commensurate with the possible economic gain, by drastically curtailing the supply of petroleum products to Spain (after having given Spain the opportunity to obtain such products by mutually advantageous cooperation with us) I should be prepared to recommend that supplies be so curtailed. If on the other hand we can gain those objectives and possibly other objectives such as bringing Spain into the war on our side (which possibility is by no means remote) by making available to Spain petroleum supplies in excess of the 400,000 tons per annum the Department has had in mind or even of the 541,000 tons which is the program agreed to last year for the first 6 months of this year I believe we should be remiss in our obligation to our Government and people if we did not make available such additional supplies. This principle equally applies to other products subject to blockade control.

My present thought is that we should give our approval to the petroleum program already submitted by the Embassy which Smith is now discussing in Washington and that we should notify the Spaniards of the amount they may expect to obtain in a given quarter while making it clear that as in the past each tanker sailing and loading must be specifically approved and that the quantity may be [Page 697] reduced by us for military or other reasons. It is also my thought that in the absence of developments I cannot now foresee the Department should leave with the Embassy the responsibility of deciding in the light of its intimate current knowledge of the changing situation in this area including the internal situation in Spain when and what tankers may sail within that total program.

If within the 6 months’ period the Embassy should decide that our interest could be advanced by increasing the amount of petroleum to be made available I should not hesitate to recommend that this be done having in mind always that our primary objective is not to improve conditions in Spain but to advance our own military interests. If the Embassy should decide that it would be in our interest to retard the flow of petroleum into Spain I should of course delay authorization for tanker sailings.

In this connection I request you bear in mind that internal political changes may occur in Spain, possibly within the next 6 months’ period. In my 1621, June 21, 6 p.m.,46 I reported that 25 outstanding members of the Cortes have petitioned Franco to restore the monarchy promptly. The handling of our economic program may have an important influence on developments. For that reason decisions as to the carrying out of the program must be made from day to day in the light of the local situation, and I particularly request that the Department, on the basis of its own impressions, not suddenly hold up tankers or otherwise interrupt the orderly carrying of the program without prior consultation with the Embassy which for very natural reasons is in the best possible position to determine the probable effect of such action on the domestic situation and on our own position in Spain.

With further reference to particular points raised in your telegram, I submit the following comment and recommendations:

Our economic program with Spain, far from hampering our military operations in North Africa, aided those operations by enabling Spain progressively to overcome German military, political, and economic influence in Spain and by placing it in a position in which it could afford to warn Germany that it would grant it no military facilities and would resist any aggression from the Axis. There is no longer room for reasonable doubt on that score. My Military Attaché47 and I regard Spain as potential military ally.

So far as concerns the effect your petroleum program on American public opinion, I can predict with reasonable assurance that the present marked tendency for Spain to draw away from the Axis and closer to the democracies, which our economic program has made possible, will be continued and accelerated. If we continue to win victories in [Page 698] Europe, it would indeed be remarkable if this were not the case. If we should suffer setbacks in Europe, the will of the Spanish nation to resist Axis aggression which has been strengthened and supported by our economic program will be an element of safety to us.

Our enemies, the Germans, are openly complaining not only privately but in the German press that we have already won great diplomatic victories in Spain, and the German press has long been consoling the German people by predicting that our efforts to bring Spain into the war on our side will not succeed. In my 1623, June 21, 9 p.m.,48 I reported that the German Ambassador49 himself has stated that the desire to please the United States is today the basis of Spanish diplomacy.

I do not believe that the Spaniards knew that the last approved program was for 541,000 tons per year but simple arithmetic permitted them to make fairly accurate deductions. It must be remembered that when this program was under study last year, it was necessary to have frequent conversations with CAMPSA,50 CEPSA51 and the Petroleum Commissariat to determine Spain’s requirements, and that an approximation of stock limits has had to be disclosed in order to make adjustments in tanker cargoes.

I do not consider that inability to use tanker fleet to capacity will cause serious dissatisfaction provided Spaniards are informed of the extent of the program. The Embassy has informed the Ministries of Foreign Affairs and Commerce and Industry, and Smith has informed the Petroleum Commissar, CAMPSA and CEPSA, that Spain cannot expect to have released of [a] quantity of products equivalent to the increasing tanker capacity, and, at my suggestion, Smith discussed tentatively with officials of CAMPSA the eventual employment of some of the tanker fleet for services beneficial to us.

The petroleum program is a part of the economic program and assurances regarding facilitating pesetas have been obtained in connection with the broad program. I do not believe it advisable to connect the petroleum program specifically to the peseta situation as this would encourage the Spaniards to point out that their difficulty in getting rid of dollars is partly due to our own unwillingness to make larger quantities of petroleum available to them. I prefer to accept the assurances already given as having constituted an undertaking of the Spanish Government.

Our petroleum control has been deficient in detail principally because many observers sent from the United States were unqualified and because they have devoted undue attention to other duties. I [Page 699] have discussed this situation in a separate despatch. However, a very important guarantee that petroleum made available by United States will not benefit the Axis derives from (1) Spain’s great need for petroleum and desire to utilize it in its own interest and (2) recognition by Spain that leakage of petroleum products to the Axis will mean the end of the program. Spain knows it is in its own interest to cooperate with us in petroleum control and is guided by that knowledge and interest.

Hayes
  1. Not printed.
  2. Col. William D. Hohenthal, who succeeded Col. Dusenbury, May 1, 1943.
  3. Not printed.
  4. Hans Heinrich Dieckhoff.
  5. Compañia Arrendataria del Monopolio de Petróleos, Sociedad Anónima.
  6. Compañia Española de Petróleos, Sociedad Anónima.