711.53/41a
The British Embassy to the Department of State
Aide-Mémoire
The recent strong representations to the Portuguese Government at the highest political level have done something to persuade Dr. Salazar to move some way to meet us over the question of Portuguese wolfram exports to Germany, but his present offer is still far from being satisfactory. The alternatives before us are (a) to resort to drastic means of pressure, political or economic, or both, in the hope of compelling Dr. Salazar to give way, or (b) to accept a compromise settlement analogous to that recently reached with Spain.
In the view of His Majesty’s Government course (a) presents long and short term disadvantages. So far as the immediate wolfram issue is concerned, we are particularly concerned with quick results. Whatever the means of pressure we may adopt, we cannot hope that they would compel Dr. Salazar to meet our requirements for several months. By that time we hope in any case to be able to stop wolfram exports to Germany by other means. Meanwhile Germany would continue to receive wolfram at the present rate of some 150 tons a month, if not at an even higher rate if she makes every effort to expand production in Portugal to compensate for her loss of Spanish wolfram. From the longer term point of view, there are obvious objections for us as well as for Dr. Salazar in a deadlock in which all our strategic requirements, and more particularly the smooth development of the Azores facilities, to which the United States Government will no doubt attach increasing importance for ferrying aircraft to the Far East, will be gravely prejudiced.
His Majesty’s Government have therefore reluctantly but definitely reached the conclusion that we must adopt course (b), but they regard Dr. Salazar’s present proposals as unacceptable. We cannot accept an offer based on an unpredictable production of the German mines, which once the free market was closed to Germany would undoubtedly absorb large quantities of free wolfram. We must have a basic figure as a ceiling for Portuguese wolfram exports to Germany, and His Majesty’s Government would be prepared to meet Dr. Salazar by accepting as a ceiling for the wolfram year ending February 28th, 1945, the figure of 700 tons, to which he thinks production of German mines should approximate. Since at least 260 tons have already been exported since March 1st, the balance exportable on the basis of this ceiling figure would be 440 tons between now and February 28th, 1945. As we are mainly interested in the immediate future, and since Portugal has already exported to Germany much more than Spain in recent months, we should insist upon monthly installments of a maximum of [Page 111] 20 tons from May to August inclusive, and 60 tons a month thereafter until next February. We must also insist upon the cancellation of the export of 150 tons, which Dr. Salazar claims to be due to the Germans under the expired agreement, and also upon adequate measures being taken to permit our cooperation with the Portuguese authorities in preventing smuggling.
His Majesty’s Government consider that strong pressure will have to be brought to bear on Dr. Salazar if we are to induce him to accept the above arrangement in the near future. They therefore feel that the time has come to make a frank statement to Dr. Salazar of the position regarding the continuance of supplies to Portugal, which he will be free to construe as a threat or not as he sees fit. If the Portuguese Government fail to meet us on the basis now proposed, it will be impossible for His Majesty’s Government to justify to the British public the continuance of supplying economic assistance to Portugal such as that provided under the Azores Agreement. Nor could they ask the United States Government to make available essential supplies, including oil, under their control. Apart from wolfram, we have no essential purchases in Portugal, and therefore after the expiry of our Azores obligations on June 3rd, we should make no special effort to produce coal or other supplies for Portugal. If there should again be a bad harvest, we should equally be unable to release wheat or shipping as we have done this year.
His Majesty’s Government hope that the United States Government will concur in the line of action now proposed. They think it necessary to act quickly and trust that instructions may be sent to the United States Ambassador to concert with His Majesty’s Ambassador and support the latter’s representations. His Majesty’s Government are similarly inviting the concurrence and support of the Brazilian Government.