Foreign Relations of the United States: Diplomatic Papers, 1944, Europe, Volume IV

711.52/383: Telegram

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

Madrid, March 9, 1944—noon.
[Received March 10—7:54 p.m.]

817. My 792 March 7. It is evident that we have reached another impasse in our wolfram negotiations. Jordana’s proposal to limit wolfram exports to Germany to as low as 10% of total exports last year and to institute a 6 months’ embargo which was acceptable to us has not been agreed to by Council of Ministers. On the other hand there is nothing in telegrams from Department to indicate we would be content on anything less than Jordana’s proposal.

Ackerman and Harrington⁷³ had a long luncheon conversation Monday⁷⁴ with Carceller⁷⁵ at latter’s invitation. Carceller reported as follows:

Jordana endeavored to get the Council’s approval to the 6 months’ embargo and 10% limitation but the Council declined to give its approval. Jordana’s suggestion that the matter be handled by a special committee is merely a temporizing device. Committee will have no power. Power will continue to rest in the Council which at its last meeting took a definite stand against an “embargo” and against giving way to “coercion”.

The Council approved an agreement made between Jordana and the German Ambassador for the purchase by Spain from Germany of material valued at 2 billion pesetas for the erection in Spain of a synthetic gasoline plant subject to subsequent signing of detailed contract at which time 30% of total sum involved or 600,000,000 pesetas would be made available to the Germans. When Carceller objected on grounds that the scheme was not practical Franco agreed but approved the decree with remark that it would not be necessary to follow it through to a conclusion. (Jordana has not mentioned this alleged agreement to me but the Council of Ministers recently issued a public announcement of the forthcoming production of synthetic gasoline in Spain.)

Carceller further stated that Jordana’s estimate of percentage of wolfram exported to Germany in 1943 is erroneous. Instead of about 700 tons licenses were granted for between 1000 and 1100 tons. In other words Germany received about 33% of total export permits instead of 23% as Jordana claimed. Carceller questioned Jordana’s figures at Council meeting saying he had true figures since he had issued licenses.

Carceller indicated to Ackerman and Harrington that he could arrange the wolfram matter if we would:

1. Agree to let an additional 209 tons of wolfram go to Germany between now and end of August. He said Spanish Government was committed to supply this amount. He did not specify exact nature of commitment nor by whom it was made but he said the commitment was effective and that it could not be canceled. I suspect that Carceller himself may have made commitment and that Jordana may be ignorant of it. He said he could spread export licenses for the 209 tons out between now and end of August.

2. Purchase Spanish wolfram output at prices well below present levels. Such lower prices would cause sharp contraction in output.

3. Supply Spain with commodities received in the past plus other commodities such as motor trucks, copper, etc. which Germany cannot supply in exchange for which he would be prepared if necessary to requisition excessive German stocks.

Carceller ridiculed Jordana and discounted his ability to reach or carry out effectively a satisfactory agreement with us. His attitude confirmed reports of open conflict between Jordana and Carceller with latter still exerting strong influence in economic matters and acting with comparative independence of Foreign Office.

While Carceller was obviously trying to sell a bill of goods to Ackerman and Harrington and while there have been persistent reports that he has lost Franco’s confidence and while yesterday’s conversation was clearly an effort on his part to retain control of wolfram negotiations which Franco has placed in the hands of Jordana, according to latter, it is also clear that Jordana is not at present in a position to obtain Cabinet approval to either a 6 months’ embargo or to a 10% limitation on exports and it is possible he may not be able to obtain such approval in the future.

Meanwhile time may not be entirely in our favor because our peseta situation is deteriorating rapidly and in presence of continung unwillingness of our supply authorities to furnish goods to Spain, we estimate that wolfram purchases can be continued at present rate only until end of month. There is no indication that Spain is willing to accept gold from United States at this time. In fact present indications are that it will not. There is reason to fear, therefore, that by the end of month we shall have to suspend wolfram purchases and the Germans will then be in a position to buy freely at much lower prices and that they will use the large amounts of wolfram they have already acquired and will acquire to bring additional pressure on Spain to issue export licenses.

Meanwhile also Jordana has reminded me that the present temporary embargo on wolfram exports cannot be continued indefinitely in the absence of some agreement and has said that a time limit should be placed on the deliberations of wolfram committee.

In reviewing developments of recent weeks, it is apparent that Germany and we are following exactly opposite tactics in endeavoring to influence Spain at present time.

While we have cut off petroleum supplies and have been reluctant to offer satisfactory amounts of other materials of which we have an exportable surplus such as cotton and while our supplies to Spain and therefore our power to purchase in Spain have been steadily reduced, Germany, as I have several times reported, is making a prodigious effort to supply Spain at considerable sacrifice to itself. In addition to war materials Germany is supplying wheat, barley, potatoes, heavy machinery and a variety of other materials. The balance in the clearing on March 1st favorable to Germany was 65,500,000 reichsmarks.

Germany through this means is acquiring increased purchasing power and at the same time [we] are insisting that Spain refrain from exporting to Germany not only wolfram but other commodities such as olive oil, almonds, wool, et cetera. We are attempting by pressure to prevent Spain from exporting surplus Spanish products to Germany in return for products that Germany is eager to supply and which Spain badly needs while we so far have made no definite commitments to Spain that we will ourselves either continue to purchase Spain’s surplus commodities or show a willingness comparable to that of Germany to supply Spain with commodities it requires.

Germany is not only supplying Spain with large quantities of needed materials but is making all kinds of promises for the future which it may not be able to fulfill but which are nonetheless impressive to the Spanish Government especially to Franco and certain Cabinet members who still have great respect for German military and economic strength.

In contrast with Germany’s willingness to offer freely, this Embassy on the other hand, has been given no latitude in this direction. We cannot even discuss future economic relations with Spain until the wolfram question is settled to our satisfaction.

Moreover despite the fact that Germany during the present war has suffered a diplomatic defeat of the first magnitude in Spain, which contributed very substantially to the loss of the Mediterranean to the Axis and to the surrender of Italy, it continued, in its own interest, because it is still seeking economic advantages from Spain, to say pleasant things about Spain officially and publicly. This impresses the Spaniards favorably.

We on the other hand have made known officially and publicly our dissatisfaction with Spain and our popular press constantly reminds the present regime of its offenses, real and imagined, while little or no effort is made to present the more favorable sides of the Spanish picture which have been concealed from our public.

I hesitate to make new recommendations concerning our policy toward Spain principally because I cannot have in Madrid the over-all picture which the Department has. However, I believe the Department should have very closely in mind the following:

(1) The Spaniards are a stubborn race who are characteristically incapable of determining their long-term interests and acting in accordance with them. If they were more rational and intelligent in such matters they would not have had the disastrous history they have had during the last several centuries.

(2) Continued economic boycott may well strengthen Franco internally at least for a time and drive Spain into German arms, economically, if not politically and militarily.

(3) If agreement on wolfram is not reached shortly the temporary embargo on wolfram exports may be lifted, in which case whatever may be the subsequent arrangements if any which we make with Spain, we will have failed to attain our primary objective of depriving Germany of wolfram from Spain. If our suspension of petroleum shipments is thereafter continued and we extend our boycott against Spain, as public opinion in the United States might require us to do, Spain’s trade with Germany will doubtless be intensified rather than diminished, and I for one do not know how we can prevent it except by military means.

(4) If agreement on wolfram is not reached, we cannot expect full compliance with our other pending requests, which has been promised and when carried into effect will constitute another important political defeat for Germany.

(5) If suspension of petroleum shipments is continued indefinitely we cannot expect to be permitted to retain our large staff of petroleum observers and other “Attachés” many of whom are doing work which certain agencies of our Government appear to consider very important in connection with our future military operations in France.

(6) If our trade with Spain diminishes or disappears, the trend of Spanish policy away from the Axis and toward us will have been reversed and we may expect to lose many privileges we now have, such as comparatively free communication with resistance groups in France, free evacuation of our numerous military refugees, principally aviators, et cetera, et cetera. In fact it will be difficult for us to maintain normal diplomatic relations with Spain.

I believe that, if we continue to maintain our present attitude, either Spain will eventually give in to our demands or the present regime eventually will be overthrown. Much will depend on our military progress on the continent. However, there is a chance that meanwhile Germany will have been able to get large quantities of wolfram and other strategic materials out of Spain precisely at the time its needs are most critical. As pleasing as the overthrow of this regime might be to us from the ideological viewpoint, I have distinct reservations concerning the utility to U.S. of such a development, with attendant risk of civil war, from the military point of view.

I do not prophesy with any degree of certainty that if we persist in our present attitude all, or even any, of the unfavorable developments which I have given as possibilities, will take place. The prospect of continuing to be deprived of petroleum and other products from Americas is indeed a grim one. It may be that the Spaniards will give in before we do. It may be also that considerations of overall policy justify us in taking the risks. On the other hand it would be a mistake for us to underestimate the strength of Germany’s position in Spain or to ignore the very definite risks involved in continuing our present attitude.

I am unable accurately to evaluate Carceller’s present strength in the Government. However, in evaluating his proposal we should bear in mind (1) that if agreed to it would mean that wolfram exports to Germany during the first 8 months of this year would be approximately half of export permits given to Germany during all of last year and, more important, that total exports to Germany during the 8 months’ period of this year would be much lower than they would be if Germany were allowed freely to export the large amounts of wolfram it has already purchased this year and is in a position to purchase during coming months, and (2) that, regardless of what kind of agreement we may reach with Spain, the problem of smuggling is going to be an extremely difficult one. The Spanish coast line is long and imperfectly policed. If Germany’s need of wolfram is as urgent as we claim it is, Germany will not neglect any opportunity legal or otherwise to smuggle wolfram out of Spain. We ourselves have smuggled wolfram out. Smuggling across the Portuguese border is a common occurrence. Spanish minor officials are notoriously venal and wolfram is so valuable that the Germans can afford to pay huge bribes to get it out.

Our best hope of limiting smuggling is to reach an agreement with the Spaniards which, while drastically reducing potential wolfram exports to Germany, will be attractive enough to the Spaniards to induce them to cooperate willingly in carrying it out.

Repeated to London. By pouch to Lisbon.

Hayes

73. Julian F. Harrington, First Secretary of Embassy in Spain.
74. March 6.
75. Demetrio Carceller, Minister of Industry and Commerce.