Foreign Relations of the United States, 1948, Western Europe, Volume III

840.50 Recovery/2–948: Telegram

The Chargé in the United Kingdom (Gallman) to the Secretary of State

confidential
urgent

London, February 9, 1948—7 p. m.

493. Berthoud and Makin[s] of Foreign Office reviewed Anglo-French, Rome, Bern and Hague talks re CEEC as outlined in Paris telegram 301 to Department January 17.¹

1. Italy desires issue individual country report economic development since CEEC. Swiss afraid their report might be negative in view of recently imposed Swedish restrictions on Swiss imports. Benelux feels information already supplied to American missions sufficient but willing to use other form publicity. View this and imminent publication economic survey for 1948² UK reconsidering publication formal report.

2. Actually US already issued statement progress of cooperative efforts but CEEC secretariat preparing one.

3. Benelux and Italy are “very keen” establish working party but Swiss reserving their position. Berthoud believes working party will be open to all sixteen countries, established in Paris, and begin work March. Eire only country replying through diplomatic channels re next steps CEEC anxious to join working party. Italy, Switzerland and Benelux agree working party should

(a) Suggest constitution and organization for continuing 16-power body although final form dependent on congressional ERP decisions. Benelux apparently regards UK as steadier anchor than France or Italy and supporting UK on headquarters location continuing organization in smaller country presumably Brussels and on establishing organization as group of national representatives not complicated by strong international executive secretariat.

(b) Draft multilateral agreement reaffirming CEEC’s undertakings for inclusion in bilateral agreements. Berthoud stressed, however, that ERP should be adopted first since European countries unable commit selves without knowing ERP’s terms.

(c) Prepare for next meeting CEEC though no date yet discussed. Some pressure developing having meeting soon in order discuss next steps if ERP not approved by April 1. UK discouraging this pessimistic approach. Benelux questioned whether working party should be authorized to “follow and facilitate” European cooperation as interim body but decision reached to restrict working party to terms of reference indicated above.

4. Chairman and rapporteurs of CEEC technical committees calling working groups together study US ERP commodity reports³ in order (a) “comment factually thereon” and (b) draw up conclusions for participating countries not for USA. All commodity working groups meeting February: food Hague February 24, iron and steel Geneva today, transport and timber Paris, fuel and power Geneva, finance London.

Re iron and steel Brussels reiterated non-existence cartel and apparently questioned US concluding statement iron and steel report regarding prior US detailed approval reestablishment such cartel. Re finance report Belgium indicated keen interest in US offshore European purchases in dollars.

5. Berthoud leaving for Copenhagen, Oslo and Stockholm February 10, return February 22.

Berthoud also mentioned following:

(1) Swiss worried lest reimposition US export controls implies wartime re-export requirements but interested in ERP program due commodity allocations thereunder.

(2) All countries visited indicated desire exchange comments on ERP conditions of bilateral aid believing US cannot object such cooperative consultation.

(3) Italy first, France second and Netherlands third in crisis timetable. Italy especially but France also much concerned lest conditions of ERP aid give ammunition to their Communist parties. Due exchange difficulties Dutch cut first quarter 1948 import quotas one-half. Italy, France and Netherlands now importing practically no raw materials for industrial program.

Copies by pouch to Paris, Rome, Brussels, Hague, Bern, Copenhagen, Stockholm and Oslo.

Gallman

1. Not printed.
2. British Cmd. 7344, Economic Survey for 1948.
3. The reports of various committees studying European Recovery Program problems are included in the Department of State Committee Files, Lot 122, the consolidated master collection of the records of committees of the Department of State for the years 1943–1952, prepared by the Records Service Center of the Department of State.