840.50 Recovery/8–948: Telegram
The Ambassador in Sweden (Matthews) to the Secretary of State
916. From the point of view of our general policy toward Sweden hope it will be possible for ECA to grant Sweden a moderate third quarter credit as requested (see Toeca 14, July 30 and following).1 I believe the credit is needed and that its extension will increase [Page 474] Sweden’s interest in ERP which has developed continuously since last December as Sweden’s stake in European recovery has loomed larger. However much Undén2 may publicly proclaim that ERP is economic and not political the closer Sweden is associated with it the more it will gradually be tied to the west whether the government likes it or not. I consider that in its effect on Sweden there is a marked distinction between granting ERP aid and withholding military materiel.
The foregoing covers the third quarter credit only and we do not wish Sweden to utilize credit to avoid remedial steps in the economic field. My recommendation upon general policy grounds covering future credits will be governed by the situation at the time and by the leverage which we may want to utilize either for ECA purposes or for other reasons.
Failure to extend a credit which Sweden was loath to request until the need made it urgent would I believe, in the light of recent signature and Riksdag approval of the bilateral agreement serve greatly to dampen Swedish interest both governmental and popular in ERP.
I realize of course that the decision to grant a credit or not is one solely for ECA but I believe the Department might want my views from the general policy angle.
Sent Department 916; repeated Paris 237 for Harriman.