800.48 FAA/1–748: Telegram

The Ambassador in France (Caffery) to the Secretary of State

us urgent

113. Afem 28. Deptel 4584, Mefa 3, December 23 and Embtel 5486, Afem 6, December 21.1

Following repeated requests for indication of French organization to be established for administration USFAP PL 3892 Alphand3 last night orally gave Reagan4 following outline of French organization as now proposed but which has not yet been officially approved. (He expects formal decision within several days on set-up as outlined).

[Page 593]
Any difference in interpretation of agreement will of course be worked out between Foreign Office and Embassy.
Baumgartner, president of Credit National, to be French administrator. His over-all function would be two-fold: He would be charged with (a) administering and accounting for the use of the franc counterpart fund and (b) the collection of information on goods received under USFAP PL 389, their distribution and their end-use.
Baumgartner would be assisted by a small group of advisers and administrative officers charged with the operation of (a) and (b) above. (Alphand was not certain whether these assistants would be from Baumgartner’s staff or whether they would be key representatives of the interested French ministries and agencies. Baraduc5 has since telephoned to say that he hopes Baumgartner’s advisers will be these key representatives who will also be the direct liaisons with our special representatives).
Baumgartner would, with the advice of the interested agencies, determine the policies and operations required to fulfill the French part of the agreement. (Foreign Office entering into the picture only on questions under one above.)
Contact of US adviser or his representatives would be direct with Baumgartner or his assistants on all questions of policy and operation. Baumgartner would furnish US adviser all information required under the agreement.

Alphand then referred to all-out attack by Communists on agreement and particularly charges of set-up of network of US industrial “spies” under guise of observers. He said that to minimize possibility of giving Communists excuse to maximize this false theme, he felt sure we would agree that all inquiries regarding French operations under agreement and any request of an investigative character should be directed by US to Baumgartner who would have necessary investigations made and would report to US. He cited as exaggerated example, possibility of American observer making on-the-spot check-up of a reported misuse of aid products, having photographs made and announcing incident to press. Also Alphand considered it would be inappropriate for our advisers or observers to check with local authorities (prefects, mayors, etc.) on operation or on indications of misuse of products delivered under aid.

Reagan pointed out that in part to minimize possible adverse publicity, commodity rather than geographic observers who are part of identifiable USFAP unit in Embassy were decided upon, that obviously we had as much interest as the French in avoiding incidents which might serve Communists purpose: That Alphand should appreciate [Page 594] our observers would not indulge in exaggerated operation in manner outlined by Alphand but would work discreetly in the framework of instructions set forth in aid act. Reagan then stated that, while willing to cooperate with French to avoid unnecessary “incidents” he must unequivocally reject A’s suggestion that any limitations be placed by French Government on the operation of the American foreign aid in France or others as provided under the act (specifically Section V, I and J). He said that Alphand’s suggestion was so important that unless an immediate understanding could be reached on this point it appeared that even at the beginning of the operation the French Government was requesting derogations from the obligations accepted under the agreement.

Alphand hedged by saying he had merely thought it would be preferable if we would canalize our work through one government channel but that, if we considered it necessary to implement the agreement by making on-the-spot investigations, his government of course would fulfill its obligations but he requested that we first obtain the consent of his government before such investigations were to be made. Reagan emphatically rejected the latter reservation but said he saw no objection to advising Baumgartner with regard to any special investigations we might consider necessary on the grounds that Baumgartner might have information which could clarify or make unnecessary such investigation, but that we would not be required to obtain the prior approval of the French Government. Alphand somewhat reluctantly agreed that such approval would not have to be obtained.

I believe it would be useful if Department made known to French representatives Washington its position on French organization in support of Embassy’s recommendation as suggested in Paragraph Three Deptel under reference.

Sent Department 113, repeated Athens for Allen as 6.6

  1. Neither printed.
  2. For documentation on the development of the United States Foreign Aid Program under Public Law 389, 80th Congress, see Foreign Relations, 1947, vol. iii, pp. 197 ff.
  3. Hervé Alphand, Director General in charge of economic and financial affairs in the French Ministry of Foreign Affairs.
  4. Daniel J. Reagan, Counselor of Embassy for Economic Affairs, at Paris.
  5. Pierre Baraduc, Chief of the Economic Cooperation Service in the French Ministry of Foreign Affairs.
  6. Telegram 187 to Paris, January 21, 5 p. m., read as follows: “1. Dept fully supports Reagan on position taken with Alphand re responsibilities US mission under USFAP, PL 389 … 2. Dept believes in matters such as this Allen and US mission should reach settlement with French in Paris as it is solely question of field administration. 3. We will inform French reps here Dept fully supports ur view per last para reftel.” The telegram was repeated to Rome, as Mefa 161, for Richard F. Allen, Field Administrator of the United States Foreign Relief Program, who had participated in earlier discussions of this matter. (800.48 FAA/1–748)