PPS Files, Lot 64 D 563, Assistance to Foreign Countries1
Memorandum by the Coordinator of Foreign Aid and Assistance (Labouisse) and the Assistant Chief of the Division of Commercial Policy (Moore)
The French Crisis
It is becoming increasingly clear that the major current problem of European recovery is the situation in France. France is today receiving economic assistance not only from the United States, but from England and other participating countries as well, far in excess of an amount which could be justified upon basic economic considerations. The trend of improvement which was taking place last spring has been reversed and there are no indications that the present government has sufficient political strength and support to make effective the measures which it agrees are necessary.
The unhealthiness of the French situation has undesirable economic and psychological repercussions on the other participating countries to such a degree that the success of the European recovery program as a whole is jeopardized unless a solution of the French situation can be found.
[Page 669]It is important from the viewpoint of the US interest in European economic recovery that the basis of US aid to France be reviewed in an effort to determine a course which might ameliorate the deteriorating situation.
On the one hand, the Congress did not intend and cannot be expected in the future to approve the allocation of funds in excess of those which would be required if a Government were to live up to its commitments under its bilateral agreement. However, the Cominform is undoubtedly centering its efforts to disrupt ERP in France. A reduction of ECA assistance to France below the present rate might well result in more effective Communist propaganda and attacks on ERP. There is also a risk that a reduction in aid, coupled with disruptive tactics by the Communists and the failure by the Government to take the measures necessary to make the available aid effective, will accelerate a deterioration in the French situation.
It is believed that the following among other specific questions must be considered in evaluating the risks and determining a course of action:
- a.
- If the Queuille Government is not in a position to achieve the necessary economic reforms, would the US look with favor upon a de Gaullist Government?
- b.
- If it could be foreseen that a de Gaullist Government would come in, should the United States undertake any discussions in advance with de Gaulle or his advisors?
- c.
- Should the United States continue to make available indefinitely the increased assistance which a continuance of unstable political conditions in France would make necessary?
- d.
- If not, should the United States inform the appropriate people in France that it will not be able to do so, and if so, when should that information be given them?
We should not, under any circumstances, take any action which could be interpreted as bringing pressure on France in favor of de Gaulle or any other individual or party. France must work out its internal political situation itself. We would be assuming great political and propaganda liabilities if it could be argued that we had interfered in France’s domestic political situation. Furthermore, it is doubtful if de Gaulle would in fact be able to bring about an improvement in the French situation.
Assistance given without requiring enforcement of reasonable conditions or given in unjustified amounts produces neither the political nor the economic results which the assistance is designed to achieve and might in the long run endanger the entire program. In spite of the risk that Communist tactics might accelerate economic deterioration, we should carry out the terms and spirit of the Foreign Assistance [Page 670] Act and limit assistance to France to that which she would require if she reasonably complied with the terms of the bilateral agreement. This position might imply some reduction in the assistance contemplated for France in the annual program approved by the OEEC.
All appropriate political leaders in France should be informed prior to November 1 that we must comply with the provisions of the Act. This should be accomplished by having representatives of the State Department and of ECA inform the leaders of the non-Communist French political parties along the following lines:
The purpose of the Foreign Assistance Act is to bring about economic recovery in OEEC countries as rapidly as possible with a minimum drain on the US Government. In the opinion of the US Government, unstable political and financial conditions in France are causing a greater drain on the US than the basic economic situation would otherwise warrant. Measures to remedy these conditions are believed to rest entirely in the hands of the French people and we have neither the right nor the intention to interfere in such domestic matters. Nonetheless, because of the limitations on the amount of available US aid and because of the requirements of the basic legislation and the bilateral agreements, we consider it necessary to inform all non-Communist party leaders that financial assistance to France from the US will be governed by the extent the French government is able to control the situation. Pending further developments in the situation in France, ECA is considering withholding approval of the full amount of aid envisaged in the annual program submitted through OEEC.
The method and timing of any approach to the French should be discussed with Messrs. Caffery and Harriman in advance and cleared with Secretary Marshall.
Any policy formulated with respect to France should also be applicable, with appropriate modifications to meet individual cases, to other OEEC countries whose situations are aggravated by factors similar to those prevailing in France.
- Master file documents, drafts, records of meetings, memoranda and related correspondence of the Policy Planning Staff for the years 1947–1953.↩