711.53/5–1048

Memorandum by the Director of the Office of European Affairs ( Hickerson ) to the Secretary of State

secret

Subject: Summary of U.S. Relations with Portugal.

On February 2, 1048 a highly satisfactory agreement was signed with the Portuguese Government granting US military aircraft transit privileges at the Lagens Airport in the Azores for the next five years. Although this is acceptable to the military authorities as an interim arrangement, the Joint Chiefs of Staff are still interested in ultimately obtaining long term base rights in the Azores.

The present objective of US policy is to maintain and improve the existing cordial relations with Portugal and to encourage Portuguese cooperation in the economic and political rehabilitation of Western Europe. Portugal’s financial condition is sound; its budget has been balanced for the past 15 years and the escudo is one of the firmest currencies in Europe.

Portugal is participating in the ERP but is receiving no financial assistance. Portugal has offered to make loans to other countries to assist in the purchase of Portuguese goods, mainly fish, fish products, naval stores, citrus fruits and cork. In view of the relative soundness and stability of the Portuguese economy, the aim of the ERP in Portugal will be primarily that of maintaining rather than rehabilitating the economy.

Although Portugal has not been admitted as a member of the UN, it has taken an active part in a number of the affiliated organizations, in particular the ICAO. The US has taken a leading role in sponsoring Portuguese membership in the UN but there is at present little hope of success in the face of Soviet opposition.