840.20/12–1549: Telegram

The Secretary of State to the Embassy in the United Kingdom


4490. For Holmes.

Amb Franks called on Sec Dec 14 re proposed MDAP bilateral and assistance program. Stated Brit Cabinet deeply concerned. Franks left long confusing document outlining Brit position copy of which is being pouched to Emb.1 Brit worries appear to be primarily on three points: (a) what further expenditures will we ask or expect Brit to undertake under concept of mutual aid; (b) amount of materials (as distinguished from finished equipment) which Brit expect to receive [Page 361] much less than anticipated earlier; (c) specific clauses of draft bilateral2 raised difficulties.
Re point (a), Brit point out they have, since end of war, made substantial contributions to defense potential of Western European countries, and in particular have undertaken a Western Union production program, primarily for benefit of other countries, which represents limit of additional Brit production. Alleged that U.S. air forces in UK now cost Brit about one million pounds a year, excluding capital costs. Brit unwilling to enter into any general commitment re mutual aid, including possible aid to U.S. under bilateral as they are now doing the maximum possible.
Re point (b) Brit originally believed that US aid toward additional production program of Western Union countries wld be in neighborhood of one-third of total cost of $300,000,000 to $350,000,000. Recomputation of Western Union program indicated dollar costs of about 25 per cent. Present Brit computation of dollar cost of UK share in Western Union production program revised down to about $25,000,000 or 11 per cent. Doubtful whether US aid under MDAP cld cover these costs due to fact that dollar materials have already been drawn from Brit stocks for this program and rebuilding of stocks apparently not permitted under MDAP. Furthermore, some of additional materials needed in production program obtainable from Belgium and Brit advised US cannot therefore supply even though Brit might have to pay gold or dollars to Belgium in settlement of account. Accordingly, it seems to Brit that they will receive very little assistance under program.
Re point (c) most important is clause in first draft relating to exports of equipment identifiable as having been fabricated with U.S. assistance or similar to equipment furnished by US. Reference was made to unhappy experiences under Lend-Lease. In addition, concern was expressed re provision for meeting of administrative expenses since it was pointed out that Brit will have no counterpart funds to use and Parliament wld have to vote funds for this purpose. Objection also expressed to provisions relating to stockpiling strategic materials and patent arrangements.
Franks stated he had no authority to negotiate bilateral but had been instructed to expound general Brit position. Sec pointed out requirements of MDA Act, stated no intention to request greater aid than Brit cld afford, pointing to provision in Act which states principle that economic recovery shld have priority over additional military production. Further, Sec expressed view that provisions re transfer of material should not go beyond Sec 402 (b) of Act. Sec expressed [Page 362] view it wld be most unfortunate if bilateral with UK was not worked out and we wld consider what we cld do to meet Brit points.
In negotiations with Fr, Itals, Danes, and Norwegians, number of changes in original draft have been agreed, including a restriction of the transfer clause to the language of the Act. These concessions have undoubtedly been known to Brit Emb and will of course be offered to Brit. Believed possible also that more acceptable language for Art 1 relating to mutual aid can be drafted.
Long memo which Franks left is a confused document. While its principal pts seem to be concern about future requests under mutual aid, and disappointment at amount of assistance to be received, it is not clear what the heart of the difficulty is. We may be able to redraft Art 1 so as to play down possibility of its being interpreted as an indefinite commitment to give further aid to NAT countries, including US and we may be able to work out some scheme by which quantity of aid to be received by UK will be increased. This latter point is very uncertain and shld not be mentioned.
We wld much appreciate ur urgent estimate of what is worrying Brit and what line wld be best calculated to resolve difficulties. While we are aware of pre-election pressure on Brit Govt and of their disappointment that MDA Act forbids use of assistance to compensate for loss of exports resulting from additional military production, we feel it is essential to success and continuance of military assistance program that Brit sign a satisfactory bilateral, and fear that difficulties in this field wld have most unfortunate repercussions in renewal of ERP.
  1. Not printed.
  2. See telegram 4159, November 18, footnote 2, p. 351.