No. 357
Ambassador W. Averell Harriman, Special Representative in Europe for the
ECA, arrived in Lisbon, via a U.S.
army plane, at 2 p. m., on Thanksgiving Day, November 24th. This was Mr.
Harriman’s first visit to Portugal since the initiation of the Marshall
Plan.…
Though Mr. Harriman intended his visit to be primarily one of rest and
recreation, he made good use of the opportunities which it afforded for
enlightening interested Portuguese on ECA matters and most obligingly acceded to all the official
demands unavoidably made upon him. The Portuguese press gave good
coverage to his visit and carried extensive accounts of a press
conference held by him at the American Embassy. In addition, he had a
long interview with Dr. Salazar, the Prime Minister, at which he was
accompanied by both Mr. Patten2 and Mr. Xanthaky, the American Ambassador’s Special
Assistant, who acted as interpreter at Dr. Salazar’s request. He also
called with the American Ambassador on Dr. da Matta, the Foreign
Minister, and on Dr. de Faria, Acting Director General of the Foreign
Office. He made a special personal call on Dr. Costa Leite, the
[Page 715]
Finance Minister, at the
latter’s house where he was recuperating from a serious accident, was
guest at a dinner given by the American Ambassador for the Foreign
Minister, and also guest of honor at a large luncheon in the Ministry of
Foreign Affairs given jointly by the Ministers for Foreign Affairs and
Finance.
The visit seems also to have been useful as regarding Mr. Harriman’s
personal opportunities for observing the working out of the Marshall
Plan in Portugal. In addition to two long conversations with the
American Ambassador regarding relations with the Portuguese and other
matters, he spent much time in company with Mr. Patten and held an
extended conference with the ECA staff
at which all aspects of Portuguese and colonial ECA operations were discussed. His interest and acumen
provided a valuable stimulus to the morale of all concerned.
The highlight of Mr. Harriman’s visit was, of course, his interview with
Dr. Salazar, of which I enclose a full report as drawn up by Mr.
Xanthaky.…
. . . . . . . . . . . . . .
[Enclosure]
Memorandum of Conversation, by Mr. Theodore A. Xanthaky, Special
Assistant to the Ambassador in Portugal (MacVeagh)
secret
[Lisbon,] November 25, 1949.
| [Participants:] |
Prime Minister Salazar |
|
Ambassador W. Averell Harriman |
|
Mr. David L. Patten, Chief, ECA Mission to Portugal |
|
Theo. A. Xanthaky, Special Assistant |
At Dr. Salazar’s request, I accompanied Ambassador Harriman and Mr.
Patten when they called on the Prime Minister this morning, and
acted as interpreter throughout the interview.
Mr. Harriman began by expressing warm thanks to Dr. Salazar for the
hospitality accorded him by the Portuguese Government, after which
Dr. Salazar welcomed Mr. Harriman to Portugal and expressed
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the profound gratitude of
the Portuguese people to the United States for its assistance under
the Marshall Plan. Dr. Salazar added that he also wished
particularly to thank Mr. Harriman for his personal patience,
forbearance, and understanding in studying the country’s
problems.
Mr. Harriman remarked that he was very pleased that Portugal had
joined not only the Marshall Plan but also its corollary, the North
Atlantic Pact. He said that in his opinion the North Atlantic Pact
is probably the most important single international step taken in
modern times. The Prime Minister smilingly commented, “We shall
see.” To this Mr. Harriman immediately retorted, “You seem to be
somewhat skeptical. May I ask why?” Dr. Salazar replied “I am not
really skeptical, but you Americans are apt to entertain an optimism
about your sincere intentions and altruistic plans which has at
times gone unjustified by results.” Mr. Harriman admitted that the
United States sets its sights high, but said he felt that by and
large its objectives have not only been met but even exceeded.
Dr. Salazar evinced great interest in our relations with the U.S.S.R.
and inquired why it had taken so many years, with loss of such
precious time, for us to realize what the Russians were up to. Mr.
Harriman explained that our leaders and diplomats were never unaware
of Soviet ambitions but Mr. Roosevelt, and subsequently Mr. Truman,
felt that, in keeping with prevailing U.S. public opinion, every
effort should be made to get the Russians to agree to a viable and
lasting peace, and that to that end we exercised great patience and
made considerable sacrifices. “In other words,” said Dr. Salazar,
“it was through the rebuffs which you got from the Russians that
your people finally realized the situation.” “Exactly so,” replied
Mr. Harriman, adding that now the American people are not only
indignant and alarmed but also for all practical purposes, united
and vigilant in their attitude toward Russia.
Mr. Harriman then went on to say that he and his associates were
convinced that the development of the Portuguese colonies could be
most useful in speeding the reconstruction of European economy in
general and specifically in helping to bridge Portugal’s dollar gap.
Dr. Salazar said he realized the importance of their possessions but
he preferred to deal with specific projects rather than to lose time
on grandiose but somewhat Utopian schemes for African development.
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For example, he said,
the Prime Minister of Southern Rhodesia has agreed with the
Portuguese Government to make a request of OEEC for technical assistance, etc., with a view to
improving transportation and port facilities in East Africa,
particularly the Port of Beira and the Beira Railway, and also rail
outlets on the West African coast either at Mossamedes or Benguela.
He mentioned that the United States has a direct interest in this as
it is the principal consumer of Rhodesian chrome ore (some five or
six hundred thousand tons annually). This led Mr. Harriman to
expound the reasons governing U.S. insistence on over-all planning,
such as the necessity of avoiding duplication of effort and
providing eventually for integrated transportation, etc., but at the
same time he assured the Doctor that he also favored specific
projects and stated that we have in mind the immediate development
of a manganese property in Angola. In this latter connection, he
said the United States is especially desirous of reducing its
purchases of manganese in Russia, but cautioned that it is necessary
to tackle the Angola project expeditiously as several other
properties in various parts of the world are also under
consideration and, should our needs be satisfied from those sources,
our interest in Angola would be proportionately lessened. With
direct reference to Dr. Salazar’s strictures on the grandiose
quality of U.S. thinking on these subjects, Mr. Harriman took
occasion to say that it had been the experience of the ECA that colonial ministries in general
seem to suffer from an “occupational disease, namely, the finding of
ways for doing nothing.” Dr. Salazar laughed at this and said he
realized that to a certain extent this may be true in the case of
the Portuguese Ministry but that it is not entirely so. He remarked
that the knowledge which the Portuguese have gained in over 400
years of colonial administration and experience cannot blithely be
put aside. He pointed out that Africa (meaning Mozambique and
Angola) is a primitive country with a primitive population and
things do not move there at the pace to which Europeans and
Americans are accustomed.
The Doctor then opened up an extended discussion on the subject of
the British and their problems. He declared that England constitutes
“the only moral and political value left in Europe” and said that he
desires to do everything possible, within Portugal’s limited means,
to contribute to her rehabilitation, mentioning in particular that
he is endeavoring to direct as much trade there as possible. He
added, however,
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that this
can be very difficult at times because on many products the British
cannot quote either fixed prices or delivery dates. He criticized
the Labor Government and attributed to it the malaise which has struck Great Britain. Mr. Harriman said
he believed that a principal cause of Portugal’s present inability
to obtain from England as much merchandise as she formerly purchased
from that country, is the fact that Great Britain is now making
heavy shipments to India and Pakistan in an endeavor to pay off her
war debts to those nations. He expressed the opinion that a change
in this policy is necessary and that some funding arrangement with
India and Pakistan will have to be made in order to allow Great
Britain to place more of her merchandise in two-way markets. In
addition, he told Dr. Salazar that there has been considerable
progress, not only with the British but also with the Belgians and
others, in breaking down the “double price” system. He mentioned
confidentially that he expects the British to abolish the present
spread between domestic and foreign price quotations on coal (which
would directly affect Portugal) by the end of January.
Mr. Harriman then complimented Dr. Salazar on his accomplishment in
balancing the budget and keeping his financial house in order for so
many years, and the Prime Minister remarked that he had done this
notwithstanding the unpopular aspect of some of his measures. He
opined that some other countries, which depend on popular support
for their existence, have not been able to take necessary financial
measures for fear their governments might be overturned.
The conversation next turned on Portuguese-American trade and Mr.
Harriman remarked that he felt there is a definite opportunity for
expansion in the sale of Portuguese products in the United States.
He mentioned that the total yearly American liquor bill, including
beer, is eight billion dollars and that there is unquestionably room
for an increase in Port wine sales. Dr. Salazar objected that
penetrating the American market is not as easy as it appears to be
on the surface. In the first place, he said, duties are prohibitive
and also administrative procedures, sanitary regulations, etc., make
business complicated and difficult. However, Mr. Harriman assured
him that the Secretary of the Treasury is at present studying both
the customs angle and the possibility of simplifying the entry of
foreign merchandise. At this point Mr. Patten remarked that a
technical assistance project is being set up by the ECA Mission in Lisbon with the idea of
[Page 719]
aiding interested
Portuguese entities in a survey of the American market.
Mr. Harriman then inquired of Dr. Salazar whether he could be of any
service to him, and the Doctor said he would appreciate help in the
acceleration of allocations destined to Portugal under the Marshall
Plan. The Prime Minister mentioned that preparation of the
Portuguese revised program has been delayed owing to the fact that
it has remained doubtful until recently just how much of the money
allocated this year was to be in grant and how much in loan. He also
remarked that the business recession in Portugal during the past
year, and the consequent shortage of escudos, had caused the
Portuguese to hope for a larger sum in the way of grant than the
four million dollars now contemplated. Mr. Harriman said that this
figure of four million has been decided on by the National Advisory
Council in Washington and that he hoped the Doctor would understand
that decision to be final. Dr. Salazar said he fully understood
this, and that, he was, of course, very thankful for the grant; all
that he wished to point out was that this question had been a
contributing factor in delaying the completion of the Portuguese
program.
In conclusion, Mr. Harriman expressed pleasure in knowing that
Portugal subscribes to the free enterprise system as we understand
it in the United States, and the Doctor confirmed that he is
entirely of that school of thought, the only instances in which the
Portuguese Government has entered into industrial or other
enterprises being, he said, when private capital was not available.
Mr. Harriman then said that he felt sure that private American
capital would be glad to cooperate in the development of Portuguese
resources not only in metropolitan Portugal but also in the
colonies. The Doctor inquired how such capital would enter the
country, i.e., would it be in the form of direct loans or in
association with Portuguese capital. Mr. Harriman explained that it
might take either of those two courses or it might be in the form of
branch factories, etc. He personally felt that association with
local capital was the most satisfactory method. Dr. Salazar said he
agreed with this but was also not opposed to the other methods
should they appear more appropriate in given cases.
The long interview terminated with Dr. Salazar again thanking Mr.
Harriman for what the United States had done for Portugal and
inviting him to call on him again anytime he desired.
[Page 720]
AGREEMENT BETWEEN THE UNITED STATES AND PORTUGAL
RESPECTING SETTLEMENT OF CERTAIN WAR CLAIMS AGAINST THE UNITED
STATES
[For text of Agreement regarding compensation for damage caused
to persons and property in Macao by American military planes
during World War II, effected by exchanges of notes dated at
Washington October 3, 1947, and February 21, May 3 and 20, and
August 4, 1949, which entered into force August 4, 1949, see United States Treaties and Other International
Agreements (UST), volume 3 (pt. 4), page 4914.]
