Foreign Relations of the United States, 1950, Western Europe, Volume III

740.5/8–250: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

top secret
niact

London, August 2, 1950—6 p. m.

720. For the Secretary and Perkins. Re Embtel 648¹ and Deptels 579 and 580.

1. I have no question whatsoever about the policy of utilizing German industrial capacity for the purpose of providing non-military items necessary for military equipment, including primary commodities such as steel, aluminum, et cetera. I have been recommending this for longtime.

2. I think, however, we are completely deluding ourselves and will be guilty of deceiving our allies if we indicate to them that it does not contemplate any modifications of PLI, about which I personally know a great deal, for I negotiated the PLI agreement,² As matter of inexorable logic it is impossible, in my view, to follow the policy which is indicated in reference cables, and with which I agree enthusiastically, without modifying the PLI agreements.

3. The British Government has today been notified of our policy in the matter in accordance with the instructions but again I repeat this will entail, in my opinion, necessarily modification of the restrictions on the production of certain primary commodities.

4. PLI, as matter of fact, as you know, is on the calendar of ISG and will be discussed when ISG meets on 15 August.

5. I suggest very urgently that in view of the political implications here and in Europe, whatever the Secretary’s evidence may be, discussion of the matter in NAT should not receive any publicity on this side of the water or at home. I make this recommendation with great urgency.

6. It seems to me that all we need at the moment to implement the policy is the right to indulge in off-shore procurement. When this right has been obtained we can then in an orderly manner put the policy into effect and suggest that other NAT countries do likewise. We can then, too, arrange for the adjustments that will necessarily be entailed in Germany itself.

7. The lapse of month before putting this policy into effect other than by off-shore procurement, cannot influence rearmament to any appreciable degree. On the other hand, to give it publicity before the harvests are in may be taking risk which it is not necessary for us to take. (I do not place much stock in the theory that the Soviet can be provoked, but I do not see the sense of putting this theory to the test unless there is commensurate gain to us.)

8. The primary question on the continent is to determine whether the French have the real will to fight. We have to make certain commitments in order that the French instinctive will to fight will be encouraged by the consciousness of reasonable possibility of winning. But to plunge Germany into this matter too soon, before we have made our commitments and the French will to fight has been substantially encouraged, is hazardous business.

Douglas

1. See footnote 2, p. 174.
2. Documentation on review of the Prohibited and Limited Industries Agreement of 1949 by the Intergovernment Study Group on Germany is scheduled for publication in volume iv.