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

740.5/10–1750: Telegram

The Secretary of State to the United States Deputy Representative on the North Atlantic Council (Spofford), at London

confidential

Washington, October 17, 1950—7 p. m.

Todep 63. For Spofford from MacArthur. Re phone conversation today fol is Nize paper with new para 6. Also note downgraded classification.¹

Title: Suggested Method for Arriving at an Equitable Distribution of Economic Burdens in Carrying Out the Medium Term Defense Plan.

1. The responsibility for action in raising and supplying forces must be placed upon natl govts. Coordination thru the NATO machinery is necessary, however, if the actions of the individual govts are to conform with an integrated overall def plan, if the forces for def of freedom in Eur are to be sufficient to carry out their task, and if there is to be an equitable distribution of the econ burdens involved.

2. The decisions involved in arriving at an equitable distr of econ burdens cut deeply into the internal affairs of individual countries and affect their most vital immediate and long-range interests. They are therefore basic polit decisions and will probably need to be taken by govts acting thru the NA Council itself.

3. The preparation of recommendations to the Council and arrangements for the neces staff work on which those recoms are to be based shld be the responsibility of the Deps. The Deps shld have such staff assistance in carrying out this responsibility as they may consider neces. The composition and org of this staff shld be determined by the Deps.

4. The Deps can look to the SG for guidance on effectives, equipment, and other mil requirements by countries. They can look to the MPSB for guidance on the distr of prod tasks by countries. There is an ad hoc costing grp from which the Deps will be able to secure costing formulas.

5. From these data it shld be possible to compute gross cost of the mil program in the aggregate and by countries computed before aid. It is suggested that the Deps arrange for this work to be done by the Staff of the DFEC.

6. When the cost of the MTDP is computed, the next step shld be an analysis of the econ impact of the program of this magnitude on the member countries. This analysis shld of course take account of the total proposed def expenditures including the additional expenditures required specifically to carry out the MTDP. It shld also draw on, and be appropriately related to, the broad analysis of Eur and North Amer econ prospects being developed concurrently in the OEEC in connection with that org’s third annual report. To this end it is suggested that

a. the form of OEEC questionnaires covering gen natl accts, bal of payments and budgetary projections be reviewed to insure maximum usefulness for this specific NATO purpose as well as the gen purposes of the OEEC;

b. the natl submissions by the NATO countries to the OEEC be based on assumption by each country of the cost of the mil program as indicated in para 5 above;

c. the Deps create a NATO working grp based on the NATO countries dels to the OEEC (inc US and Can), utilizing if pos the services of experienced members of OEEC secretariat;

d. this working grp, under guidance from Deps, arrange for supplementary submissions by NATO member countries covering more specific info bearing on the impact of the proposed mil programs on their economics and their relative abilities to carry the burden of expanded def requirements; and

e. the working grp develop for the Deps a report, drawing both on OEEC submissions and their own[?] analysis in OEEC and on the special submissions to the NATO grp and their analysis, this report indicating the effect of the proposed mil program on the natl accts and bal of payments of each country and including a critical evaluation of the data bearing on equitable distr of the econ burden. An important purpose of the report shld be to isolate out the major questions of policy requiring decisions by NATO govts, individually and collectively.

7. The recommendations referred to in para 3 wld be worked out by the Deps and the decision referred to in para 2 wld then have to be reached by govts acting thru the Council. Assistance wld be bilaterally arranged in conformity with NATO programs and administered pari passu with performance of the NATO program by the various participants.

8. While the above program is being worked out, interim arrangements shld go forward bilaterally on an urgent basis so that actions which are neces now will not be delayed. The impact of these interim arrangements wld be taken account of in the final decisions. [MacArthur.]

Acheson

1. The so-called “Nitze paper,” in early draft form, was quoted in a memorandum handed to Spofford in New York by Edwin Martin on September 19. The memorandum, not printed, began with this explanation: “The attached paper is based upon the Nitze, Alphand, Franks discussions in New York. It is designed to provide a procedure for reaching agreement unilaterally on equalization of burden economic assistance, and thus replace the various financial proposals submitted by the French.” (396.1 NE/9–1950) The memorandum was classified top secret. The paper, as quoted in Todep 63, not only contains a considerable addition to paragraph six but also shows revisions of paragraphs three and seven and an addition of paragraph eight.