611.53/10–2050

Policy Statement Prepared in the Department of State 1

secret

Portugal

a. objectives

The primary objectives of US policy toward Portugal are: (1) to maintain and improve existing cordial relations; (2) to ensure continuation and development of the facilities now granted to us in the Azores; (3) to encourage Portuguese participation in efforts to achieve economic, political and military integration in western Europe and coordination in North Atlantic area; and (4) to aid in the economic and strategic development of Portugal’s large African possessions.

b. policies

United States relations with Portugal are on a close and friendly basis. Portugal is a participant in the European Recovery Program, the North Atlantic Treaty, and the Military Defense Assistance Program and it is hoped that it will also participate in any ultimate European political or economic union. However, ideas looking toward the closer association of the European nations, and particularly the idea of a federated Europe, have long been anathema to the Portuguese Government which believes that any organization of Europe must be based on the “cooperation of national sovereignties.” While the Portuguese Government has not closed the door to consideration of such arrangements, it has revealed strong suspicion that they might threaten both the present form of government in Portugal and the integrity of Portugal’s overseas territories. This feeling is strong also among educated Portuguese who suspect foreign influence as threatening their country’s independence and rights. There is consequently no reason to anticipate Portuguese participation in the foreseeable future in any efforts looking toward the closer association or ultimate political union of the European nations.

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The most important aspect of our relations with Portugal in recent years has been the United States Air Forces’ requirement for air base facilities in the Azores area. On February 2, 1948, the existing agreement for transit facilities for US military aircraft at Lagens airfield was extended for a period of five years.2 In addition, US and Portuguese personnel are cooperating in such related activities as the training of Portuguese personnel, the operation and maintenance of the airfield and the construction of new technical facilities. In view of Portugal’s participation in the NAT, questions relating to the extension of the present agreement to make it coterminous with the NAT will be discussed within the appropriate organ of the treaty organization.

As a participant in the European Recovery Program, Portugal requested and was allocated financial assistance for the first time during 1949–50. Portugal received $31.5 million in direct dollar aid from the EGA, of which $27.5 million was provided as a loan and $4 million as a grant. Portugal also received the equivalent of $18.2 million in assistance from other participating countries. Because of the recovery of Portuguese trade with western Europe, this latter figure represented only about 70 percent of the intra-European aid to which Portugal was entitled. The amount of direct ECA assistance Portugal will receive during 1950–51 has not been determined yet. The amount of assistance Portugal may receive from other OEEC countries in 1950–51 will depend upon the trends in Portugal’s trade with western Europe as well as the settlement of intra-European accounts through the newly established European Payments Union, in which Portugal also participates.

The serious and continuous decline in Portuguese gold and dollar reserves was halted during 1949–50, primarily through the strict application of controls on dollar imports. Portuguese imports from the United States in 1950 are about one-fourth below the 1949 level, and exports have increased by one-third, so that the adverse dollar trade balance has been cut almost in half. The 15 percent devaluation of the escudo as against the dollar, in September 1949, undoubtedly helped to stimulate this improvement. At this rate of improvement, and with more than $200 million in gold and dollar reserves, $200 million in other currency reserves, and with continued ERP assistance, it is believed that Portugal will be able to cover her foreign exchange requirements for the next several years without a dangerous drain on her reserves.

The long-term Portuguese recovery program is built around basic development projects, having as their core the development of hydroelectric [Page 1542] power. The program includes primarily projects feasible of completion by 1952, and which will provide the greatest contribution to the Portuguese and European dollar position by the end of the European Recovery Program. The chief problem with regard to the development of power as well as other investment projects is the scarcity of investment capital in Portugal, a condition arising out of the relatively low level of economic development. This condition is worsened by the steady rise in population, the medieval relics of absentee-landlordism and the absence of any development towards a more modern social and business structure.

In connection with the recovery program, an effort is being made to encourage the Portuguese to place greater emphasis on accelerating the development of their colonial territories in order to increase the proposed contribution of the colonies to European recovery. It is intended that some Point IV assistance will be made available for this purpose, beginning in 1950–51. Because of the US interest in the strategic materials of the non-Portuguese territories in East Africa, specifically Northern and Southern Rhodesia, we have been concerned over the fact that the port of Beira in Mozambique is a major transport bottleneck. During the past year arrangements for port improvements were worked out, including the building of a special dock to handle materials arriving from the British territories. Portugal will receive a further ECA loan equivalent to $2 million to finance the Beira improvements.3 In addition, the ECA is conducting surveys of Portuguese colonial resources with a view to determining the nature and scope of the assistance required to carry out further specific development projects in the colonies. In the interests of such development, it is also hoped that the existing Portuguese restrictions on foreign investments, both in the homeland and in the colonies, will be relaxed.

The US is interested in promoting maximum trade, on a multilateral and non-discriminatory basis, between Portugal and other countries, including the US. US trade policy is directed toward obtaining adherence of Portugal to the General Agreement on Tariffs and Trade, and a Treaty of Friendship, Commerce and Navigation in order to formalize and strengthen economic relations between the US and Portugal. A draft treaty was presented to the Portuguese Government in March 1950, for study and comment prior to the commencement of negotiations.4

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The problem of obtaining the restitution of German looted gold discovered in Portugal is still at issue. The best offer elicited from the Portuguese Government during the course of prolonged negotiations has been a proposal to deliver 3.9 tons of gold ($4.4 million) out of 44 tons ($48 million) identified as looted. The Portuguese Government has stated that it stands by this offer although it would not be able immediately to honor this commitment due to the deterioration of its gold position. The US, UK and France presented similar notes to the Portuguese Government on May 27, 1950, proposing that the matter be submitted to litigation.5 Meanwhile, German property in Portugal is being liquidated, and the proceeds are being blocked pending final solution of the looted gold problem.

Our information and cultural relations program in Portugal is designed to increase and strengthen friendship between the US and Portugal and to develop feelings of transatlantic solidarity as well as a growing feeling of a community of interest with the US. We seek to stimulate interest in the US and to create and foster appreciation of American ideals.

c. relations with other states

Anglo-Portuguese relations are firmly based on the centuries-old alliance between the two countries. During the war the UK was granted important air and sea bases by Portugal, and in May 1948 the Portuguese extended facilities to the UK in the Azores identical to those accorded the US. Portuguese friendship for Great Britain stems from the decades when the British fleet was the guarantor of Portuguese sovereignty and colonial possessions. With the change in the world positions of the US and UK, this friendship is becoming largely a matter of tradition. Time has not, however, diminished the importance to the UK of a friendly and stable government in a country flanking one of its main sea lanes.

Serious difficulties in postwar economic relations between the two countries were settled by the signing of the British-Portuguese Monetary Accord of April 13, 1949, recently extended for one year, which improved Portugal’s balance-of-payments position vis-à-vis the UK. The Beira Convention of June 20, 1950, signed after three years of study and negotiation, provides for the improvement and full utilization of the port and railway of Beira in Mozambique, and will regulate for 20 years this technical aspect of Portuguese-British colonial economic relations.

Geographic factors make close relations with Spain essential for Portugal despite Portuguese mistrust of the dream of Iberian unity [Page 1544] still held by a few Spanish nationalists. Portugal, which forms only a small enclave in the Iberian Peninsula, has its natural defense line on the Pyrenees frontier; and events in Spain have a profound influence on political stability in Portugal. These factors have led to close relations between the two countries which are facilitated by the similarity of political outlook on the part of both right-wing regimes. The close ties are evident in the Iberian bloc formed in 1942, and in the 1939 Treaty of Mutual Friendship and Non-Aggression and its 1940 Protocol, which were renewed in 1948 for another ten years. The Portuguese Government has sought with growing insistence to have Spain included in the integrated programs of western Europe. Early in 1948 it proposed that Spain be admitted to the ERP. Later, when Portugal was considering the invitation to join the NAT, Spain invoked the provision of the 1940 Protocol requiring prior consultation in Iberian defense matters. Although the Portuguese Government refused the Spanish request to make Portugal’s acceptance of participation in the NAT conditional upon the invitation of Spain, it has vigorously urged the other members to provide, at least indirectly, for Spanish participation in western European defense arrangements. On September 16, Portugal presented these views officially, for the first time, to the NAT Council.

By history and tradition the Catholic Church has played an-important role in the political and social evolution of Portugal. Underlying the corporate organization of the Estado Novo are principles based largely on Papal doctrines of social action, and the regime has granted the Vatican legal safeguards for the interests of the Church in the Concordant and Missionary Agreement of May 5, 1940. Although the character and intellectual development of Premier Salazar himself have been strongly influenced by Catholic teachings, his nationalistic regime shows traces of the independence declared by Pombal. Salazar has not followed the Vatican in sanctioning strikes and has repeatedly suspended publications of the Catholic Action’s local organ. The recent termination of the ancient religious privileges enjoyed by Portugal in India may also create a new influence in its relations with the Vatican. Under the “Patriarchate of the East” system, Portuguese nationals had to be chosen for certain Indian bishoprics, while for others the prior agreement of the President of the Portuguese Republic was required. These rights were lost under an agreement of July 18, 1950, an event which may now stiffen Salazar’s attitude on questions involving relations between Church and State.

Although French-Portuguese ties are not particularly close, amicable relations exist between the two countries, based primarily on cultural bonds. Recently steps have been taken to expand these relations [Page 1545] through a commercial agreement which was concluded on November 17, 1949. Talks designed to increase the commodity exchanges under this agreement were held in the spring of 1950.

No diplomatic relations have ever been maintained between Portugal and the USSR, and the attitude of the two countries is one of mutual dislike. Salazar is strongly anti-Communist and anti-USSR, and the great majority of the Portuguese people fear and oppose Soviet influence. The USSR has upon occasion denounced the Salazar government in terms similar to those it customarily reserves for the present Spanish regime, and has consistently vetoed Portugal’s application for membership in the United Nations. Commercial contact between the two countries is limited almost exclusively to an occasional shipment of Portuguese cork.

Relations with the Republic of India are of special interest to the Portuguese, who still have three possessions on Indian’s west coast. These colonies, small in area and relatively unimportant economically, are of great historical interest to Portugal as symbols of the country’s past colonial greatness. Portuguese sovereignty over these possessions has been threatened in recent years by the Indian desire to remove all vestiges of European colonialism from the area. The Government of India formally suggested the matter be negotiated; Prime Minister Nehru on several occasions has stated his desire to incorporate the Portuguese territories into India, and a high-ranking Indian minister has been sent to Lisbon primarily to negotiate the question. However, the Portuguese Government informed the Government of India in a note of August 1950 that legally the Indian territories form an integral part of the Portuguese homeland and their status cannot be the subject of negotiation. The situation is further complicated by the possibility that Portugal may invoke that clause in the Anglo-Portuguese Alliance which binds the UK to help defend all Portuguese territories.

The Portuguese Government is currently preoccupied over the threat to the security of the colony of Macao posed by the consolidation of Communist control in south China. A remnant of the Portuguese empire, the colony is situated on the Chinese mainland near Canton. Portugal has declared its intention of defending Macao if the UK is similarly willing to defend Hong Kong, and has dispatched military units to the colony. It has informed the US that it prefers to defer recognition of the Chinese Communist government until the latter gives evidence of international responsibility and the US and France decide to take similar action. Portugal pointed out, however, that the precarious situation of Macao might force recognition upon it at any time.

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Portugal’s relations with its former colony, Brazil, are based on common culture, language, and blood. The Portuguese Government has consistently shown its close interest in Brazil through its efforts to strengthen common cultural institutions and to take advantage of all opportunities to demonstrate its friendship.

A common concern with the problems of African defense and development has led to increasing cooperation on colonial matters among Portugal, France, the UK, Belgium and the Union of South Africa. Portugal took the initiative in calling the Central African Transportation Conference of May 24, 1949 to exchange information, recommend general measures of improvement, and draft an agenda for a second conference to be held in Johannesburg in 1950. Portugal is also an active member of the Commission for Technical Cooperation in Africa South of the Sahara, and has taken part in numerous conferences on African problems. Recently, the Portuguese Foreign Minister stated that “the future of Europe is in Africa.”

While Portugal has not been admitted as a member of the United Nations, it has taken an active part in a number of affiliated agencies, in particular ICAO. The US had a leading role in sponsoring the Portuguese membership application, but there is at present little hope that Portuguese membership in the UN will be achieved in the face of Soviet opposition.

d. policy evaluation

The continuation and development of the military facilities which we are using in the Azores is of preeminent importance in our relations with Portugal. Other important aspects of our relations with Portugal are, therefore, designed and directed along lines best calculated to serve our interest in the undisturbed development of this relationship.

While the Portuguese Government is a full and active participant in the North Atlantic Treaty, there have recently been signs that its participation in the integrated defense plans will be increasingly concerned with the defense of the Iberian Peninsula, and specifically the participation of Spain in these plans. Portuguese preoccupation with this problem, which has found no support among the other NAT members, may also become a complication in our efforts to relate a new Azores agreement directly to the NAT and the defense plans under it.

A survey of Portuguese requirements under the Military Defense Assistance Program has just been completed. No decisions have yet been made on the amount or type of military assistance which will be given. An increase in Portugal’s production of military supplies also will probably require the extension of some assistance. The relatively [Page 1547] low level of industrial development alone serves to limit Portuguese capabilities of production for military purposes, aside from such traditional products as textiles and minerals.

In the economic field the Portuguese Government is confronted with the dual need to expand production from limited resources, and at the same time hold down to moderate size the foreign exchange drain resulting from a continuous balance of payments deficit. The US interest is in influencing and assisting the Portuguese in the direction of the slow but cumulative changes necessary to achieve a more rapid economic development as well as to achieve viability in Portugal’s international accounts. While the country still faces a continued adverse trade balance and business recession, it is anticipated that the ERP aid being extended to Portugal will assist in the amelioration of these conditions.

[Annex]

Supplement to the Policy Statement on Portugal

top secret

Azores Negotiations

The JCS have established a requirement for long term base rights in the Azores. Immediate plans call for the development and expansion of existing operational and storage facilities for the Air Forces and ultimately for naval anchorages and facilities for naval aircraft.

In response to our suggestion that the existing Azores Agreement be made coterminous with the NAT, the Portuguese Government stated, in February, that it could “not … permit in time of peace the establishment of military bases or foreign areas on its territory.” From subsequent discussions it became clear that in Portuguese Government opinion the implementation of the present agreement has given the US a “base” on Portuguese territory contrary to its fundamental position. These discussions also revealed their expectation that Portuguese personnel at Lagens would be sufficiently trained, by the time any new agreement is made, to permit their Air Force to assume such responsibility for essential operational services as will satisfy their desire that Lagens shall be a Portuguese base, rather than one jointly occupied and used by US and Portuguese forces.

The Portuguese Government also indicated that any further discussion of this question should take place within the NAT, a preference which we believe stems from their desire to tie any extension of Azores facilities to the satisfactory development of NAT plans for Portugal’s defense. Once these plans, which have been developed in [Page 1548] the North Atlantic Ocean ‘Regional Planning Group, have been finally approved, we plan to raise this matter again with the Portuguese. Their unwillingness to extend such facilities in peacetime remains to be overcome and it will be necessary to convince them that arrangement for the utilization of these facilities, which are the most important contribution Portugal can make to the strengthening of the collective defense of the North Atlantic Ocean Region, as well as of western Europe, must be completed as soon as possible before it becomes too late for such arrangements to be effective in the general defense. Meanwhile the development and expansion of existing facilities may be permissible within the existing bilateral agreement without waiting for the conclusion of negotiations to bring it directly under the NAT.6

  1. Policy statements on different countries were prepared at frequent intervals by the Department of State and updated every year or two.
  2. For documentation on the negotiations leading to the agreement on transit facilities at Lagens airfield, see Foreign Relations, 1947, vol. iii, pp. 1019 ff.
  3. Further documentation on the development of the Beira port facilities is in the London Embassy Files: Lot 59 F 59: 500 Marshall Plan.
  4. Documentation relating to the draft treaty of friendship, commerce, and navigation, submitted to the Portuguese Government on March 7, is in file 611.534.
  5. The text of the U.S. note and related documentation is in file 611.00231.
  6. For further documentation on Portugal’s role in NATO and the question of bases in the Azores, see pp. 1 ff. Documentation on the Military Assistance Program for Portugal is in file 753.5 MAP.