795B.5/7–951

Memorandum by the Special Assistant for Economic Affairs (Schaetzel) to the Secretary of State 1

confidential

Subject: Reimbursement for Logistical Support to Foreign Troops in Korea

Problem

Whether the United States should initiate negotiations for reimbursement with all countries to whom the United States is currently providing logistical support.

This issue is posed sharply in the case of Colombia. It becomes a matter of general concern in that an exception in the case of Colombia will affect the dozen or so negotiations with other countries now in process.

Background

This memorandum will not go over material on this subject contained in Mr. Thorp’s memorandum to the Secretary of July 9, 1951 (Tab A).2 In considering this paper, the Secretary inquired, “Could we devise some method of current settlement?” The present policy of seeking arrangements for settlement concurrently with the accruing of obligations is consistent with the Secretary’s query, Mr. Harriman’s earlier inquiry, and is the policy that has been pursued with all other countries. It should also be stated that the issue here is not immediate reimbursement in dollars or local currency, nor even a settlement schedule for future implementation; the point of dispute is whether negotiations should be initiated.

It is evident from a review of the considerations pro and con on the Colombia case that there is a conflict between two policies which requires a decision by G or the Secretary.

Proposal that the initiation of negotiations with Colombia be postponed for an indefinite period, or at least until the totality of Colombia’s obligations can be determined.

This proposal is based on a conviction that if negotiations for settlement are initiated now with Colombia, the most likely result will be to lessen their enthusiasm for maintaining their battalion in Korea and, more importantly, may imperil our chances of persuading the Brazilians to despatch a division to Korea. ARA argues that in the State-Defense negotiations with the Colombians which preceded their agreement to make available a battalion to the United Nations forces, and with respect to more current negotiations with the Brazilians, there is no question but that an impression was left with the Latin [Page 1310] Americans that a financial settlement for logistical support was not a matter of immediate concern to us. With respect to this issue, our negotiators had had as their principal objective getting Colombia to accept the principle of repayment. The arguments in support of this position are developed more fully in Mr. Miller’s memorandum of July 27 to the Secretary (Tab B).3

This position, in summary, is that the primary interest of the United States at this time is to see that more Latin American troops are despatched to and maintained in Korea; financial reimbursement, and in this instance the initiation of negotiations, is a distinctly secondary consideration.

Position that negotiation should be initiated at once with all countries to whom we are providing logistical support.

While the government’s policy appears to be absolutely clear that negotiations for settlement should be undertaken at approximately the same time that troops are made available to the United Nations and obligations are incurred, this policy can, of course, be reversed if the considerations stated above do in fact contain the dominant U.S. interest. In other words, the fact that a policy exists is less important than the reasons which led to its adoption.

To recapitulate some of these reasons: We agree with the consideration stated in a letter from the Secretary of Defense that the principle of reimbursement establishes a precedent “which will set the pattern for future collective military action by the United Nations.” This is not a point which rests on fiscal or budgetary considerations but, rather, on the undesirability of establishing “any general principle that U.S. military supplies, services or equipment will be donated (to carry out a United Nations program) without creating any obligation on the part of the recipients.”

If an exception is made in the case of Colombia, it will be almost impossible to hold intact the present pattern of negotiations, and it is not unlikely that the net effect will be to put off all negotiations until the Korean engagement is finished.

Experience with lend-lease settlements points up the advantages of beginning negotiations with the objective of putting the settlement on a current basis while obligations are being incurred. Certainly the atmosphere most conducive to negotiations on this subject would seem to be while the battle goes on and the troops are in the field.

It has been argued that arrangements for reimbursement cannot be worked out until the final accounting is rendered. However, it should be possible to, arrange a schedule of payments which would be realistic in view of the financial situation of the contributing country. Again, the internal budgetary arrangements for troop support, worked out [Page 1311] within a country while its nationals are in battle, is an infinitely more favorable atmosphere than after the troops have returned and the engagement is a matter of history.

Conclusion

Various of the considerations set forth above are peripheral to the basic issue. That issue would seem to be:

(1)
whether the principle of reimbursement is a matter of sufficient national importance so that at least negotiations to this end should be undertaken at once; or
(2)
whether our major objective is to see that foreign troops, and in this case Latin American troops, are despatched in maximum number forthwith to Korea and that even the proposal to negotiate a settlement might stand in the way of achieving this objective.4

  1. Addressed also to Mr. Matthews.
  2. Not printed.
  3. Not attached to source text as Tab B, but see supra.
  4. In a note dated August 15, 1951, to Mr. Schaetzel and Mr. Miller, Deputy Under Secretary Matthews stated the following:

    “I have given some thought to the question of approaching Colombia to initiate negotiations for reimbursement for logistical support of troops in Korea. I believe on balance that the approach should be delayed sixty days and reexamined in the light of conditions at that time.” (795B.5/7–951) Department of State files indicate that negotiations were not undertaken during the remainder of 1951.