740.5/6–2951: Telegram
The United States Deputy Representative on the North Atlantic Council (Spofford) to the Secretary of State
6928. Limit distribution to Dept only; eyes only for Cabot. From Spofford.
1. Wld greatly appreciate your views re impact Def Dept expenditures in Eur countries upon ECA requirements for econ aid funds, and any background info re discussions between Def and ECA on this subject. As we see it, lack firm understanding this matter serious obstacle to some of our current progs.
2. As we understand it, ECA has reckoned its requirements for econ aid funds on basis certain assumptions as to Def Dept expenditures in W Eur countries. Hence to extent mil expenditures exceed amt forecast, and to extent such excess expenditures are reflected in reductions in econ aid; ECA funds are rendered surplus. Why wld it not be reasonable in such circumstances for ECA funds be used reimburse Def? If such solution found, believe wld greatly facilitate more rapid progress on such problems as foil.
3. In case US procurement Eur to stimulate mil prod (see Todep 468 May 291) one variation your proposal wld involve remittance dols to pay Fr for purchase Fr francs which wld then be used finance US procurement mil equipment in, say, Ital for delivery to Fr under US end-item prog. If—as shld be case—programmed end-item deliveries from US had already taken acct availability Ital prod, this procurement in Ital wld not substitute for procurement in US but Wld be net addition to US end-item prog. Hence funds required cld not be made available from end-item appropriations, without eliminating needed deliveries from US. However, this dol remittance to Fr–which we assume not already taken into acct in econ aid calculations—wld [Page 212] correspondingly reduce Fr requirements for econ aid, thereby rendering surplus equivalent amt ECA funds. In these circumstances, wld it not be reasonable for ECA reimburse Def under transferability clause in aid legislation? If such solution not reached, anticipate great difficulty finding funds finance Ital procurement.
4. More difficult case, in which so far as we know no “transferability” provision exists in legislation, relates to Def Dept expenditures on infrastructure, headquarters costs, etc. Here we are confronted with rigid US positions as to percentages it will contribute, although in fact, to extent higher contributions were offset by adjustments in econ aid, net cost to US wld remain unchanged. When such adjustments are contemplated, wld it not be reasonable for Def Dept to receive reimbursement from ECA out of econ aid funds thereby rendered surplus? Shld think that such arrangement wld make it much easier to obtain some negotiating latitude on such matters as infrastructure and headquarters costs.
5. Realize complications inherent in application foregoing principles, but they nonetheless seem basically sensible. Their adoption wld permit financial issues concerned to be decided on basis US interests as a whole, rather than on basis defending particular agency’s appropriations.