ECA message files, FRC 53 A 278, Paris Torep: Telegram
The Acting Administrator for Economic Cooperation (Bissell) to the United States Special Representative in Europe (Katz)1
Torep 6590. Subject: Foreign Aid Legislation.
Following is a circular telegram which we believe it would be useful to get out to all European Missions. We leave it to your judgment whether you should make this a circular to missions, or whether you should use it as text for a talk at next Wednesday’s Paris meeting,2 or both.
[Page 268]Begin text.
1. We are now beginning the final month or so of Congressional consideration of foreign aid legislation for FY ’52. House-Senate conference to settle difference between the two bills will take place next week and hearings begin in the House Appropriations Committee on September 10. Purpose of this cable is (a) to summarize the present picture for your information and that of your staff and (b) to suggest some guide lines in discussing with European representatives the developments so far.
2. This is how it looks as of now:
- (a)
- Administration. House has voted for a new Mutual Security Administration and Senate for military, economic, and Point IV aid to be administered in separate agencies under a White House coordinator. Position of Executive Branch is that if Senate version preferred, decision should be made forthwith on a new economic aid agency to do job now handled by ECA, rather than waiting until next year to make that decision, as in Senate version of bill. We have of course never had illusions about becoming an old-line agency. But foreign economic functions including aid will continue to be an important concern of U.S. Govt. abroad regardless of administrative formula finally adopted.
- (b)
- Funds. Economic aid for Europe will be somewhere between $880,500,000 (Senate) and $985,000,000 (House). For appropriation justification we are assuming House figure. Record will be made that offshore procurement, procurement of common-use items and possibly some form of AMP may all be employed as devices to relate financial assistance to Europe to the European defense efforts U.S. hopes to achieve. Moreover, five percent of military assistance funds are transferable to economic aid fund if necessary, though of course no decision has been made on this as yet. U.S. is not yet ready to discuss these elements officially with P.C.’s but they are points you should keep in mind in assessing effects of economic aid reduction.
- (c)
- Authority. Under either bill, use of counterpart for military purposes will be an important feature of our work from now on. Separate circular based on discussion at August Mission Chiefs’ meeting3 will be sent you shortly.
- (d)
- Significant changes in form and substance seem to be required in programming for FY ’53. For first time effort will be to build a really combined military/economic aid program, tied in with country requirements for military effort under NATO plans. This is a creative planning job right ahead of us. Your responsibilities in this connection, and the importance of getting on with this planning job, are not affected by the current discussions of administrative arrangements for foreign aid.
3. In talking with your European colleagues, it is most important that action of Congress on foreign aid be presented in proper perspective, so that we do not transmit to Europeans an unwarranted sense of discouragement. For example: [Page 269]
- (a)
- One fact which stands out clearly as a result of House and Senate action is the overwhelming support for our policy of aiding Western European areas with substantial financial resources in a period in which our own expenditures for defense are of tremendous proportion. The Senate vote of 61 to 5 on final passage of the Bill is eloquent and conclusive proof of this fact. Deep cuts in economic aid represent the workings of many complex crosscurrents of opinion and are attributable to failure fully to understand significance of economic aid rather than indication of lack of support for the policy of strong support for our NATO partners. This fact should be stressed on every occasion in discussion with foreign government officials.
- (b)
- While it is true that Europe should, in our view, receive more economic aid than either the Senate or House have been willing to authorize, nevertheless the total aid provided in Title I comes to a very substantial figure. The House Bill would provide slightly over 6 Billion and the Senate Bill slightly under 6 Billion. On any basis of comparison, including support forthcoming from the U.S. in past years, amounts European countries are proposing to spend on military buildup, etc., our contribution is something for which no apologies need be made. In particular, there is no reason to assume and less reason for us to show by our attitude that we have given up hope and that we and the Europeans together cannot move vigorously toward our objectives with this massive amount of American aid. End of proposed circular.