740.5/1–1551: Circular telegram

The Secretary of State to Certain Diplomatic and ECA Missions1


Subj: Fol is general framework for Mission Negots

388. Re defense effort and resulting submission info for Congressional Aid Presentation.

This is joint State–Defense–ECA msg.

I. Purpose

Purpose this cable is to:

Emphasize need for increased defense effort by NATO countries.
Indicate why intensive negots are needed in next four weeks to obtain commitment or other evidence of intention to undertake such effort and general character of such negots.
Point out info needed for such negots and for Bureau of Budget presentation of Eur aid program.
Instruct Missions to take action on getting info.

II. Need for Increased Effort

NAT countries have accepted certain mil tasks which, if carried out on sched, will meet (with some gaps) MTDP. NAT countries have not, however, taken steps necessary to carry out this plan on sched. Letting of production contracts is going forward slowly, conscription periods in many countries are inadequate and, on whole, budgets are very inadequate. We estimate that to meet their reasonable share of cost of MTDP as presently dated Eur Govts this year need on average to double their budgets over pre-Korea rate—an increase of about five billion dollars. While a number of countries are taking steps in right direction less than half this increase has been realized in budgets to date.

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FYI only, trend of events is such that US Exec Branch considering as matter of urgency extent to which present target date of MTDP shld be made substantially earlier. If at all feasible, time allowed to complete MTDP by all NAT countries shld be shortened. Certainly MTDP as now sched must be met as minimum requirement. Countries shld be prepared to make commitments now on this basis.

US feels NAT countries can meet their fair share costs without endangering their political stability or basic econ strength. Admin is prepared ask Congress for funds needed to assist them in this task provided there is reasonable assurance other countries will do their part. Moreover, as Pres stated in Budget msg US assistance will be geared to actual performance by Eur Govts.

III. Need for Negots at Present Time

Since July 22 US Govt has been discussing increased defense effort with NAT countries both bilaterally and multilaterally.2 On whole results have not been adequate to give any confidence that MTDP will be met on sched. World situation makes renewed vigorous efforts necessary. Efforts are required at this particular time so that goals will be met on sched and in order to permit presentation aid program to Congress. Before Admin can present program must be able to show convincingly that efforts Eurs are in support of an agreed defense plan and that other NAT Govts are taking necessary steps to do their part, so that with requested US aid, defense plan can be met approx on sched.

According present interdepartmental agreement Eur aid program shld be submitted to Bureau of Budget by early Mar.

In general, presentation of program will start with description of MTDP showing mil and in so far as possible, production tasks accepted by each country. Second step will be to indicate gross cost of plan. Finally, in light of cost, of country’s econ and financial position, of country’s own productive facilities and production program they can do, state what is necessary US aid program both as end-item assistance to supplement production program and as general econ assistance. Thus all econ assistance will be shown in relation to total defense effort. S/M formula3 will no longer apply to allotment US econ aid. Admin cannot present a program until it is assured that actions taken by country will at least come close to mtg phase requirement [Page 31] of MTDP for FY 1952. It is recognized that NAT countries are now engaged in costing MTDP and their submittals to NAT are due Feb 8. Moreover, some of Eur NAT countries are now reexamining their mil and budgetary plans for coming months and are or are about to make new decisions concerning them and concerning the complementary econ policies and measures needed to support them. It will not be possible, however, to postpone negots nor delay sched for Congressional presentation to await such info. Therefore, is essential that Missions obtain from their Govts as much as possible of necessary info on a bilateral basis, in advance of its submittal to NAT.

IV. Role of Missions

In next 4 weeks Missions will play extremely vital part both in conducting negots to obtain an adequate effort and in reporting info needed for appraising adequacy of countries effort and for Congress. For this purpose Mission is defined as an Emb–ECAMAAG team under leadership Ambassador. Missions will have primary responsibility for negots along line described VI below but outside participation, particularly Spofford and Katz, will be called upon to join with Ambassador in particular cases where negot situation calls for this type additional effort at head of Govt and key Cabinet Minister level.

This cable sets forth instrs to Mission with respect to obtaining info and will be followed shortly by specific instrs each Mission with respect to character and timing their approach to Govts on negots re level their effort and US aid. Such specific instrs will take account of what is known about adequacy commitments already obtained, status past and current negots, etc.

V. Relation to Multilateral Negots

These negots are not intended supplant or affect multilateral negots re burden sharing, assignment tasks, etc. If decisions had been reached in NATO more promptly burden of bilateral negots wld be less.

Missions will make clear to Govts that info and maximum commitments must be obtained at this time on a bilateral basis because (1) Aid will not be asked for by Admin without adequate data and programs covering defense tasks of NAT countries (2) Timetable for Congressional presentation does not permit awaiting the results of NATO burden sharing negots.

National undertakings obtained by action contemplated here can be fitted into subsequent multilateral undertakings and level US aid, where necessary, can be adjusted later in light of burden sharing negots in NATO, Congressional action on funds, and performance of countries. These adjustments can take place through transfer nondollar resources, through agreed adjustments of US aid program and through apportionment funds to be requested from Congress which [Page 32] will not be tentatively earmarked for particular countries in prelim bilateral negots.

VI. General Character of Negots

Negotiating pattern will differ in each country. General objectives, however, are the same: to ensure that each country contributes to mutual defense program in accordance with its ability and, in particular, that its contribution in 1951 will make possible achieving time phased goals of MTDP. It will be important to emphasize physical tasks which must be accomplished as well as fiscal actions to support such tasks. In each country it will be necessary to compare proposed defense effort of country with both its “potential” contribution and with requirements of MTDP. Prelim estimates country “potential” are set forth in ECA Blue Books. These estimates shld not necessarily be considered maxima; they are being reviewed here and will be revised in light of costs of MTDP, ECA Mission comments and other factors. Specific revisions of or comments on Blue Book country estimates will follow in individual cables to each Mission. Both comparisons will be approx since neither bench mark can be measured accurately, Whenever comparisons show that country’s effort is inadequate negots must press for a larger program.

Negots will also involve a discussion of possible level US econ aid in relation to size country’s program. It is recognized that, in order obtain a reasonably firm statement of intentions, it will be necessary in many countries to indicate scale of aid which US considers as reasonable and which Admin wld contemplate requesting of Congress. Missions will be instructed as to amount US aid which can be considered.

VII. Required Info

1. General.

Info is required for two purposes. First is to appraise what a country shld and can do to meet MTDP. This will help set general goals and character of negots. Same info is also required for presentation program to Congress along lines stated in III above. Info shld cover costs of MTDP, specific tasks necessary to achieve MTDP and specific actions to implement MTDP which Eur Govts are planning take within next 12 to 18 months.

As much info as possible shld be obtained on an unclassified basis so that favorable developments can be reported widely (See Depeirtel 351 Jan 54). An understanding shld be reached as to possible use classified material in oral testimony in Exec Session Congressional Commites. You can assure Govts use info will be confined to Exec Agencies US Govt if necessary.

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Data shld be developed where feasible to cover period through June 30, 1952. However, emphasis shld be placed on 12-month period for which country data and plans are most firmly developed. Negots can be limited to most convenient 12-month period. Projection through US FY will be made by Washington.

2. Required Info on Costs of MTDP and Other Defense Programs.

If possible, cost of entire MTDP shld be obtained. Is essential to obtain country costs for country’s next FY. What is needed are countries’ prelim estimates their submissions under NATO costing instrs. All detail called for by costing instrs is not required. As minimum, however, summary info Table H of SGM–317–50 is necessary together with data in Attachment Table B1 called for in SGM–602–50 which breaks down material requirements into “Own Production”, “US”, “Canada”, and “Other”. Projection of non-NATO production cost sched in Table 4 is also necessary.5

3. Info required or Character Commitments “be Obtained Re Govt Intentions and Contemplated Policies and Action.

In addition to info on costs of MTDP and other mil programs, info or commitments on Govt plans, policies and intentions will be required in connection with negots outlined in VI above and for Washington use in connection with Congressional presentation. Info on these commitments will be in two forms: (1) statistical forecasts; and (2) evidences of Govt pol decisions, establ of new admin arrangements and like. As indicated in VI above, major purpose of negots described in this cable is to obtain such info in form of commitments or statements of intention by Govt concerned. General categories in which such info forecasts or commitments wld be most desirable are:

Defense budget indicating part of budget required for non-NATO cost, for maintenance existing forces, for raising and supporting new forces, and for production equipment. Costs of civil defense shld be shown separately.
Overall budget.
Steps taken or contemplated to meet budgetary requirements, e.g., what funds will be raised in new taxes, what will be nature of required borrowing, etc.
Action other than fiscal to produce needed equipment:—contracts let, factories converted to armament production, procurement plans, etc.
Action taken or contemplated to raise or support troops. This is problem of sched forces, legis on enlistment, etc., as well as budgets.
Supplementary actions contemplated or undertaken re admin transfer econ resources; i.e. direct controls to be put into effect over materials and manpower, etc.
Whenever available, national accounts and balance of payments forecasts.

VIII. Summary Instrs

1. This message has given general background for negots. No negot for greater effort shld take place without specific instructions. The following pertain only to obtaining or imparting info.

2. Missions will immediately approach their Govts to obtain info called for in Sec VII, 2 and where not already obtained that in Sec VII, 3. This info is necessary by Jan 27 in order to set goals for negots. If info cannot be obtained by that time Missions shld inform Wash immediately and indicate alternative ways of appraising adequacy of country programs so that negots can proceed on solid basis. Missions shld forward info on costs as rapidly as available and supplementary reporting to date shld keep Wash currently informed re changes Govt intentions.

3. Mission shld at once inform Govts of general character proposed US aid program emphasizing following points:

There will be only single country aid program in FY 1952.
Aid will be justified only as support to a program for meeting MTDP rqmts and expenditure made only as program is put into effect. No aid will be allotted by S/M formula in FY 52.
In order present any aid program US must have assurance that actions contemplated by NAT countries will be adequate to meet time phased goals of MTDP and that adequate info will be available to present an aid program to Congress.

4. If negots are not already under way, Missions shld also inform respective Govts of US concern with adequacy of NAT defense effort and intent US to start negots shortly with country re character and level of its defense effort and rqmts for US assistance.6

  1. Sent to all capitals of the NATO countries except Reykjavik. Drafted by R. H. Whitman (RA) and cleared by him with Martin (RA), Byington (WE), Levy-Hawes (BNA), Bray (S/MDA), Colonel Ofsthun (Defense), and Cleveland (ECA).
  2. The reference here is presumably to a circular telegram from Washington on the subject of increased defense efforts, addressed to the NATO participants on July 22, 1950. For the text of that circular and subsequent correspondence on the subject, see Foreign Relations, 1950, vol. iii, pp. 138 ff.
  3. The reference here is to the Snoy-Marjolin formula for allocating economic aid through the Organization for European Economic Cooperation. Baron Jean-Charles Snoy et d’Oppuers was formerly Chairman of the Council of the OEEC and Robert E. Marjolin was Secretary-General of the Organization. For documentation on involvement of the United States in decisions of the OEEC, see volume iv .
  4. Not printed.
  5. The schedules and tables of the costing instructions mentioned here are not printed.
  6. Beneath the Secretary’s signature on the source text appear the following directions to the Department of State code room:

    Add for Rome: Instructions will follow shortly on US position re Ital proposal. Approve waiting approach to Ital Govt until receipt of same.

    Add for London: Instructions are modified as follows: The current review of their rearmament program by Brit Govt will delay any attempt get definitive date on scale of UK effort. Nonetheless, UK Govt shld be warned, at this time, of rqmts imposed by Congressional time-table. They shld also be requested furnish info called for in See VII, 2 as soon as possible. Info in Sec VII, 2 shld be obtained and forwarded when not contained in previous messages.

    Add for Lisbon: Above FYI Comments of Mission requested as to application of approach this message to Portugal.

    Add for Paris: Conversations with Fr in October and current review their program along lines Embtel 3869, Jan 8 shld provide most info called for on relation Fr program to MTDP called for in Sec VII, 2 and 3. This airgram does not alter plans for further negots with Fr, on which instrs will follow.