Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 1

ECA message files, FRC 53 A 278, box 88

The Acting Administrator for Economic Cooperation (Bissell) to the Acting United States Special Representative in Europe (Porter), at Paris¹

secret
priority

Washington, October 26, 1951—8:19 p. m.

Subject: FY 1952 Economic Aid Program

Reference: Repto 5257²

• Repto 5277³
• Repto 5296⁴
• Repto 5305⁵
• Depto 485⁶

Torep 8081. To Harriman from Bissell.

1. Concur your view desirability carrying out 51/52 division in multilateral framework so far as feasible and consistent with:

a. Basic objective to achieve maximum defense effort by Eur countries. (We firmly committed as matter Executive Branch policy and Congressional intent to use 52 aid as leverage to this end and have given Congress country target figures which we under obligation to try to attain.)

b. Necessity providing Eur govts with early firm aid assurances essential to enable them finalize budgets and make firmly available funds for expenditure first half calendar 1952 which we consider critical period from danger loss defense momentum.

2. Fully agree importance avoiding any conflict or undermining TCC exercise and would favor making explicit in any discussions that 1952 aid decisions would be modified in light TCC if necessary. Believe real conflict unlikely in practice since TCC conclusions cannot be reached early enough to have major effect on FY 52 expenditures. Suggest may aid TCC discussions, pointed at longer term agreements, to have 52 aid settled soonest possible, rather than remaining one of things each govt considers it is negotiating about in TCC.

3. Believe desirable FEB proceed immediately on burden-sharing exercise, initially stressing analysis of relationship aid to defense programs. Effort would be made to reach general judgments as to relative burdens proposed national defense effort and relation of total burden all countries to such requirements estimates as may be available from TCC interim conclusions or other NATO agencies. Suggest initial objective be early report by FEB along following lines:

(a) Ref to analysis contained interim report submitted Council at Ottawa.

(b) Comments on magnitude defense efforts by countries relative to one another.

(c) Comments on magnitude defense efforts relative to overall military requirements estimates.

(d) Agreed estimates B/P positions in 1952 if feasible. (These wld be useful, but not essential.)

(e) Comments on aid criteria as recommendations to net donors of aid. For example FEB might recommend aid be tied to magnitude and character defense expenditure undertaken to carry out agreed force commitments.

4. If this initial qualitative review indicates prospect FEB conclusions supporting our basic objective of increased Eur def effort, U.S. would then submit model division 1952 aid related to specific level def expenditures by countries, for comment by other FEB members. Wld appreciate your views re use Models I and II from ISAC D25/3a⁷ as indicating our view appropriate relation aid and def expenditure. U.S. would make clear willingness receive specific division of aid recommendations multilaterally agreed in FEB provided such agreement could be reached promptly, but also stress absolute necessity, even in absence agreed multilateral recommendation, our being able advise countries promptly at least approximate sums they can count on for FY 52 within limits Model I total.

5. Believe would also be desirable have FEB commentary on economic and financial measures necessary effective carrying out defense programs and minimizing adverse economic effects, which specific countries could take or might be taken jointly. This has been one U.S. objective in FEB from outset, but interim report disappointing this regard.

6. Believe following procedure takes account necessity that final decisions be in multilateral framework, our commitment to Congress to use 1952 economic aid negotiations to attempt secure maximum feasible European defense efforts, and undertakings by U.S. representatives during recent Washington talks (especially to French and Italians) to engage in bilateral discussions soonest possible after appropriation approved, for purpose reaching definitive agreement levels 1952 aid and def effort. (Last consideration strongly stressed Paris Embtel 2357⁸ and Toeca 1323.⁹)

a. We ask FEB start work soonest on basis para 3 above and move to para 4 stage soonest possible if progress satisfactory.

b. We start informal discussions with French (and other countries where same considerations apply) along lines suggested Paris Toeca 1323, with view to securing favorable attitude their part toward our position in multilateral FEB discussions and at same time defining shape of interim commitments re aid and def effort.

c. In both bilateral and multilateral contexts we make clear we face question transfer of military to economic assistance, and need demonstrate direct relation between additional aid above “Model I” levels and additional def effort, along lines analyses contained ISAC D-25/3a.

7. Country cables summarizing Washington aid and def expenditure estimates, and requesting country team recommendations, dispatched today through ECA channels on basis above framework. If approved by Harriman, we propose establish with each country team range of figures (including best expectation offshore procurement and other dollar earnings from U.S. Govt, as well as economic aid) within which country teams can talk. All messages both ways will be repeated Paris.

Bissell

1. Drafted by D. Gordon and cleared in draft with Cleveland and Bissell; repeated to London for Spofford.
2. Ante, p. 324.
3. Not printed; it requested a quick reply to Repto 5257 which would permit U.S. representatives in Europe to state a tenable position on whether 1951/52 aid decisions would be handled on a predominantly multilateral or bilateral basis (ECA message files, FRC 53 A 278, box 31).
4. Ante, p. 332.
5. Not printed; it informed the Department of State that Martin and Vass approved the program outlined in Repto 5257 (ECA message files, FRC 53 A 278, box 31).
6. Not printed; it stated that the U.S. Deputy Representative on the North Atlantic Council, Spofford, supported the general approach for allocating aid for 1952 as outlined in Repto 5257 (750.5/10–2051).
7. Not printed.
8. Not printed; it requested that talks with the French begin immediately concerning interim aid because of their deteriorating financial situation (751G.00/10–2251).
9. Not printed; it informed the Department of State that the ECA Mission in Paris concurred in the request made in telegram 2357 from Paris, October 22, (ECA message files, FRC 53 A 278, box 33)