ECA message files, FRC 53 A 278, Paris Torep: Circular telegram
The Acting Administrator for Economic Cooperation (Bissell) to the ECA Missions in Europe 1
priority
Torep 8295. Attention: Chief of Mission
Subject: ECA Defense Production Role, Part I
1. This is Part One of two part cable on Eur defense production problems scheduled discussion Mission Chief’s mtg. Part One not designed as directive for action, but only to state highly tentative and preliminary ECA/W views and to get Mission and OSR views. It relates exclusively to ECA/MSA objectives and activities in Eur defense production, and does not attempt discuss other important ECA/MSA tasks in Eur such as productivity drive, etc.
2. Recent events have placed increased emphasis importance of ECA/MSA role in task of stimulating Eur defense production. FEB burden-sharing exercise, DPB reports, current TCC operation, and related work have highlighted inadequacy all sectors current Eur defense programs, including military materiel production. Previous legislative restrictions on uses U.S. economic aid for defense purposes have been removed, reflecting Congressional desire obtain more direct contribution ECA/MSA activities to successful European defense [Page 343] program. At least $500 million counterpart funds must be used for “military production, construction, equipment, and matériel.” Finally, new program offshore procurement end-items for Eur use, as well as additional offshore procurement for U.S. needs by U.S. agencies and defense contractors, will serve as direct stimulus to production.
3. A primary general objective of U.S. Gov in Eur is achieve maximum effective military contribution Western Eur consistent with economic and political stability. As part of this overall goal, U.S. Gov has two objectives in fields of Eur military production: first, obtain largest possible use Eur resources for military production consistent with other high priority military requirements and essential civilian needs; and second, to assist in making certain that Eur military production takes place as rapidly and efficiently as possible. These objectives desirable not only to achieve most effective Eur contribution to NATO rearmament, but also to relieve strain on U.S. production and to make Eur self-sustaining in military production in long run.
4. Following paras contain preliminary description principal functions that ECA/MSA may perform in field of Eur defense production.
5. To develop a comprehensive and detailed knowledge of Eur defense production and available production capacity, and to report systematically to interested U.S. agencies on Eur programs of defense production. At the country level, this primarily Mission responsibility, in close collaboration US military, and shld where possible include fol specific points: current status defense production plans within defense ministries; programs of parliamentary action authorization and appropriation funds for defense production; process of contract negotiation and related contract procedures; status defense production under authorized contracts and anticipated delivery schedules; and availability additional production capacity, taking into account requirements for raw materials, technical skills, labor, machine tools, etc. The task will require closest working relationships with MAAGs and defense ministries and procurement services NATO countries.
6. To review and evaluate, in collaboration with MAAGs, Eur defense production efforts, in terms of: overall size and adequacy production program; adequacy Eur procedures for placing contracts and expediting deliveries; feasibility production specific items in time schedules and quantities proposed; identification of bottleneck areas in production process; and possibilities of more efficient production elsewhere in Eur.
7. To evaluate Eur needs U.S. economic assistance and to develop appropriate economic aid programs, designed to: (a) support of maximum feasible level of defense expenditures, including optimum allocation Eur defense funds to materiel production; and (b) meet essential needs for U.S. imports to sustain necessary levels of civilian and defense production.
[Page 344]8. To participate in U.S. cty level negotiations with NATO countries on overall sizes and composition their defense expenditures, including relative priority assigned to military production and other urgent tasks within defense budgets. In addition, to participate on regular and continuing basis discussions with cty production officials on key phases of agreed Eur defense production programs.
9. To analyze in collaboration with OSR/SUSRep available production capacity in Eur, and participate in programs and policies for maximum utilization Eur productive facilities for defense purposes through Eur financing or through various forms of U.S. assistance (including counterpart funds and offshore procurement). Programming of Eur defense production under ECC Reg D–72 example type functions to be performed this field.
10. To participate in administration counterpart funds used for purpose obtaining increased defense production in Eur. This important new area ECA/MSA responsibility, general character of which outlined ECA Circular E–96.3 Further programs now being developed and will be cabled shortly on implementation counterpart approach to defense production through country negotiations and agreements of use of counterpart for defense production and other purposes, and follow-up, review, and reporting actual release of funds to expedite specific defense production projects.
11. To advise and assist U.S. and Eur procurement officials concerning placement of U.S. contracts for offshore procurement (both for use by U.S. forces and for NATO countries). This involves: coordination of US contracts with cty-financed production to prevent overlapping production assignments; recommendations suitable plants and industries with available capacity; and advice on local laws and regulations. This assistance will be particularly useful with regard to trade union activity and labor and management relations, which are important elements in obtaining desirable effects U.S. procurement programs.
12. To participate in performance of ECA function as Claimant Agency by reviewing PC statements of material and equipment requirements and furnishing justification of all claims necessary for DPA program determinations and NPA priority actions. It is ECA function and responsibility to assure that materials and equipment are made available to PC’s in balanced programs (character, quantities, and time) to achieve maximum military and economic effectiveness.
13. To provide productivity services and technical assistance to manufacturers engaged in defense production, on contracts either for self-financing or for U.S. offshore procurement.
[Page 345]14. To review policies and procedures of Eur Governments in field of economic controls (price, tax, and wage policies, allocations of manpower and materials, etc.) and to work with govts on modifications in these controls to extent necessary to obtain most effective defense production effort.
- Authorized by Halaby; drafted by Baum of EPD/ISA: cleared in substance with Bissell; Embassy London was to pass to Spofford. This telegram was also sent to France, Italy, Belgium, the Netherlands, Denmark, the United Kingdom, and HICOG.↩
- Not found in Department of State files.↩
- Dated September 21, p. 282.↩