740.5/12–651: Telegram
The Ambassador in France (Bruce) to the Acting Secretary of State
priority
3371. For Martin from Vass. No distribution outside State.
1. As result of effective work by Lindeman in persuading economic staff to recommend budget increases of $3.8 billion, and SCS screening including departures from MC 26/1 by pruning costs to capabilities, “confrontation” in WG last night was anticlimax, since negligible gap remained between assets available and cost SCS force plan through 1954.
2. Equipment gap for European NATO shown as $22 billion before any allowance for four-year US or Canada MSP. Gap in meeting non-major material costs estimated at $3.5 billion without allowance for German occupation costs as offset to NATO costs, or estimated $500 military mutual aid possible from Belgium and Denmark. Dollar balance payments analysis shows overall four-year need of $7 billion, with assets in sight to cover $5 billion or more without raising aid.
3. Germany just now being added to tables. This will increase equipment gap by that part of $6 billion which Germany cannot or will not be allowed to produce. Line here is to indicate German military aid program will be in addition to $5.8 billion MSP figure projected for NATO in US submission without indicating amount. Gordon [Page 371] tentatively thinking of adding total of $3–4 billion for Germany in FY 1953-1954 requests. Would attempt change allocations to enable delivery all programs including FY 1952 by end of calendar 1952.
4. Meeting yesterday on German production studies got nowhere. Hirsch took line could not even consider approaching Germans until FonMins had settled security controls. Failed explain how this position consistent with French agreement to EB D–44, implicitly endorsed by FonMins at Rome. Second meeting planned today but unlikely any clarification issue obtained by then. Byroade briefed before leaving to join Secretary.
5. Now expected TCC meeting will last several days. Feeling is that we must accept national reservations on own programs but must prevent moves to suppress international staff recommendations which serve our immediate purposes of showing concrete ways European effort can be increased and also closing gap. Result, if acceptable US military authorities, promises to provide soundest basis yet for congressional presentation. Big question is whether SCS forces will be acceptable. Clear here that each of services has something to grumble about, and orthodoxy has not yet been preserved. For example, Mantz directed today to cut about $2.5 billion from costs on grounds no indication POL and other items, necessary to support SCS flying hours program, would in fact be available. Real confrontation may be in NSC rather than TCC. [Vass.]