740.5/12–751: Telegram
The United States Delegation on the Temporary Council Committee to the Acting Secretary of State 1
Repna circ 11. ToISA. 1. Working comite reported to Exec Bureau today, tentative conclusions on reconciliation of econ capabilities with the screening and costing staff’s milit program based on manpower, organization and training capabilities.
2. From fin standpoint the working comite concluded that over the three year period FY 1952 to 1954 incl, there is a net fin deficit equal to about 5⅓ billion dollars. This assumes an increase of slightly over 3 billion dollars during the three years above the currently programmed defense expenditures of Eur countries, and about 700 million econ aid from Canada. On a yearly basis there appears to be no fin deficit, assuming countries undertake proposed increases within their estimated capabilities, in fiscal 1952 and only a small estimated [Page 372] fin deficit in fiscal 1953. The great part of the estimated three year deficit wld occur in fiscal 1954.
3. Concerning equip the estimate now is that, taking into account equip for Ger forces, there wld be a deficit of about 6 billion over the three years, assuming adherence to the SCS milit program, incl its austerity standards. Excepting Ger, there wld be an estimated deficit of between 1 and 2 billion as compared to a total estimated capital value of equip of about 33 billion dollars. The judgment as to the time phasing of the impact of these deficits is substantially similar to the judgment in the preceding para on fin deficits, assuming favorable US priorities on deliveries.
4. The dollar balance of payments deficits over the three year period are now estimated at about 7 billion dollars, against which estimates apply assets of estimated US econ aid of about 1 billion per year, a half billion US expenditures in Eur which some experts here consider to be much too low, 700 million of possible Canadian econ assistance which is considered to be within Canadian capability, infrastructure, and off-shore procurement. No firm figures are yet available on the latter two items but it is considered that the dollar deficit in balance of payments wld be approximately closed over the three year period by the measures listed.
5. The TCC estimates are turning to use the three year period of fiscal 1952 to 1954 incl, but the estimates as to fin deficits and equip deficits in the preceding paras can, without adjustment, be compared with prior estimates on the period fiscal 1951 to 1954 incl.
6. Exec Bureau, with France represented by Hirsch, decided (a) that the SCS proposed milit program needed no substantial econ reconciliation for fiscal years 1952 and 1953; (5) the TCC shld not attempt a detailed reconciliation of the program for 1954 but shld probably handle the matter by submitting suggestions to the council and leaving the precise reconciliation to further study; (c) Exec-Bureau will distribute Monday to countries, country annexes which include suggested fin increases in def efforts, as well as the recommended changes and additions to milit program developed by the screening and costing staff. This latter was agreed at TCC mtg on Tuesday. The suggested increases in country program vary from zero for Portugal and UK to over 40 percent increase above that originally submitted to TCC by Belgium.
- Repeated to Ottawa, Bonn, and Heidelberg for Handy.↩