740.5/2–1551: Telegram

The Secretary of State to the United States Deputy Representative on the North Atlantic Council ( Spofford ), at London 1

secret   priority

Todep 253. Eyes only for Spofford. AmEmbassy London, eyes only for Gifford.

1. As you know, problem organization NAT economic work and NATO/OEEC relations, alternative solutions thereto, and especially question geographical location, have been intensively considered by interested Wash agencies over several weeks, especially during recent SpoffordKatz visits. In view political delicacy location question, we [Page 44] desire secure expression UK views at highest level before taking firm US position between London and Paris.2

2. Amb Gifford is therefore requested to discuss this matter with Attlee, requesting an expression of UK views. It will doubtless expedite Brit consideration and expression of views if Attlee can have appropriate Brit ministers and/or officials participate in discussion. Amb Gifford will doubtless also wish to request Spofford and Katz to take part in view their recent participation Wash discussions this subject. US position shld be presented to Attlee along following lines:

US Govt is impressed with need to take coordinated action along many lines in economic and financial field to maximize defense effort while maintaining sound basic economic structures. Action on many of these matters requires knowledge and understanding NAT military programs. It also requires close coordination with work other NAT bodies, particularly DPB, and shld be given continuous political leadership and guidance by Council Deps.
US Govt has therefore concluded that NAT requires full-time economic organization, dealing with all aspects economic mobilization in support military production, complementing DPB’s vital task of stimulating output of military equipment. US intends submit proposal for establishment such body, which might be called NATO Financial and Economic Board (FEB) to Deps at early date.
In considering necessary NAT economic and financial work, US Govt has been impressed by four points:
Difficulty of creating a second major and efficient international economic organization in North Atlantic community without stripping OEEC, with respect both to national delegations and most competent members Secretariat.
Importance in long run maintaining OEEC with genuine vitality as body promoting economic cooperation North Atlantic community on broader basis including all free nations Europe as well as present NAT members.
Value of having many economic mobilization and adjustment measures agreed on among NAT countries accepted by wider membership of OEEC, especially Western Germany, Sweden and Switzerland.
Desirability of utilizing for NAT defense effort problems, as well as in continuing work of OEEC, experience and cooperative working traditions developed in almost three years fruitful activity by OEEC national delegations and Secretariat.
As US Govt sees it, there are five possible courses of action:
To move present NAT agencies in London to Paris. If this were done, we wld assume that members of proposed FEB wld [Page 45] also be senior members NATO country delegations to OEEC. This wld permit necessary flexibility between NAT and OEEC in handling the many related and even common problems with which the two bodies will have to deal in coming few years.
To move OEEC and national delegations thereto from Paris to London, with same relationship as in (a) between FEB and OEEC.
To retain present NATO agencies in London but establish FEB in Paris, similarly related to OEEC.
To establish FEB in London, and transfer from OEEC such functions and national delegations and Secretariat personnel as are primarily related to defense programs and require consideration within NATO framework.
Retain status quo.
Intensive consideration has been given within US Govt to these five possibilities. It is present judgment US Govt that either (a) or (b) wld constitute genuinely satisfactory and effective solutions, that (c) and (d) raise such serious difficulties as probably to be unworkable, and that (e) is unacceptable. On balance, as between (a) and (b) tentative judgment US Govt favors (a). The following considerations are relevant to these judgments:
It is not easy to predict now, both from standpoint of way in which problems will arise and from standpoint of attitude of non-NATO members of OEEC, which of the problems which will be arising in general field of economic and financial support of defense effort can best be dealt with in NATO framework and which in OEEC. In fact, it may well be that many of them might best be considered more or less informally in NATO, but formally acted upon in OEEC with its wider membership. Importance maintaining maximum degree of flexibility by using body best equipped to deal with problems constitutes major advantage in choosing either (a) or (b).
Alternative (a) to move to Paris differs from all other proposals in bringing Deps into same locality as SHAPE. After careful consideration, US view is that this aspect of alternative (a) presents both advantages and disadvantages and shld not be considered as necessarily a controlling factor.
US Govt recognizes that political difficulties are posed by both (a) and (b). For example, if OEEC were to be moved to London, it wld be necessary for us to be able give assurances this step wld not reflect desire reduce prestige and position OEEC and did not indicate psychology of retreat from Continent. We anticipate, moreover, possible objections from Eur neutrals, who have given strong indications willingness cooperate informally with measures supporting NATO defense objectives but wld be fearful overt action which might be construed as subordination OEEC to NATO. On other hand, it is recognized difficulties might be posed to UK by concentration in France of all North Atlantic multilateral activities located in Europe. Move in either direction wld also pose practical problems providing housing and office facilities, although numbers moving wld be appreciably smaller if Paris were selected than if OEEC, together with OSR and other national delegations in Paris were to move to London.
Alternative (c), which wld establish FEB in Paris while leaving Deps and DPB in London, wld present major difficulties of coordination, since Deps will have major concern with political aspects cooperative economic mobilization measures, FEB work shld be intimately meshed with DPB work on military production, and Deps shld be responsible for insuring close coordination between Dep [ DPB ] and FEB.
Alternative (d) wld present many difficulties to govts members of both NAT and OEEC in distribution limited personnel experienced in types of international economic work that wld be going forward in both Paris and London. It wld also be difficult to determine concretely and without duplication and friction what shld be done in London and what in Paris. It wld sacrifice advantages fluid line of division between NAT and OEEC economic work, and wld make difficult effective association West Ger, Sweden, Switzerland and other OEEC members not in NATO with measures economic cooperation required to adjust economies to requirements rapidly expanding defense programs. US Govt fears that this alternative wld have most adverse effects on future of OEEC.
With respect to (e) no change, US Govt is impressed with necessity for reaching prompt decision as to way in which international work on economic problems of defense in North Atlantic–West Eur community is to be organized. It is believed that shape of problems and nature of political possibilities for next year or so are clear enough now to permit making decisions which will be satisfactory for at least that period. It is considered urgent to take advantage of this fact and to reach prompt decisions in order that organizational and administrative problems involved in any rearrangement of present setup can be fully worked out and new setup put in reasonable working order before substantive issues, which will arise inevitably out of rapid expansion in defense activities and increasing scarcities of manpower, materials, and eqpt, grow to such volume as to tax our common ability to deal with them. Difficulties of program on which we are embarked are too great to permit us fail to do what we can to be ready to meet them as effectively as possible. Many of them are already upon us and further delays will be increasingly costly. Therefore US Govt does not believe further continuation of status quo is acceptable answer to problems raised above.
From these very summary comments it is believed that Brit Govt will agree with US Govt on difficulty of working out perfect solution. It is partly because of difficulties that US Govt seeks views of Brit Govt before reaching firm position as between alternatives (a) and (b). Needless to say it is most desirable for our two Govts to have a common position. As already indicated, our tentative judgment favors alternative (a). Shld alternative (b) be strongly supported by HMG, the US Govt wld expect HMG to take initiative in persuading Continental Govts, including non-members OEEC, to accept transfer OEEC to London. It will be greatly appreciated if in light preceding presentation LTS Govt can have considered views Brit Govt as to most desirable solution.

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3. Action on this matter is considered here to be of great urgency and wld be appreciated if this can be taken up as promptly as possible.

4. For ur info, Canadians have informed us that they wld prefer geographical consolidation in Paris, but we understand they have not so informed HMO. You shld also bear in mind that Brit have never been as enthusiastic as US with regard importance maintaining and strengthening OEEC. You shld therefore emphasize that US regards OEEC as extremely fruitful international institution for long term economic cooperation, not only in Western Europe, but in North Atlantic community as a whole.

5. This is State–Def–ECA message, concurred in by Harriman.

  1. Repeated to Paris eyes only for Katz. The telegram was drafted by Martin and cleared with the following: Bissell (ECA), Nitze (S/P), Matthews (G), Bonbright (EUR), Cabot (S/ISA), Gordon (White House), Lovett (Defense), and Webb (State).
  2. Ambassador Gifford was informed in telegram 3828 of February 16, not printed, of Eisenhower’s unofficially expressed fear that a move of NATO agencies to Paris would cause a great increase in the tendency to turn to his staff and to him for answers to all sorts of questions. Gifford was asked to weigh carefully and report back on the extent to which the United States would face a major battle with the United Kingdom if it adhered to its position in favor of the move to Paris. (740.5/2–1651)