740.5/12–1251: Telegram
The Ambassador in France (Bruce) to the Secretary of State 1
3510. Personal from Bruce to the Secretary. Ref Embtel 3446, Dec 9 [10], 1951.2
1. In addition to request for US views on end-item assistance, Alphand on behalf of steering comite asked that US Govt study question of transferring to EDC common budget local currency counterpart of financial or econ assistance provided by US to participating nations for support of their def efforts. He envisaged that present arrangements whereby US and each govt separately determine amount and conditions of US assistance for dollar needs wld remain unchanged but each govt wld agree to contribute counterpart to common budget under control of community’s executive. A participating govt wld not be able to credit such counterpart against its agreed financial contribution to EDC. I informed steering comite that I wld ask my govt to explore this proposal and I wld communicate any comments to conf. (If any aid is allocated for nondef purposes counterpart generated thereby might, if desired, be separately treated.)
2. In my opinion proposal wld be an effective method of furthering purposes of Mutual Security Act in strengthening def and in encouraging econ unification and political federation. [Page 962]
- (a)
- Each participating country wld take treaty obligation to make an equitable net contribution to def from its own resources. Net contribution cld not be reduced by receiving US aid because counterpart of US assistance wld be automatically over and above total contributions. Thus financial availabilities for def of Eur wld tend to be increased.
- (b)
- Substantial funds cld be made available to community independent of contributions and actions of national parliaments. Independent resources cld greatly enhance authority of common executive and, if desirable, powers of common assembly. In crucial initial period independent funds shld offer even more possibilities of benefit from standardization and savings which wld result from production for community-wide use.
- (c)
- Direct negots with authorities of community shld improve position of US Govt or of SHAPE, if we wished, to use influence to obtain most effective results from US assistance. In particular participation in utilization of counterpart wld give US and NATO greater leverage in influencing community’s decisions on placement of production orders in Germany and in influencing community to cooperate with DPB in overcoming national barriers and sentiments which are preventing a sound basis of def production in Europe.
3. Use of counterpart in this way is not, of course, sine qua non for EDC as is community’s administration of common end-item program but an encouraging response to conf request wld also be of considerable assistance in obtaining governmental and parliamentary approval of concept of single European force involving common political and financial control.