740.5/4–2651: Telegram

The Secretary of State to the United States Deputy Representative on the North Atlantic Council (Spofford), at London1


Todep 404. Ref: Depto 837.2 Await with interest views Spofford/Katz. To assist in formulation your views, we are sending you a draft cable prepared by ECA which has been discussed and recd favorably working level State, and is now being sent to other ISAC agencies for comment. Wld appreciate your specific comments on this draft. Text also being sent Katz by ECA, for comment.

“1. For reasons that follow, believe you shld seek agreement in Council Deps that NATFEB undertake to recommend as one end-product of burden-sharing exercise, manner in which US econ aid can best be used to enable maximum effective contribution by NATO partners to common defense.

2. Specifically, US position in Deps (and parallel line taken by US Rep at first mtg of FEB) wld be as follows:

Original Nitze memo3 contemplated that members of NATO wld agree on some system of sharing financial burden of rearmament. Raising and maintaining of armed forces, and production of material for their use, shld be done in most efficient locations. Inequities in resulting burdens wld then be shared by financial transfers among NATO countries.
US aid is a marginal resource of considerable significance in NATO group as a whole. Decisions about US aid shld not be considered only method of sharing burdens among NATO countries, but it is clearly one important method of doing so.
Upper limit on US aid for FY 1952 will shortly be set by Congressional presentation. Executive Branch will shortly present to Congress illustrative estimates of Eur needs for econ assistance. Country breakdowns discussed with Congress will not be binding on Executive Branch. It is desire of US Govt to arrive at ultimate decisions on upper limit of aid to each eligible country on basis of recommendations from whole group of NATO partners.
At same time, it wld be desirable to consider other methods of sharing the total burdens such as credit given to Continent by sterling area, Canadian aid, possible adjustments in force, infrastructure, etc. assignments. Whole direction of efforts shld be to increase program and not level down.
Decisions on upper limits of country aid shld, of course, be closely linked with determination as to internal measures to be taken by each country to ensure the most effective diversion of resources to rearmament purposes, most equitable internal distribution [Page 152] of wealth and income, reasonable assurance that inflationary forces will be kept under control, adequate controls on domestic use of scarce materials, adequate budgetary provision for financing of current and future procurement of military end-items within Eur, etc. Most important contribution of FEB will be to get out onto table, for multilateral review, main elements of each country’s programs, plans, and prospects.
Within US decisions on total aid (made after recommendation by FEB through Deps), US will discuss with each country specific measures which will be made a condition of aid. In such discussions, US will try insofar as possible to reflect views of NATO and to help solve problems which have been highlighted in FEB and Deps consideration of country burdens and contributions.

3. Main reason for announcing this US position now is to reemphasize US desire that FEB become a body with real power to influence national econ policies along lines consistent with US objectives in NATO. If FEB has some voice from outset on division of US econ aid, it will be in a position to (a) secure realistic submissions of econ data and policy forecasts from member govts, (b) conduct useful cross examinations (based on submissions) that will highlight main respects in which each country is not pulling its weight, and (c) make recommendations re common econ policies that will potentially have weight of US aid behind them. “Teeth” thereby provided shld enable FEB to develop from beginning along lines original US proposal, which proposed FEB as main multilateral agency to promote cooperative action in field of econ and financial mobilization in support of defense effort.

4. Position of US as full member NATO requires some difference in approach from division of aid process in OEEC. Believe US shld be willing and prepared to discuss nature and magnitude of US defense effort in multilateral discussions. However, US naturally cannot be in position binding itself irrevocably to aid decisions one year in advance. Presume, therefore, that US, while active participant in discussions, wld have to place some kind of reservation on recommendations from FEB to Deps, and even on recommendation by Deps, on division of US aid as such. For example, cld make clear that as in case of other NAT actions, they are recommendations to govts only, and govts not bound to conform.

5. OEEC experience indicates that internatl review of econ policies can only be effective if internatl body has some powers to affect policy. In case of FEB, as in that of OEEC, it appears that one element of powder which can be accorded to it is that of carrying its analysis of relative burdens so far as to pt clearly to a division of aid based on econ and financial considerations, and recommending a range of figures to Deps. It is clearly understood that Dep[s] are free in light of broader polit-mil considerations to modify such figures as might be necessary to secure maximum defense effort with most equitable sharing of burdens, taking account of such other adjustments in burdens as Deps may agree to in consultation with SG, DPB and SHAPE, for this program.

6. In presenting US position described in para 2, shld be made clear that acceptability of NATO recommendations will depend on ability of NATO to arrive at realistic and hardhitting proposals for total [Page 153] efforts by NAT countries to meet total burden imposed by need to provide for defense of Western Eur. Realism shld be enhanced by fact that “fair contribution” by US will be a given factor, at least for FY 1952, in view timetable Congressional consideration fon aid bill.

7. Pls comment soonest. If you and Katz agree with proposed US position, you are authorized to present in Council Deps at first available opportunity. It shld also be included in any US statement at initial mtg of FEB.”

  1. Drafted by Cleveland (ECA) and Martin (RA).
  2. This telegram of April 26 (740.5/4–2651) reported on action taken in regard to the last sentence of section 2 of telegram Depto 836, p. 149.
  3. Presumably the so-called “Nitze paper” dated October 17, 1950, sent to Spofford on that date in telegram Todep 63 to London. For text, see Foreign Relations, 1950, vol. iii, p. 386.