751.5 MAP/7–2451
No. 176
Memorandum by the Assistant Secretary of State for European Affairs (Perkins) to the Director of International Security Affairs (Cabot)1
secret
[Washington,] July 24,
1951.
Subject: Economic Assistance to France in 1951/52
- 1.
- The French note of June 26 (Paris telegram #81982), drafted by Finance Minister Petsche, makes a strong plea that every effort be undertaken to maximize imports into France in the coming year, and maintains that “because of continual uncertainty as to the amount of dollars at its disposal for imports, the French Government has found it difficult and still finds it difficult to set up an import program for any sufficiently long period of time.” Petsche made this point at the end of the 1950/51 period during which the official gold and dollar reserves of Metropolitan France increased by $208 million, to a level of $809 million. Petsche stated and presumably believes that “outside of its credit position with EPU, which is decreasing, France has no reserves which will permit it to carry out a large-scale import program for a reasonable length of time unless she can count on sufficient foreign aid.” During the Washington talks last February the French stated that they believed their monetary reserves should increase to a level of around $1 billion.
- 2.
- The Embassy at Paris, in its telegram #8171 of June 28,3 also states its convictions that in 1950/51 “the US administered economic assistance in such a way that dollar imports were artificially reduced and the import surplus necessary to offset French inflation could not be programmed or created by the French.” The ECA Mission to France equally supports this position in its telegram Toeca 822 of July 19.4 Our relations with the French Government would appear to be affected by the fact that the French Government believes this to have been the case, regardless of its merits. At the same time the French Government has come around to accept the position summarized in the US note of July 7 (telegram #61 to Paris, July 35) concerning aid during 1950/51. The French representative stated before the FEB on July 6 that the French Government in the future would not expect external aid in excess of its balance of payments deficit. (The French representative agreed to put this statement in writing.)
- 3.
- In its balance of payments estimates being used for the Congressional presentation, ECA has projected an economic aid figure for France of $290 million in 1951/52, after taking into account US military purchases of francs amounting to $220 million. The Embassy at Paris has estimated that such purchases may increase to an annual rate of $300 million during 1952. The French Government has been informed of the illustrative aid figure, although it is not clear that it has been informed of the magnitude of anticipated US military purchases of francs.
- 4.
- To encourage the French to take whatever steps they can to increase imports into France during the next eighteen months, I believe that we should inform the new French Cabinet as soon as possible that the US agrees with the views set forth in the French note of June 26, and that for its import planning purposes the French Government might assume that from $400 million to $500 million will be available from the US Government during 1951/52. The upper limit will of course depend upon the size of the Congressional appropriation as well as upon the developing needs of the other participating countries. This amount is exclusive of any French dollar receipts that might arise from US military procurement in France.
- 5.
- The French should also be informed that more than half of the above amount will arise from US military purchases of francs, and will, therefore, be free from the programming inhibitions which the French believe are imposed by ECA procurement procedures. In [Page 411] this connection, we should if possible be in a position to inform the French more precisely of the timing and volume of anticipated US military purchases of francs (in connection with pipeline, LOG, troop pay, base construction, etc.) during the period.
- 6.
- It should be strongly impressed upon the Congress that the illustrative aid figure for France was arrived at only after taking into account the $220 million estimate of US military purchases of francs.