751.5–MAP/8–851

No. 177
Memorandum by the Assistant Secretary of State for European Affairs (Perkins) to the Counselor of the Department (Bohlen) 1
secret

Subject: Economic assistance to France in fiscal 1952.

With reference to my memorandum of July 24,2 copies of which were sent to Messrs. Cabot, Thorp, Porter, Gordon, Willis and General Scott, there is attached a draft telegram to Ambassadors Bruce, Katz, Spofford and Mr. Parkman regarding economic assistance to France in fiscal 1952 which I would like to send out before the end of this week. I would appreciate receiving your comments in the near future.

[Enclosure]
Draft Telegram by the Assistant Secretary of State for European Affairs (Perkins) to the Embassy in France 3
secret

Toisa. Presently considering draft instruction to you to inform Fr re econ aid in fiscal 51/52 along fol lines, after new Fr cabinet formed. Your comments desired.

[Page 412]
1.
US firmly hopes in coming year there can be clearer understanding and mutual agreement re most urgent requirements placed upon Fr Govt and Fr economy in mutual defense effort.
2.
US welcomes statement contained Fr note June 26 [29]4 drafted by Petsche for Harriman and expressed by Clermont–Tonnere before FEB July 6, that Fr expect future dol aid in terms bal payments deficit and not in relation domestic budget requirements. This position is in line views contained US note July 7 paras 2–4.5 Although para IV(4) a June 1 MiNatDef memo6 given Gen Bradley maintains that US aid shld not be bound to Fr bal payments deficit with US, we conclude from subsequent Fr statements and from Fr note June 26 that Fr presently understand such position to be unrealistic. We are anxious that this be understood within Fr Govt since MiNatDef even now appears take budget approach to aid for added jeep production (Embtel 790 Aug 37).
3.
As matter fact US will have fon econ aid funds available to cover only bal payments needs of Fr and other MSP participants. As Fr were informed by ECA, illustrative figures in Congressional presentation show 290 million dols econ aid to Fr during 51/52 in addition to estimated Fr earnings 220 million dols from Def Dept appropriations (for pipeline, LOC, troop pay, infra-structure, etc.). We note from para 9 MinFin May memo given Bradley that Fr realize possibility latter earnings may reach total 100 billion francs (290 million dols) in coming year. US hopes shortly be able inform Fr with greater precision re amounts and rhythm such Def Dept expenditures in Fr.
4.
For import planning purposes, Fr shld count on receiving from US Govt sources during 51/52 some 400–500 million dols, ultimate amts depending upon (a) actual level Def Dept expenditures in Fr monetary area. (b) level Congressional appropriation for MSP, (c) development by Fr of realistic import program for entire fiscal 51/52 period, (d) relative dol needs of Fr and other participating countries. Moreover, above estimates exclude possible further dol earnings from US offshore procurement military end-items in Fr.
5.
Re import program planning, developing world shortages and worsening terms of trade for Fr require that US become increasingly concerned with utilization Fr resources and relation Fr imports to production, consumption and exports. US therefore desires begin immediate review Fr import plans for entire period 51/52 on basis production-imports-exports-consumption analysis.
6.
US desires impress on Fr that necessity reach 1954 military goals requires mobilization and conversion in short-run, that in this regard US will be giving fullest attention Fr tooling arid materials problems, that US desires full conversations re Fr policy plans and intentions re industrial mobilization and conversion, and that this is an immediate problem from which Fr and US cannot afford be deflected by longer-range productivity drive.
7.
US notes emphasis in June 1 MiNatDef memo that development of schedules for delivery military goods from Fr production lines and from abroad constitutes number one problem of Fr rearmament. US hopes undertake continuous and more precise review of production plans and end-item delivery schedules, and hopes do this in Paris, in CD and DPB, in SG, and in any other effective forum. To begin with US desires obtain clearer and more complete picture than it now has of status of present and contemplated Fr production lines.

To summarize, FYI: We believe US cannot satisfy any Fr anticipation of aid to cover Fr budget requirements, and that sooner we have understanding with Fr on this score the better will be our relations during 51/52. Similarly, we do not propose to bargain with small amount econ aid available under MSP Act for Fr performance involving many times that amt in Fr expenditure. We propose that in future we deal in context that Fr will implement its obligations in good faith and as full partner in NATO effort. On this premise believe frank discussion with Fr will be considerably more availing than carrot and stick approach, particularly since latter approach has had limited impact during past two years.

  1. Drafted by Williamson of WE. Sent for action to Cabot of ISA; Thorp, Assistant Secretary of State for Economic Affairs; Bissell of ECA; Nash of Defense; Hebbard of Treasury; and Gordon of the Executive Office.
  2. Supra.
  3. Drafted by Beigel to be sent to Paris eyes only for the Ambassador, Parkman, and Katz, and to London eyes only for Spofford. However, there is no record in Department of State files that this telegram was ever sent.
  4. Not printed, but see Document 173.
  5. Not found in Department of State files.
  6. Not found in Department of State files, but see telegrams 8170 and 8171 from Paris, Documents 171 and 172.
  7. Not printed.