Foreign Relations of the United States, 1951, Europe: Political and Economic Developments, Volume IV, Part 1

751.5–MAP/9–551: Telegram

No. 181

The Deputy Chief of the ECA Mission in France (Timmons) to the Administrator for Economic Cooperation (Foster)¹

secret priority

Paris, September 5, 1951—noon.

Toeca 1032. Toisa.

1. Problem of coal and coke supply will undoubtedly be raised by Fr Mins during Wash talks.² Pleven has already told Harriman that coal shortage is perhaps greatest economic problem which France now faces (Embtel 1310, Aug 29 to Dept³). Fr Govt worried not only over econ effects of shortage and its possible repercussions on defense production, but also about impact on Franco-German relations—especially on ratification Schuman Plan, EDF, etc—of constant wrangling over coal and coke deliveries.

2. From specifically Fr point of view, problem may be summarized as follows: On assumption of capacity operation of steel industry, modest addition to currently depleted stocks, reasonable estimates for increase in coal production over last year, and maximum currently available imports from other sources, Fr estimate minimum import requirements from US for last half 1951 at 4.9 million tons for Fr, Saar and North Africa. This is 1.0 million tons greater than recent OEEC allocation to Fr of 3.9 million tons, based on present shipping availabilities. In addition, Fr feel they must have 400,000 tons of Ger coke as supplemental allocation for fourth quarter 1951 to permit steel industry now operating at 85 percent capacity to reach full capacity. (See Paris Toeca 1022, rptd Paris Torep 1237, Sept 3, 1951 for full details on coal and coke needs.)³

3. Fr see their own problem as part of a broader Eur problem and are determined to seek solution in European context. As they see it, Eur coal problem has two major aspects: (a) Over-all shortage in Eur, which results basically from low level of UK and Ger production and exports, and is made particularly acute at this time by pressures for higher levels of industrial production and need to replenish stocks depleted in 1950. In long run, Fr hope this problem can be solved by increased Eur production, encouraged by coming into effect of Schuman Plan. In immediate future, however, they feel that this over-all shortage (estimated by OEEC at 21 million tons for the last half 1951) can be met only by imports from US: (b) Problem of internal distribution of Eur solid fuels, coal and especially Ger coke which must fill large part of continent’s coke needs. This internal Eur problem is aggravated by relatively high landed price of US coal as compared with Ger coal. Fr recognize unfairness of situation in which Gers are forced to export coal at prices considerably lower than Ger must pay for US coal imported as replacement. Solution of these problems will be facilitated when Schuman Plan comes into effect, but failure to find immediate solution threatens to have serious repercussions on ratification of plan in both France and Germany.

4. Fr have in mind possibility of instituting some form of price compensation mechanism to operate in conjunction with an agreed distribution of Eur coal and which wld make US and domestic coal more or less interchangeable from Ger standpoint. This, they feel, wld make it possible for Ger to give Fr the additional coke it needs. However, Fr feel that this or any other equitable solution to internal Eur problems is only possible if there is available sufficient coal to satisfy over-all Eur requirements. In the immediate future, they feel that the necessary additional coal can come only from US.

5. In Fr view, major physical factor limiting Eur imports US coal is shipping shortage, which also threatens driving up freight rates on all cargoes. On assumption that present shipping capacity is only sufficient to carry 16 million tons during last half 1951 and that total Eur requirements (based on OEEC estimates), are between four and five million tons higher than this figure, Fr Mins will request US Govt to take measures to break out about 200 additional ships. They realize technical difficulties involved and fact that Eur countries must be prepared to guarantee each ship for six trips; they feel, however, that such difficulties are no greater than those which have been overcome in past. In their view, urgency of coal problem from econ and polit point of view and its possible impact on rearmament plans justify prompt and bold action.

Timmons

1. Repeated to OSR.
2. This topic was not discussed at any length during the Washington Foreign Ministers meetings in September.
3. Not printed.
3. Not printed.