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

No. 215

ECA message files, FRC 53A278, Paris: Telegram

The Administrator for Economic Cooperation (Foster) to the ECA Mission in Iceland ¹

confidential

Washington, March 17, 1951—3 p.m.

Ecato 32. 1. Minister Thors called this morning. He claimed economic situation in Iceland approaching crisis and would like action as soon as possible on following 2 points:

• a) Release of additional direct aid in amounts between $2.2 and $3.8 million,
• b) Establishment of further special EPU aid to extent of $3 million.²

2. We explained our impression next step up to IceGov particularly in respect to: a) submission of general program of necessary non-dollar imports and b) expression of gov intention in respect to establishment of some central control over economic situation.

3. Please note in connection with submission program of necessary imports that we do not believe precise detailed list necessary but merely general indication types of goods and magnitude of increased imports.

4. Thors said IceGov thought that action up to us since gov explained it could not submit detailed list of imports. We did not tell him as explained in preceding para that this was not necessary but you should make this clear to IceGov.

5. Thors also said govt believing we had requested impounding or other control of savings account had not answered since it could not agree. Please make it clear we have not made such request but merely expect at this time indication of firm intention to establish adequate centralization of responsibility for economic aspects these programs with implementation to follow.

6. As soon as you inform us you have satisfactory answers to 2a and b³ we are ready to move on la and b.⁴ Note “special EPU assistance” equivalent to additional initial position.

7. The above has been discussed with Minister Lawson.

Foster

1. Drafted by Woodbridge; authorized by Hopkinson; and cleared by Hannay, Porter, and Bissell.
2. Telegrams Ecato 1, January 2; Ecato 8, January 15; and Ecato 12, January 23; all to Reykjavik, gave details of previous Icelandic requests for additional aid in fiscal year 1951. (ECA message files, FRC 53A278, Paris)

3. Telegram Toeca 42 from Reykjavik, March 27, recommended “direct allotment $1.2 million now without awaiting settlement amount non-dollar aid.”

   Telegram Toeca 43 from Reykjavik, March 28, reported that the Icelandic Government recognized the need for more frequent reports on the economic situation and the “Min Com agreed obtain more frequent current info and estab informal centralized control.” (Both in ECA message files, FRC 53A278, Paris)

4. Telegram Ecato 52 to Reykjavik, April 13, reported an additional direct aid allotment of $2.2 million to Iceland. In Ecato 62 to Reykjavik, May 2, the ECA Mission was notified that “$3 mill special assistance to finance Iceland’s EPU deficits will be allotted Thursday May 3.” (ECA message files, FRC 53A278, Paris)