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

No. 394

S/S–NSC files, lot 63D351, NSC 72

Memorandum by the International Security Affairs Committee¹

top secret
[ISAC D–12a]

Washington, April 13, 1951.

Spain

problem

On February 1, the President approved NSC 72/4² and determined that the immediate objective of United States policy toward Spain should be to develop urgently the military potentialities of Spain’s strategic geographic position for the common defense of the NAT area. It is possible that we may not be able to achieve this objective unless we are in a position to offer some further economic aid to Spain.

discussion

NSC 72/4 contemplates that the policy objectives stated therein will be achieved through the provision by the United States of military assistance, and through military and naval cooperation and technical advice. No funds are being included in the fiscal 1952 budget submission to cover a specific program of military assistance for Spain as such. However, it is planned to request approximately $850 million for the establishment of a stockpile which could be used to meet a variety of possible contingencies in Europe, including the possibility of extending military assistance to Spain.

NSC 72/4 makes no specific provision for economic aid to Spain. Financial assistance is presently available to Spain through the Export-Import Bank. In accordance with the directive approved by the President on November 14, 1950, credits are available out of the $62.5 million appropriated by the Congress last September, although credits are not to be made to exceed an aggregate of $25 million except after approval by the President. To date $17.2 million in credits have been extended. The credit authorization will expire on June 30 unless the ECA takes administrative steps to extend its availability into fiscal 1952.

It is important for us to have authority to provide additional financial assistance to Spain in order to achieve the objectives of NSC 72/4, as well as to insure that our presentation of the aid program in general will be tenable before the Congress.

The economic condition of the Spanish people is such that further deterioration may require the Spanish Government to request grant assistance from the United States in order to prevent the danger of starvation and the threat of political disorder. Moreover, the military capacity of Spain to make a contribution to Western European defense would require the support of the Spanish people. It might be difficult to obtain this support if it appeared to the Spanish people that United States interest in Spain extended only to expenditures in behalf of the Spanish military establishment and disregarded the welfare of the Spanish people themselves.

To make any military assistance or future military base program worthwhile requires some immediate improvement in the transportation network to be used in connection with the construction and operation of such bases. Similarly, the present Spanish harbor and airport installations should be improved by the Spaniards for possible use later by or in support of United States forces. What amount is required for these purposes cannot now be estimated.

In view of present economic conditions in Spain and of the evidence of extraordinary mismanagement of the Spanish economy and of government administration in Spain, the general economic improvement to be achieved from any particular program may not be great. Both for this reason and because we do not yet have specifications as to the military base and facilities requirements, it is not practicable at this time to formulate an economic aid program. We should, however, have available a source of funds to call upon as the situation may require. Any financial assistance to be extended should, of course, be considered primarily in relation to the accomplishment of our military objectives. In accordance with the NSC policy paper, the provision of financial assistance to Spain should be related to the ultimate United States policy objective of bringing Spain closer to participation in NATO.

Aside from purely military and economic considerations we must keep in mind that a strong demand exists in Congress that Spain should be included in Western European defense against aggression. The strength of this sentiment is indicated by the recent passage of the resolution in the Senate urging the utilization of Spain’s military and other resources in planning for the defense of Europe. In view of the Administration’s decision that for defense purposes grant assistance for Yugoslavia will be requested of the Congress, supporters of Spain will unquestionably demand that aid for Spain be authorized for the same reasons. We would have the greatest trouble in replying to this argument since the strategic importance of both countries in the defense of Western Europe makes untenable any presentation which attempts to justify aid for Communist dictator Tito and at the same time excludes anti-Communist dictator Franco.

recommendations

As a means of achieving the policy objectives set forth in NSC 72/4, and in view of the considerations outlined above, it is recommended that the ISAC approve the following arrangement:

(1) That prior to the end of fiscal year 1951, the ECA issue notes for purchase by the Secretary of the Treasury up to the full amount of $62,500,000 authorized by Title I of Chapter XI of the General Appropriation Act, 1951, so that any portion of this amount against which loans have not been advanced to Spain by June 30 will remain available after that date;

(2) That in the Congressional presentation it be made clear by the Executive Branch that:

(a) the action in (1) is being taken;

(b) if and to the extent that the situation during the fiscal year 1952, taking into account both the needs and the reasonable possibility of repayment, calls for loans to Spain beyond the above amount, the regular lending authority of the Export-Import Bank would be available and would be used for that purpose;

(c) that in the presentation before the Congressional committees the Executive Branch officials be in a position to take the following line.

No specific grant aid is being requested for Spain in the absence of a Spanish request for such aid and in view of the uncertainties as to a practical program. Should Spain make an appropriate request for grant aid, the Executive Branch would be prepared to give it the same consideration as given to aid to Yugoslavia. In anticipation of the possibility that Spain and other non-NATO and non-OEEC countries may require assistance during fiscal 1952, the Executive Branch is seeking to have the foreign aid bill passed in such a form that funds appropriated under it could, if necessary, be used for military and economic assistance to such countries as Spain without requiring their association with OEEC or NATO. If the bill is passed with such a provision and if a specific need for aid develops, the Executive Branch would then attempt to meet the situation out of the total funds appropriated. If other requirements for the appropriated funds should make it impossible to meet the essential requirements of a Spanish program, it might be necessary to seek a supplemental appropriation, but it is hoped and expected that this can be avoided.³

1. Attached to the source text was a cover sheet which indicated that it was being circulated as ISAC D–12a. On April 6 an earlier draft of this paper was transmitted to Secretary Acheson by Perkins, who in turn sent it to ISAC. This Perkins draft is the same as text printed here except for the recommendations which read:

   “As a means of achieving the policy objectives set forth in NSC 72/4, and in view of the considerations outlined above, I recommend that you approve the following arrangement. If you approve, it will then be put before the ISAC on Monday. After clearance by ISAC, it is recommended that you seek the President’s approval. If he approves, it will be included in the foreign aid presentation to the Bureau of the Budget.

   “(1) that Spain have access in fiscal 1952 to credits in the full amount available this fiscal year, i.e. $62.5 million. (This may be accomplished by carrying over beyond June 30 the uncommitted balance of the present $62.5 million lending authority, and by requesting a new authorization in the same amount as the total of loans made up to June 30);

   “(2) that in the presentation before the Congressional committees the Executive Branch officials be in a position to take the following line:

   “No specific grant aid is being requested for Spain in the absence of a Spanish request for such aid and in view of the uncertainties as to a practical program. Should Spain make an appropriate request for grant aid, the Executive Branch would be prepared to give it the same consideration as given to aid to Yugoslavia. In anticipation of the possibility that Spain and other non-NATO and non-OEEC countries may require assistance during fiscal 1952, the Executive Branch is seeking to have the foreign aid bill passed in such a form that funds appropriated under it could, if necessary, be used for military and economic assistance to such countries as Spain without requiring their association with OEEC or NATO. If the bill is passed with such a provision and if a specific need for aid develops, the Executive Branch would then attempt to meet the situation out of the total fundsappropriated. If other requirements for the appropriated funds should make it impossible to meet the essential requirements of a Spanish program, it might be necessary to seek a supplemental appropriation, but it is hoped and expected that this can be avoided.” (852.10/4–651)

2. Document 359.
3. ISAC approved this paper on April 13 and transmitted it to the White House on April 18. On April 23 it was approved by President Truman. (Memorandum for the President, April 18, 852.10/4–2351)