No. 402

852.10/12–851: Telegram

The Ambassador in Spain (Griffis) to the Secretary of State

confidential

592. In recent weeks there have been several indications that Span Govt, press and business people are becoming increasingly critical of slowness with which Export Import Bank credit was becoming available to Spain. This feeling reflected in Franco’s recent interview, as per Emb Joint Weeka No 48, in which he attributed slowness to US suffering from as much Departmental red tape as Spain. In part this critical feeling is natural consequence preoccupation Span Govt leaders with their critical dollar position, one which is so bad that if it prevailed in any other Western European country would be labeled as grave financial crisis. In part Span reaction arises from period of more than one year since Export Import Bank credit was authorized, coupled with fact that several European countries have already received allocations under MSA 1952, whereas in case of Spain nothing has happened except continuation study activities which Span regard as inadequate substitute for needed dollars.

I am fully cognizant of fact that Span bear large share of responsibility for retardation execution Export Import Bank credits, particularly [Page 856] with respect to hiatus created by disagreement between Primate banks and govt over question of rate of exchange to be used for amortization credits to private firms. I have urged Span to resolve their differences so that credits already granted can be effectively utilized and have been informed by Min Com that matter will be presented to cabinet today with a view to reaching solution.

Irrespective degree Span responsibility, fact remains retardation completion Export Import Bank credit coupled with lack of any information re US intentions under MSA, is operating adversely to US interests and prestige in this country.

In view foregoing, I recommend adoption following measures:

(1)
Export Import Bank proceed soonest to conclude credits for tinplate, barrelstaves, teruel and escatron, with expeditious conclusion loan contracts projects already approved.
(2)
Export Import Bank detail one its officers to Emb here to act in close liaison with Span Govt in administration balance of credit of $10 million earmarked for price rises, similar factors and for credits to small and medium industries. (As pointed out Ecato 32 consideration each application requires research and detailed justification, most of which will necessarily have to be done in Spain.) As Dept is aware, I have repeatedly recommended Export Import Bank representation here. While temporary visit Jones and Fitch was helpful, need is for officer on continuing basis until loan operation completed.
(3)
Active consideration be immediately given by appropriate agencies in Washington to econ policy and program for Spain 1952, with view to its completion concurrently decisions re US military base program in this country. In my judgment any prolonged hiatus between completion this month of survey of ECA temporary study group here and discussion with Span Govt of implementation in this country of MS appropriation act would not only increase Spain’s econ difficulties but adversely affect US position in Spain.

Griffis