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

No. 430

741.5/3–2151: Telegram

The Chief of the ECA Mission in the United Kingdom (Batt) to the Economic Cooperation Administrator (Foster)¹

secret   priority

London, March 21, 1951—11 a. m.

Toeca 226. Reference: London Ecato 277, rptd Torep 1754, March 14.² This is joint Gifford-Batt message. See also Embtels 4853³ and 4933.⁴

1. Gravely concerned about effects of failure consult openly on issues with Brit before congressional presentation. Present course of failing frankly to discuss subject seems cultivate worsening of Anglo-American relations. Brit have taken NATO mutilateral burdensharing examination seriously as basic determinant of aid and in any case have regarded US approach last July and agreed terms of suspension ERP aid as official US indications that assessment of need for aid in support mil program wld be based on mutual reconsideration. They have not been informed to contrary. Relevant terms of suspension ERP aid “and suspension of ERP allotments to UK will in no way affect arrangements which are now being worked out in NATO for assessment and distribution of burden of defense programs of its members.” Imperative Brit be informed immediately of US policy decisions so that there will be opportunity for UK Govt to explain situation to country. If news breaks only with congressional presentation Brit Govt and Parliament will be shocked by apparent US disregard multilateral considerations. We understand presentation will stress objective of mil support as basis of all US aid to NATO countries. Important in this connection that US recognition of strong Brit defense effort should be emphasized and that any statements on question of aid to UK should stress present strong dollar position sterling area. If by inadvertence impression is given that Brit are being left out of aid program because mil effort inadequate in comparison to others in Europe this wld tend create worst possible atmosphere for future attempts to induce greater Brit effort if acceleration of MTDP deemed necessary. Likewise, it would tend create unfortunate public impression US re adequacy Brit program.

2. Request immediate instructions on basis of which we can give Brit at high level present US views on aid to UK defense program including aspect of how congressional presentation will be handled. We can then agree with Brit on best way of handling our mutual UK-US public relations problem in same ways as was done with suspension of ERP aid. Suggest we be authorized to take following line with Brit:

(a) Refer to our previously expressed desire to consult frankly about aid problem.

(b) Point out the question of aid to UK will inevitably have to be faced during congressional presentation.

(c) State that on basis of our present analysis UK will not require substantial dollar aid in FY 1952 and we will have to state this to Congress, although we will make clear in presentation that no one can foresee accurately what Brit position will be in future. Stress that past record US sufficient assurance that future deterioration, if any, in Brit econ position as inevitable result strains rearmament would be considered sympathetically.

(d) Express view that this is position which at appropriate time Brit Govt can explain and defend to public and Parliament.

(e) It wld be of decisive help if in addition to above we cld state that final decision on economic aid to all NATO countries must await econ developments including changes in levels of mil efforts and results of burden discharging examination, and that therefore we will ask Congress for some flexibility in allocation of aid funds. Strongly urge such flexible position in presentation in order militate against what wld otherwise be but perverse incentive effects of dollar aid.

3. In any event advise that in no circumstance shld we either to Brit or public suggest Brit left out of program because they did not request and therefore were presumed not to want aid, with possible inference Brit Govt let aid go by default. Reftel interpretation of Brit failure formally request aid inexplicable to US. Brit have always taken view ERP aid ended without prejudice to mil support aid, and never any doubt here Brit expected to be considered eligible for aid if circumstances justified it. Brit official line is that circumstances do justify aid. Of burden-sharing examination, and pending results Brit have tended proceed on basis pattern HPPP arrangements covering dollar content of mil production. Much detailed Brit planning has been proceeding on premise HPPP precedent and procedure wld probably be followed for sizable part entire mil production program.

4. Concur in your view Brit undertaking initial position EPU without offset assistance very unlikely in light apparent US aid position.⁵

Batt

1. Repeated to Paris.
2. Telegram Ecato 277 reported that for the announced U.K. military program no direct supplemental economic aid request would be presented to Congress, but the United Kingdom would continue to participate in other ECA–ERP activities. End-item aid, however, would be provided as appropriate. (ECA message files, FRC 53A278, London)
3. Document 428.
4. Telegram 4933 reported that McCaffery, a member of the ECA Mission in the United Kingdom, had talked with a British Treasury official who indicated that the British would be asking for additional military assistance program aid with respect to the dollar content of its defense expenditures. (741.5–MAP/3–1451)
5. On March 29, in telegram Ecato 358, the Embassy in London was informed that the Department of State and the Economic Cooperation Administration agreed with the substance of this telegram. (ECA message files, FRC 53A278, London)