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

No. 441

741.5–MAP/8–1751: Telegram

The Chargé in the United Kingdom (Holmes) to the Secretary of State ¹

top secret

London, August 17, 1951—10 a.m.

915. Toisa. This is General Johnson, Batt, Holmes message. There is every indication that during visit of Morrison, Gaitskell and possibly Shinwell in Washington in September question of British economic situation and relation of impact of rearmament plans will be raised. Such discussions will probably refer to British aide-mémoire² and Tedder–Lovett conversation of March 22 (Deptel 4757, Apr 18, 1951³) when British gave estimates of largescale (between pounds 1.4 and pounds 1.8 billion) military deficiencies assuming completion of current production plans.

We feel that discussions shld present opportunity to explain to British our aid policy toward the UK in terms of over-all approach including our strategic objectives in this area.

Items of concern re current status and recent developments:

(A) Economic and financial situation has recently shown signs of deterioration. British have for some time anticipated shift away from favorable economic position which developed after devaluation. This shift is now taking place and recent indications are that external position is moving in unfavorable direction more rapidly than they anticipated (Embtel will follow). While general internal financial position remains basically sound, such fundamental industries as coal, steel and electric power are getting into far more serious difficulties than anticipated. If, in fact, price increases, raw material shortages and other possibly adverse developments shld hamper fulfillment of rearmament program, there wld be further attacks on the program from Bevan and his left-wing Labor Party followers (see Emb desp 417, July 23, 1951⁴).

(B) Of $5.3 billion military aid to Europe requested of Congress for fiscal year 1952, UK wld obtain $378 million (or about 7 percent of total) and no economic aid.

(C) US interests in UK defense position include much more than strict DC–28⁵ commitments in view of (1) USAF bases in UK, and (2) need for British strength in Near and Far East, (3) non-NATO committed major units of RN probably wld be committed in any emergency to NATO mission.

(D) While there may be questions with respect to some countries, there is no question about effectiveness of aid to UK in terms of (1) whether it will be assimilated by forces capable of using it, and (2) whether those forces will fight effectively in event of war.

(E) Some concern has been expressed in UK re the distribution of the aid. Comments have been heard that “it pays to be militarily weak” (see Emb desp 657 of Aug 2, July MDAP report⁶).

We believe you shld anticipate British raising such issues as the above. In your own appraisal of British position, we assume that you will consider not only British needs—real though they may be—but will relate such needs to US current strategic objectives involving UK. As illustrations of type of questions which we feel you shld be prepared to raise and/or discuss and on which we need more policy guidance are the following:

(A) Do we propose to ask British to increase DC–28 commitments? If there are such increase commitments, would this increase prospects of larger amount of aid to Britain?

(B) Wld inclusion of Turkey in NATO mean broader consideration to UK needs in that forces deployed in Near East would be considered as technically eligible for end item aid—i.e., would DC-28 be revised to include British commitments in Near East?

(C) We assume that if RAF increased its NATO commitment by taking certain fighter planes out of “war reserve” and moving them to continent that basis for determining its needs under DC–28 would be enlarged. We would like to know, however, if RAF placed a large proportion of their “war reserve” of fighter aircraft in active units for deployment in the UK (where they would supplement the defense of the USAF bases), would the UK be likely to receive additional military aid?

We recognize there are many other questions of related character which could be asked and on which clarification might be desirable prior to British talks. We should appreciate having any views from Washington on the above or other questions in the event that we may be able to comment prior to start of these talks. We recognize, of course, the rather nebulous nature of our inquiry which reflects the inadequacy of our information on the relationship between current aid plans and US objectives in UK.

The above relates primarily to FY 1953 and 1954 plans. Re FY 1952, there appears to be a probability of substantial cuts in foreign aid bill. We should like to raise the question as to whether this will result in a proportionate cut for all prospective recipients. We assume that priorities exist within the military aid program and we trust that the considerations outlined herein would be given appropriate weight before any substantial cut was made in present UK program.

We believe that the criteria in determining amounts of end item aid must be applied country by country with considerable flexibility. In addition to criteria as set forth in Todep 75, Aug 6, 6 p.m.,⁷ we feel that somewhat more emphasis might be placed in assessment of situation on basis high priority that we must attach to the protection of USAF bases here. As you are aware, the RAF and the USAF have fully integrated the air defenses of the UK including the US bomber bases. We are not however satisfied that the protection for these bases is sufficient today nor that the plans for the next year are adequate. We feel additional funds should be made available to cover cost essential items needed to supplement the defense of these bases. (See Embtel 6287⁸ in which note was taken of the heavy requirement for essential items—electronics and communication equipment—for which so far as is known, no adequate British production plans have been formulated).

Accordingly, we recommend a re-appraisal of criteria on which aid to UK is based and urge that re-appraisal reflect the relation between the global US strategic objectives involving UK and the amount of aid which would seem to be advisable.

Holmes

1. Repeated to Paris for OSR and MacArthur.
2. Dated March 22, this aide-mémoire was transmitted from Tedder to Webb, supplying particulars about the British defense program and its financing. A copy of the aide-mémoire was sent to London in airgram A–1751, March 29. (741.5/3–2951)
3. Telegram 4757 advised the Embassy in London that any restudy of the British material program should be undertaken in London rather than in Washington. (741.5/4–1851)
4. Not printed.
5. A copy of this NATO Defense Committee document has not been found in Department of State files.
6. Not printed.
7. Telegram Todep 75 reported that end-item aid programs were formulated and executed taking into account the “relative urgency in each country, varying ratios in each case of ground, air and naval forces, national economic situation, over-all strategic plan, available local, productive capacity, available raw materials, production rate different classes of equipment in US.” (765.5–MAP/8–651)
8. Not printed.