751G.5 MAP/10–1051: Telegram
The Ambassador in France (Bruce) to the Secretary of State
priority
2118. Toisa. Ref Deptel 2008, October 5.1
1. Decision of Fr cab before departure of Mayer to Washington was to limit mil budget for Indochina to 350 billion francs in cal 1952. During past few years Fr Govt has repeatedly tried to use this ceiling device to compress Indochinese expenditures without much success. In each year the initial budgeting has been purposely optimistic and a deficiency appropriation has been obtained later in year when it is inevitably proved that active mil operations could not be compressed within ceiling. Our info is that Fr budget officials recognized that ceiling cab hoped to impose for ’52 was not realistic.
Estimate of 430 billion francs presented in Washington in Schuman’s note2 is that used by De Lattre’s advisers. Since his return to Paris De Lattre has succeeded in reopening question of level of ’52 mil budget for Indochina. He is strongly supported by Letourneau. Final decision by cab should be somewhere between 350 billion and 430 billion francs but it is not likely that such an agreement will be [Page 529] reached until first of next week when cab members will have returned from electioneering tasks.
2. Our understanding is that Fr still intend to seek supplementary aid through devices suggested by Guindey3 in September 13 meeting in Washington. Final details of presentation and components of aid to be requested also require further consideration at cab level. We have been promised additional info by end of this week.
3. Suggest you may wish to reply to sec II (C) of Fr note immediately by indicating that US is prepared to consider statement of assistance for Indochina in more specific terms during talks now scheduled for end of October. We believe it would be helpful for you to send interim reply to Fr note on balance of payments dated September 1, 1951 and forwarded in Embtel 1402.4 Our suggestion assumes you have made final decision to proceed with Oct talks here and that ISAC exercise to prepare answer to letter from Pres Truman will develop adequate estimates and instructions to permit us to negotiate usefully with Fr. We should at least be in position to promise some assistance on interim basis to try to avoid adverse repercussions on mil prog and polit situation which may arise from developing balance of payments difficulties. Some interim arrangement will probably be most desirable manner of proceeding because US should be able to take a firmer position on amount and nature of French mil effort for 52 after TCC has completed its exercise.
4. Emb and missions would like to see substantial part of any assistance to France earmarked as offset for support of Indochina mil operations or substantial assistance direct to Indochina. Ever-increasing Indochina burden is having effect not only of diminishing possible extent Fr effort in support her Eur def obligations but also affects Fr position on size of Ger contribution to Eur def and on occupation costs in Ger. A contribution in forces and finances from France to Eur def at least equal and preferably superior to that of Ger is in their view a polit necessity for agreement on Ger rearmament even within Eur army framework.
Prob becomes more difficult if Fr must now assume occupation costs for Fr troops in Ger and if Ger does not have naval forces. Fr finance officials do not find complete answer in keeping Ger financial contribution small although this is their present position. They also want Ger to carry an equitable burden of def thereby avoiding a deterioration for France in French-Ger payments relations. Accordingly, they are seeking means to have Ger make financial contribution [Page 530] outside its contribution to Eur def either by continuing occupation costs, by a special payment for infrastructure, by a “burden-sharing” contribution, or by giving other Eur countries a credit for forces in being.
Personal view of most Fr officials in EDF conf is that France cannot receive occupation payments once EDF treaty is in force. They are, however, so anxious to see desired balancing of Fr and Ger contributions in EDF framework that they have even considered advisability of having Ger continue to pay occupation costs to US and UK alone as offsetting margin outside EDF. Such an arrangement would of course be very difficult to have accepted in France.
Obviously French position would be better if Fr could reduce obligations outside Eur def. We must keep in mind, therefore, possibility that with Fr realization of growing Ger def contribution in relation to their own polit and mil situation plus continued weakening of Fr franc Fr Govt may fail to continue furnishing sufficiently large mil budget for IC to enable it, even with our presently scheduled assistance, to maintain successfully IC mil operations. Result would be progressive deterioration Fr position, giving rise to renewed and perhaps increased pressures here for some kind of negotiated settlement with Ho Chi-minh.
Sent Dept prity 2118 rptd info London 522 Frankfort 240 Paris for OSR.