Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

795B.5/3–452

The Deputy Secretary of Defense (Foster) to the Secretary of State

top secret

Washington, March 4, 1952.

Dear Mr. Secretary: In his letter of 10 October 1951,¹ the Under Secretary of State² sought the concurrence of the Department of Defense in a specific formulation of the reimbursement policy in its application to negotiations with Brazil and other Latin American Governments for troops for Korea. He also recommended that the proposed formulation apply to the Government of Colombia, if that Government were to indicate its inability to maintain, on a current basis, full dollar reimbursement or some other form of settlement for logistic support furnished by the United States.

The proposal put forward by the Under Secretary of State has been given careful consideration both within the Military Departments and the Department of Defense. Early in the consideration of this question, however, it became apparent that a complete review of past experience and practices in the application of the reimbursement policy was essential, if the proposed formulation was to be considered in its proper relationship to the broader aspects of the concept of reimbursement. The outcome of this review established that:

(1) The formulation proposed by the Under Secretary of State is within the terms of the reimbursement policy established by the Defense Department directive of 1 September 1950;³ but in those cases where the transfer cannot be brought within the terms of Section 408(e) of the Mutual Defense Assistance Act,⁴ because it is determined that prompt payment in U.S. dollars cannot be made, or payment offered in foreign currency is not readily convertible into dollars, the matter should be referred to the National Security Council for decision; and

(2) The United States, in its capacity as the Unified Command, should be guided hereafter by the following procedure in considering offers of military assistance for Korea:

(a) Upon the receipt of an offer of military assistance, it should be submitted by the Department of State to the Department of Defense for recommendation as to its military acceptability.

(b) Simultaneously with (a), the Department of State, in cooperation with the Department of the Treasury, Bureau of the Budget and appropriate representatives of the Department of Defense and Military Department concerned, should reach a determination with the offering government as to the basis on which payment will be made. If it is determined that payment will be made on the basis of prompt reimbursement in U.S. dollars or readily convertible foreign currency, the Department of Defense should be informed accordingly. If, on the other hand, it is determined that payment will be made on a basis other than prompt payment in U.S. dollars or readily convertible foreign currency, assuming the military acceptability of the offer, the matter should then be referred by the Department of State to the National Security Council for decision.

It is the view of the Department of Defense that the negotiation of master agreements relating to the participation of foreign contingents in Korea, including the specific question of whether reimbursement will be in U.S. dollars, readily convertible currency or on some other basis, is primarily a political function and should be a responsibility of the Department of State. Accordingly, all cases wherein the negotiation of master agreements either has not been commenced and/or concluded with governments whose forces are receiving U.S. logistic support in Korea, would be transferred to, and be made a responsibility of, the Department of State. Under this arrangement, the Department of State would undertake the necessary negotiations with the Government of Colombia.

It is not intended by the preceding paragraph to affect the responsibility of the Department of Defense, either in the case of presently accepted or future offers of military assistance, for the negotiation of technical and administrative arrangements subsidiary to, and contingent upon, the effecting of master agreements. The appropriate Military Departments should retain responsibility for negotiating the collection and payment of U.S. dollars or readily convertible currency wherever the master agreement negotiated by the Department of State provides for such type of reimbursement.

The foregoing procedure accordingly is submitted to the Department of State for its consideration and concurrence. Similar letters have been addressed to the Secretary of Treasury and Director of the Bureau of the Budget. Appropriate modification in the language of the reimbursement policy will be undertaken by this Department when interdepartmental agreement to the procedures set forth above has been achieved.

Sincerely yours,

William C. Foster

1. Printed in Foreign Relations, 1951, vol. ii, p. 1022.
2. Reference is to James E. Webb, who served as Under Secretary of State, Jan. 27, 1949–Feb. 29, 1952.
3. Reference is to Secretary of Defense Louis Johnson’s memorandum circulated to the military departments and the Joint Chiefs of Staff; a portion of the memorandum is printed in footnote 3, Foreign Relations, 1950, vol. i, p. 651.
4. Reference is to the Mutual Defense Assistance Act of 1949 (Public Law 329), approved Oct. 6, 1949; for text, see 63 Stat. 714.