740.5/2–2452: Telegram
The Secretary of State to the Department of State 1
Secto 62. Following discussions over past few days2 general agreement reached with French this a.m.—
- a.
- French will present 1400 billion franc budget on assumption of US aid of $500 million during fiscal 1952. This aid to consist of $300 million direct economic and $200 million offshore procurement with emphasis on Indochina needs. US Military expenditures accepted as likely to reach $100 million and, accordingly, previous assurance of $600 million recognized as fulfilled.
- b.
- French military program will be 12 divisions, 27 air squadrons and navy approximately as at present.
French presented above force figures to NATO for inclusion in force plan approved this afternoon by Council.
There are still number of points precised [sic] with French. Prime Minister Faure and Foreign Minister Schuman emphasized relationship of Indochina burden on France to France’s NATO contribution. Faure stressed 1400 billion franc budget involved increase of 125 [Page 273] billion francs to be borne by France above 1100 called for by TCC. It has been necessary to provide 50 billion francs to take care of increase in price since June and 60 billion francs to take care of stepped-up operations Indochina. Consequently net additional financing available for rearmament program is less than difference between 1190 and 1400 (i.e. 210 billion less 110 billion or 100 billion). French strongly stressed also consequences of cutback in existing contracts and failure to place planned contracts, both as regards consequent unemployment and also failure to develop industrial mobilization basis required for future armament efforts. Requested urgent US consideration of financing this production for US use or end-item program for all countries.3
- This telegram was repeated to Paris for information.↩
- For the agreed memorandum of conversation of the meeting of American and French representatives on Feb. 23, see telegram Actel 9, Feb. 25, p. 142; see also telegram LibDef 14, Feb. 23, reporting on the meeting of NATO Defense Ministers that day, p. 146.↩
- For the agreed text of the U.S.–French memorandum of understanding of Feb. 25, see infra.↩