740.5/4–2653: Telegram
The Ambassador in France (Dillon) to the Department of State 1
5667. 1. Second bilateral talk with UK held this morning2 at British Embassy residence (reference Embassy telegram 5623, April 233). Résumé of discussion follows:
[Page 386]2. Butler opened by urging strongly that UK and US keep in close contact so as to deal with delicate European situation which British felt had now been created by indications of policy of new US administration during course of NATO meeting.
3. Selwyn Lloyd went on to outline preliminary British appraisal of continental reaction to US position. British are aware that change in US views is one of method and timing but fear it will be misunderstood or misrepresented as change of policy. Some Europeans will view it as return to isolationism, feeling that withdrawal first of general economic aid and then of special defense aid will be followed by withdrawal of troops. Europeans will watch closely effect of US aid policy on UK defense build-up. If British are forced to withdraw troops from overseas, or to reduce production to point where no further build-up or re-equipment of forces with really modern and effective weapons is possible, other NATO countries will spot these facts immediately. Situation contains political dynamite. Europe is still sick; 8 of 14 NATO countries were defeated and occupied during last war. Statement of US positions comes at awkward moment because of Soviet “peace” gestures. One Frenchman said yesterday that “this is the end of NATO” and Van Zeeland also felt it was a radical change of policy involving serious repercussions. There is serious danger of collapse in carefully erected structure of European unity and defensive strength, which has been built up largely as result US leadership. Presentation of policies from now on will require most careful thought and British hope to work in close collaboration with US on this presentation.
4. Secretary replied that we had always realized that there was danger of our policy being misunderstood. We recognize that first major policy statement of new administration toward Europe can be misinterpreted as return to isolationism. However, no one could conceivably consider President Eisenhower as isolationist nor Secretary of State. US administration cannot pursue wrong policies merely because correct policies will be misinterpreted. After careful review, administration’s appraisal is that there is danger of US resources being over-strained as well as those of other NATO countries. In light of this appraisal, past policies have run their course and must be adjusted to ease burden unless, of course, threat of war becomes greater again. One purpose of President Eisenhower’s speech was to bring about relaxation of tensions. We realize initiative of this kind may result in worsening of world situation if Soviets do not reply with deeds and continue pile up armaments. We feel that Europe and North Atlantic community should react to present situation by continuing to strengthen unity rather than by breaking apart. Only by closer unity can necessary defensive strength be achieved with fewer resources. Our appraisal is that Europeans have will to carry forward along this line. [Page 387] Policy based on subsidies cannot provide firm foundation although we recognize need to make transition to the other policies smoothly and gradually. Secretary asked for suggestions as to best way of dealing with problem.
5. Butler said that British agreed that it would be a healthy move for aid to take new form of substituting trade and off-shore procurement for subsidies with one important condition. We must associate in public mind change in form of aid with opening up of trade. Europeans will face difficult interim period during summer and fall. Aid would be changing its form and flow of dollars would inevitably be reduced but there was as yet no concrete evidence of substantial change for better in US trade policy. If British and European people can see evidence that they can earn their way by trade and get over “dollar cliff” then they will have hope and situation will be healthy because they will feel independent. First signs of new administration’s trade policy such as Chief St. Joseph Dam contract are not encouraging. US action in this field will help more than anything else to dispel European defeatism. British are taking tremendous risks economically in carrying present defense burden. Unless they can see new US trade policy emerging, even their strong nerve will be shaken and they will have to reduce risks by cutting defense program. Favorable indications on trade policy would be most helpful in avoiding adverse European reactions to altered aid policy.
6. US representatives emphasized the impossibility of presenting drastic new trade program to Congress during current session. Program called for one year extension without crippling amendments of present reciprocal trade act, customs simplification bill and use of administrative flexibility to liberalize imports. In the meantime, problem would be studied carefully and every effort would be made to prepare public opinion for further move, Secretary gave it as his opinion that plebiscite in US would show substantial majority in favor of liberal trade policies. However, protectionist influence of special interest group was strong in Congress. Most difficult task of new administration is to achieve agreement between executive branch and Congress in trade policy field. Extension of present law without amendment should be helpful. There may be indications of favorable administrative policy in coming months, but not major Congressional action this year.
7. Butler offered to supply information on British taxation that would be useful to us during Congressional presentation. UK taxes were still highest in world and hit particularly low income groups. Stassen said information on taxes by income category would be very helpful both with Congress and to build understanding by public of relative burdens. He felt we should concentrate on putting out constructive information. We should emphasize long term character of [Page 388] decisions on infrastructure and aircraft contract recently announced. US should make firm commitments and stick to them. We can increase flow of dollars from troop payments, tourists, and capital investments.
8. Secretary asked Butler to support position vis-à-vis Europeans that these discussions are evolving joint program in which trade policies will have their rightful place. Butler replied that UK was already taking this line. Referring to Secretary’s earlier remarks, Lloyd agreed that logical consequence of US position should be for Europeans to draw closer together. However, he felt actual result might be to encourage neutralist thinking. He expressed gratitude that US and UK had agreed to consult to prevent strengthening attitude that Europe must become third force between US and Soviets. In his view, Soviet objectives have not changed at all.
9. There was brief discussion of plans for trilateral meeting with French.4 British had impression Bidault wished to take initiative before Soviets march again. They thought he had in mind some sort of disarmament conference. It was agreed that this would be premature at this time and that US–UK should support a step-by-step approach to get agreement on specific issues with Soviets. British felt that French would also request concrete assistance in Laos.
10. Separate message follows on UK aid problem in fiscal year 1954.5
- This telegram, which was transmitted in two sections, was repeated to London. The source text states that copies should be passed to the Departments of Defense and Treasury and to the Office of the Director for Mutual Security.↩
- Apr. 25.↩
- Ante, p. 371.↩
- For a record of the trilateral meeting, Apr. 25, see telegram 5669, Apr. 26, p. 390.↩
- Presumably, a reference to telegram 5671 from Paris, Apr. 26; regarding this telegram, see footnote 5, p. 372.↩