Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 2

State–JCS Meetings, lot 61 D 417, No. 39

No. 497
Record of the Department of State–Joint Chiefs of Staff Meeting, Wednesday, February 6, 1952, 11:30 a.m.¹

top secret

Washington, February 6, 1952, 11:30 a.m.

Present:

• General Bradley
• Admiral Fechteler
• General Vandenberg
• General Hull
• Admiral Fife
• General Cabell
• Admiral Wooldridge
• Admiral Lalor
• General Lee
• Colonel Carnes
• General Bolte
• Mr. Matthews
• Mr. Nitze
• Mr. Perkins
• Mr. Bohlen
• Mr. Ferguson
• Mr. Tufts
• Mr. Nash

[Here follows a discussion of matters relating to Korea.]

France

Mr. Matthews: We would like to discuss with you the French financial and economic problems. As you know, the French face a serious budgetary problem in meeting their NATO program.

General Bradley: I take it from several recent messages that the situation is not as bad as we first thought. We heard at first that the French were going to cut back to eight divisions whereas the latest word is that they will be able to finance twelve. Is that right?

Mr. Nitze: Our studies indicate the French could not maintain twelve divisions. This is a real and a serious problem; even making allowances for errors by the French in their calculations it is still a problem that amounts to about $1 billion. That is the amount they are short if they are to build up the forces recommended by the TCC. This problem relates not only to the French build-up but also to the conclusion of the EDF Treaty, to the German problem, and to Indochina as well. We think that the inability of the French to finance their planned build-up is an important factor inhibiting the conclusion of arrangements by which German rearmament can be initiated. If we shoot for the 14 divisions recommended by the TCC, there is a problem the dimensions of which are from 300 to 400 billion francs—not making allowance for an adequate infrastructure program. We should face up to the consequences of failure to meet this problem. The consequences of doing nothing might be a collapse on all fronts. We would not get the build-up in France, we would not get an EDC Treaty, and we would not get a satisfactory performance in Indochina.

As to what can be done about the problem, we might revise the targets for 1952. We believe that the French now have 11 divisions in some shape. We might just build those divisions up to full strength this year and carry out the air force and navy programs. That might be a manageable program. It would probably require, however, the financing of some procurement in France—including some contracts that have already been let and some contracts for materiel which does not conform to U.S. specifications although it has been approved by NATO.

Mr. Nash: As you probably know, the President yesterday approved the transfer of $478,000,000 to economic aid from the military program. $100,000,000 of this will be allocated to France. The President also noted that $30,000,000 more would be used for end-item shipments to Indochina which would relieve France of an equivalent burden. This decision raised difficult problems for the JCS who will have to decide how the cut of $478 million can be spread over other programs and where the $30 million can be picked up. For example, can the Formosa program be reduced on the ground that the Indochinese campaign is of more immediate importance?

General Bradley: I agree that we cannot accept the consequences of doing nothing, but it is pretty discouraging to face this situation when one remembers what we have done to build up French production capacity. One wonders whether this is going to happen every year and whether there is anything we can do about it to keep it from arising next year and the year after. It seems to me we have got to find some way to stop it. If we are going to do it this time shouldn’t we step in and demand changes in France so that the problem will not arise year after year? The French Government is set up in such a way that it is almost bound to recur. The government was set up in this way in 1870 and has been like this ever since.

Mr. Perkins: I think we might recognize that the gap is exactly the size of the Indochinese problem. The French would be all right if it were not for Indochina.

General Bradley: But that is their fault too. If they had applied wise policies three or four years ago they would not be in this spot today. The local Vietnamese forces are not building up as fast as the unfriendly forces. DeLattre was going to reform the situation but I doubt if his program is being continued for France is now a little more confident.

Mr. Matthews: Have they made any progress in building up the Vietnamese forces?

General Hull: They have in absolute terms but not in comparison with the enemy. They have not done anything to assure the Vietnamese that the French are not going to stay indefinitely. If they would do that, they could get more support from the Vietnamese. The Indochinese thing looks hopeless to me. It looks as though it could go on indefinitely.

Mr. Matthews: I have the impression that they have gone as far as they can in giving independence to the Vietnamese at this time.

General Hull: Of course, we told the Philippines years ahead that we were going to give them independence.

General Vandenberg: Really, the only solution to all these peripheral problems is a strong warning. Indochina is draining France. Korea is draining the U.S., and Egypt is draining the U.K., and the whole NATO concept is being drained by these peripheral areas. We are not going to have a solution to this thing until we issue a strong warning.

General Hull: It is amazing how much military effort is concentrated in these fringe areas.

General Vandenberg: The lead in this thing has got to come from the State Department if we are going to change the attitude of our allies on this problem.

Mr. Matthews: That is easier said than done.

General Vandenberg: But the U.S. is going to have to do the job of rearming the world anyway.

General Bradley: Do you have any suggestions for a solution of the French problem, Mr. Nitze?

Mr. Nitze: We have got to deal with the situation as it exists. We cannot undo the mistakes of the past. The French budget is about as large as it can be. I don’t think the French can plan to do much more than they are doing. We have already taken account of possible increased tax receipts by saying that it is only a $1 billion problem. Our end-item assistance program is based, as I understand it, on 28 divisions for 1954 and 14 divisions for 1952. It would be inconsistent to proceed with these end-item programs if the French are not actually going to meet their force targets. It seems to us that it might be wise to accept a more modest target for 1952 and to make corresponding reductions in the end-item programs, using the funds thus freed for procurement in France. Another possibility would be to pick up some of the costs of the Indochinese war. That, however, would require Congressional action whereas procurement in France would not require Congressional action.

Mr. Nash: I think we could do the Indochinese financing without an amendment of the legislation if that was necessary. We could, for example, transfer some funds from Formosa to Indochina. Furthermore, we have authority to transfer up to 10% in the other titles to title 3. In that way we could obtain sufficient funds for Indochina. Secretary Lovett would rather do it that way, I believe. We recognize the importance of holding Southeast Asia and furthermore we do not want to pick up the bill for French procurement. It seems to us in Defense that a disproportionate amount of assistance is going to Formosa in light of the relative importance of Formosa and Indochina.

Mr. Perkins: Assume that we wanted to do it in that way. Would it be possible to use funds thus obtained—are there enough things to spend the money for?

Mr. Nash: I don’t know the answer to that question. The matter is being studied in Paris right now.

General Bradley: What can we do for you?

Mr. Nitze: We wanted guidance from you. We have been operating under the assumption that it is important to get ahead on the infrastructure. We have also been assuming that it would not be too serious to cut down from 14 divisions to 11 divisions in 1952.

General Bradley: Is there anything we can do until the MAAG report is available?

Mr. Perkins: Not much. We may, however, have to take important decisions next week if we are to get anything done at Lisbon.

Mr. Nash: Failure in France has a double effect. It affects the French build-up and it prevents the initiation of German rearmament, and that is crucial. So in considering this problem, we have to consider the 12 German divisions. If we can cut the French back to 12 divisions and thereby get a start on Germany, that would be all to the good. I think that what we need is a little competition between France and Germany. Secretary Lovett does not think the French economy will support more than 10 divisions on a long-term basis. Germany is a better keystone for our arch than France and the thing that will snap the French out of their morass is to see Germany building up.

Mr. Nitze: I do not think that it would be effective to attempt to get a commitment out of France on cleaning up its internal political situation. What we want from the French, I think, as Frank Nash has suggested, is the conclusion of the EDC and a start on German rearmanent. If we could get that going that would be the best way to bring pressure on France to clean up its internal situation. But to obtain the EDC and the initiation of German rearmanment the U.S. will have to take radical measures. It will probably take $500–$600 million more even to get 11 divisions in France. The value however in terms of our own security is enormous.

General Bradley: There is nothing we can do about this right now, is there?

Mr. Nash: If we can get agreement on what we are after, that would be a big help. There is also the problem of the security restrictions on Germany. I do not think we should restrict their production.

General Bradley: I agree with that. As regards the 12 German divisions, we should get just as many as we can. They will probably be cracker jack divisions and they are located where we need them. If the MAAG study shows that France can only build up 12 divisions, we will have to go along with that, of course. I think we will have to cut the air force and navy programs also for this is a budgetary problem and there would have to be cuts all along the line.

Mr. Nitze: But even to finance 11 French divisions and to get the necessary start on the infrastructure, we will have to be prepared to make $500–$600 million more available.

Mr. Nash: I don’t think the JCS can help us on that but it can help on the question of the relative importance of Indochina and Formosa.

General Bradley: Are you sending us a memorandum on that?

Mr. Nash: Yes, we are.

Mr. Perkins: We may also have to transfer funds from U.S. end-items to procurement in France.

General Bradley: I suppose that means buying stuff that is already on order there?

Mr. Perkins: Not necessarily. We might be able to use our funds for new contracts.

General Bradley: This is not really a JCS problem.

Mr. Nash: It may become one, especially if it involves transfers between countries in order to get the necessary funds.

[Here follows a discussion of the Japanese Peace Treaty.]

1. On a cover sheet attached to the source text it was noted that this record was a Department of State draft which had not been cleared with any of the participants.