751.5 MSP/2–1252: Telegram

No. 499
The Ambassador in France (Bruce) to the Department of State1

top secret

4924. Attn Lincoln Gordon. Ref Deptel 4719 Feb 9.2

Re third para reftel, country team has today recd from Fr data showing possible scope and nature of a 1952 mil program based on 1400 bil franc expenditure program. We are informed that this program has since recd the approval of Min Bidault and may be considered as an official submission. This info being analyzed and will be forwarded to you in separate tel.3 Purpose present message is to comment on second para reftel and to set forth our views on action needed to arrive at some conclusion as rapidly as possible. For purposes this tel, therefore, we are accepting that mil program on basis of 1400 bil francs will prove viable and balanced within itself, and politically acceptable in relation to Ger contribution and continued support Indo-China operations. We doubt whether these objectives cld be obtained if budget were at a lower level.
Under suggestion in Embtel 4884,4 Fr wld have to contribute 1225 bil francs from their own resources if 1400 bil francs in expenditures are to be achieved. This wld represent an important increase over TCC financial recommendation. It wld obviously be very difficult for Fr cab to undertake budget at this level in view of price inflation in France and crisis in external payments. However, French need for imports, their desire to have adequate NATO Def program, and prospective political repercussions of spectacular cutbacks in Fr effort, might compel France to agree if US can give firm commitment that $600 mil will be so rearranged as to provide [Page 1155] an additl $200 mil5 to be applied against 1400 billion franc program for calendar 52 and can indicate intentions to ask Congress for equivalent of $500 mil out of FY 53 appropriation for assistance through direct aid and offshore procurement as outlined in para 5 of Embtel 4884.
Suggestion made in para 2 (d) Embtel 4884 Feb 8, was based on fact that, in absence additl economic aid beyond and $300 mil already in sight for FY 52, surest way of mtg US assurance of $600 mil and at same time providing equip required for 1400 bil franc mil program, is to help French place new orders (largely for IC) from Fr production. For example, if we shld undertake to increase the total end-item assistance from US to Indochina, in substitution for Fr budgetary expenditures on Fr production for IC (which, from second para reftel, we understand you have under consideration), such a step wld not help meet the $600 mil assurance. On the other hand, if we spend dols in France for mil equip for IC or Metropole, such action both helps meet France’s dol needs and assists her mil program.
Even if the $600 mil assurance can in fact be met by other means, any substantial substitution of US end-items does not seem feasible for fol reasons:
French mil authorities have always been extremely reluctant to put too much IC mil effort, either Fin or physical terms, under end-item procedures with consequent delays which jeopardize their troops in IC. Thus we feel sure we wld encounter serious difficulties in persuading Fr admin to accept your proposal. See Tomus 67.6
If we undertake to increase end-item assistance in substitution for Fr production, the effect will be to decrease total Fr mil production. This will be a serious danger for future as it wld mean a sharp reduction in Fr arms production which it has been US policy to encourage.
It is important to emphasize that the type procurement suggested in para 2 (d) of reftel will necessitate changes in US proc procedures. A great many indiv items will be involved and the urgency of time wld not permit the negot of a long series of indiv contracts. Arrangements wld doubtless have to be made whereby the US Govt wld reach a broad agreement with Fr and for the Fr Govt to purchase agreed list of items. Fr Govt wld procure items in usual way and without delay. Dol payments to Fr might be accelerated [Page 1156] by use of Eximbank. Other OSP, of the normal type heretofore under consideration, cld continue to extent desirable.
With respect your request (second para reftel) for further info on IC appropriations and composition proc program, shld like point out that considerable amount of detailed info on IC mil program along lines has been transmitted to Wash during past 2 months:
In Toeca/Torep D–1224, Dec 10,7 we transmitted Fr proc program for 52 both for Fr forces in IC and for natl armies of Assoc States. Are requesting Fr for any subsequent revisions these figures. However, we are reasonably certain that any such revisions will not appreciably alter data as to magnitudes of program or types of items.
In Toeca/Torep D–1239, Dec 187, we transmitted Fr proposals for US financing of $130 mil of IC proc.
In Tomus A–12, Jan 9,8 we gave you our tentative estimate of 52 budget breakdown for IC including estimates for air and naval forces in metropolitan budget not yet voted for full year. Fr are being requested to verify this breakdown.
We are sending you today copies of IC budget as voted on Jan 3. Altho certain revisions will be forthcoming on above date, believe enough info available to you to take decisions in principle. However, MAAG with Fr is preparing list of items to be procured here which conform to JCS criteria and will cable soonest.
We urge that every effort be made overcome policy and administrative difficulties standing in way of course of action proposed para 2 Embtel 4884. On a realistic view of sitn it does not appear to us that Fr cab can increase Def expenditures to level required to meet 1400 bil franc program unless US undertakes to provide at least 70 bil francs of additl fin resources in FY 52 and to seek Congressional approval for FY 53 aid as outlined in para 2 above. Additl transfer of econ aid may be possible and offshore proc as proposed in para 5 above cld be reduced to this extent.
This message concurred in by Harriman, Draper, Pauley, Labouisse and Richards. They see no other way to meet all aspects of existing crisis than to provide additl $200 mil from FY 52 funds.
  1. In telegram 4930 from Paris, Feb. 12, Bruce urgently requested that the Department of State make sure that Secretaries Acheson and Lovett, Tyler Wood, and Lincoln Gordon see this message and telegram 4925 (infra) promptly that morning so they could discuss it before Acheson departed for London. (751.5 MSP/2–1252) Telegrams 4924 and 4925 from Paris had both been received in the Department of State during the night of Feb. 11.
  2. This telegram requested information concerning the breakdown of how appropriations for Indochina would be spent and what the composition of the French procurement program was, as well as the Embassy’s analysis of the size of the forces that could be maintained on a budget of 1400 billion francs. (751.5 MSP/2–852)
  3. Infra.
  4. This telegram recommended that the United States contribute 175 billion francs in budgetary assistance ($500 million) out of the fiscal year 1952 funds. To this the French would add 1225 billion francs from their own resources, giving a total defense budget of 1440 billion francs. (751.5 MSP/2–852)
  5. In order to avoid any misunderstanding, Bruce sent telegram 4931 from Paris, Feb. 12, to explain that the additional $200 million mentioned here and in paragraph 8 means a rearrangement of expenditures within the $600 million figure and not an additional sum. (751.5 MSP/2–1252)
  6. Not printed. (MSA telegram files, lot W–130, “Paris Tomus”)
  7. Not printed. (ECA Airgram files, lot W–140, “Paris Toeca”)
  8. Not printed. (ECA Airgram files, lot W–140, “Paris Toeca”)
  9. Not printed. (MSA Airgram files, lot W–140, “Paris Tomus”)