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

751.5 MSP/10–352: Telegram

No. 542
The Secretary of State to the Embassy in France¹

secret

Washington, October 3, 1952—7:20 p.m.

1955. Cotel. This cable contains (a) letter to Pinay now authorized for transmittal, and (b) text of oral statement to be made to the French at time of transmittal. Separate telegram being sent simultaneously contains instructions on separate points not covered this telegram.²

(a) Ltr to Pinay.³

Begin text. I have the honor to refer to your Excellency’s letter of August 8, 1952⁴ concerning plans for the French defense budget for the calendar year 1953 and the relationship of U.S. aid thereto. The U.S. Government has been giving the most serious consideration to this important matter and has been reviewing it as one of the exceedingly difficult and complex problems resulting from the large-scale requirements for mutual security assistance in relation to the funds finally made available by the United States Congress.

At the time of the conversations in February 1952 at Lisbon, U.S. representatives indicated that provision had been made in the projected United States budget for the fiscal year 1953 whereby assistance to France could be comparable in amount to that made available from fiscal year 1952 funds. During the conversations with M. Letourneau in Washington last June, the United States representatives indicated that in connection with French efforts in Indochina and requirements for the build-up of the National Armies, the United States was prepared to consider additional aid of up to $150 million. During the discussions it was noted that final decision on the total of U.S. assistance to France could only be made in the light of the NATO Annual Review, and the decisions taken by the French Government with respect to the size of total defense effort and expenditures from French resources in 1953.

It was also made clear both at Lisbon and to M. Letourneau that the United States could not take any definitive engagement with regard to fiscal year 1953 funds pending action by the United States Congress. As your Excellency is aware, the Congress made substantial cuts in appropriations requested for the Mutual Security Program in fiscal year 1953.

Consequently, pending the development of further information during the course of the NATO Annual Review, it will be impossible to reach final determinations with respect to the allocations of aid. It is our present judgment, however, that in view of these circumstances it will not be possible for the U.S. to make available to France the amount of $650 million, referred to in your Excellency’s letter, in those types of assistance that directly enter into French budgetary planning.

In this connection my Government desires to call your attention to the substantial assistance planned for France in 1953 which will not be directly reflected in the French defense budget. In the first place, while the $186 million of OSP agreed to in our letter of July 12 to Mr. Pleven is not included in the figure on U.S. aid mentioned below, you will appreciate that it will have the effect of reducing the amount of funds available to the U.S. for other purposes while permitting the continuation of essential munitions production in French industry. In addition, the U.S. is continuing to provide a substantial amount of military end-item assistance and training to French forces, as well as an extensive program of direct aid to Indochina. The full scope of these programs will be developed in the weeks to come through discussions between representatives of our two governments and in the course of the Annual Review. It is clear already, however, that these U.S. contributions to the French defense effort which will amount to many hundred millions of dollars, will comprise the largest segment of the 1953 Mutual Security Program, and will provide great assistance to the French Government and its armed forces, as well as to the French economy. In addition, we should call your attention to the heavy expenditures of the U.S. for facilities built and maintained in France in our mutual interest.

We can understand your Excellency’s desire for some indication as to the probable extent of U.S. assistance from fiscal year 1953 funds that might take a form which would also serve the purpose of aiding the French calendar year 1953 budget. In the light of the Lisbon understanding and the Letourneau conversations, and on the assumption of a French defense budget for 1953, including Indochina and provision for NATO defense forces as developed in the annual review, which is appreciably larger than the corresponding budget for 1952, I have been authorized to inform your Excellency at this time that the U.S. would be able to make available from fiscal year 1953 funds an amount approximating $525 million in forms of assistance directly related to the French defense budget for 1953. The final determination as to the amount of U.S. aid, including the possibility of any assistance above this amount, will depend largely on the results of the Annual Review and the evaluation of the extent and nature of the defense contributions and economic needs of the various NATO countries, including France, in relation to the total funds available to the U.S. It is hoped that these preliminary indications will assist the French Government in developing plans and programs for its 1953 military budget and for the Annual Review.

The exact breakdown of this assistance figure among defense support, U.S. financing of equipment from the French defense budget, and purchases in the U.S. for Indochina, is not yet known. However, in order to permit the French Government to cover immediate dollar needs, the U.S. government is now prepared to make available, against the final figure of budget-supporting assistance, an interim allotment of defense support funds.

With respect to the U.S. procurement part of this assistance, as well as purchases in the U.S. for Indochina, we would urge that the French Government, in consultation with the MAAG, draw up at the earliest possible date, lists of items which will be included in the 1953 military budget for France and Indochina and for which U.S. financing under off-shore procurement is desired. Early mutual consultation should assure adequate time and study for the selection of items satisfactory as to prices, types, specifications, deliveries, etc., in anticipation of the final allocation of funds. End text.⁵

(b) Oral Statement to French

Begin text. Since the U.S. has indicated that $525 million could be made available on the assumption of a French defense effort in 1953 appreciably larger than in 1952, it is considered desirable that the French Government be informed as to the preliminary U.S. views concerning the level of the French military budget. These tentative views are, of course, subject to all of the facts yet to be developed in the course of the Annual Review, the results of which the U.S. does not wish to prejudge.

The U.S. estimates roughly that a desirable military effort by France, which is within the realm of feasibility, would cost about 1500 billion francs. Although the U.S. does not underestimate the difficulties involved in finding the resources needed for a program of this size, the U.S. believes, on the basis of information available at this early stage, that it should be possible to reach or at least come very close to this target. In any event, it has been assumed, for the purposes of the Ambassador’s letter in reply to Mr. Pinay, that the French budget would be, as a minimum, in excess of 1450 billion francs, based on NATO definitions. The U.S. also assumes that such a budget will be composed in a way which will best achieve the force goals developed in the course of the Annual Review. The U.S. is of course assuming that the French Government will carry out in 1952 the defense program agreed at Lisbon, with a budget of 1400 billion francs, including U.S. assistance of $500 million.

A final judgment of these questions can, of course, only be arrived at in the course of the Annual Review, taking into account the specific composition of French defense expenditures, the economic and financial capabilities of France, and the amounts and types of all forms of U.S. aid to France. End text.

Acheson

1. Drafted by Schelling of the Office of the Director for Mutual Security and cleared with Martin, Halaby and Nash of Defense, Hebbard of Treasury, Cleveland of MSA, and Ohly of DMS.
2. Supra.
3. For an earlier draft of this letter proposed by Dunn, see Document 539. During the Secretary of State’s daily meeting of Sept. 29, Martin asked if his position was approved that the French should be told that the floor on the funds which they would receive would be $550 million and that the ceiling would be $650 million. Bruce stated that this appeared to him to be a reasonable position and Acheson approved. (Secretary’s Daily Meetings, lot 58 D 609, “September 1952”)
4. The text of Pinay’s letter was transmitted to the Department of State in Document 535.
5. According to telegram 2113 from Paris, Oct. 6, this letter to Pinay was delivered on Oct. 6 with only one slight change in the text. (751.5 MSP/10–652)