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

DMS files, lot W–1444, “France”

No. 628
The Director of the Foreign Operations Administration Mission in France (Labouisse) to the Assistant Secretary of State for European Affairs (Merchant), at Berlin¹

secret

Paris, February 9, 1954.

Dear Livie: I know that you have more than enough to do than to be bothered with the attached “personal appraisal” which I have sent to Mr. Stassen covering FOA programs, etc., during the last half of 1953.² However, the parts on Indo-China (Section II–2) and on the General Economic Situation (Section III) may be of possible interest in connection with some of your talks with the French.

I won’t take your time to labor the points now, but I do want to stress two things which I consider important, particularly if we are contemplating further commitments of assistance to the French. I do not know what is contemplated on this score, but I understand that the Secretary asked for a copy of the September 29th agreement.³

• First, I believe that there is a serious question as to whether the French will be able, in fact, to continue much longer this far-off war. Although the government is on record to us as intending to do so, there are important forces—some within the government—who do not have their hearts in this conflict. In my opinion, there are increasing pressures to find a way out short of “breaking up and destroying the regular enemy forces”, as the goal of the Navarre plan was characterized in the September 29th agreement. Therefore, it has become even more apparent than it was last summer that more and more responsibility for the war against the Viet Minh will be placed on the U.S. It appears to me quite probable that success or failure will depend not just on financial and material aid from the U.S., but on U.S. participation as well. In making decisions as to further U.S. aid, or generally to U.S. policies re Indo-China, I feel that we should have these factors in mind.
• Second, if we are to give France more financial assistance—this year or next—I believe some very serious talks should first be had with top French officials concerning the use to which the dollars will be put after they serve their purpose of budgetary support through the purchase of French francs. What I have in mind is that the French should be utilizing this wind-fall of dollars to enable them to cushion financial and other adjustments so badly needed to put the French economy—and French morale—in a more healthy state. I realize that we do not have much bargaining capacity on this front, as the French know that our main bargaining position is to have them continue the war to a successful conclusion. Nevertheless, I hope that no commitment will be made to grant further funds without careful consideration on this point, and without some effort on our part to influence the direction of French action.

Incidentally, if there is any talk of additional financial aid for the calendar year 1954, I think we should refuse it. I do not believe any more is needed.

My best to you,

Sincerely,

Harry

1. Labouisse sent a copy of this letter to Harold E. Stassen with a covering letter dated Feb. 9. In his letter to Stassen, Labouisse noted that the reason he was sending this letter and the enclosed report to Merchant in Berlin was because discussions were taking place during the Berlin Conference concerning Far Eastern questions and he wanted to draw the delegation’s attention to two points which seemed important to him. (DMS files, lot W–1444, “France”)

   Labouisse also sent a copy of his report to Bonbright on Feb. 9 suggesting that it be circulated to the officers dealing with French affairs. (EUR files, lot 59 D 233, “Letters—France, Jan.–June 1954”)

2. This detailed 19-page report, dated Jan. 29, concerned Labouisse’s personal evaluation of the progress of FOA programs in France during the last half of 1953 as well as his observations on the general economic and political situation in France.
3. Reference is to the U.S.–French agreement on supplementary aid for Indochina, embodied in letters exchanged by Ambassador Dillon and Foreign Minister Bidault at Paris on Sept. 29, 1953; for the texts of these letters, see vol. xiii, Part 1, p. 812.