ECAMSAFOA files, lot W–13, “MAAC Documents, D–1—D–11”

No. 837
Memorandum by the Chairman of the Mutual Assistance Advisory Committee (Gordon) to All Members of the MAAC 1

top secret
MAAC D–3/1

This is to confirm the following understandings reached at the MAAC meeting of January 312 as regards the utilization of the $100 million appropriated for Spain in the Mutual Security Appropriation Act of 1951.

It would not be appropriate for MSP funds to be used to finance direct dollar expenditures for the construction of military facilities to meet U.S. requirements in Spain. This is based on the view that expenditures of MSP appropriated funds for this purpose do not appear to constitute assistance to Spain within the terms of the Mutual Security Appropriation Act.
It would be appropriate for counterpart funds, generated through the purchase of dollar commodities for the Spanish economy, to be used for the construction of military facilities in Spain, even if for exclusive use by U.S. forces.
In view of the strong desire of the Spanish Government for military training equipment, and for assistance to the rehabilitation of the Spanish munitions industry, MAAC recognized the need for consideration of these items in negotiations with the Spanish for military facilities.
As a rough working basis for developing negotiating instructions, the following breakdown should be used as general guidance by the Working Group on Spain (State, Defense, MSA, and DMS):

$40 million for commodity purchases as economic assistance to Spain. The counterpart funds deposited against such expenditures could be used for construction of military facilities and other local expenditures.

$25 million for the purchase of military training equipment.

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$15 million for the purchase of materials for the railroad rehabilitation program.

$20 million for investment in Spanish munitions industry, development of strategic materials, and other investment projects.

The Working Group on Spain3 will study this proposal, will obtain the necessary information on the time-phasing and the approximate division between dollar and peseta costs of the military facilities program, and will formulate promptly a specific negotiating program.
  1. The Mutual Assistance Advisory Committee was created on Nov. 1, 1951, as a replacement for the former International Security Affairs Committee in its role as an interdepartmental coordinating agency for mutual security programs. W. Averell Harriman, Director for Mutual Security, appointed Lincoln Gordon, Assistant Director for Policy and Planning, as the Chairman of the MAAC. The Department of State, the Department of Defense, the Department of the Treasury, the Office of Defense Mobilization, and the Economic Cooperation Administration (later the Mutual Security Agency) were also represented on the MAAC.
  2. The minutes of the MAAC meeting of Jan. 31 were circulated on Feb. 5 as MAAC M–8. (ECAMSAFOA files, lot W–13, “MAAC Minutes”)
  3. The Working Group on Spain was chaired by Dunham of the Department of State and included Tannenwald of DMS, DePaul of MSA, and Fischer of the Department of Defense.