711.56352/4–2752: Telegram

No. 854
The Secretary of State to the Embassy in Spain 1


947. USNEG. Fol is reply Embtels 1142 and 11522 (rptd Paris 203 and 204).

Appears from reftels Spans do not clearly appreciate purposes MSA 1951, distinct from purposes ECA. This basic misunderstanding seems to be key to erroneous Span concept re magnitude econ aid which is reflected in such aspects as Span dissatisfaction that prospective sum $68 million is insufficient finance massive commodity import program, long-term level programs, or cover B/P deficit.
We recognize that there is basic difference between our approach subj econ aid to Spain and Span approach. We believe explanations re purposes MSA 1951 contained in Aide-Mémoire Apr 19, especially paras 1 and 3b are excellent summary this subj and provide basis for further clarification Span misconception. In this connection suggest possible develop thought briefly expressed paras 2 and 9 DMS D–7, Mar 20.3
Span misconceptions apparently extend also to conditions stipulated by Congress re $100 million (para 3a Embtel 1142). These clearly indicated funds are to be used “in the discretion of the President under gen objectives set forth in declaration of policy contained in titles of Econ Cooperation Act of 1948 and Mutual Security Act of 1951.” Whether more funds are provided during FY 1953, and what additional funds will be provided in FY 1954, shld be determined on basis specific objectives of econ program to be developed in these negots in line with para 2 above and provisions US legis; not on basis so-called principle Spans have advanced.
Re para 3c 1142 we feel sure Spans wld prefer not consider our statements continuing interest their economy as acceptable substitute for additional fiscal 53 appropriation. However realities situation will undoubtedly indicate in due course what this continuing interest will develop in tangible form of fon exchange or commodities. Obviously purposes and objectives econ program must first be estab and agreed. On this basis they can then project possibilities for aid in future years. Obviously if one purpose of US policy is avoid inflationary effect US mil construction program in Spain this may well require some form continuing availability for fon exchange to Spain for imports consumers goods. We know you realize no assurances can be given Spans re foregoing, but offer them as possible lines of reasoning which you might wish develop informally.
We discount concern that flow commodities into Spain might cease after Jun 30, 1953, due hiatus in arrival commodities under any FY 1954 aid. This problem no different for Spain than for any other country. Timing involved in prospective four-quarter commodity import program is such that arrival commodities in Spain wld probably not begin until final months calendar 1952, in some instances considerably later, and therefore flow from four-quarter purchase wld continue through first months FY 1954 at least.
Re alternatives you have suggested (para 3 Embtel 1152) see paras 4 and 5 above. FYI re para 3a,4 eligibility provisions already contained MS Act in Section 101(a) (1). No suggestion, however, shld be given Spans that they may expect addtl funds under this provision. Re para 3 C(b)5 this cld be considered, but do not now believe magnitude wld be significant.
  1. Drafted by Millar and Dunham and cleared with Cabot, Ebb, Blaisdell, Edwards, and Byington. Repeated to Paris.
  2. Telegram 1142 from Madrid, Apr. 24, reported that the Spanish were dissatisfied with Train’s aide-mémoire, Document 851, and that there was suspicion within the Spanish Government that the United States wanted to acquire the bases at a price so low and so temporary that Spain would not receive any long-term benefits from the arrangement. (711.56352/4–2452)

    Telegram 1152 from Madrid, Apr. 27, reported MacVeagh’s opinion that the $68 million ($50 million for commodity imports and $18 million for investment purposes) programmed for economic aid was a bare minimum for the achievement of U.S. goals in Spain, and that the Department of State should seek additional funds for fiscal year 1953, use the $15 million of railway rehabilitation funds for economic aid, or extend aid through additional channels, such as the Export-Import Bank. (711.56352/4–2752)

  3. Document 846.
  4. Reference is to MacVeagh’s suggestion that the Department of State consider seeking more funds for Spain in the 1953 Mutual Security Appropriations Act.
  5. Reference is to MacVeagh’s suggestion that the Department of State establish quartermaster and post exchange procurement offices in Spain in order to increase Spain’s dollar earnings.