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

711.56352/2–2753: Telegram

No. 882
The Ambassador in Spain (MacVeagh) to the Department of State

secret
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Madrid, February 27, 1953—10 p.m.

683. Department’s telegram 649, February 26.¹

1. Reference your paragraph 2, we question whether it is safe to assume that Congress will carry forward all or part of $125 million uncommitted in fiscal year 1953, and would point out that if such action not taken, adoption of Department’s present proposals would leave us with only $60 million for both economic and military aid to Spain in fiscal year 1954. Furthermore, with respect to subparagraph C, we believe that adequate new appropriations in addition to carry-over of $125 million are required for successful conclusion of negotiations.

2. Reference parapgrah 3(a), please refer to Embassy telegram 354, October 31.² This telegram expressed our recommendation re military aid fiscal year 1954 and subparagraph A–2 thereof states in part: “If, contrary to expectations, $37 million could not be committed before June 30, 1953, this unobligated balance should be carried over to fiscal year 1954 without reducing” the amount recommended for fiscal year 1954 budget. Furthermore, Embassy telegram 383,³ November 12, recommended $85 million military aid for inclusion fiscal year 1954 budget in addition to military aid portion of $125 million already appropriated fiscal year 1953. Consistent with this recommendation, we, therefore, urge the planned authorization for military aid for Spain fiscal year 1954 remain $85 million in addition to carry-over at proper time (end fiscal year 1953) of all or any then unexpended military portion of $125 million already appropriated. As an alternative solution, we recommend that fiscal year 1954 budget figure contain military aid for Spain not less than $122 million (85 plus 37) and preferably $135 million (85 plus 50).

3. Reference paragraph 3(b), in our judgment of $75 million reappropriated, $25 million new appropriation would be minimum additional amount economic aid required for fiscal year 1954.

a. We recommended $145 million economic aid program to cover 18-month period in Embassy telegram 378⁴ of November 11, 1952. For one year we believe that $100 million is minimum requirement.

b. Any possible savings in categories listed reference telegram may well be offset by requirements for wheat imports in fiscal year 1954 resulting from adverse growing conditions this winter season. Embassy now preparing crop condition report indicating outlook less favorable than last year.

c. At this stage of negotiations, we do not believe we should assume that entire counterpart generated, after deducting 10 percent, will be available for peseta costs of base construction. For example, certain railway (RENFE) rehabilitation, necessary to military program, may need assistance from counterpart fund to provide local investment requirements. Since its resources are already committed to rehabilitation in other areas than those of importance to US military, RENFE will not be able to deposit counterpart for equipment imported with MSA aid and simultaneously obtain additional internal financing to provide for local investment required for projects of interest to US.

4. We consider above recommendations re both military and economic aid, especially military, minimum amounts indispensable for negotiating purposes, as evidence good faith US statement of intent, and to achieve cooperative atmosphere for effective utilization facilities in Spain.⁵

MacVeagh

1. Supra.
2. Telegram 354 discussed in greater detail the proposals made in Document 872. (711.56352/10–3152)
3. Telegram 383 provided a detailed breakdown of the portion of telegram 354 (see footnote 2 above) which dealt with military aid. (711.56352/11–1252)
4. Telegram 378 provided a detailed breakdown of the portion of telegram 354 (see footnote 2 above) which dealt with economic aid. (711.56352/11–1152)
5. As indicated by a letter from Under Secretary Smith to Stassen, Mar. 6, the proposals of the Embassy in Spain were adopted in full by the Department of State. (752.5 MSP/3–653)