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

752.5 MSP/10–1354: Telegram

No. 922
The Ambassador in Spain (Dunn) to the Department of State

secret

Madrid, October 13, 1954—8 p.m.

232. Cotel. In view joint FOA–State message A–88,¹ we must again recommend (Embtel 213²) most strongly that decision be taken urgently to (1) grant full $30 million economic aid to Spain; (2) make available local currency proceeds from sale of 80 percent of $55 million surplus commodities under McCarran amendment for bolstering Spanish economy in form grant rather than loan; (3) authorize FOA Madrid to negotiate exchange rate, preferably within range 35–42 one-half pesetas to dollar for surplus commodities sales.

Impossible approach Spanish prior decision first two points because amount and form of aid bear on every subject to be discussed. Meanwhile we are losing momentum and initiative with inter-ministerial commission as evidenced by Spanish Embassy’s recent direct approach to FOA/Washington re cotton and vegetable oil requirements. We are firmly convinced full economic aid mentioned (1) and (2) above necessary if Spanish economy is to withstand the effect of and bear its share of cost for participation in our joint military program. This reported further detail in Williams Tousfo A–204 October 8.3 General Kissner sending separate message to Defense concurring this message, in message J–466 October 11³ to executive agent he has already pointed out adverse effect on military program should Spanish not receive full amount dollar aid expected as well as aid under McCarran amendment.

Quite aside from foregoing, we must emphasize crucial nature of psychological impact upon Spain of any action by US Government now to water down or deprive her of benefits awarded by Congress. Spanish fully conversant with long history of US Government opposing or holding back or delaying aid to Spain legislated by Congress pending completion of agreement satisfactory to US. Previous Spanish dissatisfaction and suspicion re this policy has now been dissipated by full cooperation they have been getting in carrying out agreements signed last year. There has from General Franco and his Cabinet down the line been rapid development of confidence and trust on Spanish side absolutely necessary if we are to have their cooperation needed for our military program. It would come to this individualistic group as a blow now were US Government to alter or fail to carry through on our own figure of thirty million based on the one hundred fifteen million originally committed at the time of the agreements, plus the Congressional amendment which certainly does not carry in it any implication that it is a loan.

After all principal purpose in our being here relates to the strengthening of western defense by building facilities in this vital area. These facilities will not be of their maximum value unless we have the enthusiastic and sincere cooperation of the Spaniards. That cooperation will be lost if we now begin to change the terms on which we are morally engaged to carry out our side of the agreements of a year ago.

Dunn

1. Not found in Department of State files.
2. Dated Oct. 4, telegram 213 revealed that communications from Washington to Madrid had imparted the view that the $55 million alloted Spain by the provisions of the McCarran Amendment included the $30 million earlier sought for economic aid for fiscal year 1955 under the terms of the September 1953 agreements. The Spanish, on the other hand, had viewed the $55 million as an addition to the $30 million. (752.5 MSP/10–454)
3. Not found in Department of State files.