185. Report Prepared by the Operations Coordinating Board1


(Policy Approved by the President, June 9, 1954)

(Period of Report: June 9, 1954 through April 27, 1955)

A. Summary of Major Actions


The U.S. base development program in Spain is being executed in a careful and deliberate manner in order to avoid criticisms which have arisen in connection with construction programs elsewhere. Contracts were awarded for pavement work at Torrejon (Madrid) and Zaragoza in September 1954, and work is in progress. A contract has been awarded for the initial increment of construction for the Navy facility at Rota (Cadiz). A contract was awarded in January 1955 for the pipe to be laid from Rota (Cadiz) to Zaragoza. A contract was awarded in February 1955 for the construction of aviation fuel storage at the civil airports of Barajas (Madrid), Muntadas (Barcelona), and San Pablo, and work is presently underway. Preparatory work accomplished will enable a progressively increasing number of projects to be placed under contract in the coming months. A contract for construction of the POL pipeline is scheduled for award in April 1955. Contracts for initial construction at air bases at Moron and San Pablo are scheduled for award in May and June 1955, respectively.

[Numbered paragraph 2 (5½ lines of source text) not declassified]

The U.S. Embassy made official representations at Madrid to obtain a moderation of the hostile anti-French tone of the broadcasts to French Morocco of Radio Tetuan but these were only temporarily successful.
For the first time U.S. naval vessels will make a Spanish port their home port in accordance with plans to station two Navy tankers at Barcelona in May and June.

The Department of State and FOA established procedures for Spanish participation in selected European Productivity Agency (EPA) projects as a step in the direction of closer Spanish cooperation with the Organization for European Economic Cooperation (OEEC) countries.

This problem is complicated by EPA’s need for the active support of the free trade union movement and the hostility of the free trade union movement to Spain.

Spanish association with the OEEC Agricultural Ministers’ Council was approved in January 1955 with U.S. support.
The Department of State supported the Spanish Government in obtaining UN observer status. Observer status was granted January 26, 1955 and the observer has now been appointed by the Spanish Government.
With U.S. support, Spain was granted observer status in the International Labor Organization in March 1955.
Of the $85 million Defense Support programmed for Spain for FY 54, $24.7 million has been disbursed through April 1, 1955, and an agreed program with the Spaniards for the use of the 30% of counterpart funds has been developed. Of the $30 million for Defense Support allotted for FY 55 (P.L. 665), $10 million in procurement authorizations have been issued.
Under an amendment to the MSA for FY 55 proposed by the late Senator McCarran, $55 million worth of surplus agricultural commodities was authorized for Spain. Procurement authorizations for the full amount of $55 million have been now issued: $49 million in cotton, and $6 million in cottonseed oil; and the loan agreement is expected to be signed in the near future.
An agreement for the sale of $21 million surplus agricultural commodities under Title I of P.L. 480 was signed April 20, 1955.
Generally speaking MDA material and training programs have proceeded satisfactorily. As of December 31, 1954, $38.3 million in end items had been shipped to the Spanish out of FY 50–54 programmed total of $142.4 million. The major items shipped were 80 training aircraft, 76 tanks, 895 trucks, 121 artillery pieces, and 2 mine sweepers. On the above date, 500 Spanish nationals had completed training in U.S. military schools and 425 were in training as of that date. Modernization of the 24 Spanish vessels which constitute the bulk of the Navy MDA program has not progressed as rapidly as desired by the U.S. Navy. U.S. Navy personnel have repeatedly urged the Spanish Government to expedite the selection of a shipbuilding technical advisor and to submit their proposed plans and specification for the modernization.
USIA expanded its operations in Spain. Emphasis was placed on local radio programs, book translations, films, and exhibits and lectures explaining U.S. aid. One information center was opened in Zaragoza, and two more are planned for Moron and Cadiz.
Visits of high-level American officials to Spain and by senior Spanish officials to the U.S. created opportunities for mutual understanding. General FRANCO visited a Sixth Fleet carrier in October.
The Department of State provided 16 Exchanges of Persons grants for Spain in FY 1954.
Over $600,000 of FY 54 Defense Support funds were set aside for a technical exchange program which will send 23 American technicians to Spain and bring nearly 160 Spaniards to the United States. As of April 1, 1955, 2 Americans had been sent to Spain and 39 Spaniards had arrived in the United States. Arrangements for remaining persons to be exchanged are proceeding slowly but no important problems exist.
Under the FY 54 Facilities Assistance Program, authorizations have been let to the Spanish Government authorizing them to procure equipment at U.S. expense to the extent of $3.6 million for two plants manufacturing TNT and propellants. The FY 55 Facilities Assistance Program totals $5.6 million for five projects for the manufacture of propellants and explosives. Money has been funded for the FY 55 projects and the engineering surveys are now being conducted. In addition, the Department of the Air Force has been directed to complete a facilities assistance survey of the Spanish aircraft industry as soon as possible.

B. Evaluation of Progress in Implementing NSC Policies

Over-all U.S. operations in Spain have developed satisfactorily within the framework of U.S. policy and U.S.-Spanish relations have remained cordial.
Official Spanish inquiries regarding membership in NATO indicate some evolution in the Spanish attitude toward this organization. Notwithstanding Spain’s association with several international organizations, there has been no marked improvement in relations between Spain and the principal European NATO nations. Spanish policies, particularly vis-à-vis France and Great Britain, do not evidence awareness that such improvement is desirable in connection with NATO membership for Spain.
Base construction has progressed slower than forecast. There has been an estimated slippage of four months. This has been due principally to unexpected difficulties encountered by the Spanish Government in the procurement of land, slippages in preparation of construction [Page 536] designs, and one site change. Delays in acquiring land in Spain have been no greater than delays experienced in acquiring land for the military in the U.S.
Substantial disagreement developed with Spain over the amount of loan and the exchange rate under the $55 million (Sec. 109, P.L. 778). Of the 80% of sales proceeds for the Spanish civilian economy, a $20 million loan-$24 million grant ratio, and an exchange rate, now have been agreed to.

C. Emerging Problems and Future Actions

[Numbered paragraph 22 (4½ lines of source text) not declassified]

The recent U.S. agreement, signed on February 18, 1955, with Germany for the disposal of $5 million of surplus U.S. feed grain included assurances that German currency from the sale would be used for purchase of materials in Germany for the base construction program in Spain. This amount of German materials can no doubt be absorbed into the Spanish program at competitive prices but if agreements of this type were to become general, they would tend to impair flexibility in procurement and could result in a breach of the understanding concerning Spanish contractors.
Economic aid and air-base construction programs, and the growing number of Americans in Spain have increased the demands from Spaniards for information on the U.S. If this trend continues, it will be necessary to consider the possibility of increasing all USIA facilities.
The problem with respect to religious welfare and marriage of U.S. armed forces personnel has not been resolved. Embassy Madrid is now under instructions to seek a unilateral declaration from the Spanish Government which would constitute a guide for the activities of U.S. military chaplains and other U.S. officials in Spain.
Land acquisition in Spain will be a continuous and difficult problem, although it is believed that the Spanish will eventually provide all land as required by the agreement. Some members of Congress were critical of the progress made. Hearings before the Special Investigation Subcommitee of the House Armed Services Committee on February 1–2 and March 15, 1955 appeared to satisfy the Committee that proper action was being taken.
There is a potential problem of renewed inflation in Spain. During the past year the cost of living rose about 3 percent and the currency in circulation increased about 11 percent. Expenditures for the Spanish Armed Forces are expected to rise from 8.2 billion pesetas in 1952 to 12.5 billion pesetas in 1955; expenditures for economic development are expected to rise from 9.6 billion pesetas in 1952 to 14.6 billion in 1955. Crop conditions for the past four years have been generally above the long-term average except for the 1953–1954 crop [Page 537] year. Unfavorable crop conditions would aggravate inflationary dangers. If inflation threatens accomplishment of our objectives in Spain it will be necessary to take remedial steps such as urging appropriate adjustments in Spanish Government programs and policies, possibly revising the uses and amounts of U.S. assistance.
Press comment and public and private statements of responsible Spanish officials indicate that the Spanish government will seek economic assistance, beyond the now-fulfilled economic portion of the over-all $465 million aid commitment to Spain, not only for supporting the military programs but for improving her economy generally. It should be noted that the U.S. has already committed itself to about $550 million aid to Spain, although this total is not entirely obligated in the technical sense, if the McCarran amendment aid, the P.L. 480 aid, and the wheat sale aid is added to the original commitment. The Spanish government may be expected to seek additional assistance in the form of grants rather than loans.
There are no agreed force goals or missions for the Spanish Armed Forces for use in U.S. policy and program planning, aside from limited MDA programming guidance developed unilaterally by the U.S. after taking into account the known views of the Spaniards.
The NSC is requested to review U.S. policy toward Spain (NSC 5418/1) particularly with respect to paragraphs 22, 27, 28 and 29 of this report which raise problems regarding the implications of: Spain’s association with NATO, potential problem of serious inflation, force goals and missions for Spanish armed forces, and the extent and purposes of U.S. aid to Spain.
  1. Source: Department of State, OCB Files: Lot 62 D 430, Spain 1954–55. Top Secret. A cover sheet; a May 17 memorandum by Elmer B. Staats, Executive Officer of the Operations Coordinating Board, transmitting the Report to the OCB; and a second memorandum by Staats, May 3, transmitting the Report to the National Security Council, are not printed.
  2. For text of NSC 5418/1, see Foreign Relations, 1952–1954, vol. VI, Part 2, pp. 19801985.