186. Memorandum of Discussion at the 248th Meeting of the National Security Council, Washington, May 12, 19551

[Here follow a paragraph listing the participants at the meeting and items 1 and 2.]

[Page 538]

3. U.S. Policy Toward Spain (NSC 5418/1; Progress Report, dated May 3, 1955, by the OCB on NSC 5418/1)2

Mr. Anderson commenced to brief the Council on the contents of the OCB Progress Report on Spain and the OCB proposal that the NSC undertake to review NSC 5418/1. [22 lines of source text not declassified] Despite the strong feeling against Spain which was still so obvious in Europe, there had been some progress in the right direction. For example, said the President, we have succeeded in reassuring our NATO allies that the military and other assistance we have given to Spain will not be subtracted from the assistance which we are going to give to them.

Secretary Wilson expressed the opinion that we had actually gained by our bilateral relationship with Spain. Secretary Humphrey inquired skeptically what concrete advantages the United States would derive if Spain became a member of NATO. The President replied that it would be more efficient and simpler if we could deal with Spain in NATO in terms of military planning and outlay. Ideally, this would be preferable to two separate systems, one for our NATO allies and one for Spain. Governor Stassen added that the possibility of combined planning would be advantageous. Also, Spanish membership in NATO would provide a better system from the point of view of logistics and supply.

[1 paragraph (12 lines of source text) not declassified]

Mr. Anderson then proceeded with his briefing, and outlined the second problem emphasized by the OCB Progress Report—namely, the extent and purpose of U.S. aid to Spain with particular respect to the possibility that heavy U.S. expenditures in Spain would produce serious inflation.

With some asperity the President reminded the Council that at the time that the Council adopted NSC 5418/1 there had been very considerable discussion of the possibility of an inflation in Spain as a result of our program for building bases there. Secretary Humphrey said that the Council at that time had been aware that inflation was bound to occur when such large expenditures of U.S. funds were made in Spain. Secretary Wilson added that this was the typical American way of doing things. We try so hard to get things done so fast.

Mr. Anderson then pointed out with respect to this problem that the United States had three possible attitudes to take toward Spanish requests for further aid: It could refuse any further aid on grounds that the $465 million package deal was full consideration for the base rights granted to the United States. This was one extreme. On the other extreme, the United States could grant sufficient additional economic [Page 539] aid to pull Spain to the economic level of the other more prosperous NATO powers. In between these two extremes, said Mr. Anderson, there was a third possibility—namely, to grant Spain that minimum amount of additional economic aid necessary to insure internal stability in Spain so that the use of our bases there would not be jeopardized by civil disorders in Spain.

The President said that he felt that what Spain needed most to combat potential inflation was a much larger supply of consumers goods. He wondered whether in this connection the capital food program of the Department of Agriculture could not be used. Governor Stassen replied that some use had already been made of this program; and as far as the three courses suggested by Mr. Anderson’s remarks were concerned, he strongly believed in the middle course.

Secretary Hoover pointed out that our original $465 million package deal had already been exceeded by over $100 million. He predicted that the end was not yet in sight, and we would probably be asked for additional assistance. All this, moreover, was exclusive for the most part of the actual cost of constructing the U.S. bases in Spain.

Governor Stassen said that of course the reason that we had already spent more than the $465 million on Spain could be laid at the door of the appropriation sponsored by the late Senator McCarran.

After further discussion of the character and level of U.S. expenditures, present and contemplated, in Spain, Secretary Humphrey expressed the same opinion earlier stated by Secretary Wilson, that the trouble was that we were doing too much too fast in Spain. Secretary Hoover agreed with Secretary Humphrey, and said that this essentially was the reason why the OCB thought that the issue should be presented to the National Security Council.

Again with a show of impatience, the President said that what impressed him was that all the warnings sounded in the present discussion had plainly been made when the Spanish policy paper had first been discussed by the National Security Council.

The Director of the Bureau of the Budget said he felt very great concern about the phrase in the middle course of action described by Mr. Dillon Anderson, to the effect that we should “insure internal stability in Spain”. This, felt Mr. Hughes, was a very large order for the United States. Mr. Anderson reassured Mr. Hughes by reading the precise course of action in NSC 5418/1, which called for “implementing the economic aid, military aid and base development programs in such a manner as best to support U.S. objectives in Spain while, in so far as practicable, avoiding adversely affecting Spain’s economy.”

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Governor Stassen said that the real problem we faced in Spain was how to get the right kind and amount of consumers goods into that country. He believed that we could not meet this problem without some additional economic aid to Spain. At least it was encouraging, he added, that there was no runaway inflation in Spain today.

The President inquired whether some kind of a reduction in the rate of U.S. expenditures in Spain might not help to curb these inflationary tendencies. He then looked at Mr. Dodge and asked him if he had been in on this problem and had any comments to make. Mr. Dodge replied that as in the case of Turkey recently, there was just too much capital expenditure in Spain. The President said that he wanted at any rate the best possible look at this emerging problem in order to discover ways by which we could use our influence to meet it. Governor Stassen then suggested that Mr. Dodge and the Council on Foreign Economic Policy be asked to review what the United States had been doing in Spain to carry out its assistance programs. Mr. Dodge said that he would be glad to undertake this task, and would review both what the United States was doing and what the Spanish Government itself was doing. Secretary Hoover added that of course the moral of this tale was that in all these countries like Spain, Turkey, Pakistan, any large expansion in the military field was bound to have a terrific impact on the economies in question. Governor Stassen said that he could not help agreeing with Secretary Hoover, but that perhaps, when all was said and done, it was better for the United States to have a firm military ally, as in the case of Turkey, even though that country had serious economic problems.

The President then turned to Governor Stassen and suggested that he lay out his programs to Mr. Dodge and see whether it might not be possible to slacken off some of the inflationary pressures in Spain. The President agreed that no actual revision of the policy on Spain was required, but he strongly recommended the study by the CFEP of the manner in which our programs in Spain are being carried out.

The National Security Council:

Noted the reference Progress Report by the Operations Coordinating Board on the subject, and discussed the request contained in paragraph 30 thereof.
Noted the President’s statement:
Reaffirming that “The primary interests of the United States with respect to Spain lie in …3 the improvement of relations between Spain and the NAT nations in order to tie Spain [Page 541] as closely as possible to Western plans for regional defense and to obtain Spanish participation in NATO at an appropriate time” (paragraph 10–(b) of NSC 5418/1).
Authorizing the Secretary of State to explore the problem of a propitious time for obtaining Spanish membership in NATO.
Noted the President’s request that the Council on Foreign Economic Policy review the implementation of U.S. aid programs for Spain under NSC 5418/1, in order to determine the means by which the potential problem of serious inflation in Spain might be most effectively solved.
Agreed that a review of the existing policy toward Spain (NSC 5418/1) is not required at this time in view of the actions in b and c above.

Note: The action in b above, as approved by the President, subsequently transmitted to the Secretary of State. The action in c above, as approved by the President, subsequently transmitted to the Chairman, CFEP.

[Here follow items 4 and 5.]

S. Everett Gleason
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Drafted by Gleason on May 13.
  2. For text of 5418/1, see Foreign Relations, 1952–1954, vol. VI, Part 2, pp. 19801985. The Progress Report is printed supra.
  3. Ellipsis in the source text.