188. Memorandum From the Acting Secretary of State to the President’s Special Assistant (Dodge)1
- United States Policy Toward Spain
Your memorandum of July 14, 19552 notes that one of the principal concerns about the NSC policy toward Spain is that it “can be or will be interpreted as an open end commitment for continuing United States economic assistance”.
At the time when the agreements were signed with Spain in September 1953, our Ambassador gave the Spanish Foreign Minister a letter3 containing the figure $465 million for economic and military assistance. Of the $465 million, $350 million has been considered by the Spanish and the U.S. to be in the form of military assistance, with a balance of $115 million thereby taking the form of economic assistance. The Department of State considers the foregoing to be the extent of our commitment. However, this does not mean that the economic aid portion of that figure is considered a ceiling on economic aid to Spain. Rather, it means that this Department would agree to additional economic aid to Spain only if fully justified as serving U.S. interests.
Including FY 1956 funds appropriated by the Congress, the total amount of defense support assistance provided to Spain amounts to $165 million exclusive of the McCarran Amendment provided in FY 1955 ($55 million). This exceeds the commitment of $115 million by $50 million. It should be pointed out, however, that 70 percent of the counterpart of the $165 million defense support funds is returned to the U.S. for its peseta expenses in Spain. Even the 30 percent for Spanish use is limited to agreed defense support projects in such fields as transportation and munitions and military matériel production. It is expected that substantially the same arrangement will apply to FY 1956 defense support assistance to Spain (except for the small technical exchange component). The other programs which you mentioned—the McCarran Amendment, PL480, and the $20 million wheat sale—are not defense support assistance. These programs, for the most part of Congressional rather than Administration origin, seem to serve U.S. interests not limited to the field of foreign policy by providing for the disposal of U.S. surplus agricultural commodities. In [Page 545] the case of the wheat sale, the entire peseta sales proceeds accrue to the United States for its use. A substantial proportion of the PL480 and the McCarran Amendment programs is on a loan basis.
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These considerations, together with the United States Operations Mission (Spain) recommendation of a $30 million defense support program, are among those which prompted this Department to support the Administration request for a $28 million FY 1956 defense support program for Spain as the minimum program required for the accomplishment of our foreign policy objectives. As you know, the Congress subsequently increased the amount to $50 million. However, the President took the occasion, in signing the Act, to raise a legal question concerning those provisions of the Act in which particular countries (including Spain) are named as eligible recipients of assistance in specified amounts. He stated that these amounts are regarded by the Executive as authorizations and limitations rather than as directives, adding that “to construe them otherwise would raise substantial constitutional questions”. Nevertheless the full $50 million authorized by Congress for Spain is now being programmed.
A further consideration bearing on U.S. economic assistance to Spain is related to your reference to the Progress Report of the Operations Coordinating Board on NSC 5418/1, dated April 27, 1955,4 which anticipated that Spanish Government expenditures for defense and for economic development would be approximately 50 percent higher in 1955 than in 1952. The type, magnitude and duration of economic assistance to Spain which would best serve U.S. interests would seem to depend, in part, on the extent to which these increased Spanish defense expenditures are the result of the activation, maintenance and support of U.S.-supplied MDAP equipment and on the extent to which these defense efforts or others might serve U.S. security interests. In this connection, and in accordance with your recommendation to the National Security Council, the Department of Defense is studying the subject of force goals for Spain and the projection of the role of Spain in Western defense. Following the conclusion of this study, we should consider again the level and duration of our defense support assistance to Spain.