60. Telegram From the Embassy in France to the Department of State1

3087. I should like to stress certain political aspects of proposed financial aid to France through IMF,EPU and other agencies.

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Subject is receiving wide and often misleading publicity. Banner headlines front page December 21 France-Soir (largest circulation in France) reported agreement already reached with international and US agencies to supply $450 million. Other papers, including front page Combat December 23, more accurately report negotiations under way to provide either $262 million or smaller amount from IMF and $200 million from EPU. Several reports also mention contribution by Export-Import Bank or other such sources. All published stories emphasize foreign aid between $400–500 million essential to prevent substantial shortfall essential imports and consequent serious economic crisis.
While reports uniformly make clear aid is being primarily sought from IMF and EPU, most bring out major creditors in these two institutions are respectively U.S. and Germany and that decision whether or not aid is granted will in large measure be determined by these two governments.
Gaillard government is generally considered to be highly unstable. Its Assembly majority is dependent on support both Socialists and Independents, neither of whom are happy about continued participation in government responsible for relatively severe economic measures which have been or are to be taken. More liberal attitude toward Algerian solution among Socialists also increases tension between these two parties. Expectation seems to be that government will survive January, which is traditionally quiet period, but that beginning end that month it will, for reasons set forth above, be extremely vulnerable.
If foreign financial aid question is unsettled by end January it will almost inevitably become important factor in internal political maneuvering, and foreign governments primarily concerned, U.S. and Germany, whatever they do or do not do, will be accused by interested parties of interfering in French politics. If aid is granted when French Government is in serious trouble in Assembly, it will be charged we are bailing this government out in exchange for certain commitments, e.g., on Algeria; if aid is withheld under these circumstances, even though reasons are purely financial, we shall be accused of willfully overthrowing government and provoking crisis of regime.
In view these circumstances, I should strongly urge that every effort be made to bring aid negotiations to definite conclusion one way or another well before end January, preferably by January 20. This recommendation would hold good even if French Government should not press for conclusion by that date, since it is not inconceivable government might itself desire to use pending aid negotiations as argument in Assembly for prolonging its life.
  1. Source: Department of State, Central Files, 851.00/12–2357. Secret. Repeated to London and Bonn.