Foreign Relations of the United States, 1958–1960, Western Europe, Volume VII, Part 2

287. Memorandum for the Portuguese Desk Files⁰

December 21, 1959.

SUBJECT

• Ambassador Elbrick–Mr. James H. Douglas Conversation

Ambassador Elbrick called on Deputy Secretary of Defense Douglas on December 21 at the Pentagon. Also present were Mr. Knight, Deputy Assistant Secretary of Defense for International Security Affairs; Mr. Philip E. Barringer and Colonel August P. Sauer of OSD/ISA, and Mr. Starrs.

Ambassador Elbrick congratulated Mr. Douglas on his recent advance to be Deputy Secretary. Mr. Douglas raised the question of renegotiation of the Azores Base Agreement, which expires at the end of 1962, and Mr. Knight inquired whether the Portuguese Government could be expected to ask a higher remuneration for future cooperation with the US in the Azores than they now receive. The Ambassador replied that, while there were no clear indications, it was likely the Portuguese would increase their demands on us. He said he had obtained the impression that the Defense Department considered our Azores installation of strategic importance now and for the foreseeable future, and Mr. Douglas confirmed that this was indeed the Defense view.

Ambassador Elbrick praised the operation of the Lajes Air Base as a model that might serve for US bases in other parts of the world, and said an analysis of its success showed how much could be accomplished if both sides employed common sense.

Mr. Douglas asked whether the US was doing generally a good job with the Military Assistance Program in Portugal. Mr. Elbrick reviewed briefly the questions of the cost-shared DE’s and the second squadron of patrol aircraft (covered in another memorandum),¹ and stressed the embarrassment the US would feel if we could not provide the matériel which the Portuguese expected to receive. Our failure to provide the patrol aircraft would be particularly embarrassing, the Ambassador noted, because we had strongly urged the Portuguese to accept the patrol squadrons in lieu of fighter squadrons. Mr. Knight stated that the Portuguese MAP for FY 1961 was presently set at the $16.5 million level, but that this figure was based upon an estimated MA appropriation of $2 billion, and no one knew what the appropriation figure would turn out to be. Ambassador Elbrick said that, because of its relatively small size, the Portuguese program should not undergo the same percentage cuts as larger programs. Speaking of the proposal to eliminate or curtail future grant assistance to Portugal as a country capable of paying its own way, Mr. Knight indicated that he appreciated that this was true of Portugal only in a very special sense, and he indicated to Ambassador Elbrick that it might be preferable if Portugal were not listed as one of the nations capable of paying its own way.

Ambassador Elbrick spoke briefly about Portugal’s extreme economic conservatism as developed under Salazar. He said that, while the country had a favorable balance of payments and some gold reserves, Salazar apparently feels that the lowering of the present strict economic and financial barriers by this or some successor regime in Portugal could dissipate the reserves rapidly and quickly produce bankruptcy. He also mentioned that the Portuguese were concerned over the tendency of important US officials to overfly Portugal to visit other European countries. The Ambassador hoped that important Defense officials, including Mr. Douglas himself, would find it possible to visit Portugal. Mr. Douglas expressed an interest in doing so at some future date.

0. Source: Department of State, Central Files, 753.00/12–2159. Confidential. Drafted by Starrs. Regarding other memoranda of this type, see the source note, Document 286.
1. Not found.