711.52/394: Telegram
The Ambassador in Spain (Hayes) to the Secretary of State
[Received March 26—12:58 p.m.]
1044. At the second meeting of the Spanish Committee it proposed on the authority of Jordana and Carceller and in the belief that the Cabinet would accept the following arrangement.
In consideration for the immediate lifting of the embargo on petroleum products and preliminary to discussion of the broad economic program, Spain, in addition to complying with our wishes regarding German agents, the Consulate at Tangier, Italian merchant ships, et cetera, is willing to limit exports of wolfram to Germany for the remainder of this year to 450 tons. Exports would be at the rate of 50 tons per month and after an initial shipment of 50 tons in April in consideration of the importance we attach to the next several months, the export authorities would delay for as long as possible May and June shipments. The Committee believes that German pressure can be parried throughout May and June although it could not give definite assurance that all exports could be held up during these 2 months. July shipments would of course pick up any undelivered balances and thereafter the monthly rate would be held at 50 tons. Full assurances would be given by the Spanish Government to use its best efforts to prevent smuggling. In the event of proven cases of smuggling as a minimum Government will reduce exports to Germany in proportion to quantity smuggled. It will impose such additional penalties as may be necessary to discourage further attempts. Although Government cannot [apparent omission] our right to station wolfram observers in Spain with authority to make inspections in customs railway yards or on piers it will appreciate our cooperation and will act immediately in any bona fide instances of attempted or presumed smuggling we call to its attention.
In addition to the immediate resumption of flow of goods to Spain, Spanish Government desires that we continue wolfram purchases and supply commodities which cannot be obtained from Germany. This is the basis on which the Spaniards believe they can justify reducing wolfram exports to Germany. Discussions on this subject are to be resumed at the next meeting to be held on Monday.83
In support of its proposal which it stated was the ultimate concession the Government would make, the Committee urged that the Allied Governments recognize Spanish Govermnment’s sincere intention to meet our views to the maximum possible and that because [Page 374] of its geographical position and economic dependence Spain cannot sever its economic relations with Germany. To maintain its neutral position Spain must treat with both belligerents and in that treatment it gives access to each side to those commodities they desire and of which Spain has an excess. Wolfram holds priority in German demands just as there are certain commodities which hold high priority in British.
When the agreement of August 18 was signed with the Germans, Spain extricated itself from a position distasteful to the Spaniards and disliked by the Allies. As a result of that agreement, it had withdrawn the Blue Division from Russia; it had charged the cost of that division against the cost of the Condor Division used in Spain during the Civil War; while agreeing to pay Germany for the 100 million reichsmark unbalance still owed from the Civil War, it had insisted that Germany supply Spain with materials sufficient to pay off 110 million of the 180 million owed to the clearing. When that agreement was signed which covered the 12-month period beginning November 1, 1943, Spain had no commitments with United States or with anyone else to deny Germany access to its excess production of wolfram and, in consideration of very definite advantages, Spain agreed that Germany might use all or any part of the funds arising from that agreement, either by reason of the adjustment of the debt or the shipment of German goods to Spain for the purchase of Spain’s excess commodities, among which wolfram was specifically named.
The Germans have complied with their part of the agreement by permitting the withdrawal of the Blue Division and by shipping a large quantity of goods to Spain. Actually shipments of goods from Germany reduced the clearing unbalance to below the 70 million reichsmarks agreed to. Under these circumstances the Cabinet strongly opposed entering into any agreement with United States which so impinges on the German agreement as to give grounds for Spain being charged with acting in bad faith. The [apparent omission] committee suggested represents a drastic reduction. Apart from the fact that the Germans obtained export permits for about 1050 tons of wolfram during 1943 plus 150 tons under a special arrangement with the Air Force, they have the funds to purchase much larger quantities this year in open market and other operations. Actually they have paid export taxes on 209 tons now held at Iran for shipment and have had applications pending for some time for an additional 545 tons, plus more recent acquisitions for which applications have not been submitted because of the existing temporary embargo. Under competitive conditions German shipments during 1944 would undoubtedly greatly exceed those of 1943. The Committee also stressed the fact that the voluntary temporary embargo [Page 375] in effect during February and March has been definitely advantageous to the Allies. The proposal submitted, in the opinion of the Committee, will meet with violent opposition in the Cabinet but Jordana and Carceller believe by their combined efforts they can overcome such opposition.
The Committee was informed that the arrangement proposed meant that the Germans would receive during the present year approximately 750 tons wolfram which compared favorably with our estimates of what Germans had received during 1943 discounting from that quantity the tonnage obtained under the special arrangement with the Air Force. The British and American representatives insist that this showed little disposition on the part of the Spanish Government to meet the desires of the Allies for a wolfram embargo. It was not even a drastic limitation from our point of view.
Ackerman stated that he was convinced that this proposal would not be acceptable to United States Government and that he was reluctant even to transmit it to Washington. The Committee insisted, however, that it be transmitted to London and Washington and that an objective and unbiased presentation of their arguments be used to support it bearing in mind that the Committee was sincerely anxious to find an early solution.
Subsequent to the meeting when Ackerman expressed to Ellis-Rees his regret that this proposal was so far from meeting the views of Washington which had been made so clear to the Embassy, Ellis-Rees expressed the opinion that London might be disposed to accept it with only slight modifications.
Repeated to London, Lisbon by pouch.
- March 27.↩