Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

Bruce Mission files, lot 57 M 38, “U.S. Aid”: Telegram

No. 120
The United States Special Representative in Europe (Draper) to the Department of State

confidential

Paris, October 9, 1952.

Repto 1222. Cotel. Ref: Torep 1168, Sept 13.¹

1. In present circumstances, doubt that US financial aid wld assist CSC to obtain funds in open market because fact that counterpart or dollars are furnished enterprises in CSC does not necessarily make investments either more or less attractive to private capital, unless possibly lower interest rate on counterpart or dollars wld enable enterprises to pay attractive rate of interest to private lenders. Moreover, if US aid is available, CSC might be under less pressure, than otherwise it wld be, to adhere to policies capable of attracting private investment.

2. On basis talks here with Hill of IBRD, it appears that Bank wld prefer to be source of capital for CSC, and availability of aid from US for CSC wld not be factor in determining IBRD attitude on soundness and desirability of investments. Bank’s apparent interest in possible CSC investments may stem partly from its desire to use CSC capital needs as means of obtaining agreement of some or all of six member countries to release their full 18% local currency contributions and also perhaps permit floatation of local currency issues. Some of local currency contributions have been released, Fr in particular having done most, but each country has put conditions on use of these funds and demands to examine projects for which Bank proposes to use funds. But whatever Bank’s reasons may be, it is interested in possible CSC financing requirements.

3. In addition above consideration, believe political reaction to any US financial aid to CSC at this time and in absence strong and well-documented case establishing:

(a) real need for such aid, and

(b) impracticability of raising adequate funds from private money markets, IBRD, etc.,

wld be damaging to CSC prestige, which in turn might decrease rather than augment its open market borrowing capacity. Might also reinforce theme of CSC opponents that CSC is creature US policy rather than European institution in which Europeans themselves believe and support. Note in this connection that HA has not even informally mentioned subject tho they have had ample opportunity to do so if they desired.

4. Realize of course that MS Act provides authority assist CSC financially if necessary and within limits demonstrated needs and available US aid resources, and US shld therefore be ready consider CSC request based on realization conditions stated in 3 (a) and (b). In meantime, seems to us that most effective US contribution that can presently be made to CSC is general moral support treaty objectives and consideration provisions of such informal technical assistance as HA may request.

5. Cabling separately re paras 3 and 4 reftel.

Draper

1. Not printed; it stated that if the Coal and Steel Community was in need of financial assistance the Mutual Security Agency believed it should canvass all possible sources of assistance before the Agency would be willing to consider extending aid. (MSA telegram files, FRC Acc. No. 54 A 298, “Paris Torep”)