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

740.5/8–1753

No. 281
Memorandum by Thomas C. Schelling of the Office of the Director of Foreign Operations to the Deputy Director for Operations of the Foreign Operations Administration (FitzGerald)¹

confidential

[Washington,] August 20, 1953.

Subject:

• FY 1954 Programming

This memorandum summarizes the programming guidelines for FY 1954 with respect to MSA programs, developed at the meeting conducted August 17, 1953 by the Director of Foreign Operations.

Europe: Economic Aid Programs

MSA will develop, in coordination with the State Department, programs for mutual defense financing in Europe within the amounts appropriated for that purpose, plus carryover, plus additional funds to be administered under Section 550 as described below. These programs will be subject to the following guidelines:

1. The East German food program in the amount of $15 million will remain a charge against Title I economic aid funds. The General Counsel is, however, being simultaneously requested to consider urgently whether part of this program can be financed under the Famine Relief Act.

2. The Technical Assistance Program will amount to $15 million; an additional $3 million will be held in reserve for possible increase in this program to a total of $18 million.

3. An Information Program of approximately $7 million has been discussed. Dr. FitzGerald is to consider this program further and make a recommendation as to the exact amount.

4. Total assistance to the United Kingdom will be $200 million. Of this, $85 million is separately appropriated for the aircraft program. Of the remaining $115 million, an amount of from $40 to $65 million will take the form of defense support, and an amount of from $50 to $75 million will take the form of surplus agricultural commodities administered under Section 550.

5. The program for Germany/Berlin (exclusive of the East German food program) remains as originally programmed at $15 million. The specific objectives and composition of this program have not been determined. Recommendations for the use of these funds will be worked out jointly between the Deputy to the Director for Operations and the Assistant Director for Refugees, Migration and Travel in coordination with the State Department.

6. In the event the surplus agricultural commodities program for the United Kingdom does not reach the upper limit of $75 million mentioned above, the difference for the United Kingdom is to be made up with defense support; and surplus commodity programs for other European countries may be developed, to meet defense support and economic aid objectives, up to a total of $75 million of such programs inclusive of the program for the United Kingdom. It will be assumed that surplus agricultural commodity programs in Europe, other than non-UK programs within that $75 million, will be used to meet objectives of the Title I military assistance program, not economic aid and defense support objectives in Europe.

7. Assistance to France out of funds available for mutual defense financing in Europe will be limited to the specific amounts appropriated, namely $485 million of which $400 million is to support the campaign in Indochina and $85 million is to finance certain types of equipment for French NATO ground forces.

8. It should be assumed for planning purposes that the several Spanish agreements will be signed and become effective on or about October 1, 1953, and that any further obstacles in developing and implementing Spanish programs will be no different from those encountered in initiating programs in any new country.

9. The Defense Department has under review the question of devoting further funds (including the $37.5 million of unobligated MSA funds specifically carried over for this purpose) to the Italian aircraft program. MSA should simultaneously consider with the Defense Department the techniques by which the $37.5 million will be furnished if a decision to give such assistance is reached.

10. MSA may recommend holding in reserve at this time some portion of the funds available to it for European programming. It should be assumed that the total of funds available for this purpose will be neither augmented nor reduced by transfer.

MSA should review counterpart procedures in light of Congressional attitudes (particularly as expressed in the report of the Senate Appropriations Committee) and make recommendations to the Director as to whether and how such procedures should be revised, with particular regard to the release of funds on a project by project basis.

MSA, in coordination with the Department of Defense, should develop and recommend procedures for administering the special defense financing for France/Indochina, for French ground force equipment, and for British aircraft. MSA should also, in consultation with the General Counsel, recommend procedures governing the use of local currencies in the United Kingdom arising from the surplus agricultural commodities program for that country.

A series of additional programming and administrative matters resulting from new legislation or expressions of Congressional intent are being either considered by the Director or studied by the General Counsel.

[Here follows a discussion of Fiscal Year 1954 programming for the Far East and the African Dependent Overseas Territories; for text, see volume I, Part 1, page 639.]

Thomas C. Schelling

1. Copies to Stassen, Nolting, Nash, Ohly, Murphy, Paul, and to TCA, Treasury, and the Bureau of the Budget.