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

740.5 MSP/8–2453

No. 282
Memorandum by Robert G. Cleveland of the Office of European Regional Affairs to the Director of the Office (Moore)

secret

Washington, August 24, 1953.

Subject:

• Economic Aid Prospects of European Countries in FY 1954.

1. The aid situation is still very fluid, but the following is a guess as to the way the overall distribution may work out. Gov. Stassen proposes to make about $75 million available for European country programming under Section 550 out of Title I Military funds. $223 was the Sec. 541 appropriation. String attached to use of Section 550 funds is that local currency proceeds must be used for OSP purposes. This is a tentative balance sheet:

Assets		Liabilities
Section 541	$223	East German Food	$15
Section 550	75	Information Agency	7
	__	T.A.	18
Total	$298	U.K.	115	(50–60: Sec. 550)
	__	Austria	0
		German Refugees	15
		Italy	20 (Possibly Sec. 550)
		Greece	20
		Turkey	50
		Yugoslavia	45
		Spain	8
		Total	$323 [313]

You will observe a deficit of $25 millions. This could probably be covered by (a) reducing the UK by that amount, or (b) spreading the reduction among several programs, including the TA program, German refugees, Greece, Turkey, and possibly Italy.

2. The following is a run down of ’54 economic aid possibilities for the various countries:

Austria.

The B/P and reserve situation continues favorable, and barring some action by the Soviets (i.e. denial of Soviet Zone oil or some similar action), Austria should not receive aid this year. Austrian Government has requested some $40 million aid, but it is poorly justified, and not recommended by our Mission.

Greece.

In view of large pipeline and improved economic prospects, need for aid on economic grounds seems doubtful. However, in view of earthquake, and importance of providing political support to pro-US Government, NEA is likely to insist on continuance of some aid this year.

Turkey.

The maintenance of proportionately very large armed forces while continuing a heavy investment program makes it desirable that Turkey receive substantial aid this year.

Yugoslavia.

Final aid figure seems to be almost certain to be firmed up at $45 million, of which at least $15 million will be in surplus agricultural commodities.

United Kingdom.

At the April meetings in Paris,¹ we told the British that we would try to get them $200 million from Congress. We succeeded in getting about $155 million ($85+$70). The country team believes this amount would be accepted by the British as effective fulfillment of the April commitment. However, Gov. Stassen appears to take the line that this shortfall should be made up by applying military funds under Section 550. If surplus commodities can be programmed and if local currency proceeds can be used for OSP, this may be an acceptable position. (See Levy-Hawes’ Memo re Plan K.²)

Germany.

The East German food program may not ever require the full $15 million originally programmed, although many tentative plans are being made fully to utilize this sum. The Refugee program, tentatively tagged at $15 million, is far from firm as to how the funds would be used. In addition, the Berlin investment program could require some 1954 funds, although this is not likely.

Italy.

There appear to be strong political reasons for continuing aid to Italy at about $20 million this year. At least part of the aid could be in the form of surplus cotton.

Spain.

In addition to the $75 million carry-over, we appear, because of Congressional history, and Spanish expectations, bound to grant an additional $8 million to Spain this year (if agreements are signed).

TA and Information.

Gov. Stassen has proposed $18 million for TA this year, which seems somewhat high, although it is a roughly proportionate cut from the illustrative figure. The $7 million for the information program is to be transferred to USIA, and is a matter over which State appears to have little control.

France.

All aid for France this year is tied directly to IC except for $85 million production assistance for French NATO forces, $400 million is in the Act plus another $100 million or so concealed in Title III Military. Any requirements in addition to these will have to be met largely from Title I Military.³

1. For documentation on the Eleventh Session of the North Atlantic Council at Paris, Apr. 23–25, 1953, see vol. v, Part 1, pp. 368 ff.
2. For documentation on Plan K regarding jet fighters for the United Kingdom, see Documents 426 ff.
3. The last sentence of the memorandum which reads “I gather that the present thinking on the administration of additional aid would be to operate on the same basis as the $400 million, after appropriate consultation with Congress” is crossed out and the following handwritten sentence substituted: “Presumably, any additional aid must be administered under section 303, where we have greatest latitude (thanks to China bloc!)”.