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

740.5 MSP/1–1354

No. 289
Memorandum by Laurence C. Vass of the Office of European Regional Affairs to the Assistant Secretary of State for European Affairs (Merchant)¹

secret

Washington, January 13, 1954.

Subject:

• Fiscal Year 1955 MSP and EDC

On January 21 the Budget message will reveal to the Congress and our allies the Mutual Security Program which the Administration requests for Fiscal Year 1955. The grand total of military aid will appear as $2.5 billion, which is not startlingly lower than the figure Congress appropriated last year. However, appearances are quite misleading in this case.

All of the $3.2 billion Congress gave us last year was for “normal” military aid programs. This year the Administration has included $900 million of budget support aid in the $2.5 billion (including the Indochina $800 million), so that only $1.6 billion is requested for regular MDAP. After allowing for fixed items (administration, infrastructure, etc.) and non-NATO country programs, only about $700 million of this can be expected to be shown as equipment for NATO countries (including Greece, Turkey and Germany). By comparison, Congress gave about $1.5 billion last year for these countries.

However, there remain two major hurdles to surmount. There is as yet no decision within the Administration that the full $1.6 billion will be requested as an appropriation. Stassen is counting on substantial “savings” again this year to reduce the new funds needed. The Bureau of Budget takes the line that the program can be largely financed by funding the “lead time” through the Department of Defense appropriations. It is likely that the authorization requested in the actual bill to be submitted will be less than the Budget message figure; it is virtually certain that the appropriation request will be substantially lower, even though Congress were to surprise us by granting the full authorization requested.

However, there is faint hope that Congress will be so generous. We face this year the usual consequences of overfunding and over-promising. We have flopped badly on our expenditure forecasts, with the consequence that some $8 billion (of which about $3 billion is for OSP) will be unexpended at the end of this fiscal year. Even worse, it is feared that several billions will remain unobligated at the time Congress is considering the bill. Given the forecast budget deficit of $3 billion, it will require a powerfully strong stand by the Administration, based on a persuasive presentation, to prevent the budget balancing bloc from trimming the program very substantially.

So far as the NATO program is concerned, the prospects for a successful defense are not good. In fact, the following adverse factors indicate that the NATO program will bear the brunt of the attack:

1. an unexpended balance of about $6 billion in Europe;

2. no spectacular force increases;

3. dissatisfaction with the East West trade policies of our allies;

4. the absence of a NATO lobby, to offset pressure for preserving programs for Formosa, Israel, Spain, etc.

Of overriding importance is the prospect for early ratification of EDC. The Congress will certainly be considering the bill by April, and the authorizing legislation may be on the floor by May. If early ratification appears assured by then, our prospects of successfully defending the program are fairly bright. If, however, the four power talks drag out, if the French and Italians are unable to act or procrastinate, our “agonizing reappraisal” will occur but in the most explosive place—the floor of the Congress.

Since the odds are that this is exactly what will happen—Congressional debate at the very time when the success of our integration policy hangs in balance—it would seem wise to consider any approach, however drastic, which might serve the dual approach of (1) aiding ratification by administering a second “shock” and (2) retaining the initiative in the Administration. The latter is a most important consideration, as the passage of the Richards Amendment² last year illustrates. As indicated above, the monetary stakes for which we are playing are not large. We can do without the few hundred million involved, if we could thereby protect our foreign policy objectives. The risk we run in asking for this sum is the temptation for Congress to devise some punitive action tying up unexpended funds, if EDC ratification has not by then become assured. The danger is obvious: Congress may itself decide upon an alternative to the EDC, e.g., direct German rearmament, thereby nullifying whatever plans the Administration may have for bringing its own policy to a successful conclusion.

There is an alternative approach, if certain assumptions be accepted. These are:

1. EDC ratification is not expected to be certain before we present the aid bill to Congress.

2. We have decided not to abandon EDC for a policy of pushing ahead with an independently rearmed Germany.

3. We accept the fact that we are overfunded and that there is no firm basis for asking for more money this year, except for political reasons.

4. The fate of EDC is sufficiently in doubt that (a) “shock treatment” is a warranted risk and (b) the risk of a lethal shock by the Congress is too great to be accepted.

Under these assumptions, it seems to me that the best defense is for the Administration to be offensive. In the bill itself or in a special message, carefully timed for French impact, the Administration could announce that the Fiscal Year 1955 estimates include no new program of military aid for NATO countries and Germany, for the following reasons:

1. Because of the delay in the ratification of EDC, we are over-funded. We have $1.3 billion funded before Fiscal Year 1954 for Germany and another $550 million of Fiscal Year 1954 funds sterilized under the Richards Amendment. In addition, the new Administration is finding substantial savings which “stretch” past appropriations over new requirements.

2. Despite our confidence in eventual ratification, we have no firm basis for calculating requirements for further funding now of the EDC build-up. Presently-known slippage requires substantial reprogramming, with the result that new European requirements can largely be met from equipment already procured for German forces.

3. Since all NATO planning is based on the “forward strategy”, all additional NATO build-up is open to question until EDC is ratified and German contingents are known to be available. Until this only practical means for German rearmament materializes, we cannot justify further requests based on the assumption that we are to carry out this strategy.

4. We accept the wisdom of the Richards Amendment. However, we ask that the Congress authorize reprogramming of this amount to non-EDC Title I and II countries. To the extent that valid requirements in non-EDC countries exist, the German program will similarly be reprogrammed.

5. We do not request that the Richards Amendment be lifted so far as EDC countries are concerned. With the possible exception of Italy, previous programs funded an adequate supply of equipment over the next two years, so that Fiscal Year 1955 funds are not needed. Some reprogramming among these countries may, however, be required.

6. Should, as we hope and expect, EDC be ratified shortly and the German build-up begins, we will have retained in the German program the short-lead items necessary for the beginning of training. In addition, there is ample funding in Defense budget to insure prompt delivery of longer lead-time items, if funds are available when required. Should the desired happen, and additional funds are warranted for EDC forces in view of their rapid build-up, the Administration will request a supplemental appropriation.

The timing of an announcement of this sort will largely depend on its effect on EDC ratification. It would not be wise to make an announcement until after the new French Government is formed and until the Berlin talks³ are disposed of as an obstacle to ratification. If these obstacles are removed fairly quickly and the key debate in the French Assembly is scheduled to take place without delay, we should definitely suppress an announcement along the lines suggested, since it would undoubtedly have a disruptive effect. We would instead want to be making announcements on our assurances and taking other constructive steps to provide the final inducements.

What we may be faced with, however, is prolonged delay in the formation of a government or continued procrastination on EDC ratification by a government already formed. If we are faced with either of these situations and we approach March with no action on the EDC, then an announcement of the proposal at that time could be a very effective final “shock treatment” to bring about ratification.

Perhaps the best procedure, whatever the situation a month from now, would be to inform the French privately in mid-February that we will be forced to make an announcement along the above lines in the near future in view of the approaching Congressional consideration of the mutual military program. Informing the French in advance would make very clear to them the urgency of the situation.

If announced, the impact of the proposal throughout Europe will be very great. It will be obvious to all concerned that this is the first concrete result of the “agonizing reappraisal” of U.S. foreign policy. Between the lines of the announcement it will be apparent that the real choice being presented is between the forward strategy and the peripheral strategy. The peripheral overtones will be obvious in the fact that aid to non-EDC NATO countries, plus Spain and Yugoslavia, continued as planned, partly by transferring aid previously programmed for the EDC countries.

The EDC countries other than France will, of course, object violently when the proposal is announced. However, seeing the peripheral handwriting on the wall, their principal reaction will be to do everything possible to bring about French EDC ratification. The Germans, who are taking a hard line on the Saar and other French-German questions these days, are likely to change their tune, if they see how completely everything depends on EDC ratification. The Italians should also be “shocked” into a different attitude. The Benelux countries will undoubtedly protest to us most vigorously about the reprogramming of the Richards Amendment equipment to non-EDC countries, but they will also react by bringing a maximum of pressure on the French.

The proposal will also have an impact on the other NATO countries. While on the one hand they will have the assurance of a continuance of their own aid programs, they also have a great deal at stake in the forward strategy and they will add to the pressure on the French to ratify.

1. Copies to Nolting, Reinstein, Elbrick, Moore, Jones, and Martin.
2. The Richards Amendment to the Mutual Security bill of 1953 provided that 50 percent of the military assistance funds for Europe in fiscal year 1954 be used for equipment and materials to be transferred to the European Defense Community or to countries which became members thereof unless Congress, upon Presidential recommendation, provided otherwise. For text of the Richards Amendment agreed to July 11, 1953, see vol. v, Part 1, p. 796.
3. For documentation on the meetings of the Foreign Ministers of the United States, United Kingdom, France, and the Soviet Union, at Berlin, Jan. 25–Feb. 18, 1954, see vol. vii, Part 1, pp. 804 ff.