Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 2

Conference files, lot 59 D 95, CF 108

No. 519
United States Delegation Minutes of the French-United States Discussion at the Quai d’Orsay, Paris, May 29, 1952, 3:30 p.m.¹

secret

[Washington,] June 10, 1952.

Participants:

• France:

  • Prime Minister Pinay
  • Foreign Minister Robert Schuman
  • Defense Minister Pleven
  • M. Letourneau
  • Mr. Maurice Schumann
  • Mr. Montel
  • Mr. Gaillard
  • Mr. Parodi
  • M. de Margerie
  • General Lecheres
  • M. Alphand
  • M. de Clermont-Tonnerre
  • M. Charpentier
  • M. Wormser
  • M. Mertinet
  • M. Ratineau, and others

• U.S.:

  • The Secretary
  • Ambassador Dunn
  • Ambassador Draper
  • Ambassador Jessup
  • Mr. Perkins
  • Mr. Nash
  • Mr. Labouisse
  • General Richards
  • Mr. Knight
  • Miss Kirkpatrick
  • Mr. Timmons

Mr. Pleven as Minister of Defense opened the discussion with a lengthy statement along the lines generally familiar. He said that he would like to say a few words regarding the implementation of the policy which arose out of the discussion held in Lisbon last February. On February 25 the French and US Governments, over the signature of Messrs. Acheson and Schuman, had agreed on a memorandum² dealing with French military expenditure for 1952 and the amount of US financial aid to be made available in support thereof.

Mr. Pleven said paragraph 6 of the Lisbon Memorandum of Understanding recognized the fact that the agreed program of 1400 billion francs would entail cancelling a certain number of contracts for military equipment and also that generally speaking no new orders could be placed. This meant that France’s armament industry would be brought to a very low level. It was therefore agreed at that time, Mr. Pleven said, although there were no legal commitments entered into by the US, that the US would examine the possibility of offshore purchases in addition to those already decided upon for Indo-China. The French Government was to give the US Government a list of items of equipment which were already in production or which could be produced quickly. This policy, Mr. Pleven continued, was quite in line with the recommendations of the TCC Wise Men which were approved by the NATO countries, and which stressed the usefulness of offshore purchases and the necessity of placing contracts as quickly as possible. The TCC report also pointed out that there was a greater possibility for offshore purchases in France than elsewhere in Europe. A figure of $1 to $2 billion was mentioned for the period 1952–1954. In the comments made by the US Government on the TCC report, Mr. Pleven said, mention was made of some prior conditions which would have to be fulfilled in order for offshore purchases to be possible. The US Government stressed the necessity of settling certain fiscal problems, and of reaching bilaterial agreements concerning facilities granted to the US. Shortly after the Lisbon meetings, Mr. Pleven said, the French Government set themselves to the task of meeting these requirements, so that now there are agreements on both the fiscal problems and on the facilities to be granted. In addition, the administrative procedures had to be settled.

Mr. Pleven said that as they had agreed to do, the French Government gave the US representatives in Paris a list of orders that would be cancelled if it were not possible to replace French Government orders with offshore purchases. It was on these contracts, Mr. Pleven indicated, that he wished to dwell for a moment. The list in question shows in many cases the items affected will be items of essential equipment. If the contracts are cancelled, there will be a crisis in the French armament industry, the social, economic and financial consequences of which cannot be exaggerated. A whole part of the aircraft program passed by Parliament in 1950 might be brought to a sudden stop on July 1, 1952. This would particularly affect interceptor, transport and jet aircraft. Two out of the four big nationalized concerns would have to be closed down and the same would apply to a well-known private firm (Hispano Suiza). As regards the Army, the cut would hit mostly light tanks and armored vehicles, and a considerable part of the artillery program. As for the Navy, production of carrier borne interceptor aircraft to be used by NATO would have to stop. All of these factors had been pointed out to the US representatives by Mr. Bourges-Maunoury in Lisbon last February; The Lisbon agreement had been signed on February 25 and over three months have elapsed since that time. Although the French Government has been able to defer the debate on the budget until June 10, Mr. Pleven said, the debate would open under very unfavorable conditions if the French Government were not able to give Parliament at least some idea of the minimum volume of offshore purchases that France can hope for, even if only from the credits involved in the US fiscal year 1951–1952 exercise. The French budget has been set up in conformity with the Lisbon commitments, including infrastructure. Parliament will be sorely tempted to use part of the infrastructure or other funds to prevent plants being forced to close down, unless the French Government is able to tell Parliament that sufficient offshore orders will be placed in time to avoid such an outcome. Mr. Pleven went on that he would like to say frankly that the greatest consideration should be given by the US agencies concerned to the political considerations involved in OSP. The whole offshore procurement problem is part of the general framework that was referred to yesterday in the discussion of Indo-China, and it is obvious that equilibrium inside the EDC calls for sufficient production of armaments and aircraft in France to meet at least a large part of the needs of the French contribution to EDC—so that France would not have to rely solely, in the future, on US or German deliveries.

The Bonn and Paris agreements now enable Germany again to produce items of military equipment. Politically it would be inconceivable, even unthinkable, Mr. Pleven said, that French armament factories should have to close down just when German armament factories are beginning operations. It is in direct interest of the EDC and the whole of NATO (especially for the US forces, so far from their home bases) that there should exist in France the necessary industrial facilities for maintaining and repairing military equipment. It is equally essential that it should be possible to produce in France the necessary spare parts for aircraft and to carry out the heavy maintenance of aircraft. In any case this would reduce expenditure which would have to be incurred otherwise. Mr. Pleven said that he fully recognized the fact that the US entered into no legal commitments at Lisbon regarding the offshore purchase of the items now under discussion, nor were any dates fixed by which the US consideration of the problem would be terminated; however, the time for quickly reaching a decision had now come. Mr. Pleven said he did not mean that the detailed contracts should now be signed but rather that the French Government should know on what minimum volume of orders it could rely out of the US FY 1951–1952 funds, as well as the possible order of magnitude of purchases that might be made from FY 1953 funds. Mr. Pleven concluded by saying that the main objection which the ratification of the EDC treaty will encounter is that Germany will attain military hegemony in Europe. The only possible answer to that charge will be to see that all measures have been taken to assure that France’s military forces (her contribution to the European Army) will be as strong and well-equipped as possible. He was convinced, Mr. Pleven said, that it is in the French and in the US interest that such a state of affairs should be reached rapidly.

The Secretary said that considerable progress has been made in the field of offshore purchases, and that there is very little difference of opinion between the two Governments concerning the principles involved. He wished to mention, the Secretary continued, some of the points on which progress has been made since the Lisbon meetings, and which has proved most useful. One point, which had not yet been raised in the present discussion, concerned the agreement reached about the volume of offshore purchases in relation to the 1952 military budget, that is, the $200 million program agreed at Lisbon.

Some contracts had been signed within the last few days, the Secretary said, and the rest will be signed within the next two weeks or so. This particular undertaking is going well and therefore gives us no concern. While this has been going on, the two Governments have been studying what other orders could be placed. Yesterday an important contract for naval vessels was signed, and a large ammunition order has been opened to bids. The Secretary said that other discussions are being pursued and that what has been done already has been done well and quickly. With regard to the questions mentioned by Mr. Pleven, the Secretary said that he had indicated to Mr. Pleven in Lisbon that certain preliminary tasks had to be accomplished. It had been first of all necessary to determine what defense production would be financed by the French budget in 1952 and what would not, and also to prepare the list of equipment which the French Government wished to suggest for offshore procurement. The Secretary said that he understood that this work had been completed by the French Government some three weeks ago, and that the necessary information had been made available to the American Government. The list of items for which the French Government had requested offshore procurement had been studied earnestly by the US officials here in Paris and also by Mr. Nash, who was returning to Washington that evening. The Secretary went on to say that the US side knows the necessities of time and would try to meet them. The US would attempt to give the French Government some indications, some lines of guidance, as to what is possible, what is not possible and what items might require further discussion. The Secretary said that the French and the US Governments agree in general on the principles that had already been mentioned by Mr. Pleven. With regard to the Mutual Security legislation now before Congress, Mr. Harriman and Mr. Lovett had appeared before Congressional committees and explained energetically why it is best whenever possible to place orders in Europe. They had explained that building up the European armament industry, and particularly French industry, would enable equipment to be replaced and spares to be produced in France, thereby avoiding future dollar difficulties. The principle of offshore procurement had been very well received by the Congress. The current legislation before the House of Representatives provides for $1 billion, out of the funds to be available for the purchase of military equipment, to be used for purchases outside the US. This raises a question which applies to certain items of equipment, the question of prices. It is obvious that if military equipment is less expensive in Europe than in the US then no question arises.

Questions do however arise when such equipment is more expensive in Europe than in the US. There is no difference of opinion between the two Governments on that score, the Secretary said; he was sure that the French Government is as concerned as the US in having French prices at a level at which OSP purchases will not only be desirable but also economical. The two Governments are in complete accord, the Secretary continued, on another principle discussed by Mr. Pleven, that of the maintenance of an appropriate balance between the French and German armament industries. The Secretary said that he understood that such a balance is a basic necessity for the EDC undertaking, that he realized the underlying reasons, and that the practical success of the recent accord rests thereon. The necessity of maintaining such a balance applies not only to the armed forces but also to production facilities. In all of these things, the Secretary said, the US wishes to support EDC and NATO policy and findings, such as in the TCC and annual reviews. The US has no separate and distinct policy in this regard. The Secretary went on to say that it would be outside his field to discuss any individual items in the French Government request for OSP. Some of these may raise specific questions, particularly the problem of prices already discussed. He was sure, he said, that the aim was a common one and he was certain that the Department of Defense and the Mutual Security Administration would give their best consideration to the French Government’s request, and would see that Paris is informed as quickly as possible about the decisions that may be reached in Washington. The Secretary concluded this part of his statement by saying that the Senate last night passed a bill which did not differ greatly from the recommendations made by the committee reporting the Mutual Security legislation. The House of Representatives had, however, made a serious reduction in the appropriation request. The next step therefore is for the bill to go to conference.³

Mr. Pleven said that he wished to thank the Secretary for his agreement on the principles involved, that is, the necessity for maintaining in France an armament industry which is alive and active and in equilibrium with the German armament industry. Mr. Pleven said that he did not refer earlier to the $200 million offshore purchase transaction that had been agreed in Lisbon as this concerns mainly Indo–China. He wished to confirm that the first such contracts had already been signed and that the others are going well. He said that the contracts signed yesterday concerning naval vessels fall into a somewhat different category, as this equipment will replace equipment to be delivered from the US under the end-item program.

The main French concern now, Mr. Pleven said, is the time factor, particularly as far as the production of aircraft is concerned. France has a modern interceptor fighter and the equipment necessary to produce it has already been obtained. But if the French Government does not know what the US decision is before July 1, Mr. Pleven said, a very serious risk will be run which he had already explained to American representatives, the consequences of which will very likely not be tolerated by Parliament. Mr. Pleven said that he realized the Secretary would not be able to give an answer today on the questions raised, but that he asked the Secretary to discuss the matter with Secretary of Defense Lovett upon his return to Washington, particularly with regard to the aircraft production problem, where a speedy decision is vital. With respect to prices, Mr. Pleven said he thought this problem was less important with regard to aircraft than perhaps other items of equipment. He wished to thank the US Government for the additional time that had recently been granted for the submission of bids on the ammunition order already discussed. As a consequence of this extension lower bids had been put in than had originally appeared possible. Mr. Pleven concluded by saying that the problem with which the French Government would be faced on July 1 still remained, and that he asked that some indication as to what the US Government would do about the French Government’s offshore purchase request be given in time for the French military budget debate, which is scheduled for June 10.

The Secretary said that this gave very little time, and presented great difficulties, especially in view of the present status of the US Mutual Security legislation for FY 1953. The Secretary went on to say that all he could say now was that he and Mr. Nash would repeat to the appropriate persons in Washington what Mr. Pleven said, and they would try to get a decision as soon as possible. We will do the best we can, the Secretary said.

Mr. Montel (Secretary of State for Air) said that he wished to give a short exposé of the French aircraft situation. It is our purpose, he indicated, to give General Norstad the greatest number of aircraft possible against the commitment that France has undertaken. With respect to the French five year program for the aircraft industry, at the end of 1951 this program was up to date. It involved the reorganization of the industry, based upon a minimum volume of production, and the cancellation of the present aircraft production plans would upset the entire program and would lead to unemployment. Mr. Montel said that present plans called for the production of some 1424 aircraft by the end of 1954. As against overall budget needs which had been estimated as follows, 290 billion francs (1952), 450 billion francs (1953) and 460 billion francs (1954), it was now estimated that financing possibilities would only allow expenditure of the following sums in the three years: 246 in 1952, 256 in 1953, and 270 in 1954. Thus the gap for 1952 would be 44 billion francs, the gap for 1953 would be 194 billion francs and for 1954, 190 billion francs. In concluding his statement Mr. Montel spoke of the great goodwill Secretary of the Air Force Finletter had shown during his recent visit to Washington. Mr. Montel said he was ready to go over at any time with us the details of the French Air Force problems in order to help achieve the greatest possible production.

In conclusion, Prime Minister Pinay thanked the Secretary warmly for having taken the time from an extremely busy schedule to remain in Paris for three days. The Prime Minister said he joined with Mr. Pleven in asking that on the Secretary’s return he attempt to find the most practical and speediest solution to the urgent problem that they had discussed today.

The Secretary replied the greatest cooperation between France and the US was essential to success of all our present undertakings. He had been delighted to be in Paris and to have had a chance to study the questions which he and his associates had discussed with the Prime Minister and his colleagues.

1. These minutes, presumably drafted by officials of the Department of State upon their return to Washington, were circulated as document SCEM Min 4. Regarding the background and preparations for this talk, see Document 517. A summary of this meeting was transmitted to the Department of State in telegram 7482 from Paris, May 31. (751.5 MSP/5–3152)
2. Transmitted to the Department of State in Document 507.
3. For information concerning the Mutual Security Act of 1952 and its revision by Congress, see Document 263.