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

751.5 MSP/10–1052: Telegram

No. 545
The Ambassador in France (Dunn) to the Department of State

secret
priority

Paris, October 10, 1952—6 p.m.

2213. Cotel—this is joint Embassy/MSA message. Re: Embtels 2153, October 8¹ and 2212, October 10, 1952.²

1. We should distinguish clearly between the nature of the two major objections French have raised to the conditions contained in letter and oral statement on aid. These are discussed below, together with recommended positions which we could take with French in course of continuing discussions.

2. First objection is to expression of US assumption that CY 1953 French military budget would be “appreciably larger” than in CY 1952, and to our estimate of size of desirable French military effort. Form in which Pinay cast his objection probably does not reveal full force his resentment. It would appear that in addition to his stated concern re attempt of US to interfere by estimating what size French military budget should be, Pinay was very upset by what he took as implication that French Government should revise its fiscal and budgetary policies in order to make possible appreciably larger French defense effort next year than French have projected thus far. One of bases of Pinay’s political strength with Parliament and country has been his financial and economic policies, including his firm public stand against raising taxes in 1953. In face of strong political and economic pressures, he is now reluctantly having to give ground on increases in civil operating and investment expenditures for 1953. Thus he may well have interpreted suggestion in oral statement that with $525 million in budget support aid level of CY 1953 military budget should be within range of 1450–1500 billion francs (in place of his proposed military budget of 1464 billion francs as maximum French could do on basis the larger aid figure of $650 million), as an expression of US views that French taxes should be raised in order to finance the further increase in France’s own financial contribution to defense implicit in US figures.

3. It is not yet clear to us whether the French objection is intended to mean that as matters now stand they will refuse to discuss size or content of military budget not only with us but also in NATO framework. Aware that French main objection on this score is to “US interference”, but that they recognize that such discussion is implicit in NATO annual review. Difficulty is that their present frame of mind could seriously prejudice review and that Fr may line up others to restrict scope of examination of military budgets.

4. Consequently we believe it would be desirable for us to seek to make clear to the Fr again, in the continuing discussions, the reasons why US assistance must be related to a level of defense effort by the recipient countries, and at the same time to assure them that we are not attempting to drive hard bargain. In these continuing discussions, we should emphasize that we of course recognize that the Fr budget both as to size and composition, is a matter for Fr determination; but that we simply considered it fair to all concerned to attempt an exchange of views in a friendly manner preliminary to the final aid determinations which would be made as result of the annual review. We should emphasize that this was sense of our message and that, if Fr considered its phrasing unhappy, they should forget the wording. The main points are the idea that there is a relationship between assistance and level of effort and that it would be helpful to have preliminary discussions as to possibilities on both sides.

5. Second Fr objection is to proposed counterpart procedure. Basic objection apparently directed to our suggestion that we wanted closer review military budget. Fr can only see this as totally unjustified prying into matters that are internal Fr affair. Moreover, obvious Fr suspect proposed procedure would mean that they would be held to a hand-to-mouth basis, having to justify various segments of their production program in the greatest detail. As stated in ref tel, we are convinced that the procedure envisaged in Deptel 1954³ is not capable of accomplishment in the face of the adamant Fr objections. It is no longer simply a question of risking a certain amount of friction in order attain results which would outweigh possible harm; issue has become one which if maintained from US side could conceivably have most serious consequences in terms of our NATO policies.

6. We therefore recommend that we be authorized to make clarifying statement to Fr which will modify somewhat intent of para 4 of Deptel 1954. Line would be that Fr may be assured that, assuming satisfactory outcome of annual review, as counterpart accrues in CY 1953 it will be released for application to mil budget or, however, in view of importance on US side of making convincing public and congressional explanation as to use MSP funds are put, we would like to work out a procedure for selecting production to be financed by counterpart ahead of time rather than by [garble]. If Fr would accept such a general arrangement, we believe it would give us as much opportunity as we can expect to bring our views to bear on their production program. We believe that we must accept as certain that we cannot hope to obtain the more detailed influence and control envisaged in Deptel 1954.

7. We should appreciate your earliest possible authorization to proceed along foregoing lines.⁴

Dunn

1. Document 543.
2. Supra.
3. Document 541.
4. At the Secretary’s daily meeting of Oct. 10, there was a discussion of the French reaction to the letter sent to Pinay concerning U.S. aid to France. The general consensus was that the French were making domestic political capital out of this issue and that it was not as serious an issue as it was being made out to be. (Secretary’s Daily Meetings, lot 58 D 609, “October 1952”)