751.5 MSP/9–2154
No. 659
The Acting Secretary
of State to the Director of the Foreign Operations
Administration (Stassen)1
Dear Harold: The Secretary discussed with me briefly the memorandum you gave him on September 132 regarding the French aid program. I have considered your suggestions carefully and would like to make the following comments without delay, in view of the need to prepare for the talks with the French representatives here later this month.3
As you know, the Congress laid down two specific mandates affecting France in the current legislation: the requirement embodied in the Richards Amendment that MDAP supplies equivalent in value to the fiscal 1954–1955 programs be withheld from delivery, and the provision that to the extent possible aid in support of military forces in Southeast Asia should be given directly to the countries concerned. The Congress agreed, at a time the war in Indochina had already ended, to carry over and consolidate the unspent portion of the $785 million fund with the new appropriation, all of which is now designed to sustain the integrity and security of the remaining free areas of Indochina and the adjacent region. It seems to me that our purpose now should be to use these funds to carry out this policy by means and devices which we consider best suited to our national interests. It is to this end that we have prepared letters from the President for delivery to the Governments of Vietnam and Cambodia. It is also our view that we do not wish to see the French withdraw entirely from the scene at this time.
With regard to your proposals that the French Government be notified that the entire aid program involving France is being suspended, I would like to make certain specific comments, as follows:
1. Suspension of end-item deliveries to French NATO forces:
It is my understanding that the Department of Defense will automatically withhold deliveries as required by the Richards Amendment; but it is also my understanding that this will have no effect [Page 1449] upon deliveries to France until the present pipeline runs out, which may be many months hence. With regard to suspending deliveries in the entire pipeline of undelivered end items from previous French programs, amounting to some $1300 million, I recently proposed to Deputy Secretary Anderson that both SACEUR and MAAG/France be sounded out regarding the likely consequences of such an action on the military capability of the NATO forces. I believe that we should have this advice as well as the recommendation of the Joint Chiefs of Staff at hand before considering this matter further on political grounds.
2. Suspension of off-shore procurement contracts in France:
As you know, we have for the past several months withheld the letting of any additional contracts in France, and this situation continues to prevail, with certain exceptions in those cases where alternative sources may not be available. I understand that there are some $600 million in previous contracts let in France on which deliveries have not yet been made, contracts for end-items for NATO forces some of which may be delivered to forces other than in France. To suspend these contracts would appear to involve not only lengthy termination negotiations, but under the terms of the contracts would obligate the United States to make substantial termination payments to the contractors. I believe that the question of withdrawing contracts already let calls for careful consideration by the Department of Defense, taking into account the views of SACEUR and the JCS. The disruptive effects and implications for Western European defenses of suspending all the presently outstanding OSP contracts in France is of such major consequence that such a decision should be taken only after the most careful consideration by the NSC and the President.
3. Suspension of payments to France under the $385 million Indochina program:
The principal question remains of entering into negotiations with the Associated States to lay the basis for a direct aid program surrounded by the safeguards considered to be necessary under current legislation and policy. It is, however, important that there not be a hiatus in the flow of funds to the Associated States, which are so heavily dependent on external financing of their military forces. Although we will soon publicize our intention of channeling aid directly to these governments, we will not be prepared to enter into negotiations with them until we know more clearly and more precisely what military program we wish to see carried out in Indochina during the coming year. I have suggested that the Joint Chiefs of Staff undertake a study of these force goals, and this study is presently under way.
[Page 1450]4. Suspension of payments to France under the $400 million Indochina program:
I understand that there is a considerable pipeline of French expenditures made before July 21 which are being processed for reimbursement and which are eligible for reimbursement under the present aid arrangements with France. Your memorandum does not indicate how you would propose to treat this pipeline, although I understand that, except for items which we may wish to declare ineligible retroactively, we would have a clear obligation to honor these payments. If we were to propose a suspension of all payments from the $400 million account henceforth as well as retroactive to July 21, such action would carry the clear implication that the sooner the French withdraw all their military forces from Indochina the better. It is not yet clear to me that this course of action will be the wisest one to follow if we are to safeguard the present free areas of Indochina.
It is my view that we should continue to support the French forces in Indochina during the remainder of 1954, but that we should be prepared to inform the French that we propose to suspend payments retroactive to July 21 on arms, ammunition and supplies being procured in France which may no longer be required in Indochina or which could not be delivered under the terms of the cease-fire agreements. I understand that approximately a third of the reimbursements from the $400 million portion, and a third or more of the reimbursements from the $385 million portion, are intended to cover payments for procurement. I believe that after reaching agreement in principle with the French on this, detailed negotiations should proceed in Paris to determine exactly what items will be affected.
Before reaching a conclusion regarding future support for the French forces, I have asked for the recommendations of the Joint Chiefs of Staff on the question of what French forces should remain in Indochina during the coming fifteen months. I think, however, that we should propose to the French that the forces retained in Indochina in the coming year to assure the security of that area, should be within the capability of France to support from her own financial resources. Should the French representatives take the position that without some assurance of continued United States support they will withdraw all forces as soon as possible from Indochina, and should we decide that such action would not be in our own national interest, we may have to take a different position.
It is my hope that we will have a fully developed position prepared on the many aspects of the Indochina question by the time [Page 1451] the French representatives arrive here later this month. However, we may not be fully prepared, particularly so with regard to the kind of military program we might wish to support in Indochina over the coming year. The forthcoming talks may therefore constitute an initial exchange of views, in which we should seek to learn from the French representatives what their current political and military plans and intentions in Indochina may be.
Sincerely yours,
- Drafted by Beigel and cleared in draft with MacArthur, Nolting, Barbour, Robertson, and Claxton. Merchant sent Acting Secretary Smith a memorandum on Sept. 20 recommending that he sign this letter and briefly summarizing its contents; the text of this memorandum is in EUR files, lot 59 D 233, “France, 1950–1955”.↩
- Supra.↩
- Reference is to the U.S.–French talks on Indochina which were scheduled to take place in Washington, Sept. 27–29, 1954; for documentation on these talks, see vol. xiii, Part 2, pp. 2080 ff.↩