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

DMS files, lot W–1444, “France”

No. 664
Memorandum by the Deputy Assistant Secretary of Defense for International Security Affairs (Davis) to the Director of the Foreign Operations Administration (Stassen)¹

secret

Washington, October 20, 1954.

• Subject: Aid to France

1. Reference is made to your memorandum to the Secretary of Defense, dated 29 September 1954,² subject as above, which was referred to this office for reply.

2. The National Security Council in their paper 5433/1, dated 25 September 1954,³ established a policy that “under present circumstances and until the situation has been further clarified, slow down U.S. aid to France and make no new financial commitments to France.” In implementing this policy, Department of Defense has forwarded memoranda to the Secretaries of the three Military Departments requesting that until further notice no new financial commitments be made to France and implementing action be taken without delay to slow down Mutual Defense Assistance Program shipments to France.

3. Based on a request by American Embassy, Paris, Department of Defense dispatched instructions to USCINCEUR on 27 July 1954 stopping all proposed awards on Mutual Defense Assistance Program/Offshore Procurement contracts to the Government of France or private contractors in France. These instructions also requested that current negotiations, if any, would be suspended and no new discussions of negotiations with French contractors would be instituted.

4. Thus, part of the action suggested in your memorandum of 29 September has already been accomplished. However, your suggestion that during the months of October and November 1954 legitimate payments due the French under our Defense contracts be purposely delayed is not favorably considered by the Department of Defense.

5. Serious objections have been raised by the three Military Departments concerning the implementation of this suggestion. Primarily these objections are:

(a) Increased administrative burden in administering offshore contracts.

(b) The integrity of our military contracting officers and the services they represent may be open to serious question by the French.

(c) Retaliatory action by the French, such as slowing down deliveries.

6. One of our compelling bargaining tools to obtain low prices and satisfactory delivery schedules from the French on existing contracts was every assurance by our contracting officers to the manufacturers that payments would be accomplished promptly to offset their short working capital position. To date prompt payments have been effected to the maximum extent practicable. Implementation of the proposed action would place our contracting personnel in a most undesirable position of being justly accused of breach of faith. The effect of this on our future contracting in Western Europe not only for Mutual Defense Assistance Program end items, but also logistical support of United States units deployed there, is readily apparent.

7. Retaliatory action by the French to perhaps hold back deliveries could be expected. We would then be confronted with the late receipt of urgently needed items as well as concurrent contracting problems generated by contract delinquencies.

8. For the above reasons, therefore, we would prefer not to delay payments under our existing French contracts. We are in agreement with your other suggestions and, as previously indicated, implementing action has already been initiated.

A. C. Davis

1. Copies of this memorandum were sent to Secretary Dulles and Director of the Budget Hughes.
2. Document 662.
3. For text, see vol. v, Part 2, p. 1268.