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

700.5 MSP/1–2152: Circular airgram

No. 723
The Department of State to Certain Diplomatic Missions¹

[Extract]

confidential

Washington, January 21, 1952.

• Subject: Intergovernmental Understandings on OSP.

Unn. This is joint State, Defense, MSA, DMS, Treasury message.

. . . . . . .

IV. Benton Amendment Issues

23. General Statement—The Benton Amendment (Section 516 of the Mutual Security Act of 1951) restates in legislative terms U.S. policies regarding the need to administer assistance in such ways as to encourage free enterprise to eliminate restrictive business practices and raise productivity, and to encourage the development and strengthening of free labor union movements to the extent feasible. It is important that our execution of the OSP program and other programs meets the intent of the amendment, which is to strengthen the economic and political fabric of Western Europe. Moreover, the issues to which the amendment is addressed are of immediate practical application in the successful attainment of OSP’s primary objective, inasmuch as their solutions may be expected to result in avoidance of work stoppages, sabotage, and adverse Communist propaganda, and to ensure prompt deliveries of military equipment procured at reasonable prices. However, at this stage of the OSP program it is difficult either to predict in detail the extent and character of the problems which will arise in practice or to lay down in advance and make applicable to all countries a general set of techniques for dealing with problems in this area. Therefore, in addition to taking such action recommended below as may be appropriate in specific countries, you are requested to report fully to regional and Washington offices on pertinent experience as it is gained so that new or improved techniques may in time be made available to all country teams.

24. Labor Policy and Guidance—The offshore procurement program must be conducted in such a way as to win the support of European workers and strengthen and keep the good will of the democratic trade unions. It is imperative that this be fully appreciated, for if offshore procurement is not conducted with due regard to the labor aspects and implications, the program may turn out to be a boon to Communist propaganda and Communist strength. The nature of this problem varies widely among PC’s and considerable discretion is left to you as to how best to meet the requirements of your own situation.

25. U.K., Netherlands, Norway and Denmark—In the cases of the U.K., The Netherlands, Norway and Denmark, no extraordinary effort is required on our part. Democratic labor unions are strong, management generally enlightened, union-management relations generally satisfactory, and Communist influence is of minor importance.

OSP contracts should include the labor clause contained in Depcirtel 572 of January 3,² and where the PC Government’s own procurement contracts are subject to legislation or regulations calling for wages and working conditions better than the generally applicable standards, OSP contracts shall also require conformity with these higher standards. Procurement officers should stress in their contract negotiations the importance we attach to good union-management relationships. They should avoid placing contracts with the occasional notoriously sub-standard or anti-union firm unless these firms are willing to make improvements. In general, country teams and procurement officers should be guided in these regards by the advice of Labor Attachés and MSA Labor Advisers.

26. France and Italy—A wholly different situation prevails in France and Italy, where a large part of our contracts will be placed. These two countries offer the greatest potentialities for using OSP to achieve the free trade union objectives of the Mutual Security Act and the greatest dangers of its having the opposite effect if the labor aspect is neglected or mishandled. The factors to be considered in Italy and France are (a) the preponderant position of Communist unions in the labor movements as a whole and more particularly in the very industries most likely to be involved in OSP; (b) the general indifference, or even hostility, of most French and Italian workers to the defense program; (c) their extreme discontent over high prices, low wages, and high profits; and (d) the unenlightened labor practices of many employers and the lack of adequate protection of labor by their own unions.

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1. This 12-page message, drafted by Kranich of State, Arth of DMS, and Levy-Hawes of Defense, was sent to Brussels, Copenhagen, Paris (with instructions to pass to Rubin and OSR and MacArthur), Rome, The Hague, Oslo, London (for Embassy and Spofford), Luxembourg, and HICOG Bonn. It was repeated to Heidelberg for Handy, Wiesbaden for Norstad, and Naples for Carney.
2. This circular telegram notified certain American missions in Europe, including the Embassy in Italy, that the OSP contracting should begin immediately. It also contained the full text of a Department of Defense cable of Jan. 3 giving detailed instructions to offshore procurement officers. (780.5 MSP/1–352)