Foreign Relations of the United States, 1955–1957, Western Europe and Canada, Volume XXVII

35. Telegram From the Embassy in France to the Department of State¹

Paris, January 28, 1957— 1 p.m.

3624. Pass Treasury and ICA. Reference: Embassy telegram 3401.² While economic situation very different, political reasons for aid to France are equally as valid as those in case of Britain. If U.S. refuses all assistance to France after prompt and generous help to Britain, effect on public opinion here bound to be very drastic. In view of U.S. statements prior to closing of Canal that we stood ready to help shoulder extra dollar costs of oil through Exim Bank loans,³ and in view of loan for this purpose to Britain, French opinion certainly entitled expect similar assistance. Technical economic reasons for differentiating between France and England will not be understood here except in technical circles. For these political reasons I feel it imperative to make available some economic aid to France at this time to show that U.S. Government is willing to share burden of Suez crisis.

While loan for extra dollar costs of petroleum and coal would be best understood by French public, I understand from Tuthill who has just returned from Washington that there are serious objections to this kind of loan in the case of France.

If such a loan not feasible, a useful alternative would be Exim Bank loan to cover cost new American equipment being purchased by Air France. I understand payments due on this account will amount to approximately $40 million in Calendar Year 57 and to overall total of $75 to $100 million over next three years.

I also understand that this type of loan would be more acceptable to Exim Bank and Treasury than petroleum loan, and from business point of view it obviously a much sounder type of loan to make. There are probably other items of major capital equipment that could be similarly financed.

My recommendation therefore is that if petroleum loan out of question,Exim Bank make capital equipment loan of $100 million to cover aviation equipment and such other capital items as required to reach $100 million figure. I feel that loan of this size is required to impress public and avoid unfavorable reaction. Loan would of course not have to be disbursed entirely during Calendar Year 57. To obtain maximum political advantage I hope that action can be expedited and favorable announcement of some sort made by mid-February at latest.⁴

Dillon

1. Source: Department of State, Central Files, 751.5–MSP/1–2857. Confidential.
2. Telegram 3401, January 14, described a January 14 conversation between Dillon and Pineau on France’s financial position. (Ibid., 851.10/1–1457)
3. For text of Secretary Dulles’ remarks on this question at his news conference on September 13, 1956, see Department of State Bulletin, September 24, 1956, p. 478. Further documentation on this subject is in Department of State, Central File 974.7301.
4. In telegram 3625 from Paris, January 28, Dillon urged that the decision on aid to France be taken before Prime Minister Mollet visited Washington, February 25–28. (Ibid., 751.5–MSP/1–2857)