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

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

Paris, February 19, 1957— 8 p.m.

4222. Re Deptel 3168.² Re last para, comments at end our 4101³ do not reflect any change in recommendation our 4017.⁴ To recapitulate:

1. Only US military or economic aid, other than that already programmed or tentatively programmed, which we recommend be granted at present time is Exim Bank loan of about $100 million to finance purchase commercial aircraft and possibly other capital equipment. We feel that extension other new economic aid at this moment would be likely to provide excuse to French Govt for avoiding urgently required economy measures.

2. On other hand, we strongly urge Washington agencies keep in mind that developments in France before end Calendar 1957 may confront us with necessity decide whether granting additional US economic and military aid essential to our political and military objectives in Europe generally and France in particular.

3. Since early 1956 France has relieved inflationary pressures primarily by substantial increase of imports. Gold and dollar reserves in 1956 reduced from $2.0 to $1.2 billion. Increase in imports represented primarily energy, raw materials and equipment required by expanding industrial production. We doubt if French Govt will be able in near future to reduce expenditures and thus internal inflationary pressures by making difficult political decisions re Algeria, overseas territories, defense, social programs and internal investments. Thus interdependent internal and external disequilibriums may create extremely serious problem for France before close 1957. Major constructive prospect French economic scene would be inauguration Common Market. Final decisions on Common Market unfortunately may occur at same time as intensification economic problems. If this should occur, and if US aid might increase prospects of inauguration of workable Common Market, plus possibly some other constructive French self-help actions, then it might be in US interest at some later date to agree some form increased economic aid over and above that outlined para 1, above.

4. As Emb has reported France not only needs modem weapons but in addition conventional equipment of French forces is suffering from attrition and obsolescence. We recommend this situation be kept in mind during consideration FY 58 Mutual Security Program and portion to be devoted to aid for France.

Yost

1. Source: Department of State, Central Files, 751.5–MSP/2–1957. Secret.
2. The final paragraph of telegram 3168 to Paris, February 15, asked whether the comments at the end of telegram 4101 (see footnote 3 below) reflected a change in Dillon’s recommendation contained in telegram 4017 from Paris (supra). (Department of State, Central Files, 751.5–MSP/2–1457)
3. The final paragraph of telegram 4101 from Paris, February 14, reads:

   “Comment: It would appear that (1) despite his insistence to contrary Minister had nourished some illusion large-scale new US aid might be forthcoming, and (2) immediate occasion for Feb 5 requests was economy pressure from Finance Ministry, but serious military problem, beyond French capacity to meet alone, is likely to arise from increasing attrition and obsolescence conventional equipment.” (Ibid.)

4. Supra.