840.50 Recovery/6–2148: Telegram
The Ambassador in France (Caffery) to the Secretary of State
us urgent
3289. Because of the critical debate on Germany (which lasted almost two weeks) on the outcome of which the government’s very existence depended, political leaders within and without the government had little time to devote to the important bilateral ERP agreement which must be signed prior to July 3. Since last Thursday, however, serious attention has been given to our original bilateral draft by political leaders of the governmental parties, as well as by others whose support will be needed in the Assembly when the agreement is voted on. In the past three days, in addition to Bidault and Paul Reynaud (my 3268, June 19, and Toeca 165, June 20),1 I have been approached by other well-disposed and friendly political leaders representing most shades of opinion (except Communists and Gaullists), who all expressed the “gravest concern” over the text of the original draft and have categorically stated that it would be “suicide” for any French Government to sign it. In particular, they take exception to certain clauses which they say would mean the abandonment of French sovereignty and which would serve not only to strengthen De Gaulle,2 but even more important would, in the minds of the French people, “completely substantiate the charges which the powerful Communist propaganda machine has been driving into the minds of the French people for a year to the effect that ERP is simply a device of American economic imperialism and is designed to make of France a vassal state”. (This would have disastrous effect on Socialists.)
The French press has now gotten wind of the original draft and even papers which are friendly to the US are taking the line that “it is time to let our American friends know that as precious as is their aid, and as much as we appreciate it, there are conditions attached (in the [Page 455] original draft) which no free country could accept”. In particular, the press takes strong exception to the most-favored nation clause as it applies to Germany and Japan (which is interpreted as a measure to give priority to the rehabilitation of aggressor nations); to the concept that the International Monetary Fund, “which is practically in American hands”, will have the right to fix the rates of exchange of European countries; to the clause providing that differences between American nationals and the French Government shall be referred to the International Court at The Hague (the press cries, “in other words, French tribunals are declared incompetent for cases where they have jurisdiction”); and the clause relating to the fact that in the case of certain “rare products”, American nationals will have the same rights of investment, prospecting, and exploitation as French nationals.
While I have not yet seen the text of the revised draft contained in Depcirtel June 19, 9 p. m. (final sections of which are just being received), I report the foregoing because of my very real concern over this situation. Although the present government is more friendly and well disposed toward US than any French Government since the liberation, I do not believe it would be willing to risk going before the Assembly to defend the bilateral agreement in the terms originally proposed by US, since it believes that it is a foregone conclusion that it would suffer a crushing defeat with all the political implications, internal and international, that a defeat on such an issue would imply.