852.50/11–1749
Memorandum of Conversation, by Mr. William B. Dunham of the Office of Western European Affairs
| Participants: | Conde de Marsal |
| Marques deNerva, Spanish Embassy | |
| Mr. Achilles, Director, Office of Western European Affairs. | |
| Mr. Randall, ARA | |
| Mr. Dunham, WE |
The Marques de Nerva described the background and position of the Conde de Marsal and explained that he was in this country on his first trip and appreciated the opportunity of learning at first hand about the U.S. attitude with respect to economic relations with Spain.
Mr. Achilles briefly outlined the position of the United States Government. A clear distinction is made, he said, between economic and political affairs. It is the intention of the United States Government that political problems, including those in the United Nations, shall not be connected with economic relations with Spain. It is for this reason that the Department of State made clear last spring that no political objections would be interposed to consideration by the Export-Import Bank of Spanish loan applications. Such applications are to be considered on their merits and will, of course, be judged in [Page 764] accordance with the Bank’s normal practice with particular regard to the possibilities of repayment.
There are a number of general factors in Spanish economic policies and practices, Mr. Achilles said, which we feel are impeding the development of greater trade between the U.S. and Spain and which in the opinion of the United States Government, can be rectified only by action of the Spanish Government. These include such problems as the existing exchange rates, which have been thrown further out of line as a result of the devaluation of currencies in Western Europe; excessive controls over imports and their distribution; the influence of the INI and its competition with private industry; and the restriction of 25% on foreign investment and the treatment of such investment as for instance in the case of Barcelona Traction Company,1 which are not encouraging to prospective investors.
Nevertheless, no barrier exists to the presentation of specific projects to the Export-Import Bank. The Bank would study such applications and would, of course, establish the terms of any loan. There are two points in this connection which should be emphasized. First that such applications should be for specific projects and be presented by the enterprises concerned. Second that the presentation should contain data justifying the means of repayment. In response to a question, Mr. Achilles said that it was his understanding this would include dollars saved as well as dollars earned.
The Conde de Marsal expressed his appreciation for Mr. Achilles’ explanation of the United States Government’s position and said that he would be happy, in the interest of promoting closer economic relations between the U.S. and Spain, to convey these views to the Minister of Industry and Commerce and to the Chief of State. Spain needs foreign financial assistance and must decide urgently the best course to follow in order to obtain it. Some interesting proposals have been made by certain of the Western European countries in assisting Spain to meet her economic problems, but the most important question for Spain is economic assistance from the U.S. It is more important to go directly to the well rather than to one or another of its secondary outlets. Although there have been some possibilities of assistance from groups in various neighboring countries, Marsal stated that there is strong feeling among businessmen in Spain and Government officials as well favoring close economic cooperation with the United States. This, he felt, could be explained from an historic [Page 765] point of view since relations with close neighbors had at times been strained. For the U.S., however, there exists strong general opinion favoring closer relations. He emphasized that the Spaniards, both in official and private circles, do not seek Marshall Plan aid but prefer straight credit assistance to be repaid in full.
Notwithstanding this opinion, feeling has unfortunately developed in Spain, not only within the Government but among private business people, according to the Conde de Marsal, that there are certain imponderable difficulties which will make it impossible for any Spanish individuals or groups to obtain financial assistance from the United States. Mr. Achilles assured him that this was not the case. The U.S. position is quite clear. No political objection exists to consideration of project loans for Spain by the Export-Import Bank and it is our intention that these applications shall be considered solely on their economic merits.
It was brought out that no Spanish applications have yet been made to the Bank and that only Spain’s over-all general needs for financial assistance have ever been mentioned by Spaniards. Marsal agreed that this was the case. He said he now understands that the correct procedure is to present individual applications covering specific projects.
The Conde de Marsal said he fully understood that the banking conditions for any loan would be established by the Export-Import Bank. He emphasized, however, that if these were to be set simply as cold banking proposition, devoid of any warmth or cordiality, he felt Spain would not wish to risk the presentation of applications. However, if these conditons were to be accompanied by a certain cordiality, lie believed it would be easier for Spain to follow this course of action. Although he realized that economic and political questions are being kept separate, he hoped that he might be able to state upon his return to Madrid that the consideration and possible granting of a loan by the Export-Import Bank would indicate cordiality on the part of the U.S. toward Spain.
Mr. Achilles explained that in separating economic and political questions we did so realizing that there were sufficiently difficult problems in each case. While we did not wish to allow political considerations to make economic relations more difficult, neither could political considerations be used in the reverse sense to override economic difficulties. He could say that we cordially wished the further development of mutually beneficial economic relations between the two countries.
The Conde de Marsal pointed out that the Spanish Government had been forced to institute many of the general practices and policies in Spain which were mentioned as a result of the lack of foreign financial assistance. He then asked whether any or all of these general factors [Page 766] were, in effect, conditions precedent to the approval of any Spanish project for assistance. In response, Mr. Achilles stated that the U.S. is interested in seeing expansion of Spanish trade with the U.S. and with the dollar area in order to increase Spain’s dollar earnings. He did not feel that the rectification of the economic difficulties mentioned was necessarily prerequisite to the approval of an application, although any steps in this direction by the Spanish Government would be helpful in establishing a more favorable atmosphere by enhancing Spanish ability to repay. It was pointed out more specifically that an adjustment of the foreign exchange rate, for instance, could have a useful effect in stimulating an increase in trade and thus contributing to the Spanish justification of repayment.
In order to clarify a further point, the Conde de Marsal stated he understands that applications to the Export-Import Bank for project loans could be presented by groups of private concerns and by industries in which there is Government participation. Mr. Achilles explained that this would depend on the particular circumstances in each individual application. Such applications are not specifically excluded but basically applications from private enterprise would be preferable.
The Conde de Marsal thanked Mr. Achilles for his frank exchange of views and the cordiality with which he was received. He stated that he would make the U.S. position clear, upon his return to Madrid, to Minister Suances and eventually to the Chief of State, It was his feeling that this conversation was very important and it is his intention to give the strongest support to the general lines of action discussed. Mr. Achilles also believed the conversation important and hoped that it might bring mutually beneficial results. Mr. Achilles suggested that a Memorandum of Conversation be agreed between the Conde de Marsal and the Marques de Nerva and Mr. Dunham and a copy made available to the Conde. In view of his interest in obtaining further information on this subject from the Export-Import Bank, it was also agreed that arrangements would be made for him to call on an official of the Bank tomorrow.
- The Barcelona Traction Company had been declared bankrupt by Spanish officials for the alleged failure to meet its financial obligations. Protests by Belgium and Canada on behalf of their stockholders in the company were supported by the United States. Documentation on the case is in the Madrid Embassy Files, Lot 55F124: 501.8 Barcelona Light and Power.↩