Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

46. Letter From the Deputy Under Secretary of State (Murphy) to the Chief of the International Division, Bureau of the Budget (Macy)¹

Washington, April 1, 1957.

Dear Mr. Macy: I refer to the draft legislation which is now being considered by the Bureau of the Budget to lend naval vessels to certain foreign governments, including seven Latin American governments. The loan of naval vessels to Latin American governments was the subject of discussion in the meeting of the Operations Coordinating Board on March 27 and, at the request of the Board, a further meeting on March 28 of representatives of the Departments of State and Defense and the Bureau of the Budget to resolve certain differences that have arisen. You requested in the meeting on March 28 that this Department provide further comments on the issues involved and this letter will respond to that request.

1. Policy Considerations. It is my understanding that the Bureau of the Budget considers that the President’s military policy on Latin America authorizes military assistance, whether it be cash, credit, or grant, primarily for internal security and that any assistance provided for other than that purpose would have to be justified as incidental to that purpose or as an exception on either military or political grounds. I also understand that even though the force levels for military grant assistance were included in NSC 5613/1 as an annex to indicate the general magnitude of forces contemplated by the policy and that the Financial Annex to NSC 5613/1 stated a general magnitude of expenditure for this purpose of $32.8 million annually, it is the view of the Bureau of the Budget that these annexes are not valid because they were not revised to conform to the military policy approved by the President.

We do not agree with this interpretation of the policy. The United States has encouraged the Latin American governments, almost from the founding of our Republic, to develop a common approach to problems of the Western Hemisphere. This policy has been formalized in the military field in the Inter-American Treaty of Reciprocal Assistance and further refined in inter-American resolutions, notably Resolution III of the Fourth Meeting of Consultation of Ministers of Foreign Affairs, in the Inter-American Defense Board’s Plan for the defense of the hemisphere, and in Military Assistance Agreements which we have with twelve Latin American Governments. The policy interpretation of the Bureau of the Budget would be inconsistent with our traditional policy and our obligations under existing treaties and agreements. This Department concurred in recommending the military policy now contained in NSC 5613/1 because the policy recognized our treaty obligations (paragraph 7), our objective of a common approach to the defense of the hemisphere (paragraph 15 f), and because we considered that the recommended courses of action (paragraphs 31–34) constituted a realistic approach to this problem and were within the developing military capabilities of the Latin American countries. We considered the modest forces and funds proposed in the annexes as appropriate and consistent with these paragraphs. We recognize that the policy stated in NSC 5613/1 represents a scaling down of the military missions outlined in the previous policy stated in NSC 5432/1 and, in fact, took a leading part in this process. We urged that the policy requirement that we encourage Latin American governments to maintain forces for extra-continental military missions be eliminated and this was done. We also urged that the policy more specifically state what we desired in the way of a military contribution and that we recognize that the Latin Americans could not defend by themselves the Western Hemisphere south of the United States. We asked that the Department of Defense state specifically what units it wanted Latin America to maintain as a contribution to hemispheric defense. We considered that the policy recommended to the President in NSC 5613/1 did these things. It established the military missions as (a) maintenance of internal security and (b) a contribution to hemispheric defense by defense of coastal waters, ports and approaches thereto, bases, strategic areas and installations located within Latin America and communication routes associated therewith. It provided that participation in combined military operations with United States forces within the hemisphere would be an exception to these missions and should be justified under stated criteria. We consider Mr. Cutler’s memorandum to you of March 28 an excellent statement of this policy and we concur with his views.

2. Terms of Ship Transfer Agreements. We believe that the transfer of any ships under the loan program, if the legislation is approved, should be made under the provisions of existing Military Assistance Agreements and should be subject to the provisions of those Agreements. An additional agreement covering the transfer is required, and we would suggest that it be substantially the same as the attached Agreement with Brazil on the transfer of two submarines. One of the provisions of the agreement would be that the recipient country agree to pay the cost of reactivating the ship from the “moth ball” fleet as well as the cost of operations and maintenance. While almost all of the ships would be replacements for existing units, we do not believe that we should require, as a condition of the transfer, that the recipient country retire or scrap an equal number of vessels of similar types that they now have in their naval forces. We take this position because the ships are being loaned and subject to recovery by the United States at any time during the loan period. Further, we are requiring the recipient country to pay reactivation cost. We therefore consider that it would be an unreasonable requirement that the countries concerned agree formally to retire or scrap existing vessels.

3. Financial Capability of Recipient Countries. All of the proposed recipients of ships, except Uruguay, have indicated a willingness to pay the cost of reactivation, although Brazil has stated that it would want credit terms. Considering that the transfers would take place over a period of three years and that the countries concerned would not be expected to pay the total cost in one year (the highest cost being $8.8 million to Brazil for four destroyers), we believe that the cost is within the financial capability of the countries concerned. If their financial situation should change we would, of course, want to reconsider our position.

In the meeting at the Bureau of the Budget on March 28² it was urged by Budget representatives that since the Latin Americans could apparently afford the cost of reactivating these ships they should be able to afford the cost of all military assistance and we should therefore no longer provide any grant military assistance. This Department does not agree with this view. The Latin Americans are already paying the entire cost of support of their military establishment, except for the few military units we have requested them to maintain for hemisphere defense. Even with respect to these units, they are paying the operating costs and have purchased some of the equipment. It is planned that they will assume the maintenance cost for agreed units at the rate of an additional 25% per annum until they have assumed the entire maintenance cost in fiscal year 1960. We should not lose sight of the fact that we have a security interest in the maintenance of these units and it is therefore important that we bear a small part of the cost to develop them into units which are combat effective. It seems to us that, from a financial point of view, this is more realistic than maintaining additional United States forces to perform these missions. This is, of course, what the United States did during World War II at a substantial cost to our Government.

4. Political Considerations. Ship loans to Latin American governments have been recommended by the Joint Chiefs of Staff as necessary to carry out the military missions stated in paragraph 32 of NSC 5613/1. It is inevitable, however, that political considerations become involved and must be taken into account in determining whether recommendations, based on military grounds, should be accepted. The proposed ship loans have been discussed with the recipient countries. The United States has no commitment to provide these ships, but I feel certain that these countries confidently expect that necessary legislation will be introduced and that the ships will be forthcoming. We anticipate serious political repercussions if the program is not presented to the Congress. I do not want to labor this point but I believe the cases of Brazil and Argentina will illustrate the problem. One of the principal issues which has arisen in our negotiations with Brazil for military facilities is the military assistance which we are providing Brazil under the Military Assistance Agreement. Brazil is of the strong opinion that the United States has not made available to Brazil military equipment, especially naval vessels, of the quality and quantity required to discharge agreed defense missions. Brazil was reluctant to agree to the establishment of a guided missile station on her territory unless she could be assured of additional equipment to discharge her defense responsibilities and has again made this an issue in the negotiations for other facilities. We consider that the proposed loan of four destroyers is essential to the success of the negotiations.

It has been the objective of our relations with Argentina to have Argentina firmly commit herself to the inter-American system and to close and friendly relations with the United States. The Argentine Government is most anxious to acquire naval units of the types proposed and we therefore consider the proposed loan a valuable contribution to our objective.

I have made this reply as lengthy as it is because I understood that it was your desire that we state as fully as possible our position on the proposed loans. I consider the proposed legislation consistent with our best interests and our policy on Latin America, and I should like to urge strongly that it be submitted to the Congress as soon as possible.

Sincerely yours,

Robert Murphy³

1. Source: Department of State, Central Files, 720.5–MSP/4–157. Secret. Attached to a memorandum from Rubottom to Murphy, April 1, recommending that Murphy sign the letter. The letter was drafted by Sayre on March 29, in response to a request from the Bureau of the Budget for the Department’s views on the subjects covered in the letter. It was cleared by Rubottom, Barnes, Sanders, and the Office of the Assistant Secretary of State for Policy Planning.
2. No record of this meeting has been found.
3. Printed from a copy which bears this typed signature.