840.50 Recovery/5–848: Telegram
The Ambassador in Norway (Bay) to the Secretary of State
us urgent
281. Upon further review of proposed ERP allocations to Norway outlined Deptel 173, April 191 and in light of consultations with Norwegian Government officials I am persuaded that Department has in many instances over-estimated potential Norwegian earnings and under-estimated requisite Norwegian expenditures. As indicated in Embtel 254, April 231 responsible Norwegian officials cannot presently foresee dollar earnings in excess 105 million in next 15 months compared Department’s estimate of 120.7. As indicated in Embtel 271, [Page 438] May 32 Norwegian authorities estimate net dollar receipts US tourism 0.9 million compared Department’s estimate 4.5 and payments to US for interest and amortization 10 million plus ship loan amortizations 19 compared Department’s estimate 9.0. Further Norwegian authorities compute available usable credits 38 million compared Department’s estimate 79.8.
I strongly urge Department consider immediate upward adjustment proposed allocation only 42.1 million dollars ERP funds Norway to sum which will permit approximation Norwegian estimate dollar deficit for 15 month period 116.5. Unless credits grants in aid approximate this anticipated dollar deficit Norwegian recovery will be seriously retarded and consumer rations further reduced.
Norway’s credit rating record repayment loans is outstanding. I firmly believe Norway merits purely on financial considerations ERP assistance in amount she has indicated. Government has imposed rigid licensing procedures assure intelligent use dollar other foreign exchange. Norwegian people generally and to notable degree have cooperated prevent black market operations in commodities or currency. Government has accorded primary emphasis rebuilding expanding merchant fleet permit ultimate restoration normal trade relations and cooperated other countries effect coordination recovery programs including measures looking towards reduction trade barriers. Given adequate financial assistance prospects intensification these efforts with ultimate loan repayments appears excellent.
Willingness to recognize Norway’s credit reputation prospects and needs at this critical juncture could well stimulate political activity favorable to US foreign policy. Norwegian Foreign policy has developed remarkably in favor of west during recent months but government leaders could well relapse into some moderate form of political apathy in reaction to inferred unfair economic response by ECA. Although Norwegian officials publicly have emphasized tentative character proposed ERP allocations they do not conceal hope and belief in necessity ultimate upward revision. This increase in proposed ERP allocations in my opinion should be effected as soon as possible to avoid indelibly fixing 42.1 million figure in minds of Congress, CEEC organization and Norwegian people.
I believe our policy should be one of calculated generosity in light of Norway’s strategic international position. Norway’s future decisions and actions will have important influence on evolution of Danish and even Swedish policies and Scandinavian trend may largely determine whether Russia will have important Atlantic outlets. In my opinion 50 or 100 million dollars invested in Norway today will prove sound investment in broad US strategy toward European reconstruction.