740.5/8–2150: Telegram
The Secretary of State to the United States Deputy Representative on the North Atlantic Council (Spofford), at London1
Todep 36. Fol is basis for statements which might be made to Deps concerning offers of increased def expenditures made by countries replying.2 These statements are designed to be as accurate as nature of country replies permit. It is not known however except in cases of UK and possibly Nor replies whether magnitude of increased effort indicated is on gross or net basis. Even in those instances where reply indicates effort is on gross basis (e.g. France) increased effort on net basis is not known.
[Page 229]Belgium.
Belg have proposed increase in mil budget of dol 182 mil for calendar 1950 to about dol 282 mil in calendar 1951 or projected increase of 55% in mil expenditures. Belg outlays for mil purposes have been relatively low but this is substantial increase for single year. Belg has indicated existence of idle capacity which it shld be pos to get into production quickly. We hope expenditure of proposed additional 4 bil francs can be stepped up and idle capacity be put into work with utmost pos speed. Arrangements for doing this will depend in part on plans developed by NATO. If this step-up is pos it is hoped total increased expenditure over calendar 50 can be greater than 4 bil francs.
Denmark.
Den has proposed to appropriate dol 43 mil for additional mil expenditures during next two yrs. Altho this total proposed additional mil expenditure is large as compared with current year’s mil budget, it still relatively small in terms total budget or natl income. Dan submission gives no details re proposed uses these additional funds and proper size Dan budget largely depends on use that can be made of its resources to expand mil prod. If plans can be worked out for better use these resources, it reasonably certain Dan budget cld be increased.
France.
Fr mil expenditures are relatively large percent of natl income. 80 bil franc additional expenditure for 51 has already been submitted to Fr Parl. In addition to this, Fr proposal calls for expenditure 2 tril francs over two yrs and formation fifteen new divisions. It not clear however in Fr submission from what resources 2 tril francs are to come. Fr have proposed common pool to which all NAT countries wld contribute. Apparently only portion of 2 tril francs wld be financed by Fr. Fr Govt will have to clarify its proposal before NAT countries can evaluate its proposed contribution to common defense.
Italy.
Ital submission provides for lire equiv of dol 80 mil initial extraordinary def expenditure. 80 mil offer is as yet not an additional sum but speed-up of mil expenditures already budgeted. Govt must still ask Parl for deficiency appropriation equal to or greater than this. Ital economy has manpower and many resources which wld permit much greater expenditure than this prelim figure calls for. Once NATO has decided what shld be forthcoming, rate of Ital expenditure shld be sharply stepped up. Increases well beyond 80 mil figure wld not overtax Ital economy but wld in fact stimulate econ activity and reduce unemployment.
[Page 230]Luxembourg.
Lux has proposed to expand its def estab from one to two infantry brigades within two yrs. Def budget will be increased accordingly. If cost this program is to be financed largely by Lux, it appears reasonable in light of population of country.
Netherlands.
Neth submission contemplates 51 military budget of 15% over original budget estimate but reduction between 50 and 60 mil as compared with 1950 rate of expenditure. Increased troop strength is offered and Neth also points out it has substantial mil econ potential in many fields such as electronics. Proposed budget for 51 seems to be definitely below Neth capabilities and rate of expenditure substantially above 1950 rather than reduction wld be more appropriate.
Norway.
Nor has stated it wld ask for appropriations equiv to dol 35 mil during two yrs beginning 1 Jul 50. This program wld concentrate on recruitment and training of manpower and on fortifications. Program can be modified depending upon determination of NATO as to best use Nor resources. Probably some expansion Nor effort is pos if specific resources can be found for effective use in common def.
United Kingdom.
UK program for expansion its mil effort calls for total or gross expenditure equiv to dol 9.5 bil which is increase of over 40% over current levels. Expansion is almost entirely in equipment, supplies, and mil pay while troop strength remains stationary. This estimate is dependent upon dol 1.5 bil of US aid in free dols over and above regular ERP funds. Additional aid requested is over 50% of total expenditure increase.
This rate of effort seems to be well below potentialties in UK. It is based upon assumptions of great rigidity in use of resources and on inability to shift manpower into def industry. This assumption seems inappropriate in light of critical situation in which West powers find themselves. US feels that level of expenditure cld be very definitely expanded and start on increased def expenditure cld be speeded up. Furthermore in light expanded gross natl product of UK this shld be accomplished without strain on econ and without precluding an increase in mil forces in being. Furthermore, estimate of required US aid seems to be well above that which is needed for direct dol costs of increased mil expenditure or to offset adverse effects on internatl balance of payments due to shift of UK resources into def expenditure.