740.5/3–551: Telegram
The United States Special Representative in Europe (Katz) to the Administrator for Economic Cooperation (Foster)1
Repto 1007. For Foster and Bissell; pass Department for Perkins and Cabot. Reference Depto 586,2 repeated Paris 1653, Frankfort 916. This is joint message from Spofford and Katz supplementing reftel.
1. Re geographical location FEB, problem would of course be automatically solved if favorable decision reached on suggestion now under consideration to consolidate NATO activities in Paris. Failing such decision, believe nevertheless essential proceed with FEB arrangement. There might be two geographical possibilities. One would be set up FEB in Paris like Working Group 12. We agree this not satisfactory because of separation from Deputies and DPB. Remaining possibility arrangement under which inner circle would normally meet in London and outer circle in Paris. This would mean FEB secretariat would be established initially in London, and that in general meetings of FEB and its sub-committees would be held in London. To reduce to minimum possible unfavorable impact upon OEEC, we would contemplate informal personal explanation with Marjolin, Hall-Patch, and possibly Stikker, of ways and means to achieve optimum result. Believe Secretariat arrangements along lines [Page 78] paragraph 7, Depto 517,3 repeated Paris 1496 and functional relationships along lines paragraph 8, Depto 517 good starting point which could be maintained despite geographical difficulties. Furthermore, would contemplate many meetings FEB taking place in Paris and in any case, would recommend leaving WG of 12 operation there until it completes report to CD on first round of burden-sharing.
2. Re Todep 287, repeated Paris 4574, March 2,4 believe our views fully in line with yours. However, “inflationary problem” comprehends great many general and particular economic issues, some of which could appropriately be dealt with in FEB. To take a clear example, FEB advice to DPB on country’s economic and financial capacity to undertake additional defense production tasks would involve assessment possible inflationary consequences thereof and on others of which “maximum flexibility and transferability” between FEB and OEEC should be maintained. To extent “inflationary problem” involves review member countries broad economic and financial policies, notably their fiscal and monetary policies (which are highlighted in Marjolin’s memorandum), see further advantage of steering problem to OEEC in that this is clearly field in which US might be reluctant offer full participation.