Foreign Relations of the United States, 1951, European Security and the German Question, Volume III, Part 2

ECA message files, lot 53 A 278, box 78. Frankfurt Ecato: Telegram

The Administrator for Economic Cooperation (Foster) to the Office of the United States High Commissioner for Germany, at Frankfurt¹

secret

Washington, March 24, 1951—11 a. m.

Ecato 303. Reference: Toeca 280, rptd info Paris Torep 266, Berlin 536.² Repto 1218, rptd Frankfort Repto 186.³

• 1. State and ECA concur your approach Bonn re non-availability GARIOA to cover Berlin budget deficit next FY. It was our understanding amt realized from Berlin Aid Tax wld be sufficient cover next year’s budget deficit with anticipated increase Berlin tax revenue and gen improved econ conditions in Berlin. This was also Reuter’s view expressed during recent visit.
• 2. You shld take strong position for continuance Berlin Aid Tax and application proceeds for Berlin aid. It seems to us any other course of action wld present polit difficulties to FedRep and therefore their continued support Berlin budget can be anticipated. However, if you do encounter difficulties in your negots with Bonn suggest you consider desirability informing them we prepared divert to GARIOA acct sufficient ECA counterpart funds now intended for FedRep investment program in order fulfill FedRep obligation support Berlin budget until satisfactory Bonn-Berlin agreement reached. Your comments requested. In your negots with Bonn you shld not leave impression that we place greater emphasis upon budgetary aid than upon other programs involving aid to Berlin. We view program total Berlin support i.e.—budgetary aid, work relief and investment program as a must and FedRep assumption budget deficit part of a whole.
• 3. Suggestion FedRep aid to Berlin be judged by U.S. as part FedRep “contribution to defense” presents fundamental problem which we hope can be avoided on basis foregoing. While we do not wish to appear to down-grade importance we place on Berlin, State and ECA apprehensive concession now on this pt wld encourage FedRep press for inclusion other expenditures, also not directly related to defense, when we commence negots with them on amt their contribution and purposes for which it will be used. In this connection they have already suggested that refugee and other social expenditures shld be credited against their contribution. They also may make similar claims RE equalization burdens payments. This subj and overall review Gers role in defense in connection Congressional presentation will be subj separate cable now in clearance interested agencies here. Desire, therefore, you make every effort avoid question Berlin aid as credit against defense contribution being raised at this time. If Gers do attempt raise problem you shld take position it is matter which shld be dealt with in context overall discussions defense contribution and purposes for which it will be used.
• 4. Concur your proposals reduce Berlin Work Relief Program from DM 20 million to DM 15 million per month.

Foster

1. Repeated to Paris and Berlin.
2. Not printed; it reported that the agreement for Federal budgetary aid to Berlin would terminate on April 1 and that HICOG felt the Federal Republic should carry the complete responsibility for such aid. For this reason McCloy planned to make no further GARIOA releases for Berlin budgetary aid, but would judge the Federal Republic’s assistance to Berlin as part of its contribution of defense. (ECA message files, lot 53 A 278, box 27, Frankfurt Toeca)
3. Not printed, but see footnote 2. supra.