CAB129-53 — Page 105

Page 105

(THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT)

SECRET

C. (52) 214

25th JUNE, 1952.

CABINET

COPY NO. 75

AIRCRAFT FOR NORTH ATLANTIC TREATY FORCES: OFFSHORE PURCHASES BY THE UNITED STATES IN EUROPE.

Memorandum by the Secretary of State for Foreign Affairs.

104

The United States Administration has announced that it will make off- shore purchases of complete aircraft for the forces of the North Atlantic Treaty Organisation (N.A.T.O. ) as part of an integrated plan, to be prepared by N.A.T.O., and if producing countries also offer a substantial measure of additional production on their own behalf and with their own finances. The amount of American expenditure will probably depend on the attractiveness of the offers; figures of $400 millions and $700 millions have been mentioned. After discussion between the Ministers primarily concerned, under the Chairmanship of the Prime Minister, we submitted to the N.A.T.O. Staff the attached offer to be included in the integrated plan. The total value of the aircraft we have offered to supply would be over $150 millions, delivery and payment being spread over 1952/3 - 1955/6.

2. We know that the bid put in by the Dutch could not be carried out within the time stipulated. We also know that the Italian bid is likely to be less economic than ours, but to be politically attractive on the grounds that it will help to resuscitate the Italian aircraft industry. The French show signs of justifying their bid on political and general economic grounds rather than on the merit of their production. We are likely to be criticised in N.A.T.O, for asking for so much particularly as we have hitherto claimed to be fully extended. There seems no hope of the N.A.T.O. Council reaching agreement and it is probable that they will refer the plan, possibly with comments but without firm recommendations, to the American Administration and that the issue will finally be settled in Washington.

3. On making our offer in N.A.T.O. we were asked to explain first how it was that we could now make this offer of aircraft and second what effect the re-arrangement of our production programme would have on our existing N.A.T.O. obligations. So far we have argued that we are revising our production programme of the latest type of bombers and that because of our economic position we have to stimulate exports as much as possible so that capacity not fully occupied on military aircraft production will probably have to be devoted to other export goods and cannot easily be recovered.

4.

us

I have come to the conclusion that the tactics most likely to secure us a substantial order will be to make it quite clear that unless there is an off-shore purchase the aircraft will not be produced here at all. Anything short of this will lead theAmericans to place the orders elsewhere and hope that we shall nevertheless maintain our full programme. I therefore consider that we should now say this quite frankly to the Americans. We would explain thetage 105 af1253 make this offer partly because of changes 5 fr2pBoduction programme by which we can make capacity available for these aircraft which

-1-