Memorandum from Leopold H. Kerney to Joseph P. Walshe (Dublin)
(M.15/20A) (Copy)

Trade Negotiations

With reference to your minute 207/48 of 5th inst.¹ and further to mine of 23rd inst.,² I was able to have an interview with Mr. Pan de Soraluce today.

The Political Director at the Ministry for Foreign Affairs is the Count de Casas Rojas; the two main branches under his control, dealing with both political and trade matters, concern themselves with Europe and America; Pan de Soraluce is the head of the former section (the post he held before the war) and the Viscount de Mamblas is at the moment (pending further imminent changes at the Foreign Office) head of the American section.

Now that the Government Departments have again gathered together in Madrid, the intention is to re-organise the work of the administration, to return to the methods of former days, to proceed in a more methodical way than has hitherto been possible and to establish some sound basis for the negotiation of trade agreements generally. There is now once more an inter-Ministerial Committee functioning; it meets ever other day from 5 p.m. till 10 p.m. This Committee has met three times so far, and has only been able to give a close examination to 3 items on the lengthy agenda down for consideration. Meanwhile, Casas Rojas has had to absent himself, and his work devolves on Pan de Soraluce, who is extremely occupied. He and I are on very friendly terms from the old days, and he has assured me more than once that he feels a greater sympathy for me than for any other chief of Mission here.

During my conversation of half an hour with Pan de Soraluce, we agreed that the main purpose of my visit was to ascertain his impressions on the broad principles of my proposals; you will understand therefore that these impressions, important though they are, do not commit his Government in any way, and that they could not do so under the circumstances; he will consult his colleagues in due course, as soon as may be possible, and then ask me to call and see him again; meanwhile I told him that this first conversation was merely for the purpose of exploration, and that I did not propose to follow it up, as yet, with any written note or aide-memoire.

The following were my proposals:

1. A payments agreement on a 2 to 1 basis (on the lines of our agreement with Turkey), a Spanish Bank centralising operations.

2. Private compensation agreements on a similar basis to be encouraged, without excluding individual enterprise outside such agreements.

   Pan de Soraluce (we might abbreviate his name to Pan in future, as his name will constantly crop up and may have to figure in telegrams) was favourably impressed, and thought it should be possible to come to an agreement quickly on these lines; he saw no objection to the principle, but of course could not commit himself definitely at this stage. The fact remains that he views these proposals favourably as a basis for discussions.

   I made it quite clear to him that we could not return to a system of quotas for oranges or other produce, but that, on the other hand, there was practically an open market for Spanish goods in Ireland, with scarcely any limitations. I also pointed out the desirability of disposing of the following matters (which I number consecutively for convenience in subsequent reference thereto) so as to make the way smooth for a trade agreement.

3. The 'blocked' account of the Irish Government in the Banco Hispano Americano, Madrid, should be released without delay.
4. The 'Clonlara' and 4 other vessels of the Limerick Steamship Co. should be taken off the black list without delay.
5. The 'frozen' pre-war credits, estimated to amount to £8,000 at the very outside, should be taken into consideration in connection with the proposed agreement.
6. Frank Ryan should be released.

Pan made a written memo of all these things, this in itself being an indication of his intention to have them considered; moreover, he took the same view of them as I did. He promised to have the matter of our 'blocked' account examined at once, and he did not protest at my describing the 'blocking' of this Government account to be intolerable. He promised to take up at once with 'Comunicaciones Maritimas' the question of the Limerick Steamship Company. He did not commit himself in any way with regard to the 'frozen' credits; but made a note of my estimate of the total maximum amount.

When I told him that another obstacle in our path was the fact that an Irishman was held prisoner in Spain, he began to explain to me the difference between untried prisoners in concentration camps and the others; I interrupted to let him know that this particular man was in Burgos Prison, and had in fact been sentenced to death, at least once, whereupon he exclaimed – 'Is it the famous – ?', and I replied 'The very same.' We did not mention Ryan's name, but he was apparently familiar with the case, although I had never had occasion to bring it to his direct notice; he agreed with me that the absence of a satisfactory solution could only continue to poison relations between Ireland and Spain, and he also made a note of this; he asked me if I had seen the 'assesseur juridique' (i.e. Fusset) whose consent would be necessary; I told him, in confidence, that Fusset had been seen, that he was well-disposed, that the Minister himself was in favour of Ryan's release, and that I was hoping his case would receive attention at the Cabinet Meeting the same afternoon.

Pan asked me what classes of goods we wanted to export to Spain; I told him that I could not say anything definite until I heard further from you; if we omitted eggs and seed potatoes I feared the volume of our exports would be small, and we had an easy market for these elsewhere under present circumstances; he remarked that it might perhaps be possible to do something in the way of eggs, but not to the same extent as formerly; I mentioned woollen goods as being likely to be included in any list we might put forward; I also told him that we would like to send some whiskey to Spain, say to the value of £5,000 or so, and chiefly for the purpose of putting ourselves in a good starting position if circumstances were to become more normal later on; he thought whiskey would be classified as being 'de luxe', but possible some nominal quantity might be admitted as 'a symbolic import'.