No. 67 NAI DFA/10/P/226/1

Memorandum for Government by the Department of External Affairs
'Enactment of Mutual Security Act by US Congress – Démarche by
American Ambassador'

Dublin, 17 December 1951

  1. The Minister for External Affairs desires to inform the Government that on Friday, the 7th instant, he received the American Ambassador at the Ambassador’s request and that during the course of the interview the Ambassador left with him an Aide-Mémoire, the terms of which are set out in Annex I to this Memorandum.1 The Ambassador explained that the Aide-Mémoire was necessitated by the terms of the Mutual Security Act, 1951, which had recently become law in the United States and under the provisions of which the Economic Co-operation Administration (through whose agency aid has been distributed to European countries under the European Recovery Programme) will, on the coming into force of the new Act on the 31st December next, be abolished and be replaced by a new agency to be called the Mutual Security Agency. The Ambassador pointed out that under the terms of the new Act it was necessary that every country which was to receive assistance – military, economic or technical – from the United States thereunder should enter into a new agreement with the American Government accepting the purposes for which the new aid is being given. The Aide-Mémoire simply set out the terms of a draft Exchange of Letters which the American authorities now proposed should be exchanged between Ireland and the United States, if Ireland desired to continue to receive assistance under the new Act. The Aide-Mémoire refers in its preamble to conversations between representatives of the two Governments. These conversations have not, of course, taken place as yet, but it is obviously the intention of the US Government that they should take place as an antecedent to the exchange of the proposed letters.
  2. The Minister for External Affairs desires to draw the attention of the Government more particularly to paragraph 1 of the Aide-Mémoire, which states that the Irish Government has expressed its adherence to the purposes and policies of the Economic Co-operation Act of 1948 ‘as heretofore amended, including the statement of purpose contained in Section 2 of the Mutual Security Act of 1951’. Photostat copies of section 2 of the Mutual Security Act and Section 101 of the same Act (which follows it) are set out as Annex II. It will be noticed that neither in Section 2 nor in the preamble to Section 101(a) is there any reference to the granting of continued economic or technical assistance to countries in Europe save in the context of strengthening ‘the mutual security and individual and collective defences of the free world’. Section 2 is in fact based upon the principle of promoting the foreign policy of the United States and upon the systems of collective security provided by the NATO and the United Nations. Moreover, the same Section provides that the Economic Co-operation Act of 1948, as amended, shall hereafter be deemed to include this purpose. It will be clear, therefore, that economic assistance granted under this Act will, in future, be based upon these new principles and that the whole basis upon which the European Recovery Programme has hitherto been administered by the Economic Co-operation Administration has been radically changed.
  3. Assuming that Ireland were prepared to co-operate with the United States for the purposes of receiving aid under the Mutual Security Act, there would appear to be only two ways in which she would qualify to benefit from the aid authorised by Section 101 of the Act, namely:-
    1. Ireland would seem to qualify for military aid if the President of the United State determines under paragraph (1) of the Section that Ireland is of direct importance to the defence of the North Atlantic area and further determines that Ireland’s increased ability to defend herself is important to the peace and security of the North Atlantic area and to the security of the United States. The Minister for External Affairs considers it highly improbable that the President of the United States would be prepared to make any such determination, in our regard, unless we were to enter into arrangements for mutual security with the United States.
    2. Ireland would apparently qualify for fresh economic assistance under paragraph (2) of the section, as a country to which the Economic Co-operation Act of 1948 originally applied, but as already stated in this memorandum, it seems clear that the new principle upon which this aid will be granted would operate to exclude Ireland from participation. Unexpended balances of appropriations already made under the Economic Co-operation Act are, however, authorised to be continued up to and including 30 June 1952. This would apparently authorise the carrying out of the commitments already undertaken in our regard, in so far as these commitments are not liquidated when the Mutual Security Act comes into force on the 1st January 1952. The Minister for External Affairs considers that this is in fact the only benefit we would be likely to obtain under the Act, but even this depends on another section (section 511) which deals with ‘Eligibility for Assistance’. This section, like section 101, distinguishes between military and economic aid and while placing the emphasis on the former provides as follows in respect of economic assistance:-

      3. ‘(b) No economic or technical assistance shall be supplied to any other nation unless the President finds that the supplying of such assistance will strengthen the security of the United States and promote world peace, and unless the recipient country has agreed to join in promoting international understand and goodwill, and in maintaining world peace, and to take such action as may be mutually agreed upon to eliminate causes of international tension.’

      [The American Aide-Mémoire] also refers to this section, where it calls upon the Government of Ireland to re-affirm that along with the Government of the United States of America, it is firmly committed to join in promoting international understanding and goodwill etc.

  1. The Government will be aware that, by mutual agreement between the two countries, Ireland notified the United States earlier this year that she did not propose to ask for any further economic assistance from the United States, save in the form of the Technical Assistance Programme which was then being considered by the Economic Co-operation Administration and which was approved in principle by that Administration on or before the 30th June last. Apart from this Technical Assistance Programme, however, there is a residue of Grant Aid still available but not yet appropriated and there is the Grant Counterpart Fund. These various forms of economic aid may be considered separately under the following heads:-

    1. The final drawing of the line of credit established with the United States Export-Import Bank by the Loan Agreements of the 23rd December, 1949, and the 30th June, 1950, was made in June last. There is still, however, due from the ECA on foot of Grant allotments a sum of $1,051,114.72. It is expected that this sum will be reimbursed on foot of certain shipments of sorghums and newsprint made this month and last month. Reimbursement is not, however, automatic since the claims and documents must be examined and approved by the ECA before payment is made. Although it is hoped that some $900,000 of this amount may have been approved by the ECA before the 31st December a balance of approximately $150,000, which is being claimed in respect of a cargo of newsprint, is hardly likely to be approved by the ECA if that body goes out of existence.
    2. The Grant Counterpart Fund. This fund is an Irish currency fund which has been created and placed in a Special Account with the Central Bank under the obligation in that behalf undertaken by the Irish Government under the Bilateral Agreement with the United States of 1948. It is the Irish currency counterpart of the Grant of $18m made to this country in 1950; after subtracting the sums authorised to be deducted therefrom under the Agreement referred to, the Grant Counterpart Fund will ultimately amount to approximately $6,100,000. Utilisation of this fund must, under the Bilateral Agreement, be approved by the United States Government and proposals for such utilisation have recently been placed before the Government.
    3. Technical Assistance. A large and varied Technical Assistance Programme, amounting to approximately $1m. was approved by the Economic Co-operation Administration, Washington, before the 30th June last. This Programme is at present in course of being carried out.
  1. The foregoing paragraph makes it clear that if American aid is not, for one reason or another, granted to this country under the Mutual Security Act, the loss will almost certainly be in the region of $1,150,000 and may be as much as $2m. It should be remarked, however, that even if Ireland were prepared to co-operate fully with the United States under the new Act, it is not at all clear that even in respect of these unexpended balances, we should stand to benefit to the same extent as formerly. While it is true that the outstanding balances referred to at paragraph 4(a) would, no doubt, be honoured, it seems, from information obtained through the Embassy in Washington and the ECA Mission in Dublin, that in considering proposals, either for the utilisation of the Grant Counterpart Fund or for Technical Assistance, the American Authorities would not be prepared to approve them on the basis formerly applicable under the Economic Co-operation Act but would feel themselves bound under the new legislation to regard them from the new angle supplied by this legislation. Thus, for instance, the Technical Assistance Programme already approved enjoyed high priority in the eyes of the Economic Co-operation Administration but the Minister for External Affairs has been given to understand that it would have a very low priority in the eyes of the Mutual Security Agency.
  2. The major question, however, to be determined is whether Ireland should co-operate with the United States in the terms suggested in the Aide-Mémoire set out in Annex I.2 The purpose of the United States Congress in enacting the Mutual Security Act is very different to the purpose which guided the same Congress in enacting the Economic Co-operation Act of 1948 and the Amendments thereto in 1949 and 1950. Apart from the emphasis on military security, it will be noticed that the preamble to section 101(a) mentions as an object of the appropriations authorised by that section ‘to further encourage the economic unification and the political federation of Europe’. This goes much further than any previous statement of the desire of the American legislature to see the creation of a unified Europe. For these reasons and having regard to the declared foreign policy of the State, the Minister for External Affairs considers it impossible to recommend to the Government that Ireland should adhere to the purposes and policies set out in paragraph 1 of the Aide-Mémoire set out in Annex I to this Memorandum. He considers, therefore, that the American Ambassador should be informed that the Irish Government would be unable to adhere to the purposes and policies of the Economic Co-operation Act of 1948 as amended, especially by Section 2 of the Mutual Security Act of 1951. If, in view of this attitude on the Irish side, the United States Authorities were to insist that failure to accept the whole of paragraph 1 of the said Aide-Mémoire would entail the discontinuance of all further American aid to this country after the 31st December, 1951, the Minister for External Affairs considers that there is no alternative but to accept the loss involved.
  3. In seeking the agreement of the Government to the recommendations made in the foregoing paragraph, the Minister for External Affairs desires to emphasise that the action therein suggested is that which would be required as a last resort and that before taking that course he will seek by every means open to him to convince the American authorities of the following points:-
    1. The only interest of the Irish Government in this matter is the carrying out to a fruitful conclusion of the generous aid given by America to the Irish people;
    2. this aid was given and accepted on the basis of the Economic Co-operation Agreement of 1948 between the United States and Ireland which will continue in force until 30 June, 1952, and was so given by the United States under and in accordance with the provisions of the Economic Co-operation Acts 1948, 1949 and 1950;
    3. the Irish Government does not seek fresh aid under the Mutual Security Act;
    4. for that reason the Aide-Mémoire suggesting an exchange of letters between Ireland and the United States on the basis of adherence to the purposes of the Mutual Security Act appears to the Irish authorities to be unnecessary;
    5. furthermore, to require the adherence of Ireland to the new purposes set out in the Mutual Security Act as a condition of receiving aid already authorised and accepted under the Economic Co-operation Acts is tantamount to a breach of contract with this country, having regard to the commitments and policies already undertaken by Ireland in expectation of the continuance of this aid until it is fully utilised.

    If, nevertheless, the American authorities insist upon the necessity for an exchange of letters on the lines proposed in the Aide-Mémoire, the Minister for External Affairs will seek to secure the omission from the proposed exchange of letters of the statement of adherence to purposes and policies which are in conflict with the declared foreign policy of this State.

  1. Apart from the opening clauses of paragraph 1 of the Aide-Mémoire, the Minister for External Affairs sees no objection to exchanging letters with the American Ambassador on the lines proposed in the Aide-Mémoire. So far as the remainder of the paragraph is concerned, he sees no difficulty from the Irish point of view in affirming ‘that along with the Government of the United States of America, it (Ireland) is firmly committed to join in promoting international understanding and good will and in maintaining world peace and to take such action as may be mutually agreed upon to eliminate causes of international tension’. The remainder of the Aide-Mémoire, being concerned with details, presents no difficulties. The Minister assumes that, if aid continued to be given by the American authorities under the Mutual Security Act to this country on the basis of an exchange of notes which does not contain the objectionable elements already referred to, the American authorities would presumably do so through a special official in the American Embassy in Dublin rather than through the setting up of a branch of the Mutual Security Agency here. The setting up of such a branch would have no advantage from the American point of view since Ireland is not to receive any aid under the new Act not previously authorised under the Economic Co-operation Act.

    If however the American authorities decide to replace the ECA Office in Dublin by setting up a branch of the Mutual Security Agency here, the Minister does not see any special difficulty in collaborating with American officials under that title for the limited purposes referred to in this Memorandum.

  2. The Minister for External Affairs will therefore be glad to receive the approval of the Government for the recommendation set out in paragraph 6 of this Memorandum as follows:-

    That the American authorities should be informed that the Irish Government is unable to adhere to the purposes and policies of the Economic Co-operation Act as amended, especially by Section 2, of the Mutual Security Act of 1951, on the understanding that before doing so, the Minister for External Affairs will take the action mentioned in paragraph 7 of this memorandum.3

1 Not printed.

2 Not printed.

3 See Nos. 71 and 72.



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