(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A001000010018-9
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 9, 2016
• Document Release Date: July 28, 2000
• Sequence Number: 18
• Content Type: REPORT

Approved For Release 2000108129: CIA-RDP79RO1012AO01000010018-9
III. A. Despite Spain's apparent desire for a bi-lateral agroemennt
with the USo lrranteo can be expected to demand extensive economic assiex-
tenet and saximnn political benefit for this association0 Spain's
needs in every field are so great that any government which bargained
away the country's primary military assets without receiving concessions
could not hope to survive,. In a dditiono the Spanish government apparently
feels that the value of its potential contribution merits large-scale .
essistenoev Apart from economic assistance, discussed below, the regime
can be expected to attempt to secure such political benefits ast
guarantees of US assistance in the event of armed egressions political
support of the US for the present regimes a voice for Spain in the over-
all defense of the westg and US influence to temper western Ruropeat
criticism of the present governwent0 Tier materiel would of course be
requested. Aty attempt by the US simply to furnish arcs would probably
be countered by economic demands in fields tangential to the purely
Military:;
Franco Ia demands can be expected to vary considerably with the degree
of international tension? In the event of actual war? the Spanish govorn
ment would probably be content to receive air and naval support for its
ground forces,, and could be expected to cooperate fully with the US to
protect Spain from invnsicn6 A considerable lessening of world tension
would also fares the Spanish government to scale dawn its demands, Under
present international conditions,, Franco can be expected to demand the
maxims price for Spanish assistanaeo
State Dept. declassification & release instructions on file
 Approved For Release 2000108t29 : CIA-RDP79RO1012AO01000010018-9W 2
i;1 1*40
The persistence of the Spanish negotiators in the current loan
discussions with the Export Import bank in pressing for large scale,
long-tams development projects, some of questionable economic
Justification, aug.ests that Spain will not permit its overall
economic development plans to be subordinated to Western defense
requirements or to be interfered with by these.
The resentment of the Spaniards over what they consider the
arbitrary criteria (principally the Bank's restrictions an loans
to state enterprises and on long-term projects requiring great amounts
of capital) of the Hank indicates that in essence what they oppose is
interference with their economic programming,
In effect the Spanish representatives have challenged the Bankts
right as a creditor to stipulate the conditions under which the
$62.5 million loan will be made available to them. The Spaniards
hold that many of the projects which the Bank has encouraged them to
submit while partly in Spanish interest are more to the Strategic
interests of the U. S. They insist that since the loan is a business
loan guaranteed by the Spanish Government, the responsible Spanish
economic planning authorities should be able to utilize the funds inj
the manner they deem best. The Spanish have also made it clear that,i
except in case of war, they do not consider themselves bound by the
more fact of the loan to give military bass rights or other concessions.
These, they have imilied, are matters to be discussed on a new and
different quid pro quo basis.
It is therefore probable that the extension of even relatively
minor privileges to the U. S. for strategic purposes will entail
economic assistance of a larger order of magnitude than the present
loan. The nature of the applications which have so far been submitted
to the Export-Import Beak, the tenor of many recent public statements
by Spanish officials in the Spanish press, and the still manifest
pique of the Spaniards over having been excluded from the European
Recovery Program suggest that the initial Spanish bargaining position
will be for fun scale economic assistance. What this would mean may
be Warred from the program proposed in 1948 by a large private
industrial Spanish bank. The beak's study, purportedly a private one,
is believed to have constituted the governmentts outline of its
economic needs and was prepared when there was hope that Spain would
be included in the European Recovery Program. The program called for
extraordinary imports over a period of four years of 0.2 billion
dollars and embraced foodstuffs and fodder, fertilizer, draft anime3.s
and tractors, capital equipment for all the sectors of industry, for
coal mining, railway equipment, fuels and industrial raw materials.