Spain and the United States - Real Instituto Elcano

OVERVIEW 23
The position of the Eisenhower administration was “to grant Spain the
minimum amount of additional economic aid necessary to ensure internal
stability so that the use of our bases there would not be jeopardised by civil
disorders.” 20 This explains the continuous American concern about inflation,
because the more it rose the greater the potential for unrest in Spain. The
Spanish government took this point on board.
Another element of the aid package was defence support. This totalled
$488 million between 1954 and 1964. It was initially used for foodstuffs, coal,
cotton and other inputs and capital goods and from 1958 for development
projects. This aid generated a counterpart fund in pesetas, a mechanism also
used in the Marshall Plan. The government was required to pay in pesetas the
equivalent value of dollars received, using a specified exchange rate of 35
pesetas per dollar. The percentage of counterpart funds to be used by the
Americans was fixed at 70% (60% to finance the base construction programme
and 10% for administrative expenses in Spain). Marshall Fund recipients, in
contrast, were able to use 90% of counterpart funds (as opposed to Spain’s
30%) to develop their economies.
The provision of agricultural surpluses under the aid programme started, as
we have seen, before the signing of the Pact of Madrid in 1953. Spain received
close to $500 million under all the mechanisms envisaged in Public Law 480
(PL480), a sales programme in which agricultural surpluses were exchanged
for local currency to be used by the American legations in the field.
Lastly, other elements of the aid programme included the donation of
foodstuffs through PL480 (distributed by Cáritas) and military aid, which took
the form of deliveries of items to the armed forces. The value of these items
was more than $300 million.
The economic assistance programme committed Spain to “stabilise its
currency, establish or maintain a valid rate of exchange, balance its
government budget as soon as practicable, create or maintain internal financial
stability, and generally restore or maintain confidence in its monetary system”,
as well as “discourage cartel or monopolistic business practices and business
arrangements which result in restricting production and increasing prices or
which curtail international trade, encourage competition and productivity and
facilitate and stimulate the growth of international trade by reducing barriers”.
In other words, create a market economy. Had these conditions, which were in
stark contrast to Spain’s policies at the time, been rigorously enforced, the
impact would have been dramatic and probably undermined the regime. The
regime initially paid scant attention to them. Over the long term, however, it
20. See Memorandum of Discussion at the 248th Meeting of the National Security Council”, May 12,
1955. FRUS, 1955-57, XXVII, p. 537.