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amount of $385 million or its equivalent in francs or piasters is decried to satisfy in full request made by French memo of Sept 1;


 * c. no further financial assistance nay be expected for Calendar Year 1954;


 * d. US Govt retains right to terminate this additional assistance should for any reason French Govt plan as outlined in memo of Sept 1 prove incapable of execution or should other unforeseen circumstances arise which negate the understandings arrived at between the two govts.

4. You should immediately begin informally to work out language with French covering paragraph 2 above. (We will cable soonest new draft of US reply.) It should be made crystal clear to French that final US Govt agreement will be given only when satisfactory language for exchange notes has been obtained.

5. During time you are working out exchange with French, Administration will inform interested leaders both houses Congress since new program involves important change in orientation foreign aid program as enacted by Congress. We have begun and will continue work on this phase of matter with greatest urgency and hope have it completed by time you wind up negotiations with French. Please impress on your French colleagues overriding necessity maintain complete secrecy on all aspects this matter until Congressional leaders informed and negotiations actually completed and notes exchanged between two govts.

6. It was agreed by NSC there should also be assurances from French Govt re intention move ahead on EDC, but that for various reasons such assurances need not necessarily be contained in formal notes exchanged between govts. Would like your current views on how most satisfactory assurances can best be obtained.

7. While procedures whereby payments to French or Associated States will be made will have to be worked out, it is important that French understand clearly our basic approach to this additional aid--US is agreeing to finance a specific action program up to an agreed dollar figure. Consequently, we will pay or reimburse French or Associated States on basis of agreed franc and/or piaster expenditures as they occur at rates of exchange then current. US should receive benefit any reduced costs resulting from screening, devaluation, or other causes. AppripriateAppropriate [sic] safeguards will be included in US note. FOA will forward details of suggested procedures shortly.

Rh