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SECRET
-2-
-- what is the Spanish position with respect to the bases? Ambassador
Hill and DOD consider the new Spanish government is eager to
conclude an agreement with us although admittedly it will seek a
substantial quid pro quo; State is considerably less optimistic about
the degree of Spanish enthusiasm;
-- finally, the question of timing: Ambassador Hill and General
Burchinal strongly desire negotiations very soon, whereas State
is inclined to begin them later (State feels that the effects of the
Symington subcommittee hearings will be bad regardless when they
occur); both seem to agree that the negotiations should be conducted
in Madrid.
Spanish-EEC Trade Arrangement. There is a probability that Spain
and the EEC will negotiate a reciprocal preferential trade arrangement in
early 1970. We have traditionally considered (and Treasury now insists)
that such an arrangement would encourage the proliferation of similar arrange-
ments between the EEC and other non-member states which would be inimical
to US economic interests and seriously damage the multilateral system of
trade. The Spanish, on the other hand, feel that their efforts to join Europe
(i,e,, the trade arrangement) should be given special consideration by the
US. They have warned us that if we attempt to block Spanish arrangements
with the EEC, Spain might retaliate against American economic interests
in Spain, and the entire spectrum of US-Spanish relations would be adversely
affected. Thus, we must decide on the nature of our reaction to the proposed
preferential trade arrangement: would opposition be effective, how seriously
would encouragement or silence affect our global trade interests, how
efficacious will the arrangement be in bringing Spain closer to Europe,
modernizing and liberalizing Spain.
Broader Issues
Spain has entered the transitional period in anticipation of the post-
Franco era. Spain has a new face: the new Cabinet is younger (by 15 years),
technocratic, and is seeking to develop a new relationship with Europe and the
US. The Government has moved quietly to make the Bibraltar issue much
more manageable, will enter serious negotiations with the EEC, is being
courted by France and West Germany for arms sales (including amproduction
arrangements), and is developing relations with Eastern Europe. US policy
toward Spain is also at a crossroads. We will be determining the value
SECRET
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"ocrText": "SECRET\n-2-\n-- what is the Spanish position with respect to the bases? Ambassador\nHill and DOD consider the new Spanish government is eager to\nconclude an agreement with us although admittedly it will seek a\nsubstantial quid pro quo; State is considerably less optimistic about\nthe degree of Spanish enthusiasm;\n-- finally, the question of timing: Ambassador Hill and General\nBurchinal strongly desire negotiations very soon, whereas State\nis inclined to begin them later (State feels that the effects of the\nSymington subcommittee hearings will be bad regardless when they\noccur); both seem to agree that the negotiations should be conducted\nin Madrid.\nSpanish-EEC Trade Arrangement. There is a probability that Spain\nand the EEC will negotiate a reciprocal preferential trade arrangement in\nearly 1970. We have traditionally considered (and Treasury now insists)\nthat such an arrangement would encourage the proliferation of similar arrange-\nments between the EEC and other non-member states which would be inimical\nto US economic interests and seriously damage the multilateral system of\ntrade. The Spanish, on the other hand, feel that their efforts to join Europe\n(i,e,, the trade arrangement) should be given special consideration by the\nUS. They have warned us that if we attempt to block Spanish arrangements\nwith the EEC, Spain might retaliate against American economic interests\nin Spain, and the entire spectrum of US-Spanish relations would be adversely\naffected. Thus, we must decide on the nature of our reaction to the proposed\npreferential trade arrangement: would opposition be effective, how seriously\nwould encouragement or silence affect our global trade interests, how\nefficacious will the arrangement be in bringing Spain closer to Europe,\nmodernizing and liberalizing Spain.\nBroader Issues\nSpain has entered the transitional period in anticipation of the post-\nFranco era. Spain has a new face: the new Cabinet is younger (by 15 years),\ntechnocratic, and is seeking to develop a new relationship with Europe and the\nUS. The Government has moved quietly to make the Bibraltar issue much\nmore manageable, will enter serious negotiations with the EEC, is being\ncourted by France and West Germany for arms sales (including amproduction\narrangements), and is developing relations with Eastern Europe. US policy\ntoward Spain is also at a crossroads. We will be determining the value\nSECRET"
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