The Minister for External Affairs presents his compliments to the American Chargé d'Affaires ad interim and with reference to the Embassy's Aide-Mémoire of the 16th February, 1951² has the honour to state that the Irish Government fully realises the circumstances in which the United States Government has decided that its own position and its commitments for defence and foreign aid must be reviewed. They note the view that it is no longer possible to proceed in terms of the S/M formula. At the same time, they are sure that the United States Government has not overlooked the fact that although Ireland, for reasons which are well known to it, has not found it possible to adhere to the North Atlantic Pact, the strengthening of the Irish economy, both agricultural and industrial, is of vital importance in the overall defence of the free nations of western Europe.

The Irish Government desires at the present juncture to place on record its appreciation of, and gratitude for, the generous and effective assistance which has been made available to it under the European Recovery Programme and which has recently been supplemented by a further grant of two million dollars. The proposal that negotiations should now be opened for the suspension of direct country allotments of ECA assistance is agreeable to the Irish Government, which has never taken the view that ECA assistance should be continued longer than necessary. They note with pleasure that the proposed suspension of direct country allotments would be without prejudice to continued Irish participation in the Technical Assistance Programme and other ERP activities and that funds already allotted would be available until finally expended, and they would be glad to continue discussions with the American Government on the elements of the programme of development and supporting measures to stabilise and strengthen the Irish economy both generally and with respect to its dollar position.

As indicated in the letter of the Minister for External Affairs of the 27th December last to Ambassador Foster,³ there is a number of considerations which are relevant to the question whether the suspension of aid should be immediate or gradual in character. The Irish Government feels assured that in the forthcoming negotiations these considerations will be fully and sympathetically evaluated by the American Government in order that the transition to an economy based on the free dollar convertibility of Ireland's sterling earnings may be effected without dislocation to the Irish economy.