800.51W89 U.S.S.R./57: Telegram
The Ambassador in the Soviet Union (Bullitt) to the Secretary of State
[Received May 16—8:15 p.m.]
85. This afternoon I laid the original Department draft agreement before Krestinsky and Rubinin and proposed that we should attempt to define our exact points of disagreement. Krestinsky is adverse to [Page 98] take the Department draft as the basis for discussion saying that it was impossible to discuss details such as total indebtedness and interest rates so long as there was no agreement on the basic question of the form of credit.
After a long fruitless discussion Krestinsky said: “Please inform your Government that we will have nothing to do with financial standing of American corporations for credits in which the Export-Import Bank will participate. Either a credit at the Bank for double the amount of debt payment or a flat agreement by the Bank to discount 100% Soviet obligations to twice the amount of the debt payment is a sine qua non for any settlement. Let the Bank agree at once to discount 100% $200,000,000 of Amtorg obligations and we will pay [$]100,000,000 on indebtedness and the matter will be settled. We will make no agreement unless it places us in a position to buy for cash and not on credit. We can get all the private credits we want in the United States.”
I told Krestinsky that I was certain that my Government would not make any such agreement and suggested that it was merely a waste of time for us to continue our conversations, adding that the Department might as well present immediately its absolute minimum to Troyanovsky in written form so that both Governments might cease to cherish illusions. He protested that he preferred infinitely to continue conversations here. Rubinin followed me which [when?] I left Krestinsky’s office and for an hour tried to persuade me to recommend acceptance of the proposal of the Soviet Union. I told him that acceptance was impossible.
Krestinsky’s acute disinclination to terminate our discussions makes me inclined to believe that his sine qua non is not a real ultimatum. But he was so categorical that the Soviet Government will be unable to make any alternative offer for some time—perhaps for some months.
I shall refrain from further discussions until I receive explicit instructions from the Department.