740.00112 European War 1939/7289a Suppl.: Airgram

The Secretary of State to the Ambassador in the United Kingdom ( Winant )

A–242. Reference Department’s telegram 5869 of November 21. The following is a copy of the recommendations referred to in paragraph 1:

“The present serious situation with regard to trade relations between the United Nations and Sweden should be corrected by a more positive and drastic policy than has heretofore been adopted by this Government; for example, by threat of suppression or diminution of exports to Sweden. However, in the process of bargaining, but only on condition that substantial objectives can be achieved thereby, it may be advisable to offer the Swedes certain concessions such as ‘basic rations’ of some imported goods and the assurance of special supplies including petroleum needed for the Swedish armed forces.

It is, therefore, recommended that this Government pursue by negotiation a policy immediately designed to attain the following principal objectives within the framework of the present War Trade Agreement:

A strict enforcement of the War Trade Agreement and modifications thereof where necessary, which would put an end to the violations and exceptions mentioned above. Modifications should include the reduction of certain blockade quotas for Swedish overseas imports which are excessive, and elimination where practicable of commodities imported from overseas which enter into Swedish production for the enemy.
An increase in the flow of strategic materials from Sweden to the United Nations, and cooperation by the Swedes in the matter of substantial purchases by the United Nations for preclusive purposes as well as for supply.
Assistance by the Swedes in effecting transport by sea and air for materials from Sweden to the United Nations.
Satisfactory arrangements for the use by the United Nations not only of Swedish shipping at present outside the Baltic but also for the vessels built or being built by Sweden.
Elimination or substantial reduction of Swedish Government credits, direct or indirect, to enemy countries.
Access to full information on Swedish exports to and imports from enemy territory.
The conclusion of negotiations satisfactory to the Department of State, whereby the Swedish government shall agree to equalize its export trade with the other American republics in such manner that, if Sweden limits its export trade to any American republic or republics, Swedish exports to other American republics to which exports are not so limited shall be correspondingly reduced.
The conclusion of negotiations satisfactory to the War Shipping Administration, for the chartering by the War Shipping Administration of 21 Swedish vessels now in this hemisphere.
A substantial reduction, the maximum attainable, in the number of enemy troops on leave now permitted to pass through Swedish territory, and a stipulation that no troops be permitted to travel through Sweden to Finland.
A substantial reduction, the maximum attainable, in the military traffic of materials now permitted to pass through Swedish territory, and a stipulation that no military traffic or materials be permitted through Sweden to Finland.
Elimination of German military traffic in Swedish territorial waters. Elimination of the use of Swedish convoys by the enemy.
A reduction in the iron ore exports from Sweden to enemy territory from the current figure of about nine and a half million tons annually to normal pre-war exports to Germany.

The most important objective, namely, a substantial reduction in the shipments of iron ore from Sweden to enemy territory cannot be attained to the extent desired except through direct military action. A decision in this matter is beyond the scope of the authority of the staff of the Board and the Sub-Committee. Nevertheless, it must be emphasized that the traffic of iron ore is the most important single contribution, in terms of raw material, made to Germany by any nation outside of its pre-war borders. The use of military action to cut down Swedish exports of iron ore is not precluded by the terms of the War Trade Agreement.”

The following resolution was passed by the Board of Economic Warfare:

Resolved that over-seas trade with Sweden be continued, including the shipment of petroleum products in exchange for commitments, secret or otherwise, of the types set forth in paragraphs a. to l. of the recommendations submitted by the staff of the Board of Economic Warfare dated November 5, 1942; and that this policy be carried out in consultation with the interested agencies by the Board of Economic Warfare in collaboration with the Department of State.”