Foreign Relations of the United States: Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

740.00112 EW/11–1144

The British Embassy to the Department of State

Memorandum

With reference to the Department’s memorandum of 26th [25th] October¹¹ on the question of economic agreements with the European neutrals, the Embassy are instructed to inform the Department that the Foreign Office propose, subject to the views of the United States Government, to instruct His Majesty’s Ambassador in Moscow to deliver the following communication to the Soviet Government.

“His Majesty’s Government in the United Kingdom have been giving consideration to the question of extending existing war-trade agreements with neutral countries of Sweden, Switzerland, Spain and Portugal.¹² The object of this extension would be to secure continued compliance on the part of these governments with requirements of economic warfare and to ensure that economic operations of these countries in the period immediately after the cessation of hostilities with Germany, when some relaxation of allied control over war time trade may be anticipated, shall be conducted in a manner which will not conflict with our interests.

“In particular, the aim of extension of agreements would be to ensure that the neutral countries concerned:

• “(a) Shall increasingly make available such of their products as may be required for the prosecution of the war against Japan and for relief and reconstruction of Allied territories.
• “(b) Shall not, by reason of their resources of foreign exchange and shipping which they have been able to conserve during the war as a result of their neutrality, acquire more than their fair share, from sources overseas not under allied control, of commodities in especially short supply.

“In return for satisfaction of these requirements, it will be proposed to allocate to neutral countries in question suitable quantities of materials in short supply, the control of which is solely or mainly vested in Anglo-American supply authorities.

“My Government have instructed me to apprise Your Excellency of their policy in this matter which they think might be of interest to the Soviet Government. His Majesty’s Government intend to seek the concurrence of the United States Government to the extension of existing Anglo-American agreements with these four countries with a view to putting this policy into effect.”

2. The Foreign Office are anxious to secure the concurrence of the United States Government in a communication on these lines and the Embassy are instructed to point out that the communication is intended to inform the Soviet Government of the proposed policy of His Majesty’s Government, rather than to seek their views on its merits. In casting it in this form, the Foreign Office have had these factors in mind.

(a) It is now clear that we shall not immediately be entering the stage of transition period agreements, but we must anticipate a previous stage for which the existing Anglo-American agreements with the neutrals, to which the Russians have not been a party, will have to be renewed, though probably in some modified form, and then merged at an appropriate date with the proposed transition period agreement.

(b) Since the Department’s note under reference was delivered, the Soviet Government have cited participation of certain neutral governments amongst their reasons for not attending the International Air Conference¹³ and have published their refusal of the Swiss Government’s request for a resumption of diplomatic relations.¹⁴

3. In view of the essential continuity of Anglo-American policy which is reflected in the proposals to negotiate further agreements and of the increasingly out-spoken hostility of the Russians towards some of the European neutrals, it seems to the Foreign Office unnecessary and even undesirable to encourage the Soviet Government to express views upon the merits of the British and United States proposals, at all events insofar as they may relate to Switzerland, Spain and Portugal. The Foreign Office recognize, however, that the Soviet Government will have a direct interest in the impending negotiations with Sweden. The Foreign Office would, therefore, propose, if the United States Government agree, to follow up the general communication on policy with a more detailed communication regarding the proposals, when these are decided, to be laid before the Swedish Government, and to ask the Soviet Government whether they have any particular point they would wish the United Kingdom and the United States to bear in mind in their negotiations.

4. The Foreign Office hope that they may receive a very early expression of the views of the Department upon the proposed communication to the Soviet Government. As the Department is aware, His Majesty’s Government are anxious to return an early reply to the Swedish Government upon M. Boheman’s proposed visit¹⁵ and to agree with the United States Government the detailed basis of conversations with him. This renders it desirable to make the proposed communication to the Soviet Government as quickly as possible and in a form least likely to provoke debate in Moscow.

Washington , 11 November, 1944.

11. Not printed.
12. For documentation on Anglo-American war trade agreements with Sweden and Switzerland, see Foreign Relations, 1943, vol. ii, pp. 739 ff. and pp. 824 ff., respectively; for documentation on wartime economic problems concerning Spain and Portugal, see ibid., pp. 632 ff. and pp. 497 ff., respectively.
13. For documentation on the International Civil Aviation Conference at Chicago, November 1–December 7, 1944, see pp. 355 ff.
14. On October 10 Switzerland submitted proposals for the reestablishment of diplomatic relations with the U.S.S.R. after a 20-year lapse; on November 1 the Swiss Ambassador in London was notified that the Soviet Government refused the Swiss offer to renew diplomatic relations, announcement of which was made in Moscow on November 4.
15. Erik C. Boheman, Secretary General of the Swedish Ministry for Foreign Affairs, expected to visit London in connection with U.S.-British negotiations with Sweden for a post-hostilities supply agreement; see vol. iv, pp. 670 ff.