740.00119 EW/11–244: Telegram
The Acting Secretary of State to the Chargé in the Soviet Union (Kennan)
2739. Please refer to the aide-mémoire contained in Deptel 2584 November 2 and proposed revision of Article XIII of Hungarian armistice terms contained in Deptel 2585 November 2. These were repeated to London with a view to obtaining British support for our position. London has informed us that British are in general agreement but that they would like to see certain changes made in our proposals before instructing Clark Kerr to support our démarche without reservations. They also stated that if we cannot accept their suggested amendments Clark Kerr would still inform the Soviet government that the United Kingdom agrees in general with our proposals but would suggest the amendments desired by the British.
- (1)
- The major amendment suggested by the British was that we omit reference to principle 1 of the aide-mémoire which states that in so far as possible reparation payments should consist of goods to be used directly in the rehabilitation or reconstruction of the recipient country and that the goods should not, unless in exceptional circumstances agreed to by the members of the reparation section, be exported to a third country. The Department cannot accept the British suggestion that this principle be dropped. American interests have important investments in Hungary and American public opinion would undoubtedly expect this Government to take cognizance of that fact. However, your attention is called to two points: (a) The principle in question is suggested as one of the criteria which should guide the proposed reparation section of the Control Commission; [Page 929] it is not incorporated as a part of the armistice terms. (b) The wording of the principle is not rigid; it permits of a considerable degree of latitude in exceptional circumstances.
- (2)
- In the event that the Soviet Government should object to the foregoing principle you may assure them that it in no way represents an attempt on the part of this Government to reduce Russia’s absolute or relative share of reparation or to reduce the amount of the Hungarian obligation. If the operation of the principle should make it difficult for Russia to receive directly from Hungary the amount of reparation which Hungary will be obligated to pay to Russia, alternative arrangements to satisfy Russia’s claim will be possible. Feasible alternatives would include (a) pooling of reparation obligations whereby any deficiency in Hungary’s deliveries to Russia would be made up by correspondingly larger deliveries from another Axis country, or (b) other compensatory action carried out under the auspices of the proposed Reparation Section of the Allied Control Commission.
The British have also suggested the following two changes which the Department authorizes you to incorporate in the documents in question if you have not already presented them to the Foreign Affairs Commissariat:
- A.
- Principle 3 of our aide-mémoire is to be re-worded as follows: “As a means of minimizing possible unfavorable effects upon overall European economic stability, payments for reparations should be scheduled in such a manner as not to interfere unnecessarily with essential normal trade.”
- B.
- The concluding words in paragraph 1 of our redraft of Annex to Article XIII which now read “... deliveries each year shall be defined in special agreements with Hungary negotiated through the Allied Control Commission” are to be changed to read as follows: “… deliveries each year shall be defined in special directions notified to Hungary by the Allied Control Commission.”
Please inform the Department of present status of negotiations on this question.
Sent to Moscow, repeated to London.71
- Repeated as telegram 9928.↩