740.00112 European War 1939/11018: Telegram

The Minister in Switzerland (Harrison) to the Secretary of State

3835. The following telegram has been sent to London.

1031. Sequence my 1023 (3814 to Department) June 15. CA and CS had informal conversation on June 15 with leading members of Mixed Commission at latter’s invitation on subject Annex I for second half 1944.

Swiss began by emphasizing that owing to present stoppage in communication in west they were more than ever dependent on Germany for trade facilities in directions north and east. Any import facilities which we are giving or might offer must therefore be regarded as purely theoretical for an indefinite period. They also pressed again for code facilities with their delegation at least in Bern London direction. They feared that further concessions to us would provoke Germany to retaliate both by withholding imports and denying transit to exports.
Swiss were unable, although warned of undesirability of further delay, to say when or how formal reply would be made to our letters of May 25. They requested urgent clarification on following points.
As regards group 4 did we envisage a global ceiling (within which Swiss could utilize sub-ceilings for individual items according to their proposals) which would group together both Germany and other Axis countries? If so we might hope for a reduction to 35% instead of their proposed 50%. Or did we envisage two separate global ceilings one for Germany and one for other Axis countries in which case they could only envisage a reduction of each global total to 40%.
On June 14 under the 15 tranches of compensation deal we still had unused balance of 29 millions. Did we want Switzerland to ask Germany for further tranches under Berlin protocol or make no request therefor or limit their requests to lower figures regarding which they would appreciate your views or even offer a cancellation of part of the outstanding balance? Swiss said naturally the less they had to ask Germany the easier it would be to induce it to accept any further reductions under Annex I.
As regards remainder of Annex Swiss indicated that their counterproposals would be as follows.
Group 1A. From 15% to 10% for all items except M6 which would be retained at 15%.
Group IB. 20% except all three categories of ball bearings which would be reduced to 10%.
Group 2. No change in Swiss proposals of March 23.
Group 3. No change in Swiss proposals except that they would agree to transfer of M9 to group 4.
Group 4. See paragraph 3a above but Swiss strenuously resisted your demand for nil quotas for piston rings. They eventually agreed to study this position again and to consider the possibility of making some reduction taking into account the particularly objectionable character of piston rings for use in airplanes.
Groups 5 and 6. No change in Swiss proposals.
As regards group 1B Swiss explained their inability to reduce exports further under 914 and 954A on ground that existing reductions were utmost which could be conceded without crippling industries concerned.
CA and CS were constrained although pointing out they were acting merely as post office to press strenuously for a reduction in ball bearings for all destinations to at least 5%. They indicated that such a concession would affect the tenor of their report of this conversation in a manner which might be helpful to the Swiss. Notwithstanding their hints as to difficulties which might result from our rigid application of clause 7 Swiss remained adamant at 10%. Swiss left impression that they had not been authorized to go below 10%. Unlike the case of piston rings they did not even offer to reconsider ball bearings.

Repeated to Department as Legation’s 3835.