861.51/3035: Telegram
The Ambassador in the Soviet Union (Harriman) to the Secretary of State
[Received March 18—1:40 p.m.]
889. I saw Mikoyan a few days ago and outlined in general terms the program described in your 510, March 7, 9 p.m., for the use of lend-lease for reconstruction projects definable as essential for the war, with an agreement for the Soviet Government to accept equipment undelivered at the conclusion of hostilities under a separate reimbursement contract. I also described the possibility of the Export and Import Bank obtaining Congressional authority to carry on into post war. I did not mention the possibility of a United Nations Bank for Reconstruction participating in this field as I have insufficient information on this subject.
Mikoyan said that he wished to give the program consideration and would discuss it with me again. He said he would be glad to give me, as soon as it was completed, the billion dollar list he was preparing but that he was not yet in position to give me anything on the longer range program. He explained that the billion dollar list included what was urgently needed for delivery up to the end of 1945 and included only items important for the prosecution of the war. He added that if he had accepted all of the requests of the different Commissariats it would have been a very much larger list.
Mikoyan asked whether he understood correctly from what I had said that requests for plant equipment should be submitted through the protocol machinery to which I replied in the affirmative. He asked me why there was a delay in the acceptance of the balance of the 800 million dollar requests already submitted to which I replied that I had no specific information but that I knew there were considerations of acute shortage of labor and productive capacity to carry on our immediate war program.
[Page 1064]I would appreciate a prompt cable commenting on this conversation and giving any supplementary information I should have for the next conversation.
I believe you should bear in mind that Mikoyan will probably submit his billion dollar program for consideration in the Fourth Protocol. I do not see how we can foresee now how much of it we may find it advisable to put into production and deliver before the end of 1945. I suggest for your consideration that we do not take a definite position one way or the other on the amount we will accept for production under the Fourth Protocol. The events of the war may develop in such a way that we would be ready to take substantially more or perhaps less than would appear at the moment. Any commitment we took now would have to be a minimum and therefore cause useless argument with and misunderstand[ing] by the Soviet authorities. It would seem therefore that the wise policy would be to screen the list as promptly as feasible after it is received and to indicate to the Soviets that we would accept the approved items for delivery at the earliest time compatible with our interests. We should however begin at once to do engineering work and other preparatory work on the approved items so that we can fit them quickly into our production program at a time when we readjust our program to conform to our own changed requirements. I have in mind that when Germany collapses and we concentrate on the war in the Pacific these Russian orders may be of value to us in relieving dislocations.
In emphasizing the value that these orders might have in keeping in balance our own program, I do not wish to give the impression that I minimize the importance of the program to the Russian war effort which I have expressed in previous cables.
I believe, therefore, that although we should not, at this time make any actual or implied commitment as to time of delivery, we should accept the approved items for delivery at our option and put them into production as our situation permits. Am I right in assuming from your cable that lend-lease has the authority to fulfill such a commitment even for some items the production of which may not have actually started when hostilities end? Please confirm for my information.
Mikoyan may ask me in my next talk what terms we expect for repayment for the items undelivered at the termination of hostilities. Please confirm my assumption that these terms would be negotiated in Washington.
In reply to your inquiry, I feel the suggested program is soundly conceived and, if implemented by reasonably early legislation expanding the authority of the Export and Import Bank as suggested, will competently deal with the problem to the mutual advantage of both [Page 1065] countries. I am not clear, however, about the International Bank for Reconstruction in this connection and will cable you further on this aspect.