861.51/3041: Telegram
The Ambassador in the Soviet Union (Harriman) to the Secretary of State
[Received April 6—2:45 p.m.]
1179. Reference your 773, April 1, 6 p.m., regarding proposed agreement under section 3(c) of Lend-Lease Act for submission in Washington to the Soviet Ambassador:
I have not seen Mikoyan since my last cable and therefore the answers to your two questions are my present best guess.
I feel it is too soon to estimate whether the Russians will wish to have substantial quantities of food included in schedules under article II as so much depends on when hostilities end. Preliminary information indicates that the Germans fostered cultivation during the autumn and winter in the Ukraine west of the Dnieper and I am [Page 1075] told by observers that relatively little damage was done to crops or facilities in their withdrawal. I intend to discuss with Mikoyan the next time I see him what effect the liberated areas will have on the Russian food situation after the 1944 and after the 1945 crops.
As to raw materials, I would think that the Soviets will have a different attitude towards different types of materials and therefore think your idea of considering each item on its merits is wise. I would think that considering our own interests we would wish to put as many semi-fabricated materials as feasible in the schedules under article II.
I believe the Russians will think that the price of raw materials will go down after the war and they will probably try to be sharp in their trading on price in connection with all raw materials included in the schedules.
In answer to your question regarding the contemplated article providing for repayment of inventories of unused lend-lease supplies of such items as have a post-war use left in Russia at the end of the war, off hand I can’t think of any item which we would wish to repatriate providing the Russians would buy it at a reasonable price. I had presumed the recapture clause would be used as a lever in negotiation for reasonable payment for useable items. I would think that any definition at this time which would commit the Soviets to pay for any items they had in stock would be desirable.
I believe that it would be practicable for the Russians to determine approximately their inventories of lend-lease supplies at the end of the war, but there would be absolutely no way for us to check any part of their statements. Also there would be difficulties in coming to an agreement as to what constituted inventory—steel that was being processed for tanks might be of value for scrap only whereas steel being processed for structural purposes might be 100% useable. From our standpoint therefore it would be better, I would think, to provide for repayment for supplies in categories useable in post-war shipped within a certain number of months prior to the termination of hostilities. The period might vary with different categories. I would think that the more items for which a formula for settlement can be arrived at now, the better.
It is difficult to generalize. Of one thing only can I be certain, and that is that the Soviets will bargain to the last dollar and I feel that we will be able to protect our interests better by reaching an agreement now if practicable rather than waiting till after the war.