Briefing Book Paper
American and Russian Economic Relationship in Countries of Eastern Europe
It is recommended that the President request that the USSR agree:
- To stop the removals from the countries of Eastern Europe of capital equipment, wholly or substantially owned by American nationals; to return capital equipment previously removed; and to insure that these countries make adequate, effective and prompt compensation, on a parity with reparations payments, to American nationals for capital equipment previously removed which cannot be returned and for current output delivered on reparations account.
- To permit American nationals to enter, move about freely and carry on commercial and government operations unmolested in the countries in question.
- Not to conclude treaties, agreements or arrangements which give to the USSR an exclusive or monopolistic position in the trade, raw materials, or industry of these countries, or which deny to American nationals access, on equal terms, to such trade, raw materials and industry; and appropriately to modify existing arrangements which have that effect.
Removal of American Property
American property rights and interests in countries occupied by the Red Army and under Soviet influence have not been adequately protected or respected by the USSR. In Rumania and Hungary the USSR has been removing capital equipment and current output wholly or substantially owned by American nationals without regard for production schedules or payment of adequate, effective and prompt compensation. In Finland oil tankers have been requisitioned and marketing installations withheld in ceded territory with no arrangement for compensation.
In the latter part of 1944 the United States raised with Russia the question of the removal of American owned oil equipment from Rumania. The Russian attitude at that time was that Germany had brought pipe and other equipment into Rumania, and that, moreover, the oil companies had assisted Germany in fighting the Allies by supplying her with oil, so that the pipes and other equipment [Page 421] were military trophies and could be properly seized by Russia. The British argued that machinery which was the property of British companies should not be removed without British consent. Furthermore, the British contemplate protesting strongly to Soviet removals on the ground that such action (1) disregarded Soviet Government’s assurances of last January; (2) directly injures an indisputable British interest; and (3) could not fail to have damaging effect upon production capacity of Rumanian oil fields and therefore upon world oil supplies. The Russians have recently given assurances that rolling stock in Rumania owned by British and American companies would no longer be taken.
The question of removal of property is complicated by the reparations provisions of the armistice agreements signed by Bulgaria,1 Finland,2 Hungary3 and Rumania.4 The agreements, which provide for reparations transfers in kind, are not sufficiently specific regarding the conditions under which American property may be transferred. It is clear, however, that there was no intention to shift any part of the reparations burden onto American property owners. This is confirmed by the fact that the armistices contain other provisions guaranteeing the restoration of all legal rights and interests of United Nations and their nationals as they existed before the war and for the return of their property in complete good order.
The removal of capital equipment results in destruction of plants, loss of foreign markets and trading connections, and decreases production schedules of strategic materials, for which there is global demand and distribution. Russia should therefore stop the removals of capital equipment, return such equipment previously removed, and adjust its reparations demands and trade relations with these countries so that plants may be retained intact, production schedules of strategic materials may be maintained at maximum levels, and adequate, effective and prompt compensation, on a parity with reparations payments, may be paid by them to American owners for capital equipment which cannot be returned.*
This Government has been unable to obtain adequate or accurate information with respect to what has actually taken place. No United States businessmen have been allowed to enter these countries, and United States Government officials have not been allowed to [Page 422] travel freely and observe conditions, although Moscow recently stated that such movement is possible.
Entry and Freedom of Movement of United States Nationals in Countries of Eastern Europe.
The United States Government believes that it is improper on the part of the Soviet Government to refuse to accord to American official personnel and private citizens the right of free entry into Europe and free movement within the countries of Eastern Europe.
It is incumbent upon the Allied Government to arrange for the equitable allocation of materials and equipment in critically short supply and for assignment of transportation priorities on the basis of carefully reviewed requirements. It is impossible for the United States adequately to discharge its responsibility to seek the most effective utilization of scarce commodities so long as limitations upon the freedom of United States observers to move about in the countries of Eastern Europe preclude access to data on local supply availability, effective use of capital equipment, and true requirements with respect to these areas.
Furthermore, American private citizens must be permitted to enter, move about freely, and carry on business in these countries. This is also necessary in order to step up production of critical materials and for the protection of American property rights and interests. Administrative, engineering and technical personnel are badly needed to maintain substantial local production. In this connection it will be noted that Soviet representatives on governmental and commercial missions are accorded complete freedom of movement within the United States and its possessions.
Economic Interests of the United States in Eastern Europe
Secret agreements have recently been concluded with Bulgaria 5 and Rumania 6 giving to the USSR a predominant, if not exclusive, control of industry and trade. The agreements in effect provide that virtually the country’s entire exports be delivered to the Soviet Union, that extensive raw material concessions be placed under Soviet control, and that Soviet controlled commercial monopolies be established. Russo-Rumanian companies have been established in important branches of the Rumanian economy (oil, lumber, metals, sea, river and air transportation, et cetera).
This kind of exclusive economic penetration is at variance with the general commercial policy of this Government, which looks toward the expansion of trade and investment on a multilateral, non-discriminatory basis. The United States has a strong interest in the [Page 423] preservation of conditions in the countries of Eastern Europe which will permit the continued operation of such multilateral trade, and accordingly sees a necessity for maintaining not only its own trading interests and position in those countries, but also the trading interest and position of other countries which were importers to, and exporters from, Eastern Europe before the war. The United States would be greatly concerned if the Government of the USSR persists in the negotiation and execution of commercial treaties giving it an exclusive position in the foreign trade of the countries of Eastern Europe, and effectively denying to nationals of the United States equality of access to the raw materials and trade of these countries.
The USSR, it is believed, should understand at the outset that the United States, while recognizing that the USSR may have special security interests in certain neighboring countries, is vigorously opposed to preferential economic arrangements, to monopolistic devices favoring the USSR, to unequal investment opportunity, and to any interference with American property or trade in these sovereign countries.
- Executive Agreement Series No. 437; 58 Stat. (2) 1498.↩
- Text in British and Foreign State Papers, vol. cxlv, p. 513.↩
- Executive Agreement Series No. 456; 59 Stat. (2) 1321.↩
- Executive Agreement Series No. 490; 59 Stat. (2) 1712.↩
- In the case of Germany, where the policy is to reduce German industrial capacity in the interests of security, instructions to the United States member of the Reparations Commission permit removal of American property, but provide that the owner may retain his interests in the property if practical, or if not, Germany shall furnish reparations to cover such interest. [Footnote in the original.]↩
- Signed at Moscow, March 14–15, 1945. Not printed.↩
- Signed at Moscow, May 8, 1945. Text in British and Foreign State Papers, vol. cxlix, p. 876.↩