740.00119 EW/7–1845: Telegram

No. 984
The Acting Secretary of State to the Assistant Secretary of State (Clayton)1

secret

56. (For Assistant Secretary Clayton.)

Bucharest has seen a letter from Russians to Rumanian Prime Minister2 informing latter that German-held shares in Rumanian oil corporations “pass into the patrimony of the Soviet Union as partial compensation for damages caused to USSR by Germany.”3 Objectionable features of this are obvious. It (1) asserts Soviet desire for share interests as reparation or otherwise; (2) manifests USSR intention to obtain exclusionary control Rumanian oil industry; (3) bypasses current Four Power discussions regarding treatment of German assets in ex-enemy and neutral countries from economic security and reparations points of view; and (4) raises serious question regarding looted property.

Accordingly, it is suggested that positive steps be taken at Potsdam Conference to forestall this action.

In addition to basing our objections to proposed Russian action upon as many of the foregoing grounds as can be mentioned to Russians, following arguments could be advanced:

(1) No shares can be subjected to control or disposition as German by Soviet for its individual advantage unless it is established that they were not acquired by the Germans in looting transactions outlawed by United Nations’ declaration of January 5, 1943.4 It might be added that US would have to be satisfied that particular shares were not United Nations’ property which had been looted by Germans; (2) shares which have met above burden of proof (i. e. shown conclusively to have been German owned through legitimate transactions) should be governed by general principles to be established by Four Powers regarding treatment of German assets in ex-enemy or neutral countries. It should be emphatically denied that such assets in Rumania pass into patrimony of USSR alone as compensation by Germany for war damage. US cannot admit competence of USSR to assert unilaterally ownership rights to German assets in ex-enemy or neutral countries. Without exception US has treated such assets coming within its control in these countries as subject to trusteeship on behalf of all four occupying powers. Similar standard of conduct expected of Soviet Union and must be strongly insisted upon. It should be obvious to Soviet Government that in three neutral Western European countries, German external assets will be principally under control of British and ourselves. [Page 952](3) Article 8 of Rumanian Armistice5 pledges the Rumanian Government not to allow the expropriation of any form of German property without the permission of the Allied (Soviet) High Command. While we recognize that protests can hardly be based on actual wording of this article, this Government maintains control should be exercised on behalf of and with respect to interests of other United Nations, particularly since Article 18 provides that Allied (Soviet) High Command, in controlling execution of Armistice, acts on behalf of the Allied Powers.

Please inform Harriman and Pauley. Inform whether this message should be repeated to Moscow and Bucharest for information.

[Grew]
  1. Sent to the Secretary of State at Babelsberg.
  2. Petru Groza.
  3. See vol. i, document No. 385.
  4. Text in Department of State Bulletin, vol. viii, p. 21.
  5. Signed at Moscow, September 12, 1944 (Executive Agreement Series No. 490; 59 Stat. (2) 1712).