Foreign Relations of the United States: Diplomatic Papers, 1945, General: Political and Economic Matters, Volume II

Council of Foreign Ministers Files: Lot M–88: CFM London Minutes

Record of the Seventh Meeting of the Council of Foreign Ministers, Lancaster House, London, September 17, 1945, 4 p.m.

London, September 17, 1945, 4 p.m.

C.F.M.(P) (45) 7th Meeting

Present

U.K.	U.S.A	U.S.S.R
Mr. Bevin	Mr. Byrnes	M. Molotov (Chairman)
Sir R. I. Campbell	Mr. B. V. Cohen	M. F. T. Gousev
Sir A. Clark Kerr	Mr. J. Dunn	M. K. V. Novikov
Sir N. Charles	Mr. J. F. Dulles	M. S. A. Golunski
	Mr. C. E. Bohlen	M. V. N. Pavlov

France	China
M. Bidault	Dr. Wang Shih Chieh
M. Couve de Murville	Dr. Wellington Koo
General Catroux	Dr. Victor Hoo
M. Alphand	Dr. Hollington Tong
M. Fouques-Duparc	Mr. Yang Yun Chu
M. Basdervant40

Australia	New Zealand	South Africa
Dr. H. V. Evatt41 (For Item 1)	Mr. R. M. Campbell42 (For Item 1)	Mr. Heaton Nicholls43 (For Item 1)
	Yugoslavia
	Mr. Ljubo Leontic44 (For Item 1)

1. Italian Peace Treaty: Yugoslav-Italian Frontier and Trieste
(Previous Reference: C.F.M.(P) (45) 6th Meeting, Minute 1)

M. Molotov said that representatives of Australia, New Zealand, South Africa and Italy were available to put their views to the Council on the question of the Yugoslav-Italian Frontier and Trieste. The Yugoslav Ambassador in London was also present. The Yugoslav Delegation had, however, addressed a letter to Mr. Bevin, as Chairman of the Council’s meeting that morning, stating that the Delegation had only just arrived in London, and were greatly fatigued by their journey, and asking that they might be allowed to present their views to the Council at 11 a.m. on the following day. M. Molotov added that he had just received a further message from the Counsellor of the Yugoslav Embassy in London to say that Mr. Kardelj was indisposed and could not attend a meeting that afternoon.

The Council agreed that the meeting to hear the views of the Governments of Yugoslavia, Italy, Australia, New Zealand and South Africa should be postponed until 11.0 a.m. on Tuesday, 18th September.⁴⁵

2. Italian Peace Treaty: Armaments
(Previous Reference: C.F.M.(P) (45) 6th Meeting, Minute 5)

The Council resumed their consideration of Section IV of the memorandum by the United States Delegation (C.F.M.(45) 16) on Armaments.⁴⁶

M. Bidault recalled that at their meeting on 14th September the Council had agreed that the proposal in paragraph 7 of C.F.M.(45) 16 for the demilitarisation of Pantellaria and Isole Pelagie should be considered at the same time as the proposals on Armaments in Section IV of that paper.

M. Molotov said that the Soviet Delegation had had no opportunity of consulting their naval and military experts and must reserve the right to ask the Council to resume consideration of these military proposals at a later stage in the Conference. Subject to this reservation by the Soviet Delegation, the Council reached the following conclusions:—

(1) Pantellaria and Isole Pelagie should be demilitarised;

(2) Italy should be prohibited from constructing any naval, military or air force installations in Sicily and Sardinia, except for such facilities as may be required by the World Organisation or for internal security purposes;⁴⁷

(3) Factory and tool equipment in Italy designed for the manufacture of war implements which is not required for the permitted military establishments and is not readily susceptible to conversion for civilian purposes should be surrendered to the Four Powers for such disposal on reparations account or otherwise as they may determine;

(4) A liberal attitude should be taken towards the production of aircraft and airplane engines for civilian use;

(5) Provision should be made for the establishment of Allied machinery to enforce the naval, military and air clauses of the Peace Treaty (as proposed in paragraphs 56–58 of C.F.M.(45) 3⁴⁸) until such time as Italy can be accepted as a reliable member of the World Organisation;

(6) The Deputies should proceed to consider the detailed provisions of the military clauses of the Peace Treaty in the light of the general principles approved by the Council as set out in (1) to (5) above and in the record of the earlier discussion on Armaments at the Council’s meeting that morning (C.F.M.(P) (45) 6th Meeting, Minute 5).

3. Italian Peace Treaty: War Crimes, Etc.

The Council considered Section V of the memorandum by the United States Delegation (C.F.M.(45) 16) on War Crimes, Return of Prisoners of War, etc.

It was agreed that the Deputies should be guided by this Section of the memorandum by the United States Delegation in their detailed examination of the relevant Sections of the draft Treaty (paragraphs 61–68 of C.F.M.(45) 3).

4. Italian Peace Treaty: Reparations

The Council considered Section VI of the memorandum by the United States Delegation (C.F.M.(45) 16) on Reparations from Italy.

M. Molotov handed in a memorandum on this subject by the Soviet Delegation (C.F.M.(45) 19⁴⁹). He explained that, as stated in the first paragraph of this memorandum, the Soviet Delegation took the view that, as an aggressor, Italy should pay reparations, but that as she had come over to the Allied side before the end of the war reparations should not be exacted from her in full. Reparations should be paid by Italy in kind (equipment of war factories, shipyards, etc.). The Soviet memorandum provided for the total amount to be inserted; and M. Molotov explained that this figure had been left open pending discussion by the Council. At the Berlin Conference the Soviet Delegation had suggested that a fair minimum for reparations from Italy might be $600 million. They had, however, gained the impression that the United States and British Delegations might not press their claim to reparations from Italy; and, if so, the total amount might be reduced. The Soviet Government thought that Greece, Yugoslavia and Albania would press their claims to reparations from Italy, and they themselves were certainly not prepared to abandon their own claim, although they would accept less than half the total. The third paragraph of the memorandum repeated the substance of paragraph 72 of the British draft (C.F.M.(45) 3), which was accepted by the Soviet Delegation.

M. Bidault gave his preliminary comments on the Soviet memorandum. The first paragraph should give rise to no difficulty. The second was too indefinite without a figure for the total amount of reparations. Paragraph 3 was open to the objection that it obliged the Italian Government to compensate Allied nationals only to the extent to which it compensated Italian nationals; and Italy might escape this obligation altogether by deciding to make no compensation to Italian nationals.

M. Bidault handed in copies of a memorandum which the French Delegation had prepared on this subject (C.F.M.(45) 20⁵⁰), consisting of an amended version of Section VI of the United States draft. While in this memorandum, as in that of the United States, the main basis of reparations was equipment from Italian war factories, the French draft emphasised the need for the restitution of, or compensation for, property of any of the United Nations or their nationals removed or damaged by the Italians. The French Delegation attached particular importance to this.⁵¹

Mr. Byrnes said that he still thought the Directive proposed by the United States Delegation in Section VI of C.F.M.(45) 16 was fair and reasonable. It would be difficult for the Council or the Deputies to fix in dollars the value of the machinery and equipment which could be made available for reparations from Italy. A tentative agreement had just been reached on the scale of military armament which Italy would be permitted to retain. It followed that a munitions industry on a corresponding scale should also be retained by Italy. The United States Delegation also thought it important that Italy should be allowed to retain all the machinery readily convertible to civilian purposes which she needed to restore her peacetime economy. Everything over and above these requirements should be surrendered to the Four Powers for such disposal on account of reparations as they might determine. Any such equipment or machinery which might be allotted to the reparations account of the United States would be made available for such of the smaller States which had suffered at the hands of Italy and were entitled to reparations.

The situation in Italy was desperate. In order to relieve it, the United States had been providing relief for Italy and would continue to do so. It was therefore essential to adopt a liberal policy in the matter of reparations from Italy. If the Council accepted the Soviet proposal to fix a total for Italian reparations, there would be a danger that in the attempt to reach this total, factories which might have been converted to civilian use would be dismantled, thus leading to further unemployment and an increase in the numbers needing relief from the Governments members of the Council. If the proposal made by the United States Delegation was accepted, an Allied Commission could be appointed to determine what equipment was available for reparations, to hear the claims of the countries entitled to receive it, and to allot it among them. He feared that the total amount of reparations available from Italy would not be large; but he was satisfied that neither the Council nor their Deputies could determine now what the total amount should be.

M. Molotov said, in reply to Mr. Byrnes, that the Governments represented at the Council were, in regard to this matter, in different positions. The territory of the United States had not been occupied by Italy, as had that of the Soviet Union. Further, the Council must take into account, not only the views expressed round the table, but also the feelings of Soviet citizens whose homes had been devastated. When soldiers were demobilised and returned to find their families killed and their homes destroyed, would it satisfy them to be told that the Soviet Delegation had been convinced by the argument of the United States and the other Delegations that reparations should not be exacted from Italy, who had been partly responsible for this devastation? How could such a decision be explained to the Soviet people?

M. Molotov also pointed out that by the Terms of Surrender, to Which the United States and British Governments had been parties, Roumania had agreed to pay on account of reparations $300 millions over a period of six years. Finland (a small country with a population of only 4,000,000) was to pay the same total amount in reparations. Both these countries were meeting their obligations in this matter. Was it just that, while these smaller countries were made liable to reparations, Italy should be exempted altogether? The Soviet Government had recently published the total amount of direct material damage done to the Soviet Union by Germany and her Allies; this amounted to 679 billion roubles. Should not even one per cent of this amount be demanded from Italy?⁵² The Soviet Delegation was claiming not even that, but only some moral satisfaction for their people. He therefore proposed a more definite version of the second paragraph of his memorandum as follows:—

“Italy shall pay reparations to the Associated Powers in kind (equipment of war factories, shipyards, including docks, cranes, machine tools, etc. and munitions). The United States and British Governments having renounced their claim to reparations, it is agreed that an amount of $300 million be exacted from Italy in favour of the U.S.S.R., Yugoslavia, Greece and Albania, of which the U.S.S.R. shall receive $100 million”.

Mr. Bevin said that, while it was true that the British Government had agreed to the insertion of a total figure for reparations in the Terms of Surrender for Roumania and Finland, they had only done so under protest and with the reservation that this should not be regarded as a precedent. The British Delegation supported the United States proposal that reparations from Italy should be limited to once for all deliveries. They objected, however, to any attempt to fix a total dollar value for such deliveries, as they were not prepared to agree to a reparations policy which would result in the British Government’s having to subsidise the payment of reparations by continuing relief to Italy. They still remembered their experience after the last war, when reparations defeated their own objects. It was the purpose of the Council to make an enduring peace, not a peace of vengeance.⁵³

If claims to reparations were to be decided on a nice calculation of damage done by Italy, he would remind the Council that the British Government had already guaranteed £10 millions for the rehabilitation of Malta, and that the Italians had also caused substantial loss to the United Kingdom in the early years of the war.

The British Government had no wish to condone what Italy had done; but they must take into account the extent to which she had succeeded in “working her passage home”. He believed that they would do much better for Europe, for Italy, and for themselves if they allowed her to restore her economy on a peace-time basis, instead of stripping her territory and making it impossible for her to live. Their policy towards Italy should be, first, to enable her to repay what had been supplied to her by way of relief; secondly, to help her to restore her economy on a peace-time basis; and, thirdly, to remove machinery and equipment which was not needed for a peace-time economy, and would help to create a war potential.

M. Molotov said that reference had been made to the experience of reparations after the last war. He preferred to rely on more recent experience. Their experience of reparations had so far been very satisfactory. The largest demand had been made on Finland, which, with a population of 4 millions had to pay $300 millions; and Finland was carrying out her obligations with friendly relations with the Soviet Union. He had no objection to the United Kingdom receiving any reparations she might claim. But if the United Kingdom, the United States and France claimed reparations from Italy, the total amount should be increased to $600 millions.

M. Bidault said that the French claim for reparations from Italy would be very small, although they had suffered damage to the extent of $400 millions.

The Council agreed to resume discussion of this question at their next meeting.

40. Not further identified.
41. Herbert V. Evatt, Australian Minister of State for External Affairs.
42. Richard M. Campbell, Acting New Zealand High Commissioner in London.
43. George Heaton Nicholls, High Commissioner for the Union of South Africa in London.
44. Yugoslav Ambassador in the United Kingdom.
45. The representatives of Yugoslavia, Australia, New Zealand, and South Africa withdrew at the conclusion of the consideration of this item. There is no evidence that an Italian representative was present at this meeting.
46. Dated September 14, “Suggested Directive to Deputies …”, p. 179.

47. According to the American minutes of this meeting, the following discussion took place regarding the demilitarization of Sicily and Sardinia:

    “Byrnes said the American position was that Pantelleria and Pagliac be demilitarized.

    “Molotov inquired what about Sardinia and Sicily.

    “Byrnes said that the United States Delegation made no proposal on that subject. He believed the proposal on this matter came from the British.

    “Bidault said that France agreed to limit the demilitarization of all four places.

    “Bevin said this was what the British proposed and they took a strong view with respect to the demilitarization of these places.

    “Molotov inquired for what reason. Were there any practical reasons?

    “Bevin said the British proposal was for prohibition against any military installations on Sicily and Sardinia except as were necessary to facilitate the functions of the United Nations organization or for purposes of internal order. There was a difference between the British position with respect to Sicily and Sardinia and that with respect to Pantelleria and Pagliac for which they proposed permanent demilitarization. Pantelleria was not necessary for the defense of Italy and could be armed for the object of aggression. Since these Islands had been used aggressively in two wars he did not think they should be so used again. The British would like the provision as set forth in their draft and the French and United States proposals with the difference that Sardinia and Sicily would be subject to the United Nations organization.

    “Byrnes agreed that paragraph 31 of Part IV of the British draft be added to the directive. He thought that Item 7 in the United States draft should be transferred to Part IV as paragraph 2 and should be followed by the language in the British draft as paragraph 3.

    “Molotov said the Soviet Delegation had no objection to this proposal but it wished to make a reservation. It might be that other Delegations had had time to consult in detail with their military and naval experts but the Soviet Delegation had not had time. It wanted the possibility of returning to this question in the course of the present session if it had any additional points to make.” (740.00119 Council/9–1145)

48. September 12, p. 135.
49. September 17, p. 217.
50. September 17, p. 217.

51. The United States delegation minutes of this meeting record the following additional exchange in the discussion at this point:

    “Bevin said he wished to report that the first charge on Italian accounting must be for relief and debts. He doubted whether anything would be left for reparations.

    “Molotov pointed out that this had not been agreed to.

    “Bevin said he did not say that it was recorded but he had certainly made the statement and had clearly indicated the British position. He felt that what was left over for reparations should go to Yugoslavia and Greece. It was preferable that the great powers not demand reparations.

    “Bidault said that they should understand that stolen goods must be restored and that if they were not able to identify them for restitution then they should be compensated by reparations. Moreover Italian property not ceded property should go to the reparations account. He referred to the fact that in the case of persons resident in Italy they would be paid in Italian currency. The French claim would be defined and he agreed that war material would be the most important part of reparations.” (740.00119 Council/9–1145)

52. The American minutes of this meeting record that the Secretary of State responded to this question by Molotov in the following terms: “Byrnes said with regard to the suggestion that the Soviet press might say that the American Delegation had opposed the Soviet Union receiving even $1,000,000 in reparations that in every country newspapers make unqualified statements. He was satisfied, however, that in the Soviet Union no newspaper would make such an unqualified statement for neither he nor any representative of the United States Delegation had made any such statement. What he had said as set forth in this paper was that there should be determined what should be divided as Italian reparations and that the United States would renounce in favor of Greece, Yugoslavia and other Governments the share of the United States. He did not specifically say France but he did say other countries. He did not say that the Soviet Union should not receive even $1,000,000.” (740.00119 Council/9–1145).

53. The American minutes of this meeting record the following additional exchange between Bevin and Molotov at this point:

    (Bevin speaking) “It was interesting to note that the appetite grew with time. At Potsdam the Soviet Delegation had put forward a claim of $250,000,000 to be divided by all States.

    “Molotov interjected that they had proposed writing the sum of $600,000,000.

    “Bevin said that nothing about figures had been mentioned but in the end the; claim had been brought down to $250,000,000.” (740.00119 Council/9–1145)

    M. Molotov had spoken of the effect on public opinion in the Soviet Union. What would the British public say if he agreed to fix a total of $300 millions for reparations from Italy, and then had to admit that the British taxpayer was contributing towards the payment of these reparations?

    For documentation regarding the consideration at the Berlin Conference of the problem of Italian reparations, see Conference of Berlin (Potsdam), vol. ii, p. 1623, index entries under Italy: Reparations.