740.00119 EW/11–945

The Secretary of State to the Ambassador in France (Caffery)

5246. For Angell Number 25. Reurtel No. 29, Nov. 5.13 Dept still believes you should seek adoption of view that Russian compensating deliveries should be considered reparation and urges following in support of its position:

1.
Collado13a has reported that in conversations with Russians at Potsdam it was made clear such deliveries would be regarded as reparation.
2.
Since deliveries of industrial capital equipment from three Western zones to USSR–Poland reduce amount of equipment available for reparation to other claimants, it is logical and just that any compensation made for this reduction should go to other reparation claimants.
3.
Use of compensating deliveries to reduce imports into Germany would not make it possible to reduce amount industrial capacity retained for export because Germany could only count on this source of supply for brief period.
4.
If Russian compensating deliveries when used to meet needs in Germany are not considered imports and therefore not taken into account in allocating proceeds of German exports in accordance with contributions of all occupying powers to cost of imports, then share of US, UK and France in export proceeds would be correspondingly reduced.

Dept proposes that occupying powers should claim in IARA major share in Russian compensating deliveries as reparation so that they may use their shares to meet import requirements for their respective zones in Germany and Austria. Such arrangement would reduce procurement from other sources of supply and interim financing [Page 1379] burden on occupying powers and make it possible for US to meet any eventual loss on German imports from reparation share rather than US Treasury. It is, however, in interest of US, UK and France to consider all supplies brought into their zones of occupation, no matter from what source, as imports and therefore qualified for payment out of export proceeds to extent such proceeds are available.

Byrnes
  1. See telegram 6420, November 5, 8 p.m., from Paris, p. 1371.
  2. Emilio G. Collado, Director of the Office of Financial and Development Policy.