Foreign Relations of the United States, Diplomatic Papers, 1945, Europe, Volume IV

740.00119 Council/12–1845: Telegram

The Acting Secretary of State to the Ambassador in the Soviet Union (Harriman)

Washington, December 18, 1945—8 p.m.

2573. Secdel⁹⁸ 21. For consideration of Secretary and Ambassador. First part of following refers specifically to Soviet reply to representations on Soviet-Hungarian agreement for economic collaboration. Second part based on assumption that if this subject comes up in FonMins discussions, it will and should lead to general consideration three powers economic interests in and possible assistance to liberated and former enemy states of Eastern Europe.⁹⁹

I. It is suggested that, if the Secretary believes it desirable, and provided subject not covered by FonMins discussions, note on Soviet-Hungarian and Soviet-Rumanian economic collaboration agreements be delivered to Soviet FonOff in reply to Vyshinsky’s letter of Oct 31 (your despatch 2260 Nov 15¹) during or after meeting of FonMins. If subject comes up in FonMins discussions Dept suggests desirability making points indicated in outline proposed note below.

Note would state that US Govt has taken note of Soviet assurances that economic collaboration between USSR and Hungary contains no element of discrimination against third countries, and considers this assurance as covering specifically the 5–year economic collaboration agreement. In view of the assurances which Soviet Govt has given with respect to its economic collaboration agreements with Rumania (Embtel 2896 Aug 14²) and Hungary, Soviet Govt should have no objection to communication to US Govt of texts of these agreements. On basis of informal info available regarding terms of these agreements US Govt continues to be deeply concerned over the apparent exclusive features thereof, particularly since it seems clear that execution of Soviet-Rumania economic collaboration agreement of May 8, 1945 is likely to result in progressive monopolization by Soviet-Rumanian enterprises of important segments of the Rumanian economy.

Note would add that development of economic relations between Italy and US is proceeding on normal non-discriminatory short-term commercial basis and involves none of the elements mentioned in previous US note in connection with Soviet-Hungarian and Soviet-Rumanian economic collaboration agreements (reDeptel 2159 Oct 13).

Note would add that US Govt is ready, in accordance with the Crimea Declaration on Liberated Europe, to concert immediately with Soviet and Brit Govts in the preparation and implementation of concrete measures to assist Hungary and Rumania to solve their pressing economic problems. This Govt continues to believe that the conclusion of bilateral long-term agreements with states still under armistice regime such as the economic collaboration agreements between the USSR and Hungary and Rumania without consultation with other signatories of Yalta Declaration is justified neither by the economic situation in those countries nor by the extension of recognition pursuant to the Berlin Conference decisions, in view of the clear obligations set forth in the Yalta Declaration. Soviet Govt should be assured that this Govt fully understands mutual economic interests between USSR and neighboring states of Hungary and Rumania, and desires to see those interests develop to the advantage of those three countries. Principal basis of this Govt’s concern over economic collaboration agreements is that they appear to affect directly the interests, rights and obligations of other countries, which also have an interest in the development of economic relations with Rumania and Hungary, and accordingly require consideration by Yalta powers with view to agreement on economic program in Rumania and Hungary satisfactory to all concerned. This Govt assumes that implementation these agreements would be adjusted to accord with any such joint programs that may be worked out and in any event to eliminate any discriminatory features.

II. With reference to material supplied Secretary by economic divisions on agreements concluded between USSR and countries of Eastern Europe (which covers whole subject Soviet economic penetration all these countries) Dept suggests that positive approach be adopted to supplement recommendations regarding discriminatory features of Soviet agreements for economic collaboration, based on Yalta Agreement to concert policies of three Govts in assisting peoples to solve economic problems. If subject of Eastern Europe comes up at FonMins discussions it would seem desirable to make most strenuous effort to recreate community of purpose implied in Yalta Agreement but never carried out by joint action. This approach has merit of being based on written undertaking entered into by this Govt in good faith and seems more likely to secure at least limited benefit of checking speed and extent of penetration than negative method of merely protesting against arrangements such as Hungarian and Rumanian agreements for economic collaboration and not offering any constructive alternative.

First objective of any program for these areas would be to make their economic futures reasonably predictable at least insofar as action of three powers concerned. In order to start on a firm basis in the former satellites, it is essential that their economic commitments in form of reparation schedules and prices, restitution, war booty, rates of exchange, and requisitions of occupying forces must be definitely fixed, and it is suggested that the most definite possible understandings to attain this end be worked out in FonMins meeting. This would involve in case of ex-satellites agreement on details within framework of armistice agreements.

To make predictable so far as possible the economic futures of these states it would also be necessary to take positive steps to check inflation and restore basis for sound economic development. Plans to this end could scarcely be elaborated by FonMins but initial steps could be indicated and machinery for collaboration be set up. A desirable safeguard for all parties would seem to be as indicated above not to forbid bilateral arrangements as such but to require that other Yalta powers shall be consulted on any long-term bilateral arrangements involving any participation in domestic economies of liberated countries or former axis satellites, and eliminate discriminatory features of existing arrangements.

In connection with above Collado³ invites your attention to Big Three agreement to article XX of Berlin Protocol⁴ and especially last paragraph of US proposal referred to as Annex II which states as follows:

“We deem it essential that the satellites not conclude treaties, agreements, or arrangements which deny to Allied nationals access on equal terms to their trade, raw materials and industry; and appropriately modify any existing arrangements which may have that effect.”

Acheson

98. Series designation for telegrams to American delegation to Conference of Foreign Ministers (American, British and Soviet) at Moscow, December 16–26, 1945. For documentation regarding this Conference, see vol. ii, pp. 560 ff.
99. There is no evidence that the matters taken up in this telegram were discussed at the Conference of Foreign Ministers.
1. Despatch 2260, November 15, from Moscow, not printed. For Vyshinsky’s letter of October 31 to Ambassador Harriman. see telegram 3735, November 2, from Moscow, p. 901.
2. Vol. v, p. 656.
3. Emilio G. Collado, Deputy on Financial Affairs to the Assistant Secretary of State for Economic Affairs, William L. Clayton.
4. For text of Protocol of the Proceedings of the Berlin Conference, August 1, 1945, see Conference of Berlin (Potsdam), vol. ii, p. 1478.