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

871.00/5–545

Memorandum for President Truman by the Chief of the United States Military Representation on the Allied Control Commission for Rumania (Schuyler)⁷⁷

[Washington,] 3 May 1945.

Subject: The Current Situation in Rumania

I. The Allied Control Commission

1. Under the Armistice Agreement signed 12 September 1944, control of execution of the Armistice terms by Rumania was entrusted to an Allied Control Commission. By later supplementary agreements between the three major Allies, Soviet Russia was accorded the principal executive role on this commission.

2. In actual operation the Control Commission is dominated completely by Soviet Russia which is using the Commission as a means for promoting a rapid communization of the Rumanian state. Directives and other instructions are issued by the Commission to the Rumanian Government in the name of the three Allies, but neither the British or American Representatives are consulted in the formulation of such directives. In most instances these Representatives are not even informed as to the nature of the instructions issued.

3. Under the present Commission organization, the United States and British Representatives are not in a position to safeguard their nation’s interests. The prestige of the United States is being adversely affected in both Russian and Rumanian eyes as a result of this situation and of the restrictions placed on the activities of the United States representatives by Russian officials of the Commission. Under these restrictions American newspaper men and American industrialists with important business interests in the country have been prevented from entering Rumania, and the efforts of United States Representatives to obtain information are impeded at every turn.

II. The Political Situation

1. The present Rumanian Government is a minority government, imposed on the nation by direct Soviet pressure. This government is dominated by the Rumanian Communist party which probably represents less than 10% of the Rumanian population. The vast majority of the Rumanian people are intensely nationalistic and are strongly opposed to communism in any form.

2. During the past month the Rumanian Communist party has been employing every available means to insure a continuation of its newly-acquired dominant position in Rumanian politics. Measures taken include appointment of communist prefects in all judetes (counties), appointment of communists to important judicial posts, promulgation of laws authorizing the death sentence for political prisoners and for those convicted of membership in a “pro-fascist” organization and the formation of a “voluntary civilian” police force which is making mass arrests of persons with allegedly “fascist” connections.

3. The Rumanian King himself and also the leaders of the major political parties have discussed the current situation at length with U. S. Representatives. They have pointed out that their attitude in opposition to the present minority government and to the communist program has been based primarily on their understanding of the announced policies of the three Allies with respect to liberated Europe, particularly the Yalta Agreement and the Atlantic Charter. They urge, of course, that the United States and Great Britain take action to implement these policies in Rumania. They emphasize that at the very least, these nations have a moral obligation to inform Rumanians at this time as to whether or not it is actually intended that these policies be applied in Rumania. They argue that any further opposition to the local communist program, if unsupported from abroad, will undoubtedly cost the lives of important Rumanian leaders and will have little effect on the ultimate fate of the nation.

III. The Economic Situation

1. Beginning shortly after 23 August 1944 and continuing through the present time, the Rumanian industrial and economic structure has been subjected to a continually growing pressure from Soviet Russia. For example:

a. Rumania has been required to release for transfer to Soviet Russia a large number of Rumanian citizens who on certain specified dates were residing in the provinces of Bessarabia and Northern Bucovina, which provinces under the Armistice Agreement have become part of Soviet Russia. Rumania has also been forced to permit Russia to deport for forced labor in Soviet coal mines some 70,000 men and women of German ethnic origin, most of whom were incontestably Rumanian citizens who had lived in Rumania all their lives, a large number of them holding key positions in Rumanian industry.

b. Rumania has been forced to release to Soviet Russia as war trophies considerable amounts of industrial equipment and supplies previously purchased from Germany by various industrial concerns in Rumania. Included among these items are quantities of oil drilling equipment, much of which was actually the property of British and American oil companies in Rumania.

c. Under the Armistice Rumania agreed to a reparations payment to Russia in various quantities of raw materials and manufactured goods amounting to three hundred million dollars in value, items to be delivered over a six-year period. Russia has forced Rumania to accept a 1938 price basis in determining quantities and items to be furnished, this, in effect, almost doubling the quantities which would have been required had present prices been taken as a basis.

d. Rumania is being required to contribute heavily to the maintenance of the Russian Armies which are operating far beyond the boundaries of Rumania. She has been forced to furnish not only food but also large amounts of manufactured articles such as bandages, overcoats, shirts, boots, saddles, etc. Since Russia has kept Rumania almost entirely cut off from trade relations with other nations, there is little possibility at present of replacing the raw materials which are being used up on these orders.

e. In order to recompense private owners and industrial concerns for items requisitioned by Russian armies, the Rumanian Government is being forced to make very large cash expenditures. Payments for requisitioned items alone, entirely apart from reparations payments, have already amounted to an equivalent of over fifty million dollars in United States currency. This constitutes one of the major factors in the present critical financial situation. The total of bank notes in circulation has almost doubled since last September and this total is increasing alarmingly each week. In the past month the exchange value of the lei on the “free-money market” has risen from 3600 to 6000 to the United States dollar. Rumanian research agencies estimate that, as compared with 1933, the cost of living in Bucharest has increased 27-fold. If present trends continue, it is highly probable that within the next month or two Rumania will face a financial debacle similar to that recently experienced in Greece.

2. The present Rumanian Government has, of course, interposed no objection to Russia’s continued exploitation of Rumania’s economic wealth. The Government has, in fact, contributed to the general industrial unrest by encouraging workers’ committees in various industries in their demands for participation in management and for the discharge of company officials who are not amenable to communist policies.

3. The passage of a recent law confiscating all large estates has further weakened confidence in Rumanian economy. Potential investors are now fearful that similar laws may be passed confiscating city property, banks, etc. The public is making frantic efforts to convert its assets into foreign currency.

4. Insofar as is known to the United States Representation, Russia has made no effort seriously to study the Rumanian economic situation or to limit her demands on the basis of the actual capacity of the Rumanian industrial establishment to bear the burden thus imposed. There is, in fact, increasing evidence to indicate a deliberate attempt by Russia to create economic confusion and chaos, possibly in the expectation that Rumania will thereafter prove more receptive to a communistic economy.

IV. Possible Remedial Measures

The following remedial measures are suggested as the only practicable means of halting the present accelerated trend toward complete domination of the Rumanian nation by a small communist minority:

1. Creation of a truly tripartite Allied Control Commission for Rumania in which representatives of all three Allied Nations have approximately equal powers. (The termination of major military operations in Germany may present an appropriate occasion for demanding a reorganization of the present Commission.)

2. Immediate broadening of the present Groza Government to include proportionately representative participation by all political parties.

3. Immediate opening of commercial relations between Rumania and other Allied nations, particularly Great Britain and the United States.

4. Immediate institution of effective controls by the Allied Control Commission to halt the impending financial debacle and to alleviate the critical economic situation.

C. V. R. Schuyler

Brigadier General, USA

77. Copy transmitted to the Secretary of State with covering memorandum of May 5 from the White House at direction of Admiral Leahy.