861.24/1–645: Telegram

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

61. ReEmbs 29, January 4, 2 p.m. Now that I have recovered from my surprise at Molotov’s strange procedure in initiating discussions regarding a post-war credit in such a detailed aide-mémoire, I believe the Department will be interested in receiving my reactions.

1.
I feel we should entirely disregard the unconventional character of the document and the unreasonableness of its terms and chalk it up to ignorance of normal business procedures and the strange ideas of the Russians on how to get the best trade. From our experience it has become increasingly my impression that Mikoyan67 has not [Page 946]divorced himself from his Armenian background. He starts negotiations on the basis of “twice as much for half the price” and then gives in bit by bit expecting in the process to wear us out.
2.
Molotov made it very plain that the Soviet Government placed high importance on a large postwar credit as a basis for the development of “Soviet-American relations”. From his statement I sensed an implication that the development of our friendly relations would depend upon a generous credit. It is of course my very strong and earnest opinion that the question of the credit should be tied into our overall diplomatic relations with the Soviet Union and at the appropriate time the Russians should be given to understand that our willingness to cooperate wholeheartedly with them in their vast reconstruction problems will depend upon their behavior in international matters. I feel, too, that the eventual Lend-Lease settlement should also be borne in mind in this connection.
3.
It would seem probable that the timing of the delivery of this note had in mind the prospects of “a meeting”. I interpret it therefore to indicate that should there be a meeting the Russians would expect this subject to be discussed.
4.
It would seem that the time had arrived when our Government’s policy should be crystallized and a decision reached on what we are prepared to do provided other aspects of our relations develop satisfactorily.
5.
It is my basic conviction that we should do everything we can to assist the Soviet Union through credits in developing a sound economy. I feel strongly that the sooner the Soviet Union can develop a decent life for its people the more tolerant they will become. One has to live in Russia a considerable period of time to appreciate fully the unbelievably low standards which prevail among the Russian people and the extent to which this affects their outlook. The Soviet Government has proved in this war that it can organize production effectively and I am satisfied that the great urge of Stalin and his associates is to provide a better physical life for the Russian people, although they will retain a substantial military establishment.
6.
I believe that the United States Government should retain control of any credits granted in order that the political advantages may be retained and that we may be satisfied the equipment purchased is for purposes that meet our general approval.
7.
I notice in the note recently delivered to the Department by Gromyko68 accepting the Fourth Protocol the request by the Soviet Government that we should put into production industrial equipment “which the Soviet Government agrees to pay for under the terms of the long term credit”. No reference, however, is made to the terms of this [Page 947]credit and I assume therefore that the Soviet Government refers to the terms proposed in the aide-mémoire handed me. If this is correct, it would seem that the Soviet Government is attempting to improve our proposals for the 3–C credit under Lend-Lease69 in this new proposal for combining the Lend-Lease and postwar credits.
8.
Quite apart from the question of the postwar credits, I recommend that the Department inform the Soviet Government promptly, either through Gromyko or through me to Molotov, or both; a/that the credit under Lend-Lease must be segregated from the consideration of postwar credits; b/that the Department has already given its final term[s] for the credit under 3–C; c/that agreement must be reached on the terms of this Lend-Lease credit before any further long range industrial equipment can be put into production. From the experience we have observed in the length of time the Russians are taking to erect the tire plant and oil refineries there is little likelihood that equipment for long range projects now put into production will have a direct influence on the war, and unless the Soviet Government is willing to accept the generous terms of our offer of financing it would not appear that the equipment for these projects is urgently needed at this time.

Harriman
  1. Anastas Ivanovich Mikoyan, People’s Commissar for Foreign Trade of the Soviet Union.
  2. Note of January 4, p. 940.
  3. See aide-mémoire handed to Ambassador Gromyko on May 24, 1944, Foreign Relations, 1944, vol. iv, p. 1087. For the Master Lend-Lease Agreement between the United States and the Soviet Union, signed at Washington, June 11, 1942, see Department of State Executive Agreement Series No. 253, or 56 Stat. (pt. 2) 1500. See also bracketed note, Foreign Relations, 1942, vol. iii, p. 708.