Foreign Relations of the United States, 1946, Council of Foreign Ministers, Volume II

C.F.M. Files: Lot M–88: Box 2063

United States Delegation Record, Council of Foreign Ministers, Second Session, Twelfth Meeting, Paris, May 7, 1946, 5 p.m.⁴³

Paris, May 7, 1946, 5 p.m.

secret

Frontiers of Bulgaria

Mr. Byrnes opened the meeting and pointed out that it had been agreed at the previous meeting that the Council should next take up the draft treaty for Bulgaria. The first question was that of Bulgaria’s frontiers. Were there any suggestions on what language should go into the treaty on that point?

M. Molotov said that the Soviet Delegation wished to raise the question whether it was necessary to put anything in the treaty concerning Bulgarian frontiers. Those frontiers were defined after the last war without the participation of the United States and of the Soviet Union. Thus, of the three states now examining the question, two had not had a part in drawing those boundaries. In addition, Bulgaria’s frontiers were not now the subject of dispute, except the frontier with Greece. To take up that question now would mean a prolonged examination of the question, and the Council would hardly wish to occupy itself with that. It would appear to be inappropriate for the Council to concern itself with the question of Bulgaria’s frontiers, and it was certainly questionable whether it was necessary to have anything in the treaty on that subject.

Mr. Bevin stated that it was the feeling of the United Kingdom Delegation that Bulgaria’s frontiers should be defined in the treaty, as had been agreed in the case of Rumania. This would make the position quite clear for all time. As M. Molotov had said, there was the outstanding point concerning the frontier between Bulgaria and Greece. Both countries were making claims. These claims should be heard, and the matter should be settled. Whatever decision might be taken on that case, all the frontiers of Bulgaria should be fixed in the treaty. The United Kingdom Delegation had expressed that view in London in September. It would be best to define the frontiers in the treaty whether they had been in dispute or not.

M. Molotov said that there was a difference between the Rumanian and the Bulgarian case in the matter of defining the boundaries in the treaty. In the Armistice with Rumania two boundary questions had been mentioned, the Soviet-Rumanian frontier and the Hungarian-Rumanian frontier. There had been every reason to devote attention to those two boundaries in discussing the Rumanian peace treaty. They were matters of direct concern to the Allied Governments. The other frontiers of Rumania, of course, were beyond dispute. In the case of Bulgaria, however, the boundaries had not been discussed either at the time of the Armistice⁴⁴ or at any later stage. The United States had not considered just the boundary fixed between Greece and Bulgaria after the last war. The question at hand was whether it was necessary for the Council to raise all these questions in the settlement of which neither the Soviet nor the United States Government had been directly involved. Perhaps it could be left to Greece and Bulgaria to work out a mutual agreement on the subject when normal relations between them had been reestablished.

Mr. Byrnes wished to state the position of the United States. The United States Government had been advised of the claims of Greece in regard to its frontier with Bulgaria.⁴⁵ The United States Delegation thought that it would be wise to include in the treaty a statement that the frontiers of Bulgaria, as shown on an attached map, should be those which existed on January 1, 1941. To this text there should be added a note that the text should be considered as tentative until Greece and Bulgaria had had an opportunity to present orally to the Council of Foreign Ministers or to the Peace Conference their views on this subject. (Mr. Byrnes circulated a draft of this proposal.)⁴⁶

M. Molotov had no objection to Mr. Byrnes’ proposal and thought that the text could be accepted.

Mr. Bevin asked whether the American proposal meant that if the Peace Conference made no agreed recommendation on the question, it would come back to the Council of Foreign Ministers.

Mr. Byrnes said that the text would stand unless the Peace Conference made a recommendation to change it. In any case the original text and any recommendation made by the Peace Conference would come back to the Council for the final drafting of the treaty.

Mr. Bevin then agreed to the American proposal.⁴⁷

Withdrawal of Allied Troops

Mr. Byrnes asked for comments on the next item on the agenda, the withdrawal of Allied troops from Bulgaria.

Mr. Bevin stated that this matter had been agreed in London.

M. Molotov observed that it was a fact that the Danube River flowed through Bulgarian territory. The Soviet occupation forces in Austria had to make use of the Danube as a line of communications. Therefore, some forces would have to be retained in Bulgaria to protect this line of communications. M. Molotov thought that the Council might adopt for Bulgaria the same language as had been agreed for the Rumanian treaty.

Mr. Bevin said that it was his belief that this question had been agreed in London. Were they to reopen it again? The Council had agreed as follows:

“On the conclusion of the peace treaty all Allied forces would be withdrawn from Bulgaria and all unused currency and goods would be returned to the Bulgarian Government”.⁴⁸

They had agreed on this language having in mind that the line of communication to the Soviet zone in Austria did run through Rumania.

M. Molotov said that it was a question of clarifying the language. As his colleagues knew, the lines of communication ran not only across Rumania but also along the Danube, which went through Bulgaria as well as Rumania. It was merely a question of finding the appropriate language for the Bulgarian treaty.

Mr. Bevin said that since the Danube was the frontier between Bulgaria and Rumania, any line of communication along it could be secured from the Rumanian side, and that there would be no need to maintain troops in Bulgaria. He thought that those considerations had been taken into account at the London meeting, and that the language of the London decision was clear. The Danube as a line of communications was covered by the language agreed upon for the Rumanian treaty, and there was no need to mention it in the Bulgarian treaty. He hoped that the Council would be able to stick to the London decision, which had been accepted by all. He saw no need to reopen it.

M. Molotov said that there was no dispute about the basis of the question. What was necessary was to find the proper language.

Mr. Bevin asked whether the language of the London decision would not be all right.

M. Molotov said that after the Conference in September his Government had studied the question with a view to improving the language of that decision and had in fact done so.

Mr. Bevin said that he had not seen any other language. The United Kingdom Government had accepted the decision to allow troops to remain in Rumania for the maintenance of the line of communications to Austria because it had been thought that that was what the Soviet Government wished. But the Council had also accepted in London a different decision on Bulgaria, and he believed that it was couched in the wording recommended by the Soviet Delegation itself. He did not want to reopen the question.

M. Molotov suggested that the Council refer the text of the London decision to the Deputies in order that the latter might agree on more precise language.

Mr. Bevin repeated that he had agreed in London to a provision for maintaining troops in Rumania. He thought that an agreement had been arrived at then that there would be no such provision in the treaty with Bulgaria. He had regarded those two decisions as part of the same compromise. In view of that situation he did not wish to reopen the question or to go back on anything he had said at London.

Mr. Byrnes mentioned that in the meetings of the Deputies in London the United States Deputy had objected to this clause in the Rumanian treaty, and that he was the only one who had so objected. The United States Delegation would now agree with respect to the Rumanian treaty that a clause should be included permitting the maintenance of troops solely for the purpose of maintaining the line of communications to Austria. With respect to the Bulgarian treaty, the United States stood by the London agreement, the language of which was specific.

M. Molotov asked what was to be done in view of the fact that the lines of communication ran through both Rumania and Bulgaria. What had been accepted in the case of Rumania should also apply to Bulgaria. The Danube had a Bulgarian bank as well as a Rumanian bank.

Mr. Bevin said that he could not imagine that anything in Bulgaria would interfere with military traffic along the Danube if there were Soviet troops on the Rumanian side. After all, these troops would be traveling through friendly countries.

M. Molotov said that when the necessity to maintain the troops there no longer existed, then they would be withdrawn.

Mr. Bevin then said that the Council had better adopt Mr. Byrnes’ proposal regarding Austria.⁴⁹ They might take it up at the next meeting.

Mr. Byrnes said that he had circulated the draft and would be glad to have it approved.

M. Molotov thought that the best thing to do would be for the Council to finish what it had undertaken to do.

Mr. Bevin said that if all Delegations would stick to the London decision there would be no need to consider the matter further.

M. Molotov said that the Soviet Delegation accepted the London decision if there were an addition which would define it more clearly.

Mr. Bevin replied that in the article proposed by the Soviet draft treaty for Bulgaria the same language was used as in the draft treaty for Rumania. It looked as if the London agreement must have been read upside down.

M. Molotov said that it would only look that way to those who were not sober.

Mr. Byrnes said that it was obvious that the Council had reached no agreement on this point, and that there was no use in spending further time in discussion of it.

M. Molotov suggested that the Council instruct the Deputies to work out the necessary language.

Mr. Byrnes did not think that the Council should do that as it was not a question of defining language. The London decision said plainly:

“On the conclusion of the peace treaty all Allied forces would be withdrawn from Bulgaria and all unused currency and goods would be returned to the Bulgarian Government”.

The Deputies could not make that any more precise. It was already defined. If the Council was not going to go along with that decision now, there was no point in sending it to the Deputies, who would not be able to change it. The Council would be giving them an impossible task. They might as well pass on to the next question.

Reparation From Bulgaria

Mr. Byrnes said that the article proposed by the Soviet Delegation read as follows:

“Losses caused to Yugoslavia and Greece by military operations and by the occupation by Bulgaria of the territory of these states will be indemnified by Bulgaria to Yugoslavia and Greece, but, taking into consideration that Bulgaria has not only withdrawn from the war against the United Nations, but has declared and in fact waged war against Germany, the parties agree that compensation for the above losses will be made by Bulgaria not in full but only in part, namely to the amount of . . . . . U.S. dollars payable over . . . . . years.”

Mr. Byrnes said that no investigation had been made of Bulgaria’s capacity to pay or of the claims of Yugoslavia and Greece. He proposed, therefore, that the language of the Soviet draft be accepted and included in the draft treaty to be submitted to the Peace Conference, where Yugoslavia and Greece would be able to make observations on it and present their claims. Then account could be taken of their views in the final drafting of the treaty by the Council of Foreign Ministers, which could fill in the blanks.

M. Molotov said that the Soviet Delegation had no objection to this procedure so long as it would not be considered as a precedent for other cases.

Mr. Bevin agreed.

Frontiers of Hungary

Mr. Byrnes said that the next subject on the agenda was the peace treaty with Hungary. He pointed out that in order to save time he was not repeating what he had said at the previous meeting concerning equality of economic opportunity. He would urge the adoption for all three Balkan treaties of the provisions which he had proposed for the Rumanian treaty along the lines of the agreement made at Potsdam.

Mr. Byrnes then circulated a proposal on the frontiers of Hungary (C.F.M. (46) 57).⁵⁰

M. Molotov said that this was a new proposal of which he had not previously been aware. It would have to be studied.

Mr. Byrnes agreed.

Mr. Bevin suggested that it be sent to the Deputies.

M. Molotov thought that that would be premature. He desired first to study it.

Mr. Byrnes recognized that it was a new proposal, and had no objection to deferring discussion of it.

Mr. Bevin noted that the American proposal seemed to cover not only the annulment of the Vienna Award but all the frontiers. The Council would thus have to defer all the frontier questions and go on to the remaining point on the agenda.

Reparation From Hungary

Mr. Byrnes asked for observations on the subject of Hungarian reparation.

M. Molotov said that there was a Soviet proposal on the subject. There was nothing new in that proposal. It merely repeated what was contained in the Armistice.⁵¹ There should be an amendment to it, however, since the Soviet Government had agreed that the period of payment should be extended from six to eight years. A request to this effect made by the Hungarian Government had been complied with by the Soviet Government.

Mr. Bevin said that he was troubled about this clause. It was true that the United Kingdom had signed the Armistice containing such a clause but had done so under protest. He considered that it had had a crippling effect on Hungary’s economy. The impositions had been far too great. After all, the ordinary people of Hungary should have a chance to live decently. Experience had shown that this burden had been too great and should not have been written into the Armistice. He did not think it should go into the peace treaty. It would not be worth it. The United Kingdom was interested in seeing the economic rehabilitation of Hungary so that the Hungarian people would have a chance to get on their feet again.

Mr. Byrnes said that when the Armistice terms had been concluded the United States Government had made a reservation to the effect that it would reopen the question if at any time it appeared that the execution of the article on reparations would unwarrantably prejudice American interests. The United States had tried to reopen the question through diplomatic channels,⁵² and the United States Deputy had brought the matter up in London as the result of complaints which had been made by Hungary on the basis of the general economic situation there.⁵³ Mr. Byrnes understood that when the Hungarian Government had appealed to the United States it had appealed also to Great Britain and to the Soviet Union. He was glad to learn that the period for payment of reparations would be extended. He would like to know from the Soviet Representative what the present situation in Hungary was, and whether there was not something more which could be done to help improve the disastrous economic conditions there.

M. Molotov replied that the United States and British Governments had had every opportunity to become familiar with the economic situation of Hungary. They had representatives on the ACC as well as diplomatic representatives there. He would not undertake to amplify what was already known to the United States Government. He also saw no need to recall that the Armistice terms bore the signatures of the British and the United States Governments. Recently, in April, a Hungarian delegation, headed by the Prime Minister, had visited Moscow.⁵⁴ Matters connected with the Armistice terms had been discussed; the request of the Hungarian Government to ease the terms had been complied with. The period for the payment of reparation had been extended. As a result the situation in Hungary had been relieved. The new arrangement had been accepted by the Hungarian Government, which was satisfied with the position of the Soviet Government. There was no need to point out how just and rightful the position of the Soviet Government was with respect to reparation. What the Soviet Government was proposing now had been agreed to in the Armistice terms with the single exception that now the obligations had been somewhat eased. For its part, the Soviet Government had done everything possible to meet Hungary’s wishes with respect to the economic situation there. It would be well for the United States Government also to meet Hungary’s wishes and to do what it could to relieve the economic situation in Hungary. In this connection he would like to recall that great quantities of Hungarian property and valuables were still located in the American zones in Austria and Southern Germany, where almost the entire gold reserve of Hungary was held. There was also rolling stock, automobiles, valuable industrial equipment, cattle, horses, foodstuffs, and other materials. According to preliminary estimates of the Hungarian Government the value of all this property was three billion dollars, ten times greater than the total amount of reparations which Hungary was to pay to the Soviet Government over a period of eight years. The return of this property to Hungary from the American zones would substantially relieve the economic plight of Hungary. All would welcome a decision of the United States Government to meet the wishes of the Hungarian Government and Parliament, which had been more than once expressed, by returning that property to Hungary.

Mr. Byrnes said that of course the Hungarian Government had not made any request of the United States Government for the return of three billion dollars worth of property. He recalled that at the Moscow Conference in December 1945 there had been an emergency request from Hungary, which had been supported by the United States Government, for four million dollars’ worth of UNRRA supplies for Hungary.⁵⁵ Only recently the Hungarians had requested, and the United States had granted, a ten-million-dollar credit for buying surplus war property.⁵⁶ If Hungary had the three billion dollars’ worth of property of which M. Molotov had been speaking, it would not be borrowing money from the United States, it would be lending money. Everybody knew that the Hungarian people had been in an unfortunate plight for many months. There was no three billion, or one billion, or one hundred million dollars’ worth of property in any zone occupied by American forces. There was some gold in the custody of the American military authorities at Frankfurt, Germany. And everybody in the world knew that that gold would be held in trust, and that the United States would not take one dollar of it. There were claims against it, and those claims must and would be settled. The United States would see to it that the gold would be disposed of equitably to those who had a right to it. He was informed that the amount of the gold was thirty-two million dollars.⁵⁷

Mr. Byrnes had no objection to the Soviet Government’s action in changing the terms of the Armistice whenever such action resulted in a liberalizing of the terms. When he had asked about changes he had only wished to find out whether the conditions of the Hungarian Government and people had been ameliorated. At the time of the Armistice the United States had thought that three hundred million dollars was too great an amount to exact from Hungary. It had reserved the right to question this later. He now again reserved the right to question it at the Peace Conference should the matter be raised there.

M. Molotov wished to ask what statement Mr. Byrnes had in mind which was raised at the time of the signature of the Armistice. The United States Representative had signed the Armistice terms and there was no reservation.

Mr. Byrnes said that he knew that there had been a reservation.

M. Molotov said that he was referring to the document which the United States had signed without reservation.

Mr. Byrnes pointed out that the reservation had not been in the Armistice document itself but in a communication made at the same time. It was in a letter written by Mr. Harriman^57a to M. Molotov on January 20, 1945, the date of the signature of the Armistice. He then read the letter, as follows:

“I have been instructed to inform you that in accepting the text of the terms of the Hungarian Armistice, as presented to the Hungarian Delegation on January 20, 1945 my Government reserves the right to reopen with the Soviet and British Governments the question of the execution of Article XII (Reparations) if, in the light of later circumstances, it is found that American interests are being unwarrantably prejudiced. I am addressing a similar communication to my British colleague.”⁵⁸

M. Molotov said that was a different matter. The letter referred only to circumstances in which American interests were affected. He could add only that since that time the Soviet Government had met Hungary’s wishes to see the period of payment extended from six to eight years. He must also add that the reparations provided for in the Armistice terms did not affect the Soviet Union alone. The Soviet Union was to receive only two thirds of the total amount, the remaining one third going to Yugoslavia and Czechoslovakia. Thus three countries were involved. If the United States Government felt that it was necessary to ease still further the condition of Hungary, why did it not return the Hungarian property to which he had referred? This property had been removed by the Szalasi^58a Government when Soviet troops were advancing in Hungary. The value of that property was rather considerable. It was now under American control. Its return would substantially ease economic conditions in Hungary. M. Molotov wished to make it clear that not only the United States Government but other governments were involved. On April 20 the Soviet Government had received a note from the Hungarian Government enclosing copies of letters from the Hungarian Government to the American Minister and to the British Representative in Budapest. The Hungarian Government had requested the Soviet Government to support these requests to the American and British Governments for the return of property in the American and British zones of occupation in Germany and Austria, including the gold reserve and foreign exchange, without which the Hungarian Government found it impossible to restore the Hungarian economy and put an end to inflation.⁵⁹ He would like to call attention to this Hungarian request, compliance with which would substantially contribute to the relief of difficult economic conditions in Hungary.

Mr. Byrnes said that the letter to which M. Molotov referred dated April 20 had not been received by him before he left Washington. When it did come to his attention, the Hungarian Government would certainly be advised that the American military authorities would be instructed to look for Hungarian equipment, and that when such equipment could be identified it would certainly be returned to Hungary. With respect to the gold, he had already made a statement. He wished also to ask whether, in the recent conference at Moscow with Hungarian representatives, the Soviet Government had made any other change in the Armistice terms than to extend the period of payment of reparations from six to eight years. Had the total amount been reduced?

M. Molotov replied that in other respects the reparation article of the Armistice had not been changed.

Mr. Byrnes then asked what the Council should do about the question of Hungarian reparation. He had stated the position of the United States. If the other Delegations were in agreement, they could register their agreement. If not, they could pass on to the next question. Mr. Byrnes had no objection to the article, in the language of the Soviet text, going into the draft treaty for submission to the Peace Conference, but he reserved the right, as stipulated at the time of the signature of the Armistice, to express any views which he might have on this article at the time of the Peace Conference.

M. Molotov said that it was his understanding that the clause proposed by the Soviet Government, which reproduced the corresponding clause of the Armistice, with a provision for extending the period from six to eight years, was accepted by Mr. Byrnes with the reservation that the latter would make a statement on the subject at the time of the Peace Conference if he so desired.

Mr. Byrnes wished it understood that he had no objection to the clause being included in the draft treaty at the present time. But at the Peace Conference, if the question of the total sum was raised, he reserved the right to reopen that subject, if conditions in Hungary as he saw them warranted it.

M. Molotov asked if Mr. Byrnes had in mind the same reservation made by Mr. Harriman, namely, that it was a question of American interests being affected. Or did he have in mind a different reservation?

Mr. Byrnes said that he was not surprised that Mr. Harriman had used the phrase “American interests”. To the United States that was understandable. It should not be interpreted in a narrow sense. To the United States the economic collapse of Hungary or of any country was a matter of great interest. If the phrase “American interests” had not been understood in that broad sense, he then reserved the right to reopen the question at the Peace Conference in the light of economic conditions in Hungary at that time.

The meeting adjourned at 7:30 p.m.

43. For a list of persons present at this meeting, see the Record of Decisions, infra.
44. Reference here is to the Armistice between the United States, the Soviet Union, and the United Kingdom and Bulgaria, signed at Moscow, October 28, 1944, Department of State Executive Agreement Series No. 437.
45. Regarding the Greek proposals for the rectification of the Greek-Bulgarian boundary, see the Greek Embassy Pro Memoria No. 1985, April 23, 1946, p. 84.
46. The text of the United States proposal referred to here is included in item 1 of the Record of Decisions, infra.
47. On May 13, 1946, the Greek Chargé in Washington called on the Acting Secretary of State to express the anxiety caused in Greece by the reported decision of the Council of Foreign Ministers with regard to the Greek-Bulgarian frontier. The Greek Chargé expressed the belief of his Government that a strategic rectification of the Bulgarian frontier was indispensable to the future economic and military security of Greece, and he expressed the hope that the United States Government would support the Greek claim at the Peace Conference. (768.74/5–1346)
48. Quotation is from the Record of Decisions of the 16th Meeting of the First Session of the Council of Foreign Ministers, London, September 21, 1945, Foreign Relations, 1945, vol. ii, p. 298.
49. Reference here is to the memorandum by the United States Delegation, C.F.M. (46) 3, April 26, 1946, p. 124.
50. Dated May 8, p. 309.
51. Reference here is to the Armistice between the United States, the Soviet Union, and the United Kingdom and Hungary, signed at Moscow, January 20, 1945, Department of State Executive Agreement Series, No. 456.
52. See the note of March 2, 1946, from American Chargé in the Soviet Union to the Soviet Foreign Commissar, vol. vi, p. 265.
53. Reference here presumably is to the report by Hungarian Finance Minister Ferenc Gordon on the Hungarian economic and financial situation, dated December 3, 1945. Regarding Gordon’s report, see telegram 1907, April 26, 1946, to Paris, ibid., p. 290.
54. The visit to Moscow in April 1946 by a Hungarian delegation led by Prime Minister Ferenc Nagy is described in telegram 742, April 20, 1946, from Budapest, vol. vi, p. 280.
55. The question of UNRRA assistance to Hungary was not taken up at the Moscow Conference of Foreign Ministers of December 1945. It was during the Secretary of State’s attendance at that conference, however, that the decision was taken to give American support to the Hungarian request. For an account of UNRRA assistance to Hungary, beginning with the Hungarian Government’s request for aid in late 1945, see George Woodbridge, UNRRA: The History of the United Nations Relief and Rehabilitation Administration (New York, Columbia University Press, 1950), vol. ii, chapter XIV, pp. 361 ff.
56. For the text of the agreement referred to here, see the letter of April 24, 1946, from the Foreign Liquidation Commissioner to the Hungarian Minister, vol. vi, p. 287.
57. During Hungarian Prime Minister Nagy’s visit to Washington in June 1946, agreement was reached regarding the return of the Hungarian gold in the custody of American forces and the return of identifiable Hungarian displaced property located in the American zones of occupation of Austria and Germany; see telegram 2875, Secdel 274, June 15, 1946, to Paris, ibid., p. 314.
58. W. Averell Harriman, Ambassador in the Soviet Union, from October 1943 to January 1946; from April 1946 Ambassador in the United Kingdom.
58. Ambassador Harriman’s letter of January 20, 1945, to Molotov is printed in Foreign Relations, 1945, vol. iv, p. 800.
59. Ferenc Szalasi was head of the German puppet government in Hungary from October 1944 until his flight from Hungary in February 1945. He was executed by the Hungarian Government in 1946 for war crimes.
59. A note along the lines described here had been received from the Hungarian Prime Minister by the United States Minister in Hungary on April 23, 1946, and was reported upon in telegram 754, April 23, 1946, from Budapest, not printed (740.00119 EW/4–2346). That same telegram added that reliable information had been received to the effect that Prime Minister Nagy, during his visit to Moscow earlier in the month, had asked for Soviet assistance in the matter of Hungarian displaced property in American custody in Austria and Germany. In telegram 744, April 20, from Budapest, not printed, the American Minister reported that the Prime Minister had asked whether the United States Government had any objection to the Hungarian Government making known its desire for return of Hungarian displaced property in connection with the forthcoming meeting of the Council of Foreign Ministers. Prime Minister Nagy had been informed, in reply, that his government was free to raise any matters which were of concern to it (740.00119 EW/4–2046).