C.F.M. Files: Lot M–88: Box 2063: US Delegation Minutes
United States Delegation Record, Council of Foreign Ministers, Second Session, Twentieth Meeting, Palais du Luxembourg, Paris, June 17, 1946, 4 p.m. 22
Report of the Deputies
Mr. Bevin opened the meeting and called on M. Couve de Murville, present Chairman of the Deputies, to give the Deputies’ report.
M. Couve de Murville stated that the Deputies had
met in the morning and had approved the text of the draft treaty with Italy
for submission to the Foreign Ministers as the report of the Deputies’ work
on the Italian Treaty in the interval following the adjournment of the
plenary session of the Council on May 17. This document was distributed as
CFM(D) (46) 177.23 The Deputies had then prepared the
suggested agenda for the present meeting of the Ministers which was before
them as CFM (46) 111.24 The suggested order for the discussion of the
economic clauses of the treaty with Italy was as follows:
The Report of the Deputies was accepted.
[Page 510]Compensation for Damage to United Nations Property in Italy 25
Mr. Bevin stated that the first item on the agenda of the meeting was United Nations Property in Italy. The first point on this subject was that of compensation for damage to such property during the war. As he understood the point in dispute, although the principle of compensation for damage was not contested, no agreement had been reached on the conditions of carrying out the principle or on the form and extent of the compensation.
M. Molotov inquired whether it would be possible to have stated the amount of the damage involved, as this was pertinent to the question of compensation.
Mr. Byrnes understood that one difficulty which had confronted the Deputies was their lack of information regarding what property of United Nations nationals had been damaged. They had had no means of getting that information.
M. Bidault remarked that the French Deputy had been in a different position on that point and had been able to give, at least in round figures, the amount of the damage to French property. The amount was approximately ten billion lire. M. Bidault said that this was only a rough figure, but that it could be regarded as the sum which France claimed for purposes of the present discussion.
Mr. Bevin said that the U.K. Delegation was not in a position to state an amount because the British claims had not been screened. He could not say at this time which particular claims would be supported by the British Government. As a matter of fact, the British Government had not attempted to have the actual claims examined. The mere fact that it agreed to the principle of compensation should not imply that any British subject who made a claim would automatically have the endorsement of His Majesty’s Government. It was the British view that the screening and payment of claims could take place after the principle and the methods had been settled by the treaty. Another difficulty was that a number of countries, whose claims were not known to the four Foreign Ministers present, did have claims. It was impossible to give any figures at the moment as to the extent of those claims.
M. Molotov said that all recognized that the damage done to United Nations property in Italy should be compensated. The question at issue concerned the capacity of Italy to pay compensation in full for that damage. It was important to know the amount of the compensation which Italy would have to pay. If the amount was in the neighborhood of $100 million, that fact would have certain implications; if it were $1 million, that would be another matter. The amount of compensation [Page 511] which it was proposed to fix was a matter of great importance. M. Molotov wished to thank the French Delegation for having given information on the amount of the French claims against Italy for this damage.
Mr. Bevin did not consider the question of capacity to pay as relevant since he understood that this was a question of payment in lire, not in foreign exchange.
M. Molotov remarked that the Italians considered lire also to be money.
Mr. Bevin said that payment in lire meant internal payment rather than in foreign exchange. Thus the money paid would be usable for internal reconstruction. The compensation payments for damage to property would be made in Italy in Italian money which would have to be used in Italy. Thus it did not involve either credits or payments abroad.
M. Molotov pointed out that M. Bidault had given the figures of the French claim in lire, namely ten billion lire. Would it not be possible to learn the claims of the other principal countries in terms of lire?
Mr. Byrnes said that as far as the United States was concerned, he was not in a position to make a statement of the amount. It was estimated that the total value of American owned property in Italy which might have been damaged during the war was approximately $110 million, but it had not yet been possible to have the property owners inspect the property. Therefore it was not known how much of it had been damaged, and it had not been possible to arrive at any estimate of the damage. The United States Government had not invited persons owning property in Italy to file claims. Therefore it could not give information which would be of any value on this point. The damage might amount to 5% of the total, or it might amount to 20%.
Mr. Bevin said that the U.K. Delegation was in the same position as the U.S. Delegation. Until recently, the British Government had not invited property owners to submit claims. He did not feel that he could give any figure. He had heard mentioned the figure of $40 or $50 million, but the figure for the total claims might be much less than that. It was the intention of the British Government to screen the claims and to keep them down to those which could be approved absolutely, so that their satisfaction would not injure Italy.
Mr. Byrnes called attention to the proposal that a national of any of the United Nations having a claim would have to submit it to a mixed commission which would determine whether it was an honest and just claim. It seemed to him that if machinery were provided to determine whether claims were just, and if the decision were taken that just claims should be paid in lire, an agreement could be reached on [Page 512] this question. What should be done was to make certain that no claimant was paid unless his claim was an honest one. Mr. Byrnes continued that in reading the report of the Economic Committee on this subject it had occurred to him that the proposal submitted by the French Delegation had considerable merit. Under it, differences which arose would be resolved by joint commissions, one member of which would be appointed by the United Nation concerned, the second member by Italy, and the third member either by agreement of those two countries or by the President of the International Court of Justice. He thought the important thing for the Council to do was to provide machinery and methods by which the payments would be the least burdensome to Italy and then make the claimants prove their claims. He expressed regret that he could not give any statement concerning the amount of the American claims.
M. Molotov considered it impossible to reach a decision without having an answer to his question concerning the capacity of Italy to pay compensation for damage caused by Italy during the war. When the question of reparation to the Soviet Union had been discussed, the Soviet Government had proceeded on the basis of the principle that compensation for damage done by the Fascist troops on Soviet territory during the war should be paid, not in full, but only in part. The Soviet Government knew that Italy would be able to pay only partial compensation, and it had also taken into account the fact that Italy had come over to the side of the Allies in the latter part of the war. Actually the Soviet reparation claim against Italy amounted to about l/20th of the total damage caused by Italy to the Soviet Union. It was therefore necessary to be clear concerning the payment of compensation for damage to United Nations property in Italy. It must be decided whether it was to be paid in full or in part, and the decision should be such as to make it possible for Italy to comply with its obligations. After taking a decision that compensation should be partial, the Council could subsequently reach agreement as to the percentage which Italy was to pay in compensation for damage to property. If this principle of partial compensation was accepted in the matter of compensation to the Soviet Union, which had been invaded by the Fascist armies, then it would be proper to apply that principle in the case of compensation for United Nations property damaged in Italy.
M. Molotov then proposed that the Council accept the principle of compensation for damage to such property and recognize that the compensation would be made on the basis of partial indemnification. It should then instruct the Deputies to examine the question of the extent to which that principle should be applied, i.e., it could instruct [Page 513] the Deputies to state the percentage which should be demanded of Italy. That percentage might be l/5th or 1/10th or some other percentage. Account should be taken of the fact that Italy had emerged from the war considerably weakened economically. That fact was recognized by all delegations.
Mr. Byrnes said that the United States was willing to wipe out all claims to compensation if all claims for reparation were wiped out at the same time. Such a decision would be of great assistance to Italy economically.
Mr. Bevin asked whether Mr. Byrnes’ proposal referred only to United Nations property in Italy and to reparation. Would it affect also Italian property in Allied countries?
Mr. Byrnes said that the subject under discussion was that of claims for compensation for damage to property in Italy. The United States was willing to abandon all claims of that kind if all the other governments followed suit and if claims to reparation were abandoned.
M. Bidault said that it seemed to him, in view of what M. Molotov and Mr. Byrnes had just said, that in all their minds there was a certain relation between the question of compensation for damage to property in Italy and the question of reparation. Probably that relationship did not exist from the viewpoint of money and foreign exchange, but it certainly did from the viewpoint of general equity. The Soviet Delegation had proposed that the principle of indemnification be accepted and that such indemnification be partial. The U.S. Delegation had proposed the abandonment of all claims for indemnification on the condition that claims to reparation also be abandoned. Speaking in the name of the French Delegation and also taking into account the interests of other countries not represented at the table, M. Bidault felt that he must say that these proposals presented certain drawbacks. The Italian aggression and occupation had caused great damage to France and had had very prejudicial effects on the French economy. France had, however, not presented important claims to reparation from Italy but had declared itself in favor of the principle of the payment of reparation by Italy to the Allied States. Acceptance of the proposals which had just been made for limitation or cancellation of claims to compensation on both accounts would have the result that France would get no compensation at all. Speaking from the practical standpoint, M. Bidault felt constrained to note that some of his colleagues had made a connection between the question of United Nations property and that of reparation. After what had been said, he concluded that they must be taken up together, because if they were not both solved together, neither would be solved alone. If there was a renunciation, it should affect both; if it did not, then there [Page 514] should be renunciation of neither. Admittedly, this point was not a legal but a moral one, which was obvious to those who saw the matter clearly.
M. Molotov wished to add that the Soviet Delegation was proceeding on the basis of equal treatment for claims under both items, reparation and compensation for property damage. Its approach to both was based on the principle of partial compensation.
Mr. Bevin pointed out that to connect the questions would involve a re-examination of all reparation claims, including those which had not been pressed. To make the point clear, the U.K. Delegation was not pressing for reparation, nor were the U.S. or French Delegations. Thus three delegations were asking for no reparations at all, while the fourth was making such demands. But on the question of compensation for damage to property, those who had such claims were being asked to balance the renunciation of those claims against a renunciation on the part of the only claimant for reparation. That did not seem to be quite right.
M. Bidault said that it was not accurate to say that France did not ask reparation. France had not withdrawn its claim to reparation. That claim was, however, extremely modest, and the principal French claim was for compensation for damage to French property in Italy. For that reason the French Delegation did not like the idea of connecting the two items for the purpose of scaling them down or cancelling them. The final result would be to penalize France for its moderation. In the French view there was a right to reparation. France claimed only a small part of what it might claim under that right. France had asked only for partial reparation, partly because it expected to get compensation for damage to its rather considerable property interests in Italy. Thus the major part of the French claims against Italy was made under the clause on United Nations property and not under the clause on reparation.
M. Molotov said that it would be correct to discuss the question of reparation when it was reached on the agenda. First the Council should finish the discussion of item No. 1, that of compensation for damage to United Nations property in Italy.
Mr. Bevin said they would then consider this item wholly apart from that of reparation and deal with it on its merits.
M. Molotov agreed.
Mr. Bevin said that the U.K. Delegation felt that British nationals ought to be paid proper compensation for actual damage to their property in Italy since this did not involve foreign credits and since no claims were made by the United Kingdom for reparation. The U.K. Government was making no other claim under this item. There were certain other claims connected with other items on the agenda, but [Page 515] they would be taken up later and had no relation to the question under discussion. He wondered if it were not possible to agree on this comparatively small item, namely that there should be compensation for damage, and also to agree on how the claims would be settled. Such an agreement would meet the French position as well as the U.K. position and would seem not to prejudice the position of any other delegation. It would protect the rights of the smaller powers which had claims but were not represented at the table. Could agreement be reached on that basis?
M. Molotov thought that all delegations agreed on the principle that there should be compensation. The question remaining was whether compensation should be in full or in part. That question might be discussed later.
Mr. Bevin asked whether it was suggested that the principle of compensation for damage be accepted but that final arrangements for payment be made later.
M. Molotov said that the latter point could be deferred for further study by the Deputies or by the Economic Committee.
Mr. Byrnes suggested that it simply be deferred. The Deputies had had it before them long enough, and it would have to be settled by the Foreign Ministers themselves.
It was agreed to defer consideration of this subject.
Settlement of Disputes Arising From the Restoration of United Nations Property in Italy
Mr. Bevin said that the next item concerned settlement of disputes which might arise over claims for the restoration of property in Italy.
M. Molotov suggested that on this question the Council might ask the views of the Italian Government. All delegations were anxious for a just decision on this question. It should not be difficult to settle it with the help of the Italian Government.
Mr. Byrnes pointed out that he had referred previously to the French proposal on this point and that he thought it was a wise one. It gave Italy the right to name one member of the tribunal of three; the United Nation concerned would name the second member, and Italy and that claimant country would agree on the third; if no such agreement took place, the President of the International Court of Justice would name the third member. If the Council could agree on the French proposal, there would be no point in asking the Italian Government for its views. Italy certainly could not ask for the right to name two of the three members. Under the French proposal, Italy would have as favorable a position as was reasonable.
M. Molotov remarked that, up to the present, Italy had not participated in the election of members of the International Court of [Page 516] Justice. Italy might have another proposal to make regarding the appointment of the arbitrators.
Mr. Byrnes repeated that under the French proposal the Italian Government would name one of the three members. If on all small matters of this kind Italy were invited to give its views, then the twenty-one nations invited to the Peace Conference would wonder why they had not been asked to give their views.
M. Molotov said that this was not the first time that the Council had sought the views of the Italian Government.
M. Bidault believed that the proposal of the French Delegation was a reasonable one. On the one hand it would give Italy the possibility of participating, with the other country, in designating the third member of the commission. On the other hand, since it was intended to bring Italy into the United Nations, Italy would be participating in the Court of International Justice even though there might be no Italian judge; there were also members of the United Nations who did not have judges on the court. The French proposal seemed to be a good one and should be acceptable to all.
Mr. Bevin did not consider it necessary to hear the Italian Government on this particular matter at this time. The U.K. Delegation was willing to accept the French proposal with a slightly altered wording which would provide that claims in the first instance should be negotiated between the claimant government and the Italian Government, and if no solution was reached through negotiation, they could be referred to the proposed commission. That procedure would have the advantage of settling most of the claims with the Italian Government directly and in a conciliatory manner, and only in cases of unsolved disputes would a question go to the proposed commission. The French proposal had the advantage of introducing a procedure for final settlement. The commission should have the final authority to make a decision not only on the basis of the treaty but also decide the amount of the claim as well as its character. That seemed to be a procedure which would be just. It was hoped that the Foreign Ministers would be able to agree to something along those lines, i.e., to a procedure which would provide first for negotiation and then for submission of disputes to a tribunal, and giving the tribunal a little broader power than was apparent from the wording of the French proposal. Finally, it combined the original Soviet proposal for conciliation with the proposal for a final court of appeal. That seemed to be a perfect combination of the two points of view.
M. Molotov said that it would be well to have Mr. Bevin’s proposal in writing.
Mr. Bevin agreed to put it in writing. He thought that if it was known that the general principle was accepted, it would be easy for the Deputies to agree on the language of a formula.
[Page 517]Mr. Byrnes said that the U.S. Delegation was willing to have the Deputies undertake that task. Mr. Bevin’s proposal was acceptable to the U.S. Delegation.
M. Molotov desired that the question be referred to the Deputies for consideration. It was difficult to adopt the proposal merely after hearing it, since it raised a number of questions regarding the settlement of claims on their merits. These questions were not dealt with in the original French proposal.
Mr. Bevin said that the matter could then go to the Deputies and that he would put forward a formula in writing.
M. Molotov noted that at the Deputies’ meeting other proposals might also be made.
Mr. Bevin felt that agreement on a formula would be more likely if agreement on the principle could be reached by the Ministers. That was why he had made the suggestion.
Italian Property in Territory of the Allied and Associated Powers
Mr. Bevin stated that the next item on the agenda was that of Italian property in the territory of the Allied and Associated Powers, Article 71 of CFM(D) (46) 177.26 On that subject there were proposals [Page 518] by the American and British Delegations and a reservation by the Soviet Delegation.
M. Molotov asked for an explanation of the following words in the U.S. proposal: “… within the limitations of its war claims against Italy other than those fully satisfied under other articles of this treaty.” What war claims against Italy were meant, since this was a question of the property of Italian nationals and their revenues in other countries? What was meant by the reference to the rights of Italian citizens to this property since the proposal stated that “each of the Allied and Associated Powers shall have the right to seize, retain, liquidate, or take any other action with respect to, all property rights and interest within its territory which on the date of entry into force of this treaty belong to Italy or to Italian nationals, and [Page 519] to apply such property or the proceeds thereof to such purposes as it may desire, within the limitations of its war claims against Italy other than those fully satisfied under other articles of this treaty. All Italian property or the proceeds thereof in excess of the amount of such claims shall be returned.”? What was meant by war claims against Italy and how was their amount determined?
Mr. Byrnes said that war claims included any claims against Italy arising from the war other than those satisfied under other articles of the treaty. These were claims by American citizens.
M. Molotov stated that that differed in no way from claims for reparation from Italy.
Mr. Byrnes said that the claims mentioned here were claims of nationals of Allied Governments against Italy arising out of the war which were not covered by the language of the treaty in other articles. For example, a ship might have been destroyed by Italian action. The owner would have a claim against the Italian Government. Unless that were covered in some other part of the treaty, it would come within the war claims referred to in the present proposal.
M. Molotov asked what was the amount of those American claims against Italy.
Mr. Byrnes said that he did not have the slightest idea. The United States Government had not invited persons to file claims against Italy.
M. Molotov said that under this heading of war claims, reparation was being asked from Italy. It could not be understood otherwise. That being the case, it was necessary for the Soviet Delegation to know at least what the amount of those claims was. If it were left as vague as it was worded in the present proposal, it could give rise to arbitrary action against Italy and Italian citizens. Would that be correct or just?
Mr. Byrnes said that he was not discussing reparation. This was not a question of claims by the United States Government. There were citizens of the United States who had claims against Italy. They would file their claims with the U.S. Government. Each one would have to prove his case. If he did so, he would be paid out of the Italian funds in the United States. Anything that was left over after the payment of those claims would be returned to Italy. Mr. Byrnes continued that it was his understanding that in a number of countries legislation had been enacted, Italian property confiscated, and provision made to take care of claims.
M. Molotov said that he could not speak authoritatively in regard to legislation in other countries, but that when the draft treaty with Italy was submitted to twenty-one nations for signature, they would naturally ask, as the Soviet Delegation asked now, what was the amount, who was entitled to submit claims, and who would decide on [Page 520] claims. Should the language be left as it stood at present, it would mean that claims could be put forward against Italy and Italian nationals by any Allied State or its nationals. It might give rise to arbitrary action and thereby to misunderstanding.
M. Molotov said that he had a proposal to make which would take these factors into account. He thought that the American proposal might be accepted as correct in principle but that it would be incorrect to make all Italian assets situated in the Allied countries liable to be taken for the satisfaction of claims of those countries or their nationals. An understanding might be reached that not more than one-third of the Italian property in Allied countries would be reserved for the payment of eventual claims and thus two-thirds would be left for return to Italy. This proposal would create a ceiling for claims that might be found just and lawful. Would it not be possible to accept the principle that only one-third of the Italian assets in the Allied states would be liable to seizure as compensation for claims which might be found just.
M. Bidault said that he regretted not being what was called an expert in such matters and feared that what he was about to say might confuse the question further. He felt, however, that he must refer to a proposal of the French Delegation. On May 2nd the French Delegation had proposed that Italian assets situated abroad and belonging to Italian nationals living in Italy should be taken as one of the categories of Italian property available as a source of reparation. This proposal appeared in subparagraph ii of paragraph A of Section IV of CFM (46) 53.27 This source of reparation would be devoted primarily to cover the reparation claims of the state in which the property was situated. This proposal was not inconsistent with the proposal made by the U.S. Delegation on May 6 which read as follows: “Each Allied country should be permitted to satisfy its claims against Italy out of Italian assets within its jurisdiction, any assets in excess of such claims being returned to Italy.”28 M. Bidault felt that in the somewhat confused discussion which had taken place, perhaps his colleagues had not noticed that the question of Italian assets abroad had already been placed under mortgage in view of Item V on the current agenda which dealt with reparation. It seemed worthwhile to record that fact.
Mr. Bevin pointed out that in the United Kingdom all Italian property was now under the Enemy Custodian. There were some five million pounds in cash and property of an estimated value of six million pounds. Against that there were trade debts owed by Italy to Great Britain, as of the date on which Mussolini declared war, of approximately [Page 521] the same amount. The U.K. proposal given in the draft treaty provided that this property now in the hands of the Enemy Custodian should be used to liquidate those trade debts. That seemed to be only common justice. If M. Molotov’s proposal were adopted, it would seem that the United Kingdom would give Italy a bonus of two-thirds for declaring war. Mr. Bevin was afraid that even a poor, unsophisticated Englishman could not be persuaded to do that, and the Scots would be even more upset. In view of these circumstances and the references which M. Bidault had made to the previous discussion, he wondered whether the principle could be accepted that Italian assets would be taken over by the Allied countries in which they were situated. If the United States wished to be generous and to give back those which were in the United States, the British Government would not protest.
M. Molotov noticed that Mr. Bevin was always pleased when he saw that he was likely to obtain something. But the point at issue was that in one of the other articles it was provided that debts should be paid. The present proposal would mean double payment. It would be difficult to be paid twice if the money had to come out of the same pocket, even if it was due to the English and the Scots at the same time.
Mr. Byrnes said that looking at the language of the American proposal, he did not think that even the Scots could get double payment. The proposal said that Italian property would be taken “within the limits of war claims against Italy other than those fully satisfied under other articles of this treaty”. Therefore any claim for property damaged in Italy included in articles previously discussed could not be paid under the language of this particular article, It was impossible to tell what would be the amount of the claims filed by citizens of the United States, but he felt confident that when those claims were screened, as they would be, the United States would be able to return some of the funds to Italy. This Italian property had been seized in the United States under an act of Congress. In some instances it involved real estate owned by Italians who had lived in the United States for years and had never become American citizens. The Congress would be careful to provide machinery that would require claimants to prove just claims before being awarded anything from the Italian funds in question. From the point of view of practical operation, the proposed plan seemed to be about the only scheme that could be worked out which would do justice in this matter.
Mr. Bevin asked what concrete proposal was now before the Council. Could they adhere to the principle that the Italian property should be retained by the Allied Governments concerned and leave the details of the application of the principle to be worked out by the experts? He understood that the experts had not discussed the details of this question because the principle had not been decided.
[Page 522]M. Molotov remarked that Mr. Byrnes had pointed out the fact that there was a decision by the Congress of the United States on this question. He thought that any decision of the Congress should be considered only as a decision of the Congress. It was not necessary to include it in the peace treaty and require twenty-one nations to sign a treaty embodying it as a decision by the Congress. Legislation in the United States or in any other country was a matter for that country.
Mr. Bevin expressed the view that to leave the matter entirely to internal legislation of each Allied country would not meet the position of his government, since the British legislation ran until the settlement of the question by the peace treaty. From the British point of view there must be some agreement on the matter in connection with the treaty. Otherwise Great Britain would be left with the trade debts and the Italians could claim back their assets.
Mr. Byrnes said that he was simply informing M. Molotov regarding the manner in which the United States had taken control of the property and what the situation was. The language of the treaty article was not of great importance to the United States, but it was important to some other nations. In the United States the property had been taken, and the Congress would dispose of it. It was not important whether provision be put into the treaty or not, since it was well known that the Congress would take account of the claims of American citizens in disposing of the property, and that what was left would be returned to the Italian Government. The language of the U.S. proposal was that “all Italian property or the proceeds thereof in excess of the amount of such claims shall be returned”. If that provision were put into the treaty and the treaty were ratified by Congress, such property would be returned. But even if there were no such provision in the treaty, the U.S. Government would do the same thing. Property left over after the satisfaction of claims would be returned to Italy.
Mr. Bevin asked whether the Council could accept the principle that the Allied governments could take Italian property within their jurisdiction, leaving the details to be worked out by the experts.
M. Molotov said that he had no objection.
Mr. Bevin said that his proposal was then agreed.
Renunciation of Claims
Mr. Bevin said that the next item on the agenda was the Renunciation of Claims, Article 68 of the Draft Treaty with Italy. On this point there were American, British and French proposals, and the Soviet Delegation proposed the deletion of the clause. As far as the U.K. Government was concerned, under British law, unless some such clause as this were included in the treaty, all sorts of claims would be brought [Page 523] into the courts for action as the result of actions taken by the Allies in carrying on the war. The British Government felt that since Great Britain was forced to go to war, there ought to be a renunciation of such claims by those states which forced Great Britain into war. At the Deputies’ meetings the point was discussed whether such a clause should be included in the treaty or in a separate protocol which would be binding on Italy and to which other states could adhere. The U.K. Delegation had no preference on this point.
M. Molotov said that the Soviet Delegation had suggested the deletion of this item from the treaty, but since the other three delegations were pressing for its inclusion, the Soviet Delegation agreed in principle to retain the article. It had been the feeling of the Soviet Delegation that this principle was accepted without being specified. It was thought that Italy would not be entitled to make claims for damages resulting from acts of the forces of the Allied and Associated Powers and that Italy would assume responsibility for the Allied currency issued in the interest of waging war against the common enemy. Such requirements on Italy, even if not included in the treaty, would be natural and lawful and could not be challenged by anyone. On the other hand, it seemed to be proposed in the present draft article, to impose on Italy certain unnecessary obligations, for example, the obligation to renounce all claims even for acts which were taken before the war and in anticipation of war. Should that point be included, it would be likely to give rise to arbitrary interpretations which would be unjust to Italy and to Italian nationals. The obligations which it was proposed to impose upon Italy might exceed by far the reparation claims against Italy. Therefore some discretion should be used in drafting this article in order that the obligations imposed not exceed certain just bounds. The Soviet Delegation therefore proposed that there be an acceptance in principle of the necessity for such an article and that the experts be instructed to work out the language and make the necessary amendments to the present proposal.
Mr. Byrnes had no objection to the Deputies working out the language of the article, but he wished to make it plain that this was a matter of importance to the United States. Six months before the United States entered the war, it took action to help the three governments represented at the table by freezing Italian assets,29 seizing Italian ships,30 and calling on Latin American countries which were [Page 524] not at war to help in the same way.31 The American Republics had seized Italian ships and taken action against Italy in the Western Hemisphere to prevent Italy from using the American Continent as a source of supply in its war against the Soviet Union, the United Kingdom and France. The United States did not want Italy and Italian nationals coming into American countries and suing for damages which resulted from those actions.
M. Molotov said that he accepted Mr. Byrnes’ explanation.
Mr. Bevin said that the U.K. was in a similar position. In the months which followed September 1939, the British Government had taken certain steps to keep Mussolini from aiding Hitler, although it had not taken as strong action as had the United States before entering the war.
Mr. Bevin then asked whether the Council agreed on the principle contained in the proposed article and was ready to refer it to the Deputies for drafting. (All delegations agreed.)
General Economic Clauses
Mr. Bevin said that the next item on the agenda was the subject of General Economic Clauses, Appendix IV of the Draft Treaty.32 The first question was that of the length of the period during which these provisions would remain in force. One delegation had proposed three years, another two, and a third one year.
Mr. Byrnes said that he was informed that the U.S. Deputy had suggested three years. He would be glad to compromise on two.
Mr. Bevin asked if there was any objection to a two-year period.
M. Molotov said that the Soviet Delegation had originally proposed that the period be one year, having in mind the desirability of easing the economic situation of Italy. Would it be possible to reach a compromise on one year and a half? All delegations were anxious to ease Italy’s situation.
Mr. Bevin said that the real difficulty lay in the fact that there was doubt whether that would allow time to negotiate commercial treaties. After all, it was to Italy’s interest to get these commercial matters straightened out, and eighteen months was a very short time for that.
M. Molotov said that the sitaution of Italy must be taken into account in some way or another. He thought it would be a good thing to put the period at eighteen months.
All delegations then agreed to accept eighteen months.
[Page 525]Mr. Bevin then called attention to the word “unconditional” in brackets in paragraph 2.
M. Molotov asked whether it would not be sufficient merely to refer to most-favored-nation treatment without using the word “unconditional”.
M. Bidault said that he was frightened by the importance of the questions they were discussing. In his opinion either solution was acceptable.
M. Molotov said that they should take care not to frighten the Italians.
Mr. Byrnes explained that the U.S. Delegation had proposed the inclusion of the word “unconditional” because it was the usual practice. He was sure that his friends had no objection to it.
M. Molotov thought that the Italians might have some objection.
Mr. Byrnes reminded his colleagues that the clause would be in force only eighteen months.
M. Molotov said that he was willing to accept Mr. Byrnes’ argument.
Mr. Bevin then stated that it had been agreed to leave the word “unconditional” in the article.
Mr. Bevin then referred to the reservation of the Soviet Delegation with respect to paragraph 4. This paragraph read as follows: “Natural and legal persons who are nationals of any of the United Nations shall be granted national and most-favored-nation treatment in all matters pertaining to commerce, industry, shipping and other forms of business activity within Italy.” The Soviet representative on the Economic Committee insisted on the addition of the following words: “Excluding certain branches where, in accordance with the internal legislation of the country, private enterprise does not take place.” The other three representatives doubted whether it was necessary to insert that added phrase, but offered no objection to a provision drafted as an interpretation of the article, and the report states that they would consider a suitable form of words later. Might they be asked to consider the suitable form of words?
M. Molotov suggested that the Council accept the proposal in principle and instruct the experts to work out the language.
Mr. Byrnes said that the U.S. Delegation would want to suggest some language for the provision modifying the general principle. He had no objection to referring the matter to the Deputies if it was referred for the purpose of consideration of revised language. (All delegations agreed.)
Mr. Bevin suggested that the Deputies meet the next morning and work out an agenda for the Foreign Ministers to follow when they [Page 526] had completed the items presently before them. (All delegations agreed.)
It was agreed to hold the next meeting on Tuesday, June 18, at 4:00 p.m.
The meeting adjourned at 7:30.
- For a list of persons present at this meeting, see the Record of Decisions, infra.↩
- Not printed.↩
- The full text of this document is quoted in the record of this meeting.↩
- Under consideration at this point was the Report to the Deputies by the Committee of Economic Experts on Italy regarding United Nations Property in Italy, C.F.M. (D) (46) 133, June 5, 1946, p. 463. This Report was included as Appendix III to C.F.M. (D) (46) 177, June 13, 1946, not printed.↩
-
The text of article 71 of C.F.M. (D) (46) 177 follows (brackets appear in the source text and indicate unagreed language):
Article 71
U.S. proposal:
- [1. Each of the Allied and Associated Powers shall have the right to seize, retain, liquidate, or take any other action with respect to, all property rights and interests within its territory which on the date of entry into force of this Treaty belong to Italy or to Italian nationals, and to apply such property or the proceeds thereof to such purposes as it may desire, within the limits of its war claims against Italy other than those fully satisfied under other articles of this Treaty. All Italian property, or the proceeds thereof in excess of the amount of such claims shall be returned.
- 2. The liquidation and disposition of Italian property shall be carried out in accordance with the law of the Allied or Associated Power concerned. The Italian owner shall have no rights with respect to such property except those which may be given him by that law.
- 3. The Italian Government undertakes to compensate Italian nationals whose property is taken under this Article and not returned to them.
- 4. No obligation is created by this Article on any Allied or Associated Power to return industrial, literary or artistic property to the Italian Government or Italian nationals, or to include such property in determining the amounts which may be retained under paragraph 1 of this Article. The Government of each of the Allied and Associated Powers shall have the right to impose such limitations, conditions and restrictions on rights or interests with respect to industrial, literary or artistic acquired prior to the entry into force of this Treaty in the territory of that Allied or Associated Power by the Government or nationals of Italy, as may be deemed by the Government of the Allied or Associated Power to be necessary in the national interest.
- 5. The provisions of this Article shall not apply to:
- (a)
- Diplomatic and consular property.
- (b)
- Property of religious or charitable institutions.
- (c)
- Property of Italian nationals permitted to continue to reside within the territory of the country concerned.
- (d)
- Property rights arising from commercial or financial transactions since September 3, 1943, between Italy and the Allied or Associated Power concerned.
- (e)
- Property of Italian nationals in ceded territories, which shall be dealt with in accordance with Annex 7 of this Treaty.
-
Note: The following provision
proposed by the U.S. Delegation in the U.S. draft article on
ceded territories (art 68 of CFM
(D) (46)105) is to be considered in the light of
the ultimate wording of Article 71:
“Such property rights shall not be subject to retention or liquidation under the provisions of Article 71 of this Treaty but shall be restored to their owners freed from any measure of this kind, or from any other measure of transfer, compulsory administration or sequestration, taken between September 8, 1943 and the date of entry into force of this treaty, in the condition in which they were before the application of the measures in question.”]
U.K. Proposal
- [1. The Government of each of the United Nations shall have the right to retain all Italian moneys and to retain and liquidate all or any Italian property, rights and interests (hereinafter referred to as “Italian property”) within its jurisdiction which are or have been subject to its control by reason of a state of war existing between any of the United Nations and Italy.
- 2. Any Government which retains and liquidates Italian property may apply moneys so retained or the proceeds of the Italian property to such purposes as it may decide, but no such application shall take effect so as to extinguish any right of the State concerned or any of its nationals against Italian debtors on account of indebtedness arising from contracts entered into before the outbreak of the war.
- 3. If the right reserved by paragraph (1) is not to be exercised by any particular Government, it shall so notify the Italian Government within six months of the coming into force of this Treaty.
- 4. The liquidation of such property, rights and interests shall be carried out in accordance with the municipal law of the State concerned, and the Italian owner shall not be able to dispose of such property nor subject it to any charge whatsoever nor enforce against such property any such charge without the consent of the competent authority of that State.
- 5. The Italian Government undertakes to compensate the persons referred to in paragraph (1) above whose money and property is retained and realized under this Article.
- 6. Provisional) Assets surrendered or retained in accordance with the foregoing provisions shall be accounted for in accordance with Article 65].
France proposes this property should be retained by the United Nations concerned.
Soviet reserve:
The Soviet delegation think that the questions of Italian property in the territory of the Allied and Associated Powers should be discussed simultaneously with the question of Italian reparations.
↩ - The Report of the Committee on Reparations, C.F.M. (46) 53, May 7, p. 286.↩
- For the proposals on reparations presented by the United States Delegation at the 9th Meeting of the Council of Foreign Ministers, May 4, see the United States Delegation Record of that meeting, p. 225.↩
- On June 14, 1941, President Roosevelt issued Executive Order No. 8785 freezing immediately all German and Italian assets in the United States; 6 Federal Register 2897. See also the White House press release of June 14, 1941, Department of State Bulletin, June 14, 1941, p. 718.↩
- The U.S. Coast Guard on March 29 and 30, 1941, placed in protective custody some 28 Italian merchant vessels in United States ports; for documentation, see Foreign Relations, 1941, vol. i, pp. 451 ff.↩
- For documents on the “Resolution and Plan of the Inter-American Financial and Economic Advisory Committee in Relation to Foreign Flag Vessels in American Ports”, see Foreign Relations, 1941, vol. vi, pp. 185 ff.↩
- Appendix IV of the Draft Peace Treaty with Italy is printed separately as C.F.M. (D) (46) 167, June 12, 1946, p. 488.↩